(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)
TAKE JOBS REPORT WITH A GRAIN OF SALT
May 4, 2012
The U.S. Department of Labor reports that unemployment rate fell to 8.1% vs 8.2% consensus.
Non-farm payrolls increased by 115k vs 162k consensus. The whisper number was about 120k. In any case this is a negative number.
On the positive side March non-farm payrolls were revised to 154k from 120k.
The rest of the data in the report is also mixed. There is ammunition in the report for both bulls and bears.
Economic data from Europe is weak. Mario Draghi, the ECB chief expects gradual eurozone recovery in the second half of 2012.
There were hopes among market participants that today’s data would provide clarity on the U.S. economy. In reality the data adds more confusion.
Bulls and bears will battle and the momentum players will jump on which ever side seems to be showing early signs of winning. It is impossible to call the market direction for today in advance. There is no change in our medium term model indicating 65% probability of a correction.
As of this writing gold is not showing much reaction.
Gold futures are at $1635, silver futures are at $30, and oil futures are $100.61.
S&P 500 resistance levels are 1400, 1410, and 1415; support levels are 1380, 1368, and 1358.
DJIA futures are down 43 points.
ECB HOLDS ITS FIRE AHEAD OF FRENCH WILD CARD
May 3, 2012
Even as the European economy is beginning to falter, the European Central Bank (ECB) has left official interest rates unchanged at 1%. The upcoming French election that has the potential to reshape ECB’s role may have been the real reason behind inaction by ECB.
In the U.S., initial weekly jobless claims came at 365k vs 375k consensus. This is a leading indicator with heavy weight in our models.
There is high anxiety in the markets ahead of tomorrow’s jobs number.
Investors are taking some chips off the table in gold and silver ahead of tomorrow’s number. Gold investors are also discouraged because ECB did not ease.
Gold futures are at $1644, silver futures are at $30.38, and oil futures are $104.91.
S&P 500 resistance levels are 1410, 1415, and 1424; support levels are 1380, 1368, and 1358.
DJIA futures are up 5 points.
THE U.S. JOB GROWTH STALLS
May 2, 2012
ADP employment change 119k vs 170k consensus. ADP is the largest payroll processor in the United States. The data shows that employment growth in the U.S. is stalling. We pay attention to this number because the market pays attention to this number; this is a lagging indicator and therefore this is not an important part of our models.
Now the market will be focused on the employment data to be released by Department of Labor Friday morning.
Gold futures are at $1657, silver futures are at $30.49, and oil futures are $105.76.
S&P 500 resistance levels are 1400, 1410, and 1415; support levels are 1380, 1368, and 1358.
DJIA futures are down 52 points.
THE U.S. STOCK MARKET REMAINS VULNERABLE
May 1, 2012
New money pours in the stock market on the first day of the month. Such money usually props up the market on the first two or three days of the month.
U.S. stock market remains vulnerable to a correction. Our models are predicting a 75% probability of S&P 500 hitting 1330 to 1344 zone. The models also predict a 65% probability of hitting 1290 to 1311 zone.
One of our favorite leading indicators is Institute of Supply Management compiles ISM Index. This index is based on a survey of the purchasing managers regarding their acquisition of goods and services. This index will be released at 10:00 am ET. The consensus is 53.
Gold futures are at $1672, silver futures are at $31.22, and oil futures are $104.84.
S&P 500 resistance levels are 1400, 1410, and 1415; support levels are 1380, 1368, and 1358.
DJIA futures are up 15 points.
MARCH CORE PCE AT O.2%
April 30, 2012
The core Personal Consumption Expenditure (PCE) is our favorite inflation indicator. PCE is a component statistic for consumption in Gross Domestic Product (GDP).
Even though food and energy prices are rising, this data shows that core inflation is rising only slightly above the target set by the Federal Reserve.
Now Spain meets the technical definition of recession, it is not a surprise.
Gold futures are at $1650, silver futures are at $31.20, and oil futures are $104.22.
S&P 500 resistance levels are 1400, 1410, and 1415; support levels are 1380, 1368, and 1358.
DJIA futures are down 9 points.
