Wednesday, December 07, 2011

Another sideways session for the stock market

Although the Dow has inched up in the past two days, the overall market is still drifting sideways, with some selected stocks continuing to rise while some of the hotter momentum plays are seeing a little profit-taking. People are basically waiting for the market to "resolve itself", and either start another decisive leg up or roll over and start trading down in its trading range. The upcoming EU summit is a convenient excuse, but just that, an excuse, not a definitive cause for the sideways "consolidation" of the market.
 
Thursday will give us another snapshot on the job market. Traders and short-term speculators can sometimes get overly excited by the weekly unemployment insurance initial claims number, but it is more important to watch the 4-week moving average of initial claims. It is currently hovering slightly below the traditional recession threshold of 400,000, but with no clear trend, although it almost appears to be drifting lower, a little, sometimes. But at least so far, it hasn't been spiking up in a way that would suggest "tipping into a recession."
 
Speaking of "tipping into a recession",  Lakshman Achuthan of ECRI is scheduled to talk with Tom Keene on Bloomberg TV  sometime shortly after noon hour on Thursday about ECRI's recession call. Back at the end of September ECRI "made the call" that the U.S. economy is "tipping into recession." More than two months later and with quite a number of semi-decent economic reports passing by, people are wondering where that recession is or went or when it really will start to show up. ECRI does have a very respectable record with its recession calls, but this time even I am wondering why we aren't seeing at least some evidence that a recession is unfolding. Maybe it won't happen until January or later in Q1 or the remainder of 2012; ECRI hasn't been clear as to when the decline of the recession will really commence.

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