(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
SHOCKING EMPLOYMENT DATA, GOLD AND BONDS JUMP
February 7, 2014
January Nonfarm Private Payrolls came at 142K vs. 161K consensus. Total January Nonfarm Payrolls came at 113K vs. 175K consensus and whisper numbers of over 200K. The data shows that the government jobs are being shed which is not necessarily a bad thing. Our models depend on private payroll data which is also weaker than expectations.
Gold and bonds have jumped on the weak data.
The gold bulls expect that the weak data will force the Fed’s hand to taper the taper. In other words, instead of $10 billion per month reduction in purchases by the Fed, the Fed may reduce the amount of the reduction. In our analysis, the data is not weak enough to force the Fed’s hand and the Fed will lose a lot of credibility if it were to taper the taper.
Stock futures are attempting a solid recovery as of this writing after a dip of over 100 DJIA points immediately after the numbers.
Gold futures are at $1266, silver futures are at $19.95, and oil futures are $97.47.
S&P 500 resistance levels are 1775, 1800, and 1825; support levels are 1725, 1710, and 1700.
DJIA futures are up 47 points.
THE BATTLE BEFORE TOMORROW’S BIG NUMBER
February 6, 2014
The most important development for the market will be tomorrow morning when the U. S. Department of Labor releases employment data for January. Here is what is shaping up for today. There are many shorts in the market who would want to cover before tomorrow to reduce risk. On the other side are large institutions who are overly exposed on the long side; they would want to sell to reduce risk before tomorrow. And then there are momentum players who will jump on which ever side seems to be winning and thus exaggerate the move.
For practical purposes it is important to remember that more likely than not, this is a correction in a bull market. Any further dip from here will be an opportunity to selectively buy.
At the same time cracks are beginning to appear in high momentum stocks that have been levitating because of short squeezes. It is important to be mindful that if one is able to catch the beginning of a fall of such stocks, a fortune can be made in a very short time.
Gold and oil are trying to rally but facing considerable resistance.
Interest rates are mostly unchanged.
Euro is moving higher against the U. S. dollar after ECB meeting.
Gold futures are at $1261, silver futures are at $20.03, and oil futures are $98.57.
S&P 500 resistance levels are 1766, 1775, and 1800; support levels are 1725, 1710, and 1700.
DJIA futures are up 38 points.
GOOD DATA FROM ADP SHOULD CALM FEARS
February 5, 2014
ADP reported good data this morning that should calm fears. The fear lately has been that the U. S. economy is slowing. ADP employment change came at 175K vs. 178K consensus. However, some technicals are turning negative and for this reason technically oriented traders may choose to sell.
Gold jumped on the ADP data but is now backing off.
Oil is also backing off.
Interest rates are rising as they should.
Gold futures are at $1263, silver futures are at $19.93, and oil futures are $97.53.
S&P 500 resistance levels are 1750, 1766, and 1775; support levels are 1725, 1710, and 1700.
DJIA futures are up 9 points.
STOCKS OVERSOLD IN THE SHORT-TERM
February 4, 2014
Stocks are oversold in the short-term. A bounce will occur. The two questions are from what point and of what quality. It is impossible to predict the exact points. However according to our models there is a very high probability that this is a correction in a bull market.
Gold is falling and has traded below $1250 this morning.
Interest rates are inching up after 10 year Treasury bonds briefly broke 2.6% intraday.
Oil is range bound.
Gold futures are at $1249, silver futures are at $19.36, and oil futures are $96.60.
S&P 500 resistance levels are 1750, 1766, and 1775; support levels are 1725, 1710, and 1700.
DJIA futures are up 60 points.
LOTS OF CROSS CURRENTS, MORE CONCERNS ABOUT CHINA
February 3, 2014
There are more concerns about China as the official PMI shows weakness in both manufacturing and services. There are many cross currents in stocks, bonds, gold and oil this morning, some positive and some negative.
The big number ahead is the employment report this Friday. The unemployment report is likely to provide a better insight into where the markets will head next.
Gold futures are at $1249, silver futures are at $19.30, and oil futures are $97.54.
S&P 500 resistance levels are 1800, 1825, and 1837; support levels are 1766, 1750, and 1725.
DJIA futures are up 11 points.
