Hardly Working

January 10, 2014 - 4:39pm

 by Gary Wagner

Hardly Working

Just as it seemed the dark clouds of recession were blowing out to sea, the December jobs report blew in and socked the U.S. economy into a fog. Only 74,000 jobs were added last month.
 
What is more disheartening is that because so many individuals have stopped looking for work, the unemployment rate dropped to 6.7%, heading faster toward the target number the Fed has posted time and again. However, rest assured that this is not what the Fed had in mind when they were thinking about a decline in unemployment.
 
"Weather is clearly playing a role and you don't want to overreact to any one number," said Julia Coronado, chief United States economist at BNP Paribas. Bu the ominous signs go well beyond the brutal weather.
 
In the group of workers aged 45 to 54, the labor market participation rate dropped 0.4 percentage point to 79.2 percent, the lowest since 1988. For workers 55 and older, the participation rate edged down by only 0.1 percentage point. So, indeed, it is not really exiting Baby Boomers (who are now supposedly retiring at a rate of 10,000 per day), but workers still in their prime earning years, the years when the most money is made in the shortest span of time. It could have seriously detrimental ramifications in the next 20 years.
Overall, the labor force has shrunk by about 550,000 in the last 12 months.
 
There are mixed interpretations regarding how the labor data will play out in the FOMC meeting at the end of January. 
 
If committee members believe that the stats are outliers, then the Fed might continue to taper. If they believe that something has gone more crucially wrong, they may stop tapping the brake until at least March.
 
We all saw what the figures did to the prices of precious metals today. Traders seemed to have interpreted the labor report as dovish for Fed QE3 policies.
 
These sorts of knee-jerk reactions work both ways, though, as we have so often seen in the last year or so. 
 
We have re-entered the land of the short, quick-turnaround trade as we await the gurus on the FOMC to give the opinion that matters most.

As always, wishing you good trading,

 

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

This morning we sent out the following trade alert:

We were looking for an entry point to sell gold and silver. Following a weaker than expected jobs report gold is up 19 dollars just shy of current resistance at 1249

Currently gold is at 1245 and silver is at 20.11

Sell at market 

We are short gold @ 1245 Gold buy stop @ 1265

Short silver @ 20.11 Silver buy stop @  20.51

Gold Market Forecast

Today’s weaker than expected jobs report sent the precious metals into a significant rally. Moving the market roughly $19 to the upside gold was able to trade to an intraday high of 1249. This price point in gold is a significant in current area of resistance.  This price point also lines up with the bottom or start of wave two, which is part of our sub count composing in intermediate fifth wave. For our wave count to remain current in valid the current high of 1249 cannot be breached. With that in mind we recommended a high risk trade which was to sell both gold and silver at the market this morning. Today’s video will detail current resistance levels above are entry price as well as detail our exit strategy.