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Jobs Data Doesn't Jive With ISM

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The president's summit didn't reflect an improved employment picture.

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Editor's Note: This article was written by Richard Suttmeier, chief market strategist at ValuEngine.com, which is a fundamentally-based quant research firm in Princeton, New Jersey, that covers more than 5,000 stocks every day.

The president's job summit was aimed at battling surging unemployment, but if you believe the November jobs data, the problem may have ended without further action needed.

President Obama told 130 business leaders that the government doesn't have the money for additional direct investments in job creation. I didn't hear a single positive comment from the participants in the aftermath of the summit.

Democrats in Congress are considering a tax credit for jobs, additional aid to states, more infrastructure spending, tax reductions for small businesses, and a public jobs program. Speaker Pelosi wants to direct TARP money to jobs.

TARP may not lose as much money as expected, but didn't accomplish its intended purposes.

TARP = Toxic Asset Relief Program: Toxic assets weren't purchased and continue to grow on and off bank balance sheets. Bernanke in a recent Q&A told the audience that he still doesn't know what some toxic structures are worth.

TARP became a bank bailout: The money was intended to increase lending, but instead both consumer and small businesses see tighter lending standards and credit difficult to get. Wall Street speculated in commodities and stocks, while Main Street banks bought US Treasuries.

What to do with remaining TARP: Replenish the FDIC Deposit Insurance Fund so that banks don't need to pony up three years of fees by year end. Using TARP would suspend bank assessments, allowing them to lend money to consumers and small businesses.

Bank Failure Friday resumed last Friday with six closures bringing the total for 2009 to 130.

The jobs report showed an expanding service sector, the ISM didn't? Friday's employment report showed that the Service Sector added 58,000 jobs. This doesn't jive with the Nonmfg ISM data released last Thursday. Nonmfg ISM was expected to show a reading of 51, but came in at 48.7 reflecting a contraction in the Service Sector. The jobs component came in at 41.6 suggesting job losses.

If you believe the increase to 33.2 hours for the average work week, up from 33.0 hours, I'd argue that the National Bureau of Economic Research could time-stamp the end of recession in November 2009. We won't know this for six to eight months, however. This chart shows that the FDIC believes that the recession continued in the third quarter.

No breakout or key reversal for the Dow, which remains positive but overbought on its weekly chart. Key support is the five-week modified moving average at 10,108 with a weekly pivot at 10,442 and the resistance on the down trend that goes back to October 2007 down to 10,550 this week. (Charts courtesy of Thomson/Reuters.)


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Gold -- which traded at a record high of $1227.50 last Thursday -- traded down toward my quarterly support at $1135.14 this morning, down $90. Gold is below its 50-day at $1155 with a weekly pivot at $1179.


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The dollar appears to have bottomed on Thanksgiving as I predicted. This week's support is 74.86 with quarterly resistance at 78.65. The euro is back below 1.50 with resistance this week at 1.5027.


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Nymex Crude Oil is below its 200-week simple moving average at $75.70, as oil has moved sideways to down from $82 over the past seven weeks.


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No positions in stocks mentioned.

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