Friday, October 7, 2011

A Nice Jobs Report

     Markets are up in the early going after a better than expected jobs report eased fears of a recession in the US.  The government non farms payroll report showed  that 103.000 jobs were created in September, a number greater than economists had forecast.  Economists were expecting 60.000 jobs created.  The unemployment rate held steady at 9.1% as more people rejoined the workforce.

     In some more good news, payroll data for July and August were revised upward by 99.000.  Remember that horrible payroll number from August were we added a big fat 0 jobs?  Well, it was wrong.  Everybody panicked over that number but it turns out the US economy isn't as bad as the market thinks.  The economic data we have been getting recently are consistent with an economy that is slowly growing and not an economy going into a recession.

     Stocks have reacted well to the news with the DJIA up 75 points in the early going as of 7:47 AM PST.  The other major averages are mixed.  European bourses are all higher by more than 1% and the Asian indexes closed green as well with the Hang Seng up almost 10% in the past two days.

Market Recap
     Stocks ended the day in negative territory today after a choppy session that saw the Dow as high as 100 points up and as low as 70 points down.  In the middle of the day Fitch announced that they had downgraded Spanish and Italian debt.  This did not move the markets very much as the Dow shot up for awhile then finished down 20 points for the day.

     It seems there was profit taking today after a huge three day runup that saw the SNP 500 gain 100 points.  We were bumping up against trendline resistance on a lot of charts so some profit taking was to be expected.  I am not quite sure if it is the end of the rally but no one ever went broke taking profits.  I would be inclined to hold on to long positions here if you have them and see what next week brings.

Cocktail Napkin Charting
     How about some rudimentary technical analysis?  One chart I have been looking at is XLE which is an ETF that represents a broad swath of Energy stocks.  XLE fell back from resistance today.
     As you can see from the chart, the red line is resistance around 62 dollars.  We opened on the highs of the day at 62.18 and pretty much went straight down all day.  This is a pretty bearish candlestick and could signal a reversal.  The 62-63 level is strong resistance as it is the confluence of two trendline resistance levels.  If we can break past this level there should be free reign to rise to 70 bucks.  I am not too discouraged by today's action, however.  I believe it is just profit taking before another move higher.

     The SPY chart looks better as we broke through trendline resistance today creating a higher high for this move which is still bullish for me.  We finished right at trendline resistance and within a whisper of the 50 day moving average at 117.99 which is the blue line sloping downward.  That should be our next stop.
I don't think this is the end of the rally but we will see next week.

     I will do one more chart for DWei who was asking about AAPL.  AAPL was down about 2% today and has been underperforming recently.  I think this underperformance is related to the JP Morgan analyst report from last week which said they ordered less parts for the iPad so people think they are selling less iPads because of the slowing economy.  AAPL lost some of it's mojo at that point.  AAPL is stuck between the 50 day and 200 day moving averages which are represented by the blue lines.  I believe AAPL is on its way to retesting the 200 day moving average that it bounced off of nicely 3 days ago.  AAPL's weakness is concerning to me and I would not be buying it here but I would wait for a retest of the 200 day moving average around 354 and then put a buy order down there if it bounces off the 200 day again.  AAPL still has one of the strongest charts around so it is still a buy on weakness.



Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!


  1. Surprised you didn't talk about Apple's stocks dropping.

  2. And that's because you talked about it yesterday. Derp, my bad.

  3. Look up Dexia stocking, it's crashing atm

  4. Thanks for the update man. Very interesting news anyway.

  5. First part was indeed great news. Those extra 40k jobs, might not look like much, but it makes a world of difference for those families.

  6. fingers crossed for more good news.

  7. @Dwei and my day in a sentence

    There is your aapl analysis.

  8. Wee, jobs for everyone! Kinda.

  9. I'm not sure if I like this news...

  10. interesting thanks for the info

  11. So basically we are just keeping up with population growth?

  12. good news, thanks for sharing.
    I'll recommend this blog.

  13. when you said a nice jobs report i thought you meant steve jobs.