By InTheMoneyStocks.com on February 4th, 2010 1:45pm Eastern Time
A plethora of bad news hit the markets in the last 12 hours. Sovereign debt concerns in Europe smacked European exchanges as Greece, Spain and other countries as default could be near. Even Brazil is getting pounded as it is a true global selloff. The Euro has been pounded as fear that to create growth, Europe will have to print money as fast, if not faster than the United States. This has caused the U.S Dollar to spike higher. A rising dollar kills the U.S. markets as it pushes down commodity prices which in turn kill major index commodity related stocks. Some of these stocks are Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX). They are both major components of the DOW. With only 30 stocks in the DOW, if two components with a major weighting are down quite a bit, the index itself will take a dramatic hit like today.
While the sovereign debt continues to spook the global markets, here in the United States Jobless Claims were reported this morning at 8:30am ET. Initial Claims came in at 480,000 which was above expectations. The scary thing about this number is that it is slowly inching back towards the 500,000 number. In December, 2009, initial claims had fallen into the low 400,000 level and it gave the markets hope we would break into the high 300,000 claims level. Claims at that level would have signaled a Non Farm Payroll number that would most likely have turned positive for the first time in years. From Wall Streets perspective, this 480,000 Initial Claims number signals that the markets are no where near job growth and are still on a path of job losses. This is extremely bearish for a market that has rallied 70%+.
Stocks across the board and getting spanked but are moving into solid double bottom support levels. Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) after a $7.00 bounce in the last three days has turned lower and is nearing the 200ma again and a double bottom level. In addition, other commodity stocks are also nearing these levels. United States Steel Corporation (NYSE:X), Newmont Mining Corporation (NYSE:NEM) and others are nearing key support levels.
Tomorrow the Non Farm Payrolls are coming at 8:30am ET. This will be a major event for the markets and could cause a spike higher or lower depending. Many think this number will cause a negative reaction. However, I would not be surprised if we get a bounce after expectations are been lowered in a major way today. If that number comes in flat or even slightly lower, it could cause a snap back rally. Watch for plays given out in the Research Center. Plenty to come.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
Comments