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Dallas, TX
June 3, 2010, 08:00 EST |
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Dr. Joe Duarte's Market I.Q. |
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The Internet's Intelligence Digest
Intelligence, Market Timing, And Trading Strategy For Traders and Investors
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Markets And Survey Expectations On Employment Report Clash Big
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What's Hot Today: |  |
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U.S. stock index futures were pointing to a higher opening on Thursday.
There are some subtle indications that the bears are starting to lose
the battle in the short term.
News For Thought
Federal Reserve Board Member says time to raise interest rate nears. According
to Reuters: "The U.S. economy is almost strong enough to allow the Federal
Reserve to begin raising interest rates, Atlanta Fed President Dennis
Lockhart said on Thursday."
Monster Employment Index Up Fourth Straight Month. According to
Monster.com: "The Monster Employment Index rose by 1 point in May as a number
of industries continued to step-up their online recruitment efforts. The annual
growth rate during May was 14 percent (16 points), the highest year-over-year
growth rate since April 2007, indicating the demand for labor is strengthening."
Of interest in the report: "Healthcare and social assistance industry sees strongest
rise in online job demand in May; management and accommodation/ food services
contract." Also "During May, online recruitment activity rose in 15 major metropolitan
markets, with Orlando registering the largest monthly gain. Although current
levels of online job demand in this market remain well below the 2005 and 2006
periods, activity has nonetheless improved consistently over the past year. Demand
remains thin but has improved over the year for blue-collar occupations like
construction. Despite monthly declines, demand has been upbeat for occupations
in primarily publicly-funded sectors including education, training, and library;
and community and social services."
Layoff activity flattens out, suggesting some stabilization. According
to CNBC.com: "Employers fired as many staff in May as the previous month, according
to the latest job-cut report released by global outplacement consultancy Challenger
on Wednesday." The report added some details that were not exactly as upbeat
as the headlines as "The Challenger report indicated that the pace of job losses
edged slightly higher in May, as employers announced plans to cut 38,810 jobs
from their payrolls. This was 1.3 percent more than the four-year low of 38,326
job cuts announced in April, but 65 percent lower than one year earlier, when
planned job cuts totalled 111,182."
Arizona governor to meet with president over immigration bill today. According
to ABC News: "President Obama sits down with Arizona's Republican Gov. Jan Brewer
today for the first time since the state passed its controversial new immigration
law." |
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Markets And Survey Expectations On Employment Report Clash Big
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When Economists Are Bullish And Traders Are Skeptical..Fireworks Are Likely
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The private industry employment surveys are suggesting
that the jobs market has likely bottomed out, or at least is slowing the
rate at which job cuts occur. And economists expect a huge number of new
jobs on this Friday's employment report. But the market has yet to become
a believer if the action in three employment related stocks is any clue.
Manpower Inc. (NYSE: MAN) is a fairly good barometer as to how the market feels
with regard to executives' employment outlook. And this stock has been moving
straight down for the last few weeks. The company made money in its past quarter
due to some currency related issues, and the stock briefly rallied, only to fall
hard soon thereafter. In fact, despite a recent brokerage house upgrade Manpower
has gone nowhere.
Chart Courtesy of StockCharts.com
Administaff (NYSE: ASF) is a barometer for how Wall Street is betting on the
fate of small businesses, the employment engine in the U.S. Administaff provides
back office and human resource services to small companies. When these companies
are hiring, they tend to send more business to Administaff. This stock has fared
better than Manpower Inc. Yet, the latest news from the company isn't very encouraging,
as the Chairman of the Board & CEO Paul Savadis sold 36,000 shares in the
company recently.
What's interesting is that small business owners are starting to turn more positive
about their situation. According to OnRec.com: "Nearly two-fifths of small business
owners are expecting an economic turnaround in 2010. Another 44 percent think
a rebound will occur in 2011, and only 17 percent are unsure. These encouraging
findings regarding small business owners’ morale come from the latest Business
Confidence Survey by Administaff." OnRec added: "the percentage of small business
owners who cite the economy as their biggest short-term concern is 71 percent,
down considerably from 83 percent in July of last year, and the continuation
of a downward trend first evidenced in in October (77 percent). Right now, 54
percent cite government health-care reform as their top short-term concern."
Chart Courtesy of StockCharts.com
Finally, we look at Monster Worldwide (NYSE: MWW). This is a bellwether for technical,
clerical, and middle management type jobs. The Monster Employment Index has shown
improvement for the last four months, suggesting that job demand is starting
to grow, albeit at a very slow pace, well below the 2005-2006 pace, according
to the most recent Monster Employment Index press release.
Chart Courtesy of StockCharts.com
This stock looks similar to Manpower Inc. In other words, it may have bottomed,
but it's not particularly robust.
Conclusion
Friday's employment report could be a game changer, for the markets, for the
economy, and for the public. Expectations are for 540,000 new jobs, with the
range being from 225,000 to 635,000 new jobs created.
Last month, there were 290,000 jobs created. That number was not well received,
and added to the market's correction.
Wall Street has huge expectations for this report. At least the economists who
answer survey questions. But the market is saying something else. It has very
low expectations.
That means that Friday's report will likely be another market moving event. Stocks
have been trying to bottom out of late, after prices dropped below the 200-day
moving average on the S & P 500.
What it means is that this could be yet another very volatile end to a very volatile
week. The way to play this market is to have lots of cash, to have some short
positions, and to have some long positions.
All of our sections are illustrative of this strategy.
We'll be on Twitter
some time today before the market closes with some updated comments.
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. |
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Market Moves - Stock Of The Day
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Short S & P 500 ETF (NYSE: SH) Starting To Struggle
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The Short S & P
500 ETF (NYSE: SH) is showing signs of wear and tear, perhaps
providing a clue that a trend change may be near.
Chart Courtesy of StockCharts.com
The stock market seems to be at a crucial point. As the
major indexes are below their 200-day moving averages,
the bears have been yelling loudly about an acceleration
of the down side for stocks.
Yet, the market isn't exactly going along. In fact, the S & P 500 may be
forming a bottom, just below the 200-day line.
Another way to look at it is this. ETFs that short the market are struggling,
which means that the momentum to the down side is starting to slow. That means
that buyers are starting to be more assertive and that the bulls may be ready
to make a move.
There is no guarantee that we'll be back in a bull market next week, or next
month. But the behavior of ETFs such as the Short S & P 500 ETF is a sign
that some kind of potential reversal of fortune may be close at hand.
For those shorting the market, it's a good idea to start paying attention to
their positions very closely. We have begun adding potential longs to all of
our sections.
Follow Dr. Duarte on Twitter |
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