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Friday, January 9, 2009

Non-farm Worst Since 1945: Market Likes It

With every passing day it becomes more probable that the market is preparing a Bear Wedge on the NSYE Composite (NYA). The wedge is getting tight and the price is now sitting on the rising bottom trendline. A decisive down day today would result in a break DOWN and OUT.

As of 8:30 AM, the market actually likes the loss of “only” 524k jobs and an unemployment rate of 7.2%. Never mind that the revisions two the last two months were significant and unfavorable. Never mind that factoring in these revisions means that the 524k number was actually much closer to “world ending”.

The rumor amongst the equity guys is that these numbers are so bad that Obama will somehow accelerate his stimulus package. (That’s right, both not as bad as expected AND so bad that stimulus will be accelerated. That’s trader logic for you…)

In reality of course the job losses are the most since 1945. You know, when the whole freaking US military industrial complex wound down and the largest army in the world demobilized…

The fixed income guys would appear to have a higher IQ and have put in their “safe haven bids”. They can smell deflation and Armageddon and they don’t like it one bit.

The US dollar is strengthening against all major currencies.

The 920 area on the S&P500 (SPX) is the level to watch. A ninja might even hide patiently in ambush ready to snap off some shorts…

The 940 area is the danger zone. Pushing beyond that would result in the possibility of a lunge for 1000.

U.S. Loses 524,000 Jobs; 2008 Losses Most Since 1945 (Update1): “The U.S. lost 524,000 jobs in December, making last year’s collapse in employment the worst since the end of World War II and underscoring the severity of the recession President-elect Barack Obama will inherit.

The decline in payrolls was in line with forecasts and followed a drop of 584,000 in November, bringing job losses for 2008 to 2.589 million, the most since 1945, according to a Labor Department report today in Washington. The jobless rate rose more than forecast to 7.2 percent, a 15-year high, from 6.8 percent.”


Anonymous said...

You may want to rewrite your post. Looks like the market does not like the numbers.

Anonymous said...

Yeah, I feel good, very positive.....getting a new hope...onward, upward

Excuse me while I go for another cup of this wonderful koolaide

Tord Steiro said...

One question totally off topic:

I notice that you have not continued your scary chart series. I think that is a pity, as I really enjoy reading your excellent analysis. So how directly do you interpret this development:

Are markets now fnished witht he sub-prime clearing, awaiting the next bubble-bust, or is this something else?

Of course, things may not be all that pretty, as the multiplier is now BELOW zero...

How is that possible, by the way?

Unknown said...

MULT is below 1, not below zero. Still ridiculous to be below 1 though.

Anonymous said...

The market is like Mikey, they like anything and everything -- socialism, corruption, depression, debt, bankruptcy, greed, you name it. There is always a silver lining for the markets and always a reason to rally.

Anonymous said...

By the way Ben, you could say the same of long treasuries given the front page of Barrons as you could of gold.

Tord Steiro said...


Below one of course, sorry for the error. But still, yes, it's ridiculous - the fed prints one dollar, but only 95 cents reach the economy...

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