Thursday, August 6, 2009

Morning Update/ Market Thread 8/6

Good Morning,

Equity futures are higher this morning, here’s the overnight action:

The Dollar is up and bonds are down.

In England, the Bank of England decided that deflation is not dead and increased the amount of bonds it is auctioning in their attempt to print their way out of recession and into prosperity. Oh yeah, that’ll work – not!

It appears that weekly initial jobless claims were massaged down to a better than expected 550,000… is all! As if that horrific number weren’t bad enough, it is completely not reliable and we’ll have to spend our time parsing through the numbers to glean a glimpse of reality. Here’s Econday’s report:
Initial jobless claims fell 38,000 to a much better-than-expected level of 550,000 (prior week revised 4,000 higher to 588,000). Very importantly, there were no special factors in the week. The current level is right at the four-week average of 555,250, more than 50,000 lower than the average at June's end. These results will lock expectations for month-to-month improvement in tomorrow's jobs report.

Continuing claims are harder to read, up 69,000 in data for the July 25 week to 6.310 million. The four-week average is nearly 500,000 lower than the comparable period in June, but there's a risk that much of this improvement reflects expiration of benefits, not new hiring.

There was very little initial reaction to the results, in part because of caution awaiting an ECB news conference. Still, results for initial claims are a positive, pointing to slowing losses for payrolls.

Expiration of benefits? No kidding, it’s not a “risk,” its reality.

Of course the real show regarding employment will be the monthly employment report that comes out tomorrow and we’ll all have to waste our time trying to parse out real data from that report to figure out what’s happening in reality. Hey, their spinning of numbers deceives the public and most investors, the way to make money, unfortunately, is to understand the difference between the hype and reality. The markets will always return to reality – eventually.

From a technical perspective, there are divergences still in place and we are nearing the next pivot at 1,018 which should represent very heavy resistance – we reached 1,007 overnight. I note that there have now been six morning pullbacks in a row, all met with a late day rally. The markets are now under someone’s control, gee, I wonder who it could be? If I were looking to find out who controls the markets, of course I would be suspicious if a large investment bank was able to turn a profit from their trading on every single day but two in the past six months! Oh, and I would be particularly suspicious if that firm’s ex-managers all went to work in the Treasury Department and took jobs in the current administration. But the SEC, of course, is blind to all of this because they, too, are also owned lock, stock, and barrel by the same company. Need I mention their name?

The fall, when it occurs (and it will), is going to be EPIC.

For those who can talk Elliott Wave, McHugh believes that yesterday’s pullback was wave 4 and that we need one more leg up, wave 5, to complete wave 1 up of c up of B up. Me, I’m not so sure that we’re not closer to being entirely done with wave B as we are at heavy resistance areas and historically are at the point (50% recovery) that recoveries during credit contractions stall. Of course I’m well aware that the money pumping and manipulation is historic as well, I’m certain that makes the movements and dislocations that much larger.

The 30 minute stochastics is overbought and the 60 has room to go a little higher but if so will be overbought pretty soon.

We got a new commenting system today, come try it out, I hope it works better for everyone. It’s designed to be interactive with Twitter and all the information feeding services to mobile devises. It sends information out and then pulls all the replies back from wherever they are made to collate all the comments in one place. There are other features as well that we can discuss on this thread.

Have a great day,


I’m thinking I’ll just make this Goldman’s theme song:

Santana – Evil Ways: