Thursday, July 30, 2009

Morning Update/ Market Thread 7/30

Good Morning,

Equity futures are up this morning, here are the DOW and S&P futures:

You can see that they climbed steadily all night long, a favorite way for the larger players and their computers to move the market over resistance. Both the dollar and bonds are down slightly.

Initial jobless claims rose to 584,000, above last week’s revised higher 559,000. At least Econoday is correctly mentioning that the drop in continuing claims is due to people falling off the roles and NOT due to new employment:
First-time jobless claims jumped 25,000 to a roughly as-expected level of 584,000 (prior week revised 5,000 higher to 559,000). The Labor Department told Market News International that the results are a "return to trend" following earlier-than-usual auto layoffs that had skewed claims lower in the prior four weeks. Still, if the high 500s is the new trend, this indicates easing layoffs from the mid 600 level before the distortions appeared. Continuing claims fell 54,000 to 6.197 million, much lower than prior weeks but likely reflecting the expiration of benefits and not necessarily new employment. The unemployment rate for insured workers was unchanged at 4.7 percent, down from an earlier peak in the low 5 percent range. Markets popped up and down in reaction to the results which offer an uncertain hint that next week's monthly employment report will show moderation in job losses.

I expect resistance at 983, which is about where it’s looking to open, and then again at or near the 1,000 mark on the SPX (like Seth’s 999). The pivot points on the up side are at 990 and then 1,018. On the down side the next lower pivot is at 961.

Oil was hammered yesterday as we learned that supply is rising and demand is falling… here’s the Point & Figure chart for oil, the technical price target it derived is way down at $44 a barrel:

I’m also paying attention to China right now. You know that equity prices crashed and now the rebound is just out of control, as in parabolic. It’s an obvious bubble forming and I think that bubble is due to break soon, but like any parabolic move, front-running it is not wise. That said, there are signs that it may be topping now or getting close to topping, although the P&F chart of the Hang Seng is just scary and as you can see, the price target is still a ways higher:

Of course the Chinese are the ones who wisely and intentionally pricked the first bubble. Unfortunately, they seem to like the extremes:

Eagles – Take it To the Limits: