POOF

by Larry Levin

Poof - like a puff of smoke disappearing in the wind - yesterday's stock market gains vanished. Why did that happen you're wondering? Reality. Today's economic news was the same as yesterday's, and last week's, and last month's, and last quarter's (see a pattern here?): very bearish.

Weekly unemployment was worse than investors had guessed - again. Continuing jobless claims rose by 159,000 in the week ended Jan. 17 to a seasonally adjusted 4.78 million, the most since the government's records began in 1967! The four-week average of new claims rose by 24,250 to 542,500. The number of new claims for state unemployment benefits increased 3,000 to a seasonally adjusted 588,000 in the week ended Jan. 24, which put the number just 1,000 below the 26-year high for initial claims set a month ago.

The difference between initial and continuing claims is that the former represent job destruction, while the latter represents how hard (or easy) it is for displaced workers to find new employment. The claims data show that businesses are laying off workers at a quick pace and that finding a substitute job is proving ever harder for those who've lost work.

The Commerce Department also reported poor news this morning: orders for durable goods slumped 2.6% in December on weaker demand for almost everything except defense-related items. This marks the 5th consecutive decline. What's more, last months data was revised much lower. The Commerce Dept revised it from -1.5% to -3.7%.

I guess the part of the so-called stimulus bill that appropriates $400-million to prevent sexually transmitted diseases is going to help provide jobs for the industrial sector in its time of need - right? Oh, guess not.

Finally, new home sales were bad. (How this is surprising I'll never know.) Sales of new homes plunged to another record low in December. Specifically, sales fell 14.7% to a seasonally adjusted annual rate of 331,000, the lowest level since the series began in 1963.

Remember the report earlier in the week from the NAR that got folks excited? It claimed that existing home sales were improving. Then I had to go spoil the party with the truth - remember that? Sorry, but I don't believe in the Pollyanna BS that you get from economists and other so-called experts. The NAR was either lying, or ignoring reality. Home sales are not improving, and won't improve until job losses turn into job gains.

Previous Day's Trading Room Results:

Trade Date: 1/28/09

E-Mini S&P Trades*
(before fees and commissions):

1) Engf sell @ 9:40am at 855.75 = -1.25 (1 lot)

2) Engf buy @ 9:50am at 856.00 = +1.50 (1 lot)

3) Engf buy @ 12:10pm at 845.50 = +2.25 (1 lot)

4) Algorithm positions (3)...combined SofT and Algo total...+0.25

ZB (30 Year Bond) Trades*
(before fees and commissions):


1) No trades today.



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