Ralph Shell's  Instablog

The surge in the unemployment rate to 10.2 was a surprise most analyst.  The Labor Dept report that only 190,000 jobs were lost in October fell far short of the real number of 558,000 that lost their jobs in October.  The implies that small business is shedding employees even faster than the large businesses.  Past experience has shown that small business is the innovator, the job creator, the driving force that can hire the unemployed and gradually end a recession.  Small business entrepreneurs, however, do not like the messages from Washington.  The threat of higher taxes, more regulations, a proposed 2000 page "reform" of the health care system that will likely impose onerous demands on owners medical responsibilities for employees, all only serve to deter small business expansion.  Further the climate change bill that has passed the House and has just been released by the Senate Committee, for debate on the floor, contains numerous taxes and penalties that will harm most US businesses.  Do not expect small business in this country to lead us out of a recession when Washington has grand plans to heavily tax and regulate those that succeed. 

Since the equities market has commenced the rally in March, the dollar has gradually depreciated to the Euro and other currencies.  Yesterday's strong rally in stocks and the tepid action in the Euro makes you wonder is a schism is developing in the relationship.  Or perhaps the stock rally was merely one of Noriel Roubini's asset bubbles.  Stocks initially attempted to shrug off the disappointing employment data, but as the session goes forward, it seems to be stumbling toward the close. 

Yesterday the Euro looked bullish, destined for a revisit of the 1.50 handle, but today the luster has faded.

Just as the fundamental inputs are giving mixed signals, so are the technical indicators.   The 18 day sma is above the the 40 day sma, but the RSI is well above 70 and the MACD is hinting that it might turn bearish.  There a lot of variables and with a week end coming up, it is best to stay on the sidelines.