Joe-Duarte.com - Market Intelligence, Daily Market Winners

Dallas, TX
March 4, 2010, 08:00 EST

Dr. Joe Duarte's Market I.Q.

The Internet's Intelligence Digest
Intelligence, Market Timing, And Trading Strategy For Traders and Investors

Employment Shock Ahead?

What's Hot Today:

U.S. stock index futures were pointing to a flat opening on Thursday as they have for the last few days. The S & P 500 has shown some improvement of late but the big action has been in the small and midcap stocks which continued their run, albeit, at a slower pace on Wednesday.

Chain Store Sales
Monster Employment Index 6:00 AM ET
Jobless Claims 8:30 AM ET
Productivity and Costs 8:30 AM ET
RBC CASH Index 9:00 AM ET
30-Yr Bond Announcement 9:00 AM ET
Factory Orders 10:00 AM ET
Pending Home Sales Index 10:00 AM ET
EIA Natural Gas Report 10:30 AM ET
3-Month Bill Announcement 11:00 AM ET
6-Month Bill Announcement 11:00 AM ET
52-Week Bill Announcement 11:00 AM ET
3-Yr Note Announcement 11:00 AM ET
10-Yr Note Announcement 11:00 AM ET
Treasury STRIPS 3:00 PM ET
Fed Balance Sheet 4:30 PM ET
Money Supply 4:30 PM ET

News For Thought

Rangel takes a powder. According to The New York Times: "Representative Charles B. Rangel stepped down on Wednesday as chairman of the House Ways and Means Committee after losing support within his party because of ethics violations, shaking up the Democratic power structure in the House and costing New York a powerful seat of influence in Congress." Mr. Rangel has been responsible for writing the tax code in the U.S. and has been investigated for controversial activity related to his own taxes. Still under investigation are "accusations regarding Mr. Rangel’s fund-raising, his failure to pay federal taxes on rental income from a villa he owns in the Dominican Republic and his use of four rent-stabilized apartments provided by a Manhattan real estate developer."

New York governor now in hot water over World Series tickets. According to The New York Times: "Gov. David A. Paterson falsely testified under oath during an ethics investigation into his acceptance of free World Series tickets last fall, according to the State Commission on Public Integrity, which announced on Wednesday that it had asked prosecutors to determine if criminal charges should be brought against the governor." According to the report: "The panel said the governor backdated, or had another person backdate, a personal check to buttress his explanation that he had planned to pay the Yankees for the seats, which were behind home plate and had a face value of $425 each."

Small child directed air traffic in New York. According to The Washington Post: "A Federal Aviation Administration air traffic controller and supervisor were placed on administrative leave Wednesday after allowing a child to direct flights at New York's John F. Kennedy International Airport on Feb. 17." The FAA has more problems. According to the report: "A Government Accountability Office study released in December concluded that the FAA's poor rankings might hurt its ability to recruit and retain enough employees in the coming years. Thirty-eight percent of FAA employees will be eligible to retire by 2013, the GAO said. The percentage of positive responses from agency workers regarding communications issues and involvement in the decision-making process was up to 19 points lower than at other agencies, the report said. But the GAO report credited the FAA with drafting a new workforce plan that should help improve future rankings. Union officials said that the survey was taken amid disagreements regarding collective bargaining rights and that morale has improved since the start of the Obama administration. "

Employment Shock Ahead?

Positive Surprise May Lie Ahead With Employment Report

The U.S. Dollar and the small and mid cap stocks have been moving nicely higher of late, and now a surprise jump in the Monster Employment Index could be a signal that a more positive than expected employment report could lie ahead.

To be sure, employment reports are difficult to handicap. And White House types have been saying that the recent bad weather could be the cause for a weak jobs number this Friday. But according to Monster.com "employers resumed hiring activity after January’s seasonal lull" leading to a ten point jump in the index and turning the year over year growth rate in the number positive at a 2% clip. This is the first time since December 2007 that job demand has grown.

