Archive for August, 2010

Jobs Report

Friday, August 6th, 2010

Bloomberg reported that private payrolls rose by 71,000 in July, which is less than forecast.  The S&P 500 declined 13 points on the news.  In addition, bond yields continue to move lower; a sign the economy continues to struggle.

Today’s stock market close will be an important indicator of the short-term market trend. A close below 1100 on the S&P 500 would put the short-term upward trend in jeopardy.

Economic Briefs

Thursday, August 5th, 2010

 Supply Chain Strengthening

The ISM Service Index came in at 54.3 for July, a number that’s better than expected.  The index was at 53.8 in June and was expected to sink back to 53 in July.  The ISM is the Institute for Supply Management, so its indices for both the service and manufacturing sector signal growth in the supply chain when they rise.

Jobs Are Up

The ADP employment report shows that 42,000 jobs were added in July and Friday’s Nonfarm Payrolls could surprise to the upside.  July’s rise in private employment was the sixth consecutive monthly gain.  However, over that period increases have averaged a modest 37,000, with no evidence of acceleration.

Market Update

Yesterday’s market action remains in a tight trading range.  Can the S&P 500 close above 1130 by week’s end?  It’s possible.

Overall, the news has been positive, but underwhelming.  However, given the long stretch of bad economic news we’ve been enduring for the past several years, any improvement is welcome news, indeed.

Dodging the “Death Cross”

Monday, August 2nd, 2010

The S&P 500 recaptured 1100 on Friday.  This is a positive short-term development.

Prior to last week’s rally, the S&P 500 was in jeopardy of violating the long-term uptrend.  In early July, the S&P 500’s 50-day moving average crossed below its 200-day moving average.  This is known as the death cross.  The crossing of the two moving averages is a bearish signal and often predicts further market declines.

Thankfully, earnings season kicked off with a slew of strong earnings reports.  The market rebounded and is within striking distance of the 50-day moving average, crossing back above the 200-day moving average.

This is a positive technical signal and should provide a continuation of the uptrend into the 1130 – 1150 price area.