Wednesday, September 2, 2009

Morning Update/ Market Thread 9/2

Good Morning,

Futures are down this morning with the /ES sitting right on the 990 pivot area:

The dollar is flat, gold is doing a rocket launch and is now sitting right on the top of that large triangle, threatening to break higher. Gold actually pinned through the top and pulled back. It is quite bullish if it breaks higher and stays above that top. Oil, on the other hand, is breaking down hard. Bonds are higher on the flight to safety. This is a pretty scary combination as you would expect the dollar to rise and gold to sink under an ordinary flight to safety type of trade. If it weren’t for bonds moving up, this looks more like a capital flight trade, a BIG difference.

The MBA purchase application, which no longer gives us meaningful data, fell 1.0%. Here’s Econoday:
MBA's purchase index slipped 1.0 percent in the Aug. 28 week while the refinance index fell 3.1 percent. The government purchase index rose 0.5 percent for a seventh straight gain. The government-insured share of purchase applications was 40.4 percent in August, the highest since 1991 and compared with 38.3 percent in July and 31.7 percent a year ago. Rates were down in the week with the average 30-year mortgage averaging 5.15 percent, down 9 basis points.

In a sign that government layoffs will be playing a role in the future, Challenger’s job layoff announcements came in like this:
Challenger's layoff announcement count fell sizably in August, to 76,456 vs. July's 97,373. The government component, swollen by post office cuts, made up half of all cuts. Non-government categories are showing easing levels of layoffs in what is good news for Friday's employment report. ADP's more closely watched count is up at 8:15 a.m. ET.

And the ADP report is estimating a job loss of 298,000, indeed, the markets did move further down on that release:
ADP is looking for a decline of 298,000 in private payrolls, a result that would be on the low end of expectations. This report has not been getting favorable reviews for accuracy, but markets did react with stocks and commodities moving slightly lower in immediate reaction.

“…not been getting favorable reviews for accuracy,” lol, no kidding. None of the Challenger,ADP, OR BLS reports are accurate, the most accurate of them all is probably the BLS U6.
Factory orders come out at 10 Eastern.

Yesterday was a pretty serious breakdown. We’re coming up on some support and 50 day moving averages, the bottom Bollinger bands aren’t that far away either. Be careful right here as the /ES is sitting right on the 990 pivot area and the short term stochastics are oversold, the percent of stocks above the 5 day moving average is ZERO, a condition that’s very oversold, although the farther out in time you go, the condition quickly reverses to being way overbought still.

The next lower pivot is at 961. For more, please scroll down a couple posts as I did a short market recap yesterday.

Is this the start of the big wave C? McHugh still does not believe so, but he is guarded as yesterday’s 93.4% volume move down was a little too powerful to be sticking to a bullish case. It’s still possible though… a breakdown below 975 would put a nail in bull’s hopes for more rally, it’s a nail biter, keep your eye on the VIX, on Gold, on bonds, on the dollar, heck, this is a time to be paying attention.

Me? I’m spending so much time on my computer I’m seeing double…

Foreigner – Double Vision: