Friday September 4, 2009 - 14:03:32 GMT
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Stock Indices Nearing Key Retracement Level Following Employment Report
The U.S. Unemployment Rate rose more than expected to 9.7%, up from 9.4% in July. The August Non-Farm Payrolls Reports showed a loss of 216,000 versus guess of 225,000. July was revised to show an even greater loss of jobs.
Traders apparently like the report because equity markets are rallying. U.S. stock markets were trading higher prior to the report. The initial reaction caused the market to bend a bit before regaining its composure and rallying. Traders are dominated the market early this morning. Analysts are most likely still crunching the internal numbers of the report.
The September E-mini S&P appears headed toward a key retracement area at 1014.75. There may be a reaction at this number as it represents both a 50% retracement and old bottom. A failure in this area is likely to trigger a sharp break to the downside.
Treasury Futures are trading lower on the news. This is mostly a reaction to the higher equity markets. The report clearly does not signal the start of a recovery in the economy so losses may be limited. A turnaround in the equity markets to the downside is likely to fuel a rally in today‚Äôs holiday shortened session.
The U.S. Dollar fell following the release of the report. The move did not take place with a lot of conviction. This indicates that the Dollar is likely to rally if equity markets begin to break.
The key is to watch the September Japanese Yen. A lower Yen will indicate that money is flowing into the safe-haven U.S. Dollar.
December Gold is weakening. This is another indication that the Dollar may strengthen. Furthermore, the report suggests that inflation will not be a factor for a while.
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