Job Reports for US Companies for October 1-7, 2011
All eyes continue to be on figures dealing with the unemployment rates. The number of new job created is a strong indicator of economic activity and potential growth. Projections for new jobs in September were 75, 000 but initial reports at the end of the month showed a decent increase in non-farm payroll workers of 103,000. Included in this number, however, are 45,000 telecommunication workers from Verizon who were on strike for two weeks. Despite this addition of jobs by US-based companies, the number of unemployed making claims increased by 6000 between the last week of September and the first week of October. The new jobless claim figure now stands at 401,000 which is still slightly below the projected figures of 410,000. The unemployment rate for the past three months remains at 9.1 percent.
European Debt Crisis Containment
The debt crisis in Europe is causing more than simple ripples in the stock and commodities markets. The European Central Bank is depending on two main strategies to keep the region from buckling under the current debt crisis. One is keeping interest rates at the current level despite the fact that this move may cause a slowdown in economic activity. On Thursday the European Central bank also opened an emergency loan facility for banks to help tide them over during the existing crisis. These loans will run from 12 to 13 months and will be unlimited to help banks avoid the issue of limited liquidity.
In an effort to bolster the UK economy, the Bank of England has already put a substantial US$423 billion (£275 billion) into the economy. Japan is also planning to pump lots of money into their economy if the European debt crisis explodes and starts derailing the global economy.
Commodities Market Responds Positively to European Banking News
With hopes high after the European Commission asked European banks to recapitalize and the expectation that they will do so, the commodities market is showing growth. One commodity in which this growth is evident is coffee beans. Reports online indicate that consumers may have to pay more for that caffeine buzz as prices start to show a positive upward trend after a period of negative growth. Oil prices have also responded positively to the US job report and the news out of Europe. West Texas Intermediate or light sweet crude is showing an increase for November from $80.65 to $82.82 based on information from the New York Mercantile Exchange.
When the market opens next week no one knows what will happen, but all eyes will once again be on activities in Europe. A worsening debt crisis there will negatively impact the financial sector in the USA and across the globe.

The DOW, S&P 500 and the NASDAQ are down after the week of doubt did it’s thing. All three of the indexes are down 10% from their recent highs and any gains they had for the year 2011 is all but erased. Equities are not the place you want to be in when the economy is in turmoil, the dollar is losing it’s worth on a daily basis and the Federal Reserve is thinking about QE3 and printing more money.

For those of you that have been following me for some time (and for those who are new, can read past articles) know that I’ve been calling for this to happen since before the New Year. I have no confidence in the markets or in our government. Since the beginning of 2011, I’ve been buying commodities such as gold and silver. No matter what the federal Reserve does about printing money, it can’t create more gold and silver than what is in the world. For that reason alone, I’ve been buying what I can for some time now.

Here’s a video that was posted today by GoldMoneyNews. The video is how silver is now expected (by analysts) to be the big mover in the near future. Typically gold trades at 16 times the price of silver. With that in mind, then silver should be trading at $100 per oz instead of it’s current price of $38 per oz.

So don’t expect good things from the markets in the near future. Our economy is still in shambles, jobs are not coming back quick enough and it’s not just in America that this is going on. Buy precious metals now and hedge yourself from the mayhem that may ensue.
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Congress and the Obama Administration have been wasting time of the last three months that has now left little chance of the country’s rating to stay the same. Last October, S&P wrote that they were keeping a stable outlook on the U.S. “AAA” rating on the ground of the current entitlement spending pressures wouldn’t really affect the country in any big way within the next three to five years. Then in April, S&P shocked Washington as well as Wall Street by changing their views and putting a negative outlook on the U.S. rating, saying that there was a one-in-three chance of a downgrade withing two years. It didn’t end there, last week Standard & Poors announced that there is a 50% chance that the credit rating could be downgraded within three months.

All three agencies agree that the U.S. must undertake a major deficit-reduction effort for the near term to stabilize debt levels and to preserve it’s credit rating. The reason for the quick deterioration of the agencies outlook is mainly because of the concern they have of Congress and the Administration not being able to work together. The federal government has forgotten how to work together. The political divide has grown too much to the point where the credit agencies wonder if they’ll be able to work together on other fiscal issues in the future. It doesn’t help that Congress hasn’t put forth a budget for over 800 days.

Even though Moody’s give the U.S. a little more room before they would lower the country’s rating, that’s because of the United States’s reserve currency status. S&P said that if the U.S. rating is downgraded, the country may see interest rates climb 25-50 basis points and reduce GDP by a similar amount.

For those of you who feel like I do about the stability of the country’s economic position, I’ve been increasing my position in the precious metal/commodities sector. I’m not sure if the federal government will ever do the right thing.

Today gold prices climbed above $1600 after eleven straight days of climbing because of fears of the federal government will not be able to raise the debt ceiling. The precious metal hit an all time record high against the Euro and sterling. Gold has been strong ever since Europe has been trying to bail out Greece for the second time and to avoid the European debt crisis. Add to the fact that the Obama Administration and Congress have been unsuccessful in coming to an agreement to raising the debt ceiling.

If you didn’t think it could climb any higher, I would seriously take a look at the technical charts which seem to point to gold moving above $1700 as soon as this fall and many think a move to over $2000 per ounce isn’t too far fetched as it once was.

