Wednesday December 24, 2008
Navivest

Initial Jobless Claims, which tracks those applying for unemployment benefits for the first time, rose to 586,000 for the week ending December 20th. This was an increase of 30,000 from the previous week’s revised figure of 556,000.

The 586,000 number is the highest figure since November 1982 and the ranks of the newly unemployed is expected to keep growing before it finally tapers off.

The 4-week moving average was 558,000, an increase of 13,750 from the previous week’s revised average of 544,250.

The stock market is shrugging off the news in early trading and the Dow at 9:43 is up 30.67 points, at 8460.16.

Tags: Initial Jobless Claims  Unemployment Rate  Economic Calendar  Stocks 

Wednesday December 24, 2008
Navivest

Yesterday, we got home sales numbers that showed that on an annualized basis, sales of new homes had dropped to an 11 year low. Fortunately, even though the numbers were worse than expected, the stock market was able to look past it, or using Wall Street terminology, the news had already been discounted in stock prices. As a result, the Dow only dropped 100.28 points, to close at 8419.49 for a loss of just 1.18% on the day.

Among the economic news on tap today, we get Durable Goods orders, which tracks orders for manufactured goods with a long lifespan of at least three years and Initial Jobless Claims, which tracks newly unemployed persons.

Already released data shows that we lost 533,000 non-farm jobs in November of this year. This follows the 403,000 jobs lost in September and the 320,000 jobs lost in October, for a three-month loss of 1,256,000 jobs.

The stock market has shown a propensity of late to almost ignore bad news since they are now par for the course, but if we get an Initial Claims number that’s worse than the 545,000 that’s being forecasted, it might be a bad day for those that are long stocks.

Other than the crude inventories report which is due out at 10:30 AM, most of the economic news slated for today, will be released before the markets open, so traders will be able to make trading decisions without having to worry about upcoming news.

We are looking for some rebound after the holidays and after the economic news shakes out, towards the end of the trading day might be a good time to go long. The trading plan would be to see how the stock market takes the news today. If the market is ignoring the news and we have an upside bias, then start buying, if not, regardless of how bad stocks fall, towards the end of the day, around 3:45, start buying.

Remember the past few days, stocks have basically just waffled then ended the day to the downside. So if buying early today, then look for strong conviction. We want to see either at least a hundred points on the Dow right at the open and have that hold for at least thirty minutes, or if less than that, we want to see big moves of at least a dollar or more in some big name market leader Dow and Tech stocks with more stocks up than down by a decent margin.

Note, if we do get a rally after the holidays, take profits. Unless noted, the trading ideas that we post on the Navivest blog are all short-term trading ideas.

For a free two-week trial to our trading advisory services, The Options Capitalist and Navivest Equity Trader, click here.

 
Tags: Initial Claims  Durable Goods  Economic Calendar  Trading Idea

Wednesday November 19, 2008
Navivest

We are looking for a rebound in stocks after a volatile week in trading that has seen the Dow trade in an almost 800 point range, but we’re still trading only about a hundred point lower than where we were trading last Wednesday.

We do have a somewhat active economic calendar today that could dictate the direction of the stock market – possibly downward. On tap, we have Building Permits, Housing Starts and FOMC minutes.

It is probably a safe assumption that the Building Permits and Housing Starts numbers will be disappointing, but at this stage, no one is expecting that builders were going gang busters applying for permits and putting up new housing.

So maybe the numbers could actually help stocks move to the upside, as whatever is released today, will be old news that should have been already been discounted.

Tags: Building Permits  Housing Starts  Economic Calendar

This week will see some market moving economic news releases. On Tuesday we will be getting the minutes from the last Federal Open Market Committee meeting on September 16th. While it is the norm for Wall Street to parse the minutes to determine the Fed’s thinking at the meetings so as to gauge interest rate direction, the dynamics of the economy has changed since that meeting and Wall Street is now looking for the Feds to cut rates, so the thought process during that meeting will be given less focus than usual.

On Tuesday, we also get Consumer Credit for the month of August, which gives insight into consumer debt and thus, the economy.

On Wednesday, we get Pending Home Sales and Crude inventory reports and on Thursday, Initial Jobless Claims for the week ending 10/04, which will be the big one for the week as well as Wholesale Inventories.

On Friday, we will be getting U.S International trade related numbers. We will get Export and Import Prices, as well as Trade Balances.

Tags: Economic Calendar  Initial Claims  FOMC Minutes

With the bloodletting on Wall Street yesterday, some market participants, will no doubt be taking a cautious stance and looking for the other shoe to drop. We do have an active slate for the day, on the economic calendar with Non-farm Payrolls, Unemployment rate, Hourly Earnings and Average Workweek all due to be reported today.

The bad news is; initial jobless claims numbers were reported yesterday and an unexpected rise in the number of people filing for unemployment for the first time, a rise of 15,000 from the prior week, was a major contributing factor to the big decline in stocks yesterday.

The good news is that all the economic news releases will be out at 8:30 AM, before the market opens, so traders get to plan their day after the fact.