Some of our back of the napkin indicators have been showing some improvement of late as well. For example, highway traffic in Dallas has been returning to more robust patterns during rush hour, although it is nowhere near what we've seen during prior booms. There are more trucks traveling the non-interstate highways as well. And there is a Starbucks with a drive through window that this reporter ogles on a frequent basis where the cars waiting for java have been making it out to the street as they wait for their morning jolt. We hadn't see than kind of action in some time.

There are some caveats, and Monster is cautious in its comments. But the press release notes '"Although some of the increase in the February Index can be attributed to seasonality, a rise in hiring for sectors like manufacturing, transportation and wholesale trade offers an encouraging sign of increased investment and business activity," said Jesse Harriott, senior vice president and chief knowledge officer at Monster Worldwide. "The fact that we are seeing a year-over-year increase in the Index may be an early indication that companies are stepping up recruiting efforts and will begin hiring again."

Recently, in this space, we have reported that some large companies have begun to reinstate pay raises and bonuses, albeit at a slow pace. What contrasts with Monster's numbers are recent reports that small businesses are not hiring, and have no plans to hire anytime soon, as they have found ways to deal with a return to more business volumes with smaller, paired down staffs.

Monster says the hot areas are technology, with information technology leading the way. Telecommunication and data distribution were the hottest areas of IT.

The company' press releases added: "the finance and insurance industry saw a similar uptrend with a 6-point rise, but remains down on a year-over-year basis. Professional, scientific, and technical services also registered an increase in February as sectors resumed hiring activity following a relatively slow 6-month period. Similarly, wholesale trade; and transportation and warehousing stepped up online recruitment in February, as reports indicating that companies were replenishing inventories nationwide, lifted demand in manufacturing and associated sectors."

Other employment data released this week points to moderate improvements as well. We should get more data when jobless claim data is released later this morning.

Conclusion

The stock market's recent advance has been spurred by the small and midcap stocks. That usually means that traders are betting on growth. Growth usually means that the economy is on some kind of improving track. And now at least one measure of employment has delivered a better than expected reading.

This suggests that perhaps, the employment numbers, released on Friday may show some strenght. That would be unexpected. By the same token, if the number was weak, it would raise questions about the disconnect between government and private data.

What is clear is that money is moving into growth stocks. And that's usually a sign that the economy is likely to strengthen at some point in the future.

We'll know soon enough.

Know when to sell and how to make money when the market falls. Get a detailed trading plan in your pocket. Read Dr. Duarte's All NEW Books "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for All Seasons. Also Available As Kindle Books.

Market Moves - Stock Of The Day

Brinker International (NYSE: EAT) Stalls As Oil Prices Rise

Rising oil prices may be starting to crimp the improving picture for casual dining chain Brinker International (NYSE: EAT).

Chart Courtesy of StockCharts.com

There is a fairly good correlation between oil prices and the action in the stocks of casual dining companies. It's pretty simple. When oil prices rise, so do gasoline prices. And that means less driving, which can translate into less restaurant traffic.

Higher gasoline prices also compete with disposable income, which is the lifeblood of casual dining.

It's still early as oil prices are struggling to rise above $80 convincingly. But Brinker's recent run has stalled, although the stock was due for a bit of consolidation.

The key is to see what happens over the next couple of weeks. If the economy shows more improvement, it could spur another run in Brinker and the restaurant sector.

Other Subscriber Reports are located on the website (log in required). These
reports are updated on a weekly basis (or as conditions require) and are not emailed:

S&P Timing / Bond Timing / Dollar Timing / Energy Timing
Gold Timing / Tech Timing / Biotech Timing

Market IQ reports may not be redistributed without permission.
Joe-Duarte.com is independently operated and solely funded by subscriber fees. This web site and the content provided is meant for educational purposes only and is not a solicitation to buy or sell any securities or investments. All sources of information are believed to be accurate, or as otherwise stated. Dr. Duarte and the publishers, partners, and staff of Joe-Duarte.com have no financial interest in any of the sources used. For independent investment advice consult your financial advisor. The analysis and conclusions reached on Joe-Duarte.com are the sole property of Dr. Joe Duarte.