U.S. Stocks finished lower for the second consecutive week on Friday, although Friday's losses were much more muted compared to Thursday. We received significant economic news this week, indicating that the recovery is at least experiencing a hiccup, if there is much of a recovery under way at all. Job losses in September amounted to 263,000, and the unemployment rate inched up to 9.8%. Total unemployment, when one considers workers that are underemployed, is about 17%. Data on manufacturing and durable good orders was also weak.
As a result, stocks have at least taken a breather. There is good support in most of the major averages just below the current levels. I suspect we may get a bounce from here, but I don't believe the market can head much higher unless we start getting better news on the employment front. Although it is traditionally viewed as a lagging economic indicator, unless there is actual job creation, consumers will not be much in a mood to spend.
As the 3rd quarter has drawn to a close, the beginning of earnings season is upon us. That will drive stock prices on an individual basis for a while. With that in mind, expect some of the better performers to hold up, but stocks that disappoint will likely get hammered!
Scott Cole
www.theultimatestocktradingsystem.com
Sunday, October 4, 2009
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