Thursday, October 1, 2009

Market Timing Strategy BUY Signal

Because of the Payrolls Report tomorrow, the Buy Signal Entry will be dependent upon the reaction to this very important key report.Stay tune.

The fourth quarter began on a strongly bearish note. The mainstream press reports that stocks were pounded (suffering their worst one-day loss in some three months) primarily because of two weak economic reports released today.

Although the market appeared to have stabilized somewhat in the afternoon, investors' fear of a poor jobs report being released tomorrow pummeled the indexes again late in the session, exacerbating the declines. The recent market weakness (five or six red sessions over the course of the seven last trading days) simply illustrates how frail the rally has become, given that the market has been climbing almost nonstop since March.

According to the Labor Department, last week saw a rise in new claims for jobless benefits. That number swelled to 551,000, higher than the 535,000 new claims economists had been expecting. Also released today was new data from the Institute for Supply Management on the pace of manufacturing activity in September. Here, too, investors were disappointed as the index that tracks manufacturing activity declined rather than advanced, thereby contradicting analysts' expectations. The most recent batch of economic data has come in below expectations, a change of pace from the previously steadily improving data that surfaced over a number of weeks.

This reminds investors that economic recoveries can be slow and painful. Other examples of economic reports that came in below expectations recently include data on consumer confidence and on manufacturing activity in the Midwest. Additional, and more positive, economic news was released today. According to the Commerce Department, in August consumer spending increased by the largest amount in close to eight years, in spite of the fact that personal income growth has lagged. Some analysts however doubted this increase would be sustainable, as at least some of the noted increase in spending was attributed to the government's Cash for Clunkers program. Finally, the National Association of Realtors announced that in August, pending home sales were up by more than 6% (as compared to July).
Finished in First Place in the International Trading Tournament Series by Strategy Runner held today.

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