But for the jobs numbers that will be reported today, we would look for stocks to rebound somewhat from the steep drop yesterday. So hopefully, its not its not all doom and gloom on the jobs front, even though we do expect another monthly decline, the eight consecutive one, in non-farm payrolls. Hopefully, Wall Street deems the numbers not negative enough to warrant another drop in stock prices.

If stocks open to the upside, we recommend traders buy call options on the S&P Deposit Receipts (SPY), more specifically, the September 124 calls. However, initiate the trade only if stocks look strong on the day, but before major moves, assuming we get any, and look to exit early. The symbol is (SPYIT) and the current price is $2.39. Enter at current prices up to $2.50 – stocks most likely won’t open at Thursday’s closing price and enter a price to sell after you place the trade, at 25% above where you entered.

Tags: Economic Calendar  S&P

The orders for durable goods (goods that last three years or more) for July were released at 8:30 AM ET, and they showed a surprisingly strong gain of 1.3% that vastly exceeded the 0% - 0.2% gain that economists had been forecasting. This matched the same 1.3% rise in orders for durable goods in June.

As recently released earnings numbers from U.S based multinational companies have already shown, exports which continue to rise, as a result of the falling dollar (recent gains against other currencies not withstanding) are helping to combat the economic weakness we are experiencing within our borders.

Capital spending, which is spending by businesses for durable goods, rose 2.6%, against a forecasted decline for the month of 0.1%

With orders for transport related goods such as aircrafts taken out, we still saw a rise of 0.7%, compared to the decline of 0.5% that economists were forecasting.

The numbers are helping stock futures to rebound a bit although we seem to be still headed for a lower open. As we stated in an earlier post today, we might see active oscillations between negative and positive territories today as countervailing forces act upon stocks today.

tags: durable goods orders  economic calendar

With Gustav looking like it will be the worst storm so far this year, in terms of the impact it might have on the oil producing Gulf of Mexico region, oil is having a bullish week and looks to extend those gains again today. As of 7:30 AM ET, oil is up $1.06 to $117.33.

With oil up, the stocks are looking to open lower as indicated by stock market futures. However, we may see very active oscillations between negative and positive territories, as we will have some countervailing forces acting on stocks.

Lehman (LEH) might be trading higher on expectations that it will sell its asset management division. The company is also looking at setting up a new company with outside investors that will buy its asset backed securities that are currently a drag on the balance sheet. If Lehman (LEH) does move up for these reasons, it will pull up shares of the other brokers and maybe the financial sector as a whole.

Some of the news we are expecting today, that could move the markets include Durable Goods orders at 8:30 AM ET, Crude (as well as gasoline and distillates) Inventories for week ending 08/23/08 at 10:35 AM ET and Chicago Fed Midwest Manufacturing Index for July.

stocks

We have three major pieces of economic news on tap for today. We will be getting:

8:30 AM - PPI (Producer Price Index ) for July 2008 - PPI measures the price of products using the wholesale price.

8:30 AM - Core PPI for July 2008 - Same as PPI, but energy and food prices which are considered volatile, are left out.

8:30 AM - Housing Starts for July 2008 - This measures the number of residential building projects that were started in the reporting period.

8:30 AM - Building Permits for July 2008 - This also measures the number of residential building projects that were started in the reporting period. However, not all areas of the country require building permits, so housings starts numbers are released as well, to give a more accurate guage.

The economic calendar for today has the potential to move markets, with building permits and housing starts more likely than not, to show that the housing market keeps weakening.

economic calendar  housing starts  building permits

Stocks tanked on Monday after a Barrons article over the weekend, raised questions about the financial state of Fannie Mae (FNM) and Freddie Mac (FRE). Raising fears that the government might have to bail out the two companies and wipe out shareholders in the process, the stocks of both companies fell to almost twenty-year lows, with Fannie Mae (FNM) closing at $6.15, down $1.76 and Freddie Mac (FRE) closing at $4.39, down $1.46.

The question now is whether we will continue to see downward pressure on the stock market today. We expect so, as if there is any validity to the Barrons article, then we should see more losses in the share prices of FNM and FRE.

Furthermore, we can probably expect earnings-related bad news from Lehman Brothers (LEH) and with the auction-rate securities issue taking on a life of its own and growing even with the announced settlement offers by Wall Street banks, there is more bad news in store from financial companies.  

Another pressure on stocks will come from the economic calendar. This morning at 8:30, we will be getting housing starts numbers for July from the Commerce Department, as well as the Producer Price Index for July as well, from the Department of Labor.

We feel very comfortable predicting that housings starts, without any adjustments or benefit of new regulations such as New York City put in place on July 1st, that skewed June’s numbers, will show a decline from June. PPI numbers probably won’t help either.

tags: fannie mae  freddie mac  lehman

The Department of Labor issued CPI numbers at 8:30 am today, that showed consumer prices grew faster than expected in July. According to the labor department, CPI or consumer price index climbed 0.8 percent in July. In June, the growth rate was 1.1 percent. Economists had been expecting a growth rate of 0.4% in July.

The fast rising prices in energy and food were mostly responsible for the higher than expected numbers. The labor department also put out Core CPI numbers, which excludes energy and food and this showed a modest growth of 0.3%, although forecasters were only looking for a growth rate of 0.2%

CPI economic calendar