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Market Support

January 5, 2011 – 5:34 pm

The big surprise this morning was the strength of the ADP private payroll jobs report for December. They determined that the economy produced 297,000 jobs, twice the official estimates. The official report comes out on Friday and that will include public jobs as well as private and most experts think public employment will fall. Public employment should fall. We have a bloated public sector that never shrank like the private sector during the recession.

The estimates for the jobs this Friday are around 140,000. That appears to be low in light of this ADP report

Also, out this morning was the ISM non-manufacturing sector report. This came in at 57.1 when the expectation was for around 55. This was the best number since early 2006.

So why is the market weak this morning? It is a case of expectations. The market is expecting better numbers and if they didn’t get them we would be in the midst of a correction. But we are getting better than expected numbers so the market is holding up well, though not powering forward. Soon all the traders will be looking to earnings as the reports start to come in for the final quarter of 2010. In fact maybe they have already turned to those numbers.

The market is overbought and is trying to work off that technical situation and as I said in last week’s newsletter it can do that with a correction that should be around 5% or in the alternative it could go sideways.

Good Trading
Steve Peasley

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