StreetSmartPost

Tuesday, August 31, 2010. 9:15 am.

In spite of Wall Street’s periodic advice when the U.S. economy or market are in trouble, to diversify into international holdings for safety, it is one economy globally, with countries large and small experiencing good times and recessions, bull markets and bear markets, pretty much in lockstep with each other.

In the last bear market, Wall Street’s compelling argument was that emerging markets were sure to be a safe haven, their economies strong and not endangered by bursting real estate bubbles, or overleveraged ‘too big to fail’ banks.

The same argument is being made now.

We would simply caution you that in spite of the assurances three years ago, emerging markets certainly did not escape the carnage of the 2007-2009 global market decline. In fact the declines in their smaller, illiquid stock markets were more severe than the declines in developed country markets. Typical was the emerging market etf shown, which plunged 67% in that bear.

Lest you think it was unique, the SPDR Emerging Markets fund plunged 65%. And note that they topped out in 2007, and bottomed in early March last year, in tandem with other global markets.

Gold Up, Stocks Down for August.

On this last day of August, it looks like gold, up 4.7% for the month so far, will have its biggest monthly gain since last April, in keeping with our latest gold buy signal.

Meanwhile, with the S&P 500 down 4.8% for the month so far, it looks like August will be the down month we told you to expect, and in fact will be the worst August since 2001.

Yesterday in the U.S. Market.

Not pretty at all – well, for the bullish side anyway. A steady decline throughout the day, and closing on its low for the day.

Yesterday’s intraday chart:

The Dow closed down 140 points, or 1.4%. The S&P 500 closed down 1.2%. The NYSE Composite closed down 1.5%. The Nasdaq closed down 1.6%. The Russell 2000, almost always more volatile in both directions, closed down 2.4%. The DJ Transportation Avg. closed down 1.8%.

Of the ‘safe havens’, the U.S. dollar closed up, but only 0.3%. Treasury bonds closed up 1.9% after plunging 2.8% on Friday. Gold closed down $1 an ounce, or 0.1%.

Yesterday in European Markets.

European markets closed down. London was closed for a holiday. The German DAX closed down 0.7%, and France’s CAC closed down 0.6%.

Asian Markets Were Back to The Downside Last Night.

Japan led Asian markets back to the downside, Japan closing down a big 3.6% at a new 16-month low, while Hong Kong closed down 1% for the 7th down day out of the last 8.

The DJ Asia-Pacific Index closed down 1.7%.

Among individual markets:

Australia closed down 1.0%. China closed down 0.5%. Hong Kong closed down 1.0%. India closed down 0.3%. Indonesia closed down 0.6%. Japan closed down 3.6%. New Zealand closed unchanged. Singapore closed down 0.2%. South Korea closed down 1.0%. Taiwan closed down 1.6%.

Markets This Morning.

European markets are down this morning. London FTSE is down 0.9%. The German DAX is down 0.9%. France’s CAC is down 1.0%.

Oil is down $.47 a barrel at $74.23.

Gold is up $7 an ounce at $1,246.

Markets in the U.S.

This week has a very heavy schedule of potential market-moving economic reports, including Consumer Confidence, the minutes of the Fed’s last FOMC meeting, the ISM Mfg Index, Factory Orders, the ADP Jobs report for August, Pending Home Sales, and culminating on Friday with The Big One, the Labor Department’s important Monthly Employment Report for August. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Yesterday’s report was Consumer Income and Spending for July, which showed incomes were up only 0.2% in July, but spending was up 0.4%, and the savings rate declined.

This morning’s first report was the Case-Shiller Home Price Index, which showed that single family home prices rose 1.0% in June from May, the third monthly increase after six straight months of declines, and was better than expectations.

Still to come today are the Chicago Purchasing Managers Index, due out at 9:45 am, Consumer Confidence at 10 am, and the minutes of the Fed’s last FOMC meeting at 2 pm.

Pre-Open Indicators:

The pre-open indicators have been negative all morning, not encouraged by falling global markets and the string of important economic reports ahead for the next few days.

Our pre-open indicators are pointing to the Dow being down 30 points or so in the early going.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($12 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

S&P 500, Short-term and Intermediate-term. And the Nasdaq.  And the weekly market pattern for this week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘Why We May Already Be In Recession!’ click here!

