Bad jobs data

4/4/08

Finally, Non-farm payroll data posted in lost of 80,000 jobs that US economy has three consecutive months in a row of job losses. As mentioned last blog and earlier blog that US has already in recessionary mood and the job market must keep getting worse before it gets better. With this only information, I am certainly saying US stock market will not have meaning rally that could last long.
Technically, stock market behave nicely to absorb the bad data on friday. It formed another Doji japanese candlestick pattern again meaning bulls & bears has balance power. If monday that market could breakout the resistance 12750(roughtly 12700-12750), bulls traders are in total control and will make it close to 13000 mark. Otherwise, if fail to keep above 12530 mark, market would lose at least 200 points. I want to point out here even if Dow could make it to 12800-13000, there has strong downtrend line draw from tops of 11/07, twice tops occur in 12/07 on daily chart basis. Also, the credit crunch,housing problem,mortgage problem....have not gone right away. As I said, it cannot just take 6 months of stock market correction to put behind all these problems. I am still remain bearish in long term. After next week, it would be our first quarter of 2008 earning reports for big names and it would give us the future picture of US economy from corporate companies point of view.
Almost everyday, I noticed that US has more and more problems arise from horizon. US consumers are falling into delinquencies on installment debt at the worst pace since recession of 1992 ( NY post on 4/4/08). We have 3 airlines company filed bankrupt, Dell is going to cut more jobs that they first decided months ago. GM is currently halting 30+ factories because of Labor problems. Housing foreclosure is rising up 100% compare with same quarter on 2007....
Folks, do you still believe we could have meaningful rebound on our stock market or economy with so much mess that need more time to resolve. We are not out of the wood yet and there is still long way to reach the end. I would say this is the end of the beginning with Fed has done many stuffs to advert US financial system in deep crisis. But our economy is for sure in a very very difficult time. Main key of the root I think would be the housing price. With no bottom in sight, those above mentioned problems would not be disappear. Base on IMF's "World Economic Outlook"from april 2003, housing price corrections averaged 30% and last about 4 years. Moreover, all major banking crises in industrial countries during the postwar period coincided with housing price busts. For US, it need at least 2 to 2 1/2 years more to reach the bottom based on the IMF data. Let's see if history could guide us in smart way to invest in real estate.