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The Push and Pull of Statistics

October 6, 2010 – 4:55 pm

After a large rally yesterday no one expects much of a follow through this morning. The ADP payroll report, a private company report on jobs that comes out a few days before the official report, said that there was a loss of 39,000 jobs in September. The official report on Friday from the government will include government jobs but the
estimate is for a loss of about 50,000 jobs. This is, of course, not good news but the market apparently is not reacting as it expected this and expects a weak report on Friday. It is in the ‘unexpected’ that the market reacts.

Two other reports this morning may be helping the market. One is that there is an estimate that the TARP price tag is only going to be $50 billion which of course is a lot of money, but when you spend $500 billion with little hope of getting it back and end up with only losing $50 billion that is good news. Well, maybe not good
news but better news. Also, retail sales could rise 2.3% for 2010 according to a Washington trade group. Not bad for a very slow recovery.

There is no surprise in any of these numbers. The surprise is that we are not falling into a double dip recession when many thought we would and that is likely why September and now October have been doing well.

The market is going to be data driven for the short term. If economic statistics are decent and earnings are good look for further upside. If not we will have a correction. A correction would not be a bad thing.

Good Trading,
Steve Peasley

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