Subscribers: There will be an in-depth ‘Markets Signals and Recommendations’ update on your website tomorrow, as well as an in-depth ‘Gold, Bonds, Dollar, Inflation/Deflation’ report.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Monday, August 30, 2010. 9:15 am.

On Friday, Fed Chairman Ben Bernanke said the Fed is ready to provide more stimulus for the U.S. economy “if it becomes necessary”.

Last night the board of Japan’s central bank met in an emergency meeting, and emerged to announce that it will ease its monetary policy again, by expanding its low-interest loan program to banks and financial institutions by 50%, from 20 trillion yen to 30 trillion yen ($355 billion).

But are the central banks behind the economic curve, as historically they often seem to be?

The policy change was aimed at lowering the value of the yen. The yen’s recent rally has been causing more problems for Japan’s exports. The Japanese stock market spiked up 3.2% in the early going in reaction, but gave up almost half of that gain by the close, to close up 1.8%, as disappointment set in when the yen continued to rise against the U.S. dollar.

The promises of action “if needed” by the U.S. Fed, and action by Japan’s central bank, begins the week on a positive note, but can it survive the heavy schedule of potential market-moving economic reports coming out this week in the U.S.?

Real rally or technical bounce?

Were the rallies in the U.S. Friday, and Asia last night, due to expectations that global economic struggles will end soon, or due to confidence that central banks can rescue the situation with more stimulus?

Or are they only technical bounces brought on because in their recent declines, and patterns of lower highs and lower lows, many markets became short-term oversold beneath their 21-day moving averages again?

Asian Markets Gave Up Early Gains But Closed Up Last Night.

Asian markets closed up last night, playing catch-up to the big rally in the U.S. on Friday. But most Asian markets that were up very strongly in the early going, gave back half of those gains by the close after Japan announced an emergency easing to stimulate its failing economy, but it was seen as not enough. The Japanese Nikkei, which was up a big 3.2% in the first half of the session, closed up 1.8%.

The DJ Asia-Pacific Index closed up 1.3%.

Among individual markets:

Australia closed up 1.8%. China closed up 1.6%. Hong Kong closed up 0.7%. India closed up 0.2%. Indonesia closed down 0.4%. Japan closed up 1.8%. Malaysia closed up 0.8%. New Zealand closed up 0.9%. Singapore closed up 0.6%. South Korea closed up 1.8%. Taiwan closed up 0.2%.

Markets This Morning.

European markets are down this morning. London FTSE is closed for a holiday The German DAX is down 0.3%. France’s CAC is down 0.4%.

Oil is down $.56 a barrel at $74.60.

Gold is down $2 at $1,236 an ounce.

Markets in the U.S.

This week has a very heavy schedule of potential market-moving economic reports, including Consumer Confidence, the minutes of the Fed’s last FOMC meeting, the ISM Mfg Index, Factory Orders, the ADP Jobs report for August, Pending Home Sales, and culminating on Friday with The Big One, the Labor Department’s important Monthly Employment Report for August. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

This morning’s report was Consumer Income and Spending for July, which showed that incomes were up only 0.2% in July, but spending was up 0.4%, and the savings rate declined.

The pre-open indicators were not moved by the report, seemingly unsure whether it’s a positive or a negative that consumers spent more than they earned in July, after having been more interested in paying down debt for most of the year so far.

Our pre-open indicators are pointing to the Dow being down 20 points or so in the early going, meaningless as to direction.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($12 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Natural Gas Futures. Crude oil. U.S. Dollar. Intermediate-term. And the weekly market pattern for this week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘Why We May Already Be In Recession!’ click here!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Saturday, August 28th, 2010. 10.30 am.

Much of the hope for the economic recovery picking up momentum again has been driven by expectations that the technology sector will lead the way, the key expectation being that it’s about time for the ‘computer replacement cycle’ to kick in. Supposedly corporations and households have not been keeping up with the latest computer models, operating systems, and software from Dell, HP, Apple, and Microsoft, etc., and should begin purchasing to catch up.

