Jobless claims grows with 4 week MA climbing above 500k

Todays jobless claims rose 11k to lift the 4 week moving average to 518k this is clearly one of the most critical of components to a recovery which is really at the moment not in sight. As said in a previous post that the caveants to a recovery was jobless claims and lowering mortgage rates.  Today one of those caveants certainly was in breach this suggests it is going to be a long and protracted recession if not D2!

As the unemployment lines grow so to does the US economic problems grow! No job no pay no mortgage no spending the list goes on this is economics 101. Obama you have one hell of a job to simulate this economy out of a real tail spin and take the chill off market sentiment.

Lets bridge this thing!

good luck trading as volumes will be thin ahead of Thanksgiving.

KT

Deflation or Inflation!

At the moment the US has a bad case of deflation and I would say that this on some level is worse than inflation.  Markets find it easier to cope with inflation as asset prices grow. Right now deflation is the root evil but will the US have a problem with inflation at the back end of this crisis. Answer YES.

keep to those stops

KT

Mortimer turn those machines back on!

Is there a bear in there?

Yes markets continue to whipsaw arround. On one level it is clear the the US treasury is throwing everything at this market even the kitchen sink to fix this economic and financial mess that world markets are in.

It is my view that clearly the dynamic has changed from Last week to this week if you ask me if the US Economy and Financial markets were on the brink of self destructing I would say yes, but now I have a glimmer of hope. If you asked me if Citi would survive I would have told no way! But now I say yes. Is there value in Citi stock I say yes. Citi is in essence now socialised! Thats one for Marxs ……Capitalism has clearly broken down. But in essence Citi is now backed by the US Gov’t if you believe that the tax payer is paying for this then buy Citi!

Now have we hit a bottom in this market I would say short term it looks like we may have, long term I don’t know what other pot holes are out there. I would still be very careful with the markets and position size is still critical in this market. However, some caveats to watch are:

1. US Jobless Claims and unemployment this hurts all aspects of the economy

2. Mortgage and lending rates need to come down to fix the housing crisis.

Yes we have low interest rates but that is not getting to the consumer because banks continue to hord it. Lets hope that Paulsons plan outlined today brings mortgage rates down as the Fed said in statements today in Washington.

“The central bank will purchase as much as $600 billion of debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans ”

trade well and stick to your stops

KT

VIX at what level do you call it Capitulation!

Yes option and volatility traders are scratching their heads, I am included in this as well. With the VIX having such a prolong period above that all important number of 30 which historically was a point one called it capitulation in the equities market. Did I say history! Yes historically what does that mean because right now with the CBOE VIX underlying index closing yesterday at 74.26 at what level do you now call capitulation? Good question back on 24 October the underlying index hit a high of 89.53. The question to ask is do we need to see 90 again to call it capitulation? Gone is the VIX convention of 30 that was the yardstick to measure a market bottom as we chart uncharted territory. FEAR is not here yet!! As we stay in levels of very high vol this now becomes the norm.

Good luck trading today

KT

S&P500 bullet train is heading to the 680 levels Equity prices of 1996

Equities Look Awful!

Just when you thought it was safe to put your big toe into the water World equity markets sink lower the S&P 500 on the weekly looks nothing but scary. Next stop is 680! this looks to be the next key support area.

For all those bulls out there stop being a bull. Don’t stand in front of this it is a Bullet train heading for its next key support level of 680 you guessed that is Equity prices of 1996! WOW.

Good Luck Trading.

KT

Gold stuck still in this sideways channel 775 to 695

Sideways Channel 775 to 695 looking for a test to this!

At the halfway mark and Gold Futures still seem to be stuck in this 775 to 695 channel. Gold traded towards the upper end of the range to trade as high as 764.80 on Comex. Gold is currently USD736.60 /oz