When you think about adjusting for inflation, gold is still not as high as it could be in relation to the price in 1980 near the end of the Carter Administration. As I said three weeks ago, I don’t have faith in the federal government to do the right thing and lower the spending and not to raise the debt ceiling. With that in mind, I still think that gold is a great investment at this point. I feel it will remain high until after next year’s election. If for some reason the government can put some sort of plan in motion to reduce the deficit, gold will take a plunge and a big one at that.

In the meantime, silver has also done well over the last three weeks when it closed at $33.59. It closed today at $40.27, topping the $40 mark for the first time since May. Silver has climbed more than 15% in just the last two weeks.

In the commodity sector, precious metal prices fall. Gold dips below the $1500 level, settling at $1496.40 per oz. and the price of silver also slipped back a bit to close at $33.59. It seems that many countries are lowering their concerns about inflation. The Chinese Premier Wen said the country’s inflation would be below 5%. With views like that, many see the haven of precious metal not being as needed or attractive as it is during poor economic times. At the current levels of gold and silver, they are both at their resistance levels. The 200 day moving average for gold is at $1415, which can signal a more downward slide in the commodity. So this is a good time to watch to see if the support level will hold. Analysts feel that this will all depend on what happens in Greece. Greece needs to prove that they are serious about their debt and how they get it in order. It’s the only way they will be able to receive any more bailouts from the IMF. If the latest measure fails and Greece can not get any more funds, then gold will continue to rise as more Europeans seek out to purchase more of the precious metal. If it goes the other way, where Greece does get the bailout, then stock markets around the globe should see a rise in trading.

Either way you look at it, precious metals, over the long haul will increase in value. I’ve been building a portfolio which holds 35% in precious metals. I do plan to scale out of it, but my opinion is that we’re not done with the economic woes. Politics have a lot to do with the news we’re hearing and I don’t have too much confidence in any government.

The S&P 500 is down 8% since it’s recent high even with all the bad news coming out. Today the S&P 500 is looking at a possible third day in a row for loses. It has shown to be able to hold on to some sort of strength through it all. Typically I would be getting ready for a decent rally in the markets, but this time I’m not too sure.

What about NASDAQ? well there have been quite a few disappointing numbers coming out from the tech sector, including Micron Technology Inc. (NASDAQ:MU) who has posted it’s less-than-expected quarter results. The street was expecting to see $0.16 on sales of $2.36 billion, but Micron has a $0.07 per share on $2.14 billion. Because of the poor performance, Micron Technology is down 13% for the day so far. What about Oracle? Oracle Corp. (NASDAQ:ORCL) even with it’s better than expected quarter, they are down over 4% for the day. Many analyst were expecting the technology sector to lead the markets out of the latest pullback, but it doesn’t look like it will be the case.

The gold and silver trading prices have fallen in the last two days because a stronger dollar, as well as the dollar being stronger against the Euro. Crude oil prices for today again dropped after oil took a nose dive yesterday after the news came out the there the International Energy Agency (IEU) would be releasing 60 million barrels of oil. Half of which is actually coming from the the strategical reserve of the United States.
My thoughts behind this move is that it’s a political/economic one to help the economy stay some what afloat. Seeing that oil prices is important when dealing with the economy since it will cause food and other prices to go up as well. We are looking at the beginning of inflation (if not already) and if fuel costs were to go up now, it would happen over night. Considering that in just the last year, when President Obama was asked about releasing some of the strategic reserve, his comment was some where along the way of saying…It would not be in our best interest to do it at this time, if ever.
Commodities prices have fallen across the board which is opposite when oil prices fall. So tell me what you think if you think I need to be corrected.
Be careful and happy trading.

If you have already been an established day trader, have you considered gravitating into a market that has more options such as the entire planet? Similar to a doctor attempting to diagnose an ailment, you have to search and then search once again to reach the end result. At times, the doctor will prescribe medications that just don’t seem to work, and you go back to the doctor to try something different. Well, it is no different in the stock market. You may think you are on track and it fails, so you attempt something different up until you find something that works.

If you are a stock trader, you understand this methodology. You have your system tweaked to the point where you know how to check your price to earnings and then price to book. You also look at the return you will receive on your equity, right? The better the system you have built, the better protection you have in the market thus improving your risk to rewards. The stock market is not an easy business. Sometimes it becomes a matter of trial and error. Eventually, we are fortunate and then other times, we tend to lose. The more educated you are the better a risk to reward you will have.

The global macro trading market provides an edge as it is worldwide, which means you can trade any instrument using the strategy you have developed globally. That means your chances of locating the best investment are greater. This market has really made a tremendous comeback compared to the last couple of years of trading. This is because a lot of people were trading long and leveraged. The macro traders however were shorting housing and financials then going long and doing some real interesting trading in short treasuries and dabbling in the commodities market.

What this really means is the global macro trading market provides a lot of options to test a variety of strategies. So if you set up your strategies to build on a model that you wish to invest, in you could be a real winner. This is a specialized market and the person who is new to stock trading might want to educate themselves before becoming active. If you are an active day trader that utilizes the same stocks day in and day out, you might not have an interest in global macro trading. However, anyone else that wants a variety and has a need to venture into a new market with a high variety, then global macro trading might be for you.

That wasn’t even the most worthy news of the day, that honor goes to the price of gold, which went above $1000 for the first time in quite some time. The U.S. Dollar lost value today and with that going on, the Commodity sector gained throughout the day.

This week will be a very telling sign of things to come in the near and distance future. Just to be on the safe side, I will be treading very carefully through it all. For those of you that want to try out a different trading technique but are afraid to do it in such trying times, here is a free fantasy stock market game that you can find out if those ideas will pan out.
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What can you lose? It’s FREE.