Finding a Foothold

A series of key economic reports this week will culminate in Friday’s report on the employment situation; and although today is bringing lower prices, it may take more than this to completely shake the foundations of recent gains. Today’s ADP Employer Services report showed 12,000 more job losses than the 520,000 predicted by a Reuters survey of economists. That does suggest to some investors that the anticipated recovery in the second half of this year may not materialize. On the other hand, the planned layoffs from US firms are lower for the fourth month in a row, suggesting that stability or a forthcoming turnaround isn’t that far-fetched. This news may end up being dwarfed by the employment situation data.

The Labor Department report – slated for release on Friday – is expected to show a loss of 550,000 jobs in May. Unemployment is expected to rise to 9.2 percent. Anything close to the survey results will likely support the market heading into the weekend while a steeper, more dramatic loss will likely be required to send things plummeting. After all, the noted move over the 200-day moving average is widely cited to be a bullish signal within this market – something which has taken place this week. This may be just the technical indicator to confirm that the trend is in place. If so, this week’s earlier economic reports may help lend some momentum.


Pending home sales data from the National Association of Realtors posted another increase with a jump of 6.7 percent. Housing likely remains volatile, but these results may have served as a positive companion to Monday’s unexpected climb in construction spending.  Gains in both commercial and residential construction served as a possible signal that the worst of the housing bust may be behind us. Manufacturing data also showed a slower contraction than forecast.  The non-manufacturing index was a disappointment to analysts who were aiming for a reading of 45 – it came in at 44 for May. Since the expectation was still on the contraction side of 50, this news may be a wash. If the market can hold this ground – and if the employment report does not spell disaster – then it should continue in a positive direction.

Past Performance is Not Indicative of Future Results.

Past Performance is Not Indicative of Future Results.

Disclaimer: Futures and options trading involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. Copyright 2009 LaSalle Futures Group