The first clue that those expectations may be problematic showed up this week in the report of Durable Goods Orders for July, which was not only much worse overall than expected, but which showed that orders for machinery and computers plummeted 15% in July, the largest monthly decline on record.

In its excitement in yesterday’s rally, the market ignored further evidence of the problem, which was revealed by Intel. Intel has a history of being a bellwether for the computer industry in particular, since its chips are used in 80% of all the PCs made globally, and for technology in general since its chips are used in so many other areas of technology.

Intel issued a warning yesterday, lowering its previous guidance for the current quarter, saying that demand for PCs has been even weaker than expected. The timing of the warning suggests that PC makers cancelled or cut back orders during the quarter.

Intel’s warning came  on the heels of similar warnings last week from both Dell and HP, of disappointing sales in what is historically a robust season for computer sales, the back to school and college season.

John Chambers, CEO of Cisco Systems, the largest maker of networking systems in the world, also considered a key bellwether of technology spending, shook the market in early August when he warned that Cisco was seeing signs of the global economic recovery slowing down.

At the very least, the reports will likely lead to heavy price-cutting that will cut into earnings going forward. But also forces the market to look elsewhere for potential economic leadership if the tech sector is slowing rather than accelerating.

Bernanke To the Rescue?

The market stumbled in the early going of its rally yesterday, when the text of Fed Chairman Bernanke’s pending speech in Jackson Hole was released. I wonder why.

After all, Bernanke said that although the economic recovery is struggling more than the Fed expected or realized, it stands ready to “do all it can to ensure continuation of the economic recovery.”

Comforting words.

But then two of the four measures he said the Fed could undertake “if it becomes necessary”, consisted only of changing the wording of its communications to investors to make them sound more encouraging. He said the Fed could change the wording of its FOMC meeting statements from saying interest rates will remain low “for an extended period”, to words that would indicate “they will stay lower for a longer period”. And as its 4th possible action the Fed could say that it is “increasing its medium term inflation goals above levels consistent with price stability.”

The two possible actions he mentioned that had more potential were to “conduct additional purchases of longer-term securities [bonds and mortgage-related debt]” and “reduce the interest the Fed pays banks for their excess reserves.” The latter would hopefully entice banks to put more of those reserves out in loans.

More than anything, the speech seemed to confirm what economists most fear, that the Fed is pretty much out of ammunition at a time when, after the most massive stimulus efforts ever undertaken, with key interest rates near zero, and Congress not likely to agree to more stimulus, the economy is slowing again.  

Was Thursday The Low For the Year?

You’d think so from the excitement on tout TV, “Investors are piling back into the market!”

Come on, folks. Sideline money was not piling into the market. Trading volume on the NYSE yesterday was 1.09 billion shares, about the same as it was all week. It was the same traders that are in there every day doing their job, this time moving to the positive side after the market being down 10 of the previous 13 days, hoping to get quick profits from the short-term oversold condition.

In order to continue the positive action the rally will have to get past a lot of potentially ugly economic reports next week, including the employment reports for August, the ISM Mfg Index, Pending Home Sales, Factory Orders, Consumer Confidence, all areas that have been worsening since May.

Yesterday in the U.S. Market.

A big rally, supposedly from taking as a positive the report that Q2 GDP growth was revised down ‘only’ to 1.6%, but much more likely technical (due to the short-term oversold condition and excess investor bearishness).

The market started to the upside after the GDP report, but plunged immediately that the text of Fed Chairman Bernanke’s speech was pre-released, apparently recognizing it was not a positive. But the upside took over again to the close, no doubt helped along by short-covering when it became evident there might not be an end of day sell-off.

Volume was light at just 1.09 billion shares traded on the NYSE.

Yesterday’s intraday chart:

The Dow closed up 164 points, or 1.6%. The S&P 500 closed up 1.6%. The NYSE Composite closed up 2.0%. The Nasdaq closed up 1.6%. The Russell 2000, always more volatile in both directions, surged up 2.8%. The DJ Transportation Avg. closed up 2.2%.

Of the ‘safe havens’, the U.S. dollar closed up for a change, but only 0.2%. Treasury bonds plunged 2.8% for change. Gold closed up $1.40 an ounce on the day, and up $11 for the week.

Yesterday in European Markets.

