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Author Topic: Market Commentary - Jan 06, 2011  (Read 779 times)
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tamo42
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« on: 2011 Jan 06, 10:40:57 pm »



The dollar continued its bullish move.  The three days starting yesterday and ending tomorrow are all about the employment numbers.  Today we had the release of the initial and continuing claims for this week and last week respectively.  Initial claims are down to "only" 400,000 for the week and continuing claims are down to "only" 4 million.  This seems to be driving people to have more confidence in the US and the dollar, so they are buying.  This pushes dollar prices down, so you must always keep in mind that the most important measure is relative strength.  That is, strength compared to a baseline.  In this case the baseline is the dollar.

Here are the numbers for today:

US Dollar ETFGoldSilverDow 30S&P 500
23.29+0.18%  1338.30-0.40%  28.98-0.72%  11,697.31-0.22%  1,273.85-0.21% 

So in relative terms, from weakest to strongest we have: silver, gold, S&P 500, Dow 30 - all of which were weaker than the dollar was strong.  This enables us to see that today was a bit of a sell-off.

Tomorrow the unemployment rates are due out.  If they are better than expected (which I think they will be), there might be a good deal of action.

Happy trading!
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Neal McSpadden
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« Reply #1 on: 2011 Jan 09, 02:20:28 am »

I haven't paid close attention, but didn't the unemployment numbers turn out to actually be worse than expected, due to layoffs of temporary holiday-season workers? Have you noticed the effects of that?
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tamo42
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« Reply #2 on: 2011 Jan 09, 08:32:35 am »

As usual, the answer is yes and no.  The "headline rate" of unemployment dropped to 9.4%, which is better than expected.  But that was mainly due to people dropping out of looking for a job all together.

If you refer back to my How to Escape the Confusion of Unemployment Numbers post, using the methodology I outline there shows us that fewer people are working overall.  Definitely a bad sign.

But, as we know, markets are about expectations in the future rather than what is happening now.  The dollar and the markets in general didn't move much in response to the employment numbers, which tells us that the numbers were more or less as expected.
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