Summary
The market is at critical support levels and with a spate of economic releases over the next several days traders and investors will be looking to see if initial jobless as well as continous jobless claims can continue to abate. The unemployment rate still remains markedly high this far into an economic recovery. The US economy remains a consumer driven economy and if the recovery is going to have any durability then people have to be working and have income to spend and stimulate growth.
That said the market via its weak price action as well as the weak price action in the transports and copper futures are indicating that it believes the jobless situation won’t improve much. However as the chart below on continuous copper futures highlights there is still a ways to go before copper can be declared dead and broken.
The silver lining is we may be getting close (maybe another 5 % down) to a near term low as bullish sentiment is down to a paltry 24.68 % (AAII Survey), Total Equity and Index Put/Call ratios are moving up to more constructive levels. Anecdotally however we thought it spoke volumes that the market couldn’t prop itself up even on a window dressing day !!