Skip to main content

Chart action: Jobs data changes everything

Last week I wrote that the daily charts of the major averages were beginning to show potential inverse head-and-shoulder patterns. That would typically be a strong bullish signal in the world of technical stock analysis. I also wrote that the weekly charts were less conclusive and we would need to see the averages move decisively above the necklines of the patterns to confirm the new bullish trend.

Tuesday the markets did indeed move up but Friday saw a plunge that left all the averages below the previous week's levels.

Now it looks like we will once again test the support of the 200-day moving averages while investors gauge the strength of the Goldilocks economy and wait for the expected rate cut when the Fed meets on September 18.

The word "recession" is starting to show up in blogs and news articles now. It wasn't so long ago we had upward revisions in GDP, mild reads on inflation and a feeling markets were stabilizing. Was the jobs data really so bad? Was it unexpected? Let's look at some charts from the Bureau of Labor Statistics.

The chart below shows unemployment in the Construction Industry. It is a surprise that it shows unemployment falling so much after hitting a peak over the winter. Note, however, that the level of unemployment isn't that much higher that at this time last year. No recession indication here.

Construction Industry UnemploymentThe next chart shows unemployment in the Financial Industry. Perhaps this is why the markets sold off so strongly. Economic weakness is hitting Wall Street where it lives as unemployment spiked to levels not seen since 2004.

Financial Industry UnemploymentThe next chart shows unemployment in Manufacturing. Whenever the US loses manufacturing jobs it is certainly troubling. This chart, however, shows more of a reversion to the trend established over the previous years that is a result of manufacturing moving overseas.

Manufacturing Industry UnemploymentIn conclusion, my take on the jobs picture is that it wasn't pretty but it doesn't indicate the economy is about to collapse. In terms of stock prices, the reaction may have been overdone but now the charts look terrible again and the outlook for the markets is again uncertain.

Comments

Popular posts from this blog

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation

Thursday Bounce: Trend Busters, Swing Signals and Trend Leaders for July 9, 2009

This is a quick post to announce that we have published Thursday's Trend Leaders, Swing Signals and Trend Busters at Alert HQ . All are based on daily data. Today we have the following: 72 Swing Signals -- A couple of days ago we had 35 signals, today we have twice as many. Happily, we now have 65 BUY signals, a mere 4 SELL Signals plus 3 Strong BUYs. Whoo-hoo! 56 Trend Leaders , all in strong up-trends according to Aroon, MACD and DMI. There are 18 new stocks that made today's list and 60 that fell off Tuesday's list. 48 Trend Busters of which 5 are BUY signals and 43 are SELL signals The view from Alert HQ -- Talk about mixed signals. If you look at our Swing Signals list you would think the market was in the middle of a big bounce. BUY signals are swamping the SELL signals and we even have a few Strong BUYs. Yes, there's a good sprinkling of tech stocks and tech ETFs but the distribution is pretty broad-based with a good number of different sectors represented, eve

Trade Radar gets another update

Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.