European markets also closed up. The London FTSE closed up 0.9%. The German DAX closed up 0.6%, and France’s CAC closed up 0.9%.

Global markets for the week.

A down week, particularly for Asian markets, Brazil, and Mexico. A 3rd down week in a row for the Dow, S&P 500, Germany, France, Japan, Hong Kong, and Australia. A third straight up-week for gold.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($12 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Our updated technical indicators and signals on U.S. Market. And the weekly market pattern for next week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

Next week’s Economic Reports:

Next week has a very heavy schedule of potential market-moving economic reports, including Consumer Confidence, the minutes of the Fed’s last FOMC meeting, the ISM Mfg Index, Factory Orders, the ADP Jobs report for August, Pending Home Sales, and culminating on Friday with The Big One, the Labor Department’s important Monthly Employment report for August. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Meanwhile, with the slowing economy and more warnings from important bellwether companies, the most recent being Intel yesterday, we should begin to see Wall Street’s earnings estimates begin to be revised downward.

To read my weekend newspaper column ‘Why We May Already Be In Recession!’ click here!

I’ll be back Monday morning with an update on the action of Asian markets Sunday night, the early action in European markets Monday morning, and further commentaries on the outlook for the economy and U.S. market.

Subscribers: The new issue of the newsletter, and more info in a mid-week Markets Signals and Outlook report, are on your website from Wednesday evening, as well as a hotline message.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Friday, August 27, 2010. 9:15 am.

As everyone was expecting, the worsening economic reports for May and June, the last two months of the second quarter, did result in GDP growth for the entire quarter being downgraded significantly from the preliminary report a month ago. While the revision from 2.4% growth reported a month ago, down to 1.6% was significant, it was not quite as bad as forecasts, which had been lowered to expectations of a revision down to 1.3%.

So the market’s initial reaction is positive.

However, with GDP growth having slowed from 3.7% in the first quarter to 1.6% in the 2nd quarter (assuming Q2 is not revised down further), and economic reports for July and August, the first two months of the 3rd quarter, having become even more ugly, the market’s optimism over the slightly smaller than expected Q2 downward revision is premature to say the least.

Particularly when within the Q2 report businesses barely eked out a profit. After tax earnings were up just 0.1% for the quarter, way down from the previous quarter’s earnings increase of 11.4%.

China Taking Next Steps Toward Becoming World Power.

A few weeks ago I wrote an article titled ‘China is Winning the Economic War’, in which I noted the speed and determination by which China, a poor and struggling third-world country as recently as the late 1980’s, has become an awakened giant, surging past all major developed countries to become the second strongest economy behind the U.S.

China remains embarked on the historical path used by other nations, from the Roman and British Empires to the U.S., in creating empires that dominated the world. The first step is economic power. The next steps are creating acceptance of the nation’s currency in international trade, raising the standard of living of the population, to develop a strong domestic economy and happy population that supports the direction being taken. Thereafter comes development of military power.

China has already demonstrated its success with the first step, of becoming an economic power, and is taking steps to improve the standard of living of its population. And:

This morning comes a report in the Financial Times that “A number of the world’s biggest banks have launched international road-shows promoting the use of the Chinese renminbi, instead of the U.S. dollar, for trade deals with China. HSBC Bank, which recently moved its chief executive from London to Hong Kong, and Standard Chartered Bank are offering discounted transaction fees, and other financial incentives, to companies that choose to settle trade in the Chinese currency.”   

The Housing Industry Is In a Depression Not a Recession.

Let’s not panic Main Street, but between you and me let’s realize that the public is not aware of the totality of the real estate collapse.

After the real estate bubble burst in 2006, it was assumed for a long time that it was primarily homes in places like Florida, and Las Vegas, and California that would be in trouble because of the previous wild overbuilding in those states. The rest of the country felt safe, even though many throughout the nation had refinanced in the boom times to take the extra value out of their homes. They were sure their homes would hold their value.

Then last year, thanks to the government rebates, low mortgage rates, and signs of economic recovery, home sales actually picked up for several quarters.

So the assumptions now seem to be that reports since April of declining home sales, as bad as they have been, are from a higher plateau, and therefore although softening again, the housing sector is well off its former bottom.

