Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
BREWING FINANCIAL CRISIS 2.0 Suggests RECESSION 2022 - 28th Jan 22
Financial Stocks Sector ETF XLF $37.50 Continues To Present Opportunities - 28th Jan 22
Stock Market Rushing Headlong - 28th Jan 22
The right way to play Climate Change Investing (not green energy stocks) - 28th Jan 22
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Friday's US Employment Report and the Stock Market

Economics / US Economy Jun 10, 2008 - 01:40 AM GMT

By: Paul_J_Nolte

Economics Friday's reaction to the employment report was somewhat of a surprise, given that fewer job losses were “created”, however what spooked everyone was the big jump in the unemployment rate. The report left a sour taste in investor's mouths, given the good news from the merger front (Verizon and Alltel) as well as good numbers from Wal-Mart (the “main” recipient of the rebate checks). Energy prices were in full retreat earlier in the week, but that reversed with a vengeance by the end of the week, as oil prices rose by their largest daily amount ever.

There were plenty of places to place the blame for the jump in prices, however the reality will be ever-higher pump prices over the summer, cutting a bigger hole in consumer's pocketbooks. Given the jawboning over the past week about the weak dollar, the Fed talked about keeping rates at present levels and may have talked themselves into a corner, as by the end of the week, the dollar had rolled over and with the weak employment report lower interest rates became a distinct possibility once again. The economy seems to be taking a back seat to the drama that is unfolding in the commodity markets – so keep an eye on energy prices and Monday's market open.

We thought this week would be a toss-up, instead by Friday it threw up. For the week our indicators really didn't move too much, but we are seeing a bit more volume with the recent decline than we have seen in a while, indicating that investors may be much more interested in cashing in and asking questions later. We have been watching the range between 1370 and 1425 that has contained the market since April.

The 1350 level marks the halfway point of the rally from the March bottom that should contain any market decline if the market were bullish. However a break of 1350 could open the doors to another retest of the lows at 1270. Given the expectations currently built into the markets (shallow recession, real estate/financial problems mostly over) it is beginning to look to us that not only is another trip to 1270 very likely, but a breaking of that level is becoming more real as well. The next important resting spots would be 1225-1235 and then 1170 – at which point the markets begin looking pretty reasonable. If the markets are going to make a bullish stand, it had better come fairly early Monday; otherwise it could be a long and very hot summer.

Bonds wound up higher (and yields lower) even as commodity prices rose on the week. The comments from the Fed, effectively telling the markets they will not be cutting rates again has put the Fed in a box with the recent release of weak economic data. The model has not turned positive, although it was close last week – if commodity prices could continue their recent decline.

While discussions ranging from Congress to the corner gas station about why prices have increased so much (see Friday's move of $11) has created a secondary market in guessing how much speculation is embedded in the price of oil today. Centering around $30/bbl, IF speculators vacate oil, we could see prices once again approach $100/bbl, however our bet is for significantly higher prices before we get back to $100/bbl.

By Paul J. Nolte CFA

Copyright © 2008 Paul J. Nolte - All Rights Reserved.
Paul J Nolte is Director of Investments at Hinsdale Associates of Hinsdale. His qualifications include : Chartered Financial Analyst (CFA) , and a Member Investment Analyst Society of Chicago.

Disclaimer - The opinions expressed in the Investment Newsletter are those of the author and are based upon information that is believed to be accurate and reliable, but are opinions and do not constitute a guarantee of present or future financial market conditions.

Paul J. Nolte Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in