Friday, December 04, 2009

Is Job Creation Right Around The Corner?

That was one surprising jobs report. If I had to bet on the release before it came out this morning, I probably would have taken the "over". The consensus was for a decline of -1250,000 job losses, but the actual figure was only a decline of -11,000 for November. Additionally, the unemployment rate ticked lower to 10.0% from 10.2%.

As that chart below shows, even though the decline in job losses has been a bit lumpy, the overall trend has been good. With a decline of only 11k jobs last month, you have to wonder if actual job creation is right around the corner?
Looking a little closer at the data, it seems most of the jobs that were added last month were temporary workers in the service sector. That tempers my enthusiasm a bit, but never underestimate the fact that better economic reports and headlines increase optimism and consumer and business confidence. So at some point the negative feedback loop we have experienced could more into a self-fulfilling virtuous cycle.

We also got some positive news in the form of Marvell (MRVL) topping earnings estimates and raising guidance, and Bank of America (BAC) raising $19.3 billion to pay off TARP. Even though the capital raise will be dilutive to earnings, its get BAC out from under the govt. and the "pay czar", which should help it compete better.
The major indexes spiked to new highs this morning, but the dollar is higher today, and that increases the odds that this early strength could fade. Commodities are mixed on the higher dollar, with oil up above $77, but gold taking it on the chin and falling below $1180 (after hitting new highs above $1225 yesterday). This could be the beginning of a much needed correction in gold, but we will have to see. It also remains to be seen if the dollar is going to rally for a bit how that will affect stocks.
Asian markets were mixed overnight; the 10-year yield is also spiking higher on the economic enthusiasm, rising 12 bps to 3.50%; and the VIX is a bit lower at 21.40.
Trading comment: I am keying off of AAPL today. That stock has been the "tell" for the action in the market recently, but this week it has not been able to rally. Today, it looks like it is reversing lower and testing its 50-day average support. If it is unable to hold this key moving average, it could be a sign that not only does AAPL need to take a breather, but the overall market might have some more consolidation ahead of it as well. As such, I want to be cautious right here, and keep my powder dry for a better entry point.
long AAPL, GLD, SDS

1 Comments:

At 9:55 PM, Blogger michaeld said...

I said it before, and I am going to say it again: What we need in this country is vigorous economic growth. If other countries can grow at 10% a year, so can we! It is all a matter of putting in place the right policies and tax incentives.

This is the only way out of this mess that we are in. Strong growth reduces unemployment. This is a prerequisite for homeowners to have a paycheck to pay the mortgage, so that real estate stabilizes and the banking crisis abates.

It will also increase company profits and help the stock market move higher to help people's retirement plans catch up. Why don't we do it? Wish I knew. All the focus has been on irrelevant issues and not on this important one. Hopefully it will be addressed soon.

By the way, with all the volatility in the stock market, it is important to know when to get in and when to get out. Timing signals can help an investor enhance their investment returns.

Consider http://invetrics.com

Its daily DJIA index trading signal is up a respectable 77% for the year (as of December 2, 2009) and it is free of charge for individual investors.

 

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