Friday, October 2, 2009

Sell Signal In T-Bonds 30yr Futures

Daily Bearish Signal in the ZBZ9 Contract means that the S&P will reverse if the T-Bonds fall. It may happen on Tuesday of next week. Also there is an 86% chance of a reversal for the SPX after it decline the last 2 days of a quarter.This suggests a decent upside edge for the next couple of days. Stay Tune.

The government's much feared 'jobs report' was released today and it brought a dose of bad news. According to the Labor Department, 263,000 jobs were lost in September, far more than the 180,000 job losses economists had been expecting. The US unemployment rate meanwhile swelled to 9.8% (from 9.7% a month earlier). Despite the significant amount of talk in the mainstream press about the end of the recession having arrived, the dynamics of the job market remain quite disturbing and may put the entire recovery scenario into question. Not only is the rate of workers being laid off not abating, the pace at which companies are hiring is also at almost historical lows.

Market commentators point out that even though consumer spending has steadily improved over the past few months, such gains will not be sustainable over the long term in the face of such poor jobs numbers, and also because they are largely based on temporary government incentives (such as the popular Cash for Clunkers program).

Not only are more Americans relying on unemployment contributions than ever before in the post-war era, but they are also staying unemployed for a more extended period of time. For instance, of the total officially unemployed population, the percentage of those who can be classified as 'long term unemployed' has now reached 36% (in contrast, after the recession of the 1980s, that number had peaked at close to 25%).

Finally, among those who are working, another new post-war record has been reached, with the average workweek now down to 33 hours. Meanwhile, over 9 million people are working part-time due to economic reasons; this is also a very high number.

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