Thursday October 7, 2010 - 18:08:59 GMT
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Forex Hound - www.forexhound.com
Decline in Weekly Claims underpins U.S. Equity Markets
equity markets rallied shortly after the release of a better-than-expected
Weekly Initial Claims Report. Economists estimated that initial claims would
rise to a seasonally adjusted 455,000 in the week ended October 2. The actual
report for state unemployment benefits fell 11,000 to 445,000 in the latest
week. This was the lowest level since early July.
In my opinion the weekly number is still
too high. It needs to remain consistently under 450,000 and begin to trend
lower. Otherwise, traders are likely to react to the accuracy of the guesses
like they are doing this morning. I truly believe that investors donâ€™t think
that one better-than-expected report means that much to the structure of the equity
markets at this time. Their focus remains on the overall weakness in the
economy, the plunging Dollar and the expectation of additional liquidity from
the U.S. Federal Reserve.
There is no question, however, based on the
current daily December E-mini chart pattern that the main trend remains up.
This current rally has been labored at times, but investors have supported the
index on breaks, creating the current higher top, higher bottom pattern.
Technically, the December E-mini S&P
500 is building momentum this morning to drive it through the May 12 high at
1160.75. Once through this level, it could surge to the next resistance point
Uptrending Gann angle support is at 1152.50
today. This angle provided support overnight. A break through this angle will
weaken the structure of the rally, but will not change the trend. The daily
chart indicates the trend will change to down on a move through 1127.00.
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