Wednesday, March 2, 2011

Morning Update/ Market Thread 3/2

Good Morning,

Equity futures are close to even following yesterday’s very negative rout. That powerful down stroke had the look of the beginning of wave 3 down, however, since it did not produce new closing lows except in the Transports, it still could be a wave b movement within a corrective uptrend – we need to see more action to judge which is happening. In the mean time, the dollar is breaking key support, bonds are lower, oil is higher (NYMEX now well above $100 a barrel, Brent now above $115), gold and silver are breaking out to new highs, while most food commodities are consolidating.

Yesterday it was reported that the Manufacturing ISM rose, but that Construction Spending fell. Bernanke flapped his criminal lips again, finally mentioning that commodity inflation will at some point, but certainly not now, LOL, begin to impact the economy. Wow. We really need to jail that guy and to end the “Fed” entirely before he gets the globe into WWIII – starving people world wide should be enough. But of course it is those who truly own the “Fed” who are really to blame, that is where the focus belongs – the rest is just distractions.

The very conflicted Mortgage Bankers released Purchase Application data with Purchase Applications falling 6.1% in the past week, and Refinance Activity falling 6.5%. Here’s Econoday:
After recovering two weeks of declines, both purchase and refinancing applications fell back steeply in the February 25 week. Purchase applications fell 6.1 percent with refinancing applications down 6.5 percent. The shortened Presidents' Day week clouds the data but the decline in purchase applications, which fell 3.5 percent when unadjusted for calendar and seasonal effects, nevertheless adds to the building run of negatives out of the housing sector. The decline also hit during a week when rates moved steeply lower, down 16 basis points for 30-year fixed mortgages to an average 4.84 percent.

The TNX (ten year) is consolidating just above 3.4%, and looks like it wants to move higher to me:

Bill Gross was also pontificating again just yesterday that rates are unsustainably low.

The Challenger Job-Cut Report rose steeply in the past month, rising from January’s 38,519 to 50,702, mostly public sector layoff announcements:
A surge in layoff announcements out of the government/non-profit group pushed Challenger's February count to 50,702, up from January's 38,519 for the largest total since March last year. Yet outside of the government/non-profit group, which accounted for 16,380 of the total, layoff announcements remain subdued.

The ADP Employment Report seems to think employment is ticking up. Remember, this report is notoriously out of synch with the Department of Labor, but it does set expectations for this Friday’s Employment Situation Report:
ADP estimates February's private payrolls rose 217,000. Compared to the revised 189,000 estimate in January, ADP's data points to modest month-to-month growth for the private payrolls reading of Friday's jobs report.

The consensus for this Friday’s number is that nonfarm payrolls will jump from January’s 38,000 all the way to 180,000! That could actually happen, as the phony Birth/Death model will be adding jobs for February instead of subtracting them as it did in the correction month of January:

Note that there is over a 400,000 swing from what was used last month to what they used February a year ago. Thus the number is not likely to disappoint this Friday in my opinion – of course that’s just trumped up false reporting.

The Bernank speaks again at 10 Eastern this morning – oh boy, can’t wait to be manipulated some more.

Meanwhile the dollar is plunging below key support:

This is signaling potentially a big move down. Should that occur, it will pressure oil and all commodities higher still. Then again, the pressure created by higher commodities may finally pressure central banking criminals enough that they finally stop their hot money injections? Naw, never happen. It won’t stop until the people make them stop or the economy just falls flat on its ass.

Oil goes parabolic:

Silver and Gold go parabolic:

The SPX’s move yesterday forced price back below that large rising wedge’s lower boundary and bearishly engulfed the past two day’s candles:

Still, it did not close below the prior low, that’s what we’ll need to conclude that wave 3 down is underway.

The Transports, however, did close below the prior low, that’s now two new lower lows in a row for the Transports, clearly now established in the beginning of a downtrend:

The dollar falling sharply is definitely something to watch. A falling dollar produces a tricky backdrop for both equities and the economy. It hurts most people badly as their expenses rise, and will eventually hurt earnings as they have less disposable real income. The central banker impossible math is continuing to express itself, events are looking to me to be picking up pace… Bernanke, yeah, it's time for a new wizard.