Thursday was a quiet day in trading but disappointing economic news still dominated. Jobless Claims came in beneath expectations despite being slightly better than the previous week; however, the four-week moving average is 30K higher. Chain Store sales were disappointing with pundits blaming the weather again. Factory Orders missed consensus forecasts at -1.2%. Lastly, not that it's much of a surprise, Moody's warned it could downgrade U.S. bond ratings should the budget deficit and debt not be resolved. So, do you think Turbo-Tim would ever stiff "the Beard"?
Anyway, the big number on Friday is the employment data. Estimates have been frantically reduced over the week given other poor data. The current consensus is 170K jobs, which is quite low, so upside surprises may be built in given all the downward revisions. Also on tap is ISM Services Index which is expected to increase to 54 from 52.8.
After yesterday's big down day markets achieved some hard fought stability. It's strange to think the employment report will hold surprises but it's Friday and bulls definitely want to go out feeling better.
The Fed was quiet Thursday but underwriters are busy getting some new issues to market ("while the getting's good") including
. These companies saw what happened with LinkedIn and they want their piece of the action.
Volume continued at a higher level as bulls and bears fought it out. Breadth per the WSJ was mixed.
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is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.
McClellan Summation Index
is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.
is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.
Continue to Concluding Remarks
This commentary is deliberately short since Friday's data and the reaction to it is the key to the week.
It's pretty shocking to see any rating agency lowering the U.S. credit rating but given the mess we're in it shouldn't surprise.
Have a pleasant evening.
Let's see what happens.
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