Rock and a Hard Place - November 12th, 2009

Today’s headlines bring another round of focus on the job situation including presidential initiatives and weekly jobless claims. The push has come more than once for the S&P to retain that 1100 milestone, but there is still a significant amount of drag. Economic woes haven’t been completely shelved, and recent trading sessions may be building towards a make-it-or-break-it moment.

The latest talk from the Fed didn’t suggest a huge amount of enthusiasm with regards to economic health of the nation. Jobs are still likely on the tops of many holiday wish lists. Jobless claims filed last week were less than a Briefing.com survey had predicted – 502,000 versus forecasts for 510,000.1 That number from the Labor Department may be the lowest this year, but it certainly isn’t spelling growth in the job market. A large portion of economic recovery will likely depend on mending the jobs situation.

The President’s plan to hold a jobs forum comes in the wake of unemployment levels at 10.2 percent. This is evidence of just how important jobs are to the overall picture. Job creation ahead of the holidays does not seem like a reasonable expectation since the situation for retailers is bordering on dire. A weak retail season probably lies ahead and one way to make it slightly less gloomy could be to slash prices. Or, a heavy hand with scheduling and trimming a few staff could keep operating costs lower and boost the bottom line, even in the face of fewer holiday shoppers. Either way, it is unlikely to invite permanent job growth.

This does not mean that further gains are not possible for the market; if it can gain a true foothold above 1100, it is possible buyers may materialize. Right now, however, it appears rather Saharan on the buyer side, and volume has been anemic. Other averages like the Nasdaq and Russell have not appeared to confirm the new yearly highs seen in the S&P and Dow. The tug-of-war that seems to be developing is manifesting in an increase of volume on the downside. Bears may be wrestling for control here.

1 http://money.cnn.com/2009/11/12/news/economy/initial_claims/index.htm