Wed night we came very close to triggering longer term buy signals in the emini S&P futures, DJ futures and NASDAQ futures (basis March). But all three markets turned south overnight. Once the surprising increase in initial claims were released Thursday morning, the markets kept pushing lower and tested the lows of last week and then broke below those lows. The spot equity markets fell by -2.6% to -3.11%.
On 2/3/10 we wrote the markets may be nearing a trigger point for the next leg upward, but we also stated the markets were looking a little overbought for the short term and could correct down to the major support level.
Since 1/24/10 we have talked about the emini S&P March contract maintaining a major support level at 1059 to 1040. On 1/29/10 the market reached a low of 1066.50. On 2/4/10 the market reached a low of 1059.25. The market has not seen this price level since 11/6/09.
If the March emini S&P does not hold the 1040 area, then the next major support would be around 950. This price level has not been seen since the end of July.
In the emini DJ March contract we have been calling for the market to reach the major support level of 9900 to 9800. On 2/4/09 the DJ emini March futures reached a low of 9955. If 9800 is broken we could see 9680 to 9500 as the next level.
This week has experienced a heightened expectation for economic reports, especially the Jan unemployment report set for release on 2/5/10. Many economists are expecting at least a flat job growth and as much as a 15,000 job growth for Jan. The range of estimates has run from -40k jobs loss to +75k jobs growth. However many traders are beginning to think the report will show a surprising job loss.
Regarding the U-3 unemployment rate, the market is expecting 10% to 10.1% with a range of 9.9% to 10.2%. If confidence of job seekers increases it would not be surprising to see the U-3 rate increase to 10.2% as many in the labor force move from the U-6 definition of unemployment to the U-3 definition. if the U-6 increases or decreases will be the real key to confidence of job seekers and where unemployment may be heading, not the U-3 definition.
However its not just jobs that are on the mind of traders, its also increasing worries about Europe's sovereign debt default as credit default markets are increasing, especially Greece, Portugal and Spain. Many believe the worries of debt default could expand to Hungary and Poland. Recent days have experienced a major fall in the Euro.
If the dollar continues to rally that should also put continued pressure on commodities. If commodities fall, so should the A$ and C$.
As this article is being written at midnight Chicago time, in the overnight markets Asian and Australian equity markets are down nearly -3%.
On 2/3/10 we wrote the markets may be nearing a trigger point for the next leg upward, but we also stated the markets were looking a little overbought for the short term and could correct down to the major support level.
Since 1/24/10 we have talked about the emini S&P March contract maintaining a major support level at 1059 to 1040. On 1/29/10 the market reached a low of 1066.50. On 2/4/10 the market reached a low of 1059.25. The market has not seen this price level since 11/6/09.
If the March emini S&P does not hold the 1040 area, then the next major support would be around 950. This price level has not been seen since the end of July.
In the emini DJ March contract we have been calling for the market to reach the major support level of 9900 to 9800. On 2/4/09 the DJ emini March futures reached a low of 9955. If 9800 is broken we could see 9680 to 9500 as the next level.
This week has experienced a heightened expectation for economic reports, especially the Jan unemployment report set for release on 2/5/10. Many economists are expecting at least a flat job growth and as much as a 15,000 job growth for Jan. The range of estimates has run from -40k jobs loss to +75k jobs growth. However many traders are beginning to think the report will show a surprising job loss.
Regarding the U-3 unemployment rate, the market is expecting 10% to 10.1% with a range of 9.9% to 10.2%. If confidence of job seekers increases it would not be surprising to see the U-3 rate increase to 10.2% as many in the labor force move from the U-6 definition of unemployment to the U-3 definition. if the U-6 increases or decreases will be the real key to confidence of job seekers and where unemployment may be heading, not the U-3 definition.
However its not just jobs that are on the mind of traders, its also increasing worries about Europe's sovereign debt default as credit default markets are increasing, especially Greece, Portugal and Spain. Many believe the worries of debt default could expand to Hungary and Poland. Recent days have experienced a major fall in the Euro.
If the dollar continues to rally that should also put continued pressure on commodities. If commodities fall, so should the A$ and C$.
As this article is being written at midnight Chicago time, in the overnight markets Asian and Australian equity markets are down nearly -3%.
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