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Saturday, April 7, 2012

Market Thought... gonna be ugly

The non-farms jobs number, put simply, was crap. There really is no spin on this data set, that I can see, to even be remotely positive. The only pseudo positive statement I can make is that it maybe a 'one-off'.  (Most surprising is the sizable divergence from the ADP number.)

The temporary employment number went from an accelerating figure, reaching a high of 54.9 last month, which should have translated to solid employment numbers this month, did nothing of the sort. And to top it off, the temp number was -7.5 this month. (Just ugly.)

The number I really cringed at was the Average Weekly Earnings. Over the last few months there was growth, albeit, the rate of growth has moderated. This month we saw a decline. Last month it was at 807.96, and this month it was $806.96.

The futures were not kind when the report was announced. Monday will most likely be an ugly day.  I believe the futures indicated a SP500 decline of 16. If that is the case, the SP500 would be breaking technically from its recent supports.

From the daily chart, the supports included the 5SMA, 14SMA and 32SMA. The implied open would suggest a breach of the 32SMA.

The weekly chart had the SP500 riding the 5SMA, but that will be breached this week.

The next, most obvious, support for the SP500 is the 32SMA. IMO, if we bounce off of that level, the market is bouncing due to earnings expectations or assuming the Fed is back on with QE3. But given the bad number, I think the market will find support near the 68SMA on the daily, and the 1360 area, as indicated via a horizontal support on the weekly.

With the above being said, I still think earnings will remain intact. But I am expecting the negative chatter to increase. Since there is an already high skepticism on the US recovery, we should start to see the bears really come out pushing this report. (I don't know if ECRI still has a recession call on the US, but if we keep seeing crappy numbers like today, ECRI's projection will only gain traction.)

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