Monday, December 8, 2008

Bracing For Another 1.1 Million Job Losses. And: Possible BOHICA Alert Ahead

In the post below I said that the infrastructure build-out would be the story in 2009. The thinking is: that's where the money is going. For the rest of the economy, ouch. If you keep track of tech companies and their '09 guidance it is just ugly. This all leads us to conclude that we're still in the embrace of a really big bear. For a scarier outlook, scroll down. First though from 24/7 Wall Street:
We keep trying to look for good news on the jobs front. Unfortunately, there is almost none to be found. The Conference Board Employment Trends Index was released today and the report shows that the index declined further in November. This is not meant just as a backward reporting number like most index reports. It is supposed to be used as a predictive tool. As you will see, the implications are for another 1.1 million jobs to be lost and there is no formal cut-off indicated.

The index fell to 102.9, a drop of 1.6% from the October revised figure of 104.5 and down more than 13% from a year ago. The report notes that the U.S. economy lost 1.9 million jobs, but more importantly the data suggests that job losses could pass 3 million jobs by mid-2009. And to add insult to injury, the report also notes that "the continued deterioration in the labor market will exert significant downward pressure on wages."...

...Again, it is becoming excessively difficult to find good news on the jobs front. But there is one bit of Panglossian data here. One issue we have commented on is to watch out for a "decline in the rate of change." The Conference Board is noting a 3 million figure, which means that the expected gain is for another 1.1 million on top of the 1.9 million so far. No, that isn't good on the surface. But over the last 3-month period we have seen 1.2 million the entire 1.9 million jobs lost this whole year....MORE

Yeah, that's Panglossian. On the other hand this post from Mish's Global Economic Trend Analysis is downright horrifying (if correct):

...$SPX - S&P 500 Daily Chart

click on chart for sharper image

In Elliott Wave terms we are looking for a "wave [4]" bounce. The short term implications are bullish with possible retrace targets of 1008 for a 38.2% retrace or 1090 for a 50% retrace of "wave [3]".
The long term implications are rather nasty. Our "Wave [5]" target back down is approximately 600.

$NDX - Nasdaq 100 Daily Chart

The pattern here is the same. If this "wave [4]" up plays out as expected, the Nasdaq Index can rally 200-300 points from here....MORE