That is so not the situation.

This week it was reported that new home sales plunged 12.4% in July from their level in June. But more discouraging than that headline number was that July new homes sales took place at a seasonally adjusted annualized rate of only 276,000 houses. That is 80% below the peak of sales in 2005, and is a record low going back to 1963 when record-keeping of this data began. Worse than at the depths of the recent recession.

Even that is only part of the story. The US population has grown 64% since 1963, yet new home sales are down 80%? That’s not a slowdown, not even a recession. That is a depression.

Yesterday in the U.S.

The day started to the upside as called for by the pre-open indicators, but as we said on yesterday morning’s blog, we expected it to turn nervous before the close in anticipation of the GDP revision this morning. And that is what happened, with a downside reversal to a negative close, and the Dow under 10,000.

Yesterday’s intraday chart:

The Dow closed down 74 points, or 0.7%. The S&P 500 closed down 0.8%. The NYSE Composite closed down 0.5%. The Nasdaq closed down 1.1%. The Russell 2000 closed down 0.8%. The DJ Transportation Avg. closed up 0.1%.

Of the ‘safe havens’, the U.S. dollar closed down 0.6%. Treasury bonds closed up 0.9%. Gold closed down $4 an ounce.

Yesterday in European Markets.

European markets closed up. The London FTSE closed up 0.9%. The German DAX closed up 0.2%, and France’s CAC closed up 0.7%.

Asian Markets Were Mixed Last Night.

The DJ Asia-Pacific Index closed up fractionally, 0.2%.

Among individual markets:

Australia closed up 0.3%. China closed up 0.3%. Hong Kong closed down 0.1%. India closed down 1.2%. Indonesia closed down 1.2%. Japan closed up 1.0%. Malaysia closed down 0.1%. New Zealand closed down 0.4%. Singapore closed up 0.4%. South Korea closed unchanged. Taiwan closed up 0.4%.

Markets This Morning.

European markets are up this morning. The London FTSE is up 0.6%. The German DAX is up 0.5%. France’s CAC is up 0.5%.

Oil is up $.27 a barrel at $73.63.

Gold is up $3 at $1,239, and up $12 an ounce for the week so far.

Subscribers: The new issue of the newsletter, and more info in a mid-week Markets Signals and Outlook report, are on your website from Wednesday evening, as well as a hotline message.

Markets in the U.S.

This week has only a few potential market-moving economic reports scheduled, but those that are scheduled are important, including Existing Home Sales, New Home Sales, Durable Goods Orders, and the every important next revision of 2nd quarter GDP growth. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Tuesday’s report, Existing Home Sales for July, was unbelievably negative, showing that existing home sales plummeted 27.2% in July, the largest monthly decline ever, while the inventory of unsold homes rose to its highest level relative to sales since 1982. Wednesday’s reports were that Durable Goods Orders rose 0.3% in July, but that minus aircraft orders, durable goods orders were down sharply with orders for machinery and computers plummeting 15%. And New Home Sales plunged 12.4% in July versus forecasts for an increase. Thursday’s report was that unemployment claims fell 31,100 last week, better than expectations of a decline of 10,000.

This morning’s big report was that GDP growth in the 2nd quarter was revised down significantly again, as expected, but to 1.6% growth from the previously reported 2.4%, but not quite as bad as the consensus forecast of 1.3% growth.

The pre-open indicators have taken that as a positive.

Our pre-open indicators are pointing to the Dow being up 60 points or so in the early going.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($12 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Our technical indicators and signals on U.S. market, short-term, and intermediate-term. And the weekly market pattern for this week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my newspaper column from last weekend ‘The Recovery Was Just An Illusion – And That’s a Good Thing’ click here! It will be replaced with this weekend’s later today or tomorrow.

NOTE: Although tomorrow is Saturday and markets are closed, I will be back in the morning with a wrap-up of today’s activity and the week’s and an outlook for Monday and next week.

Subscribers: The new issue of the newsletter, and more info in a mid-week Markets Signals and Outlook report, are on your website from Wednesday evening, as well as a hotline message.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Thursday, August 26, 2010. 9:15 am.

