On Friday morning, the monthly jobs report came out. I wrote a bit about the build-up to last month’s report in this piece:
http://www.capitalmarketforum.org/entry.php?95-FRI.-JUL.-2-Jobs-Jobs-Jobs-Jobs-Jobs
Well, the unemployment data remains one of if not the most important pieces of data and this one was no exception. According to the Labor Department, private payrolls rose by 71,000 jobs in July, but that was less than the average economist’s prediction of about 90,000. Overall employment fell by 131,000 jobs (also worse than expected) as temporary census workers lost their jobs. Even more notable, the drop in June jobs was revised to a loss of 221,000, down from 125,000 lost…96,000 more jobs lost than originally reported! What is more worrisome is that the recent factory orders report indicated that manufacturing rose in July, but at the slowest pace of 2010. As orders slowed and production drifted down, it signals employment gains may cool. Basically, think of this as the opposite as to what happened last year when there was talk of ‘green chutes’ and things that could be ‘less bad,’ aka regression at a slower pace. Well, now we’re on the other side of that, but growth is gradually slowing. Since job growth is one of the two foundations of economic recovery (along with real estate stabilization), any sign of weakness in the labor market will not be taken lightly by the equity markets thus the decline in stock prices- albeit muted by the end of the day due to rumors of a mortgage forgiveness program at the FHA.
Markets in Asia were generally higher overnight; Tokyo was down 0.7% but Hong Kong ahead 0.6% with Shanghai up 0.5% and Sydney 0.6%. Markets in Europe rebounded strongly from Friday’s weakness on the U.S. jobs report with Paris up 1.6%, London 1.5%, and Frankfurt 1.4%. The dollar is quiet, bonds and gold up slightly, and oil up 1%. Futures are up nicely despite the HPQ bombshell. Look for a quiet summer Monday with a modest upside bias as the markets show resilience ahead of the FOMC meeting tomorrow. The focus will be in technology with stories out of HPQ, AAPL, and RIMM dominating the landscape and a secondary focus on the agriculture stocks as the Russian drought continues.
Reiterating-
If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.
If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-
Good- The following stocks have good news and/or a strong technical pattern
IBM, DELL- will likely benefit from any damage to HPQ
HANS- closed near a high on good earnings
CEC- near island reversal after posting earnings in closing near a high
RIMM- closed near a high
IOC- closed near a high
BID- closed near a high on good earnings
AGO- closed near a high on good earnings
BIDU- closed near a high
SWSI- received a tender offer from NBR for $22.12/share
CHBT- decent earnings
DGI- entered into a $3.55 billion agreement with NGA
SOL- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
HPQ- CEO Mark Hurd resigned suddenly on Friday afternoon; there are worries here about a vacuum of leadership and what else may be hidden
LSCC- CEO Christopher Fanning resigned Friday afternoon after two years on the job
APEI- closed near a low on terrible earnings
DEXO- closed near a low
PACR- closed near a low on continued negative follow-through after posting poor earnings last week
ATPG- closed near a low on poor earnings
DV, ESI, LOPE- among the for-profit educational institutions under scrutiny by the U.S. Department of Education which closes on their low on Friday
PCC- closed near a low after posting bad earnings
MGA- near island reversal in closing near a low despite great earnings
DISH- poor earnings
AMED- poor earnings
Earnings:
MON AUG 9 BEFORE
AMED DISH KG
MAC SOL TSN
WCG
MON AUG 9 AFTER
CLNE CTRP GNK
IT MBI MDR
MDVN MR NUAN
PRXL QGEN SLXP
THQI
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
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