Surprise

by Larry Levin

There were two main reports today, the weekly jobs data and the ISM services data. Both offered surprises but the latter was certainly more of a bombshell than the former.

As usual, the lame-stream media ran with what the government overlords wanted us to hear: weekly unemployment claims were down (slightly). Of course, claims were hardly down at all and dare I say that when an additional 462,000 Americans file for unemployment in one week that it's not very good? You'd hardly know it with the screams of glee in each headline.

However, one number that everyone ignored is the explosion in "Emergency Unemployment Compensation." This is the same name for insurance benefits as they roll beyond their standard expiration horizon, and which the Administration is set on extending to cover a period from now to infinity. That number skyrocketed by 265,300 in one week to an all time record of 3,859,553 for the week ending November 14, from 3,594,253 in the prior week.

Surprise!

The other report was the ISM service index, which measures at least 70% of the country's GDP. It was supposed to show an increase above last month's reading showing the sector firmly expanding. Uh huh - not so much. When leading analysts were asked if they were surprised by the figures they replied, "If I woke up tomorrow morning with my head sewed to the carpet, I wouldn't be more surprised than I am right now."

Keep in mind that the government, through the Treasury and the Federal Reserve, has pumped TRILLIONS OF YOUR DOLLARS into the economy and the ISM still came up lame. The index was supposed to come in at 52.0, making the third consecutive expansionary reading greater than 50.0, but it was actually just 48.7. A reading below 50.0 means the sector is attenuating!

There was no way to sugar-coat that one folks. Can you say "double dip recession?"



Previous Day's Trading Room Results:

Trade Date: 12/3/09

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


1) VA buy @ 9:24am at 1088.75 = +.50 (1 lot)

2) 80% buy @ 1:44Pm at 1088.75 = +.50, +.25 (2 lot)

3) Algorithm positions (2)

4) "Reading the Tape" positions (11) ...combined Secret's, Algo, & "Reading the Tape" total...+7.50



Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!