Hungry for any kind of positive news in the wake of the severely negative economic reports of recent weeks, the market jumped on the report that new weekly unemployment claims fell by 31,000 last week, considerably better than the forecast of a decline of 10,000, and coming after three straight weeks of sizable increases in claims.

But is the improvement in this volatile weekly report meaningful at all for the future, given that the four-week moving average of claims, aimed at smoothing the weekly volatility, rose by 3,250 claims, its highest level in nine months.

And in the face of the increasingly negative economic reports since April and May – not only increasingly negative but considerably worse than forecasts – the economy sliding down the slope even faster than economists can revise their forecasts downward.

The economic relapse has been pretty much across the board; in the housing industry, manufacturing, retail sales, consumer and business confidence, the spike-up in the U.S. trade deficit, and so on.

A small decrease in unemployment claims in one week, with 10.2 million unemployed, seems like even less than a drop in the bucket.

Or is the market’s willingness to jump at it more a factor of the somewhat short-term oversold condition beneath the 21-day moving averages again after the plunge of the last couple of weeks?

Yesterday in the U.S.

An odd day. Two more very ugly economic reports, Durable Goods Orders, and New Home sales had the Dow down 80 points in the early going, and even that seemed like a benign reaction. And then the market actually recovered to close positive. The short-term oversold condition? The Dow is down 1.5% for the week so far.

Volume was identical to in Tuesday’s decline, with 1.11 billion shares traded on the NYSE.

Yesterday’s intraday chart:

The Dow closed up 19 points, or 0.2%. The S&P 500 closed up 0.3%. The NYSE Composite closed up 0.2%. The Nasdaq closed up 0.8%. The Russell 2000 closed up 1.6%. The DJ Transportation Avg. closed up 0.2%.

Of the ‘safe havens’, the U.S. dollar closed up 0.2%. Treasury bonds closed down 0.3%. Gold closed up 0.8%.

Yesterday in European Markets.

European markets closed down again. The London FTSE closed down 0.8%. The German DAX closed down 0.6%, and France’s CAC closed down 1.2%.

Asian Markets Broke a 4-Day Losing Streak to Mostly Close Up Last Night.

The DJ Asia-Pacific Index closed up 0.5%.

Among individual markets:

Australia closed up 0.7%. China closed up 0.3%. Hong Kong closed down 0.1%. India closed up 0.3%. Indonesia closed up 0.2%. Japan closed up 0.7%. Malaysia closed up 0.6%. New Zealand closed up 0.4%. Singapore closed down 0.1%. South Korea closed down 0.3%. Taiwan closed down 0.6%.

Markets This Morning.

European markets are also up some this morning. The London FTSE is up 0.6%. The German DAX is up 0.2%. France’s CAC is up 0.4%.

Oil is up $.43 a barrel at $72.95.

Gold is down $3 at $1,238, but up $12 an ounce for the week so far.

Subscribers: The new issue of the newsletter, and more info in a mid-week Markets Signals and Outlook report, are on your website from last evening, as well as a hotline message.

Markets in the U.S.

This week has only a few potential market-moving economic reports scheduled, but those that are scheduled are important, including Existing Home Sales, New Home Sales, Durable Goods Orders, and the every important next revision of 2nd quarter GDP growth. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Tuesday’s report, Existing Home Sales for July, was unbelievably negative, showing that existing home sales plummeted 27.2% in July, the largest monthly decline ever, while the inventory of unsold homes rose to its highest level relative to sales since 1982. Wednesday’s reports were that Durable Goods Orders rose 0.3% in July, but that minus aircraft orders, durable goods orders were down sharply with orders for machinery and computers plummeting 15%. And New Home Sales plunged 12.4% in July versus forecasts for an increase.

This morning’s report was that unemployment claims fell 31,100 last week, better than expectations of a decline of 10,000. And that has perked up the pre-open indicators.

Our pre-open indicators are pointing to the Dow being up 40 points or so in the early going.

But the market is likely to become nervous again before day’s end in anticipation of tomorrow morning’s important revision of 2nd quarter GDP.

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In the premium content area today:

A sizable change in AAII investor sentiment. Latest VIX Sentiment Index. And the weekly market pattern for this week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘The Recovery Was Just An Illusion – And That’s a Good Thing’ click here!

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