Socialists in congress flee their sinking ship like

World Outlook
Asian economies seem to stagnating. If the Asian malaise continues a sharp market correction is anticipated.

Good news… Senator Dodd and others will be bailing out and there is still a good chance the damage the socialists plan to inflict after the 2010 and 2012 elections will be safely defused by throwing them out of office. That is good news for the world because free enterprise and creativity would get a new lease on life.

Market Outlook:
Zale Corp., the Texas-based jewelry chain, said December sales at stores open at least a year fell 9.2 percent. But Macys is raising their profit estimates 2%.

Since November, commodity prices have risen even while the dollar has appreciated in value indicating that price inflation is beginning to kick in. The difference between two-year and 10-year Treasury yields widened to almost 4 percent, the most in at least 20 years as the Federal Reserve signaled it will hold its target interest rate at a record low. The much higher future rate indicates future inflation risk is higher than perceived future deflation risk. But there is a long way to go before inflation kicks in. For that reason precious metals and commodity prices will bounce upwards and fall back many times before the climax is hit and the FED tightens down rigorously similar to when they popped the bubble in 2000.

The Institute for Supply Management’s factory index rose to 55.9, the highest level since April 2006, according to the Tempe, Arizona-based group.

Spending on construction projects dropped 0.6 percent in November, to the lowest level in more than six years, the Commerce Department said today in Washington.

Factory Orders showed 1.1% growing demand in November for a wide range of U.S. factory products, signaling the potential for stronger-than-expected fourth-quarter gross domestic product. Demand beat forecasts.

The National Association of Realtors' index for pending sales of previously owned homes - a forecasting gauge of housing-market activity - slid 16% in November. That represents the first decline in the index in 10 month, and more than triple the size of the drop analysts had expected.

Yesterday:
The decline in December service related employment was the smallest since March of 2008. Employment losses are now diminishing and, if recent trends continue, service related employment could begin rising within the next few months. FOMC minutes of last month debated increasing and extending asset purchases anticipating a weakening economy as stimulus ends and new taxes begin..

Thursday, Jan. 7:
Unemployment Claims

Friday, Jan.8:
December unemployment report


Market forces January 7, 2010

We estimate the NYSE must still rise 0.2% from yesterday's close to just equal the previous high and not be interpreted as a declining head and shoulder sell signal. That reflects both the price change and volume of shares being traded. The market has been flat for six weeks and it appears the rally is over. The next sell confirmation will be if the neck resistance level (of the head and shoulders formation) breaks down on the volume adjusted NYSE market cash flow index. The modified MACD indicator gave a sell signal.
Charles Biderman, founder of Trim Tabs Research, a firm that keeps track of liquidity flows into and out of the market says the government has been investing in American stocks and caused the recent rally to create the illusion of a recovery. Biderman said, “We cannot identify the source of new money that pushed stock prices up so far so fast." He says the money didn’t come from companies, retail investors, foreign investors, hedge funds, or pension funds. Socialists are known for taking ownership to get the changes they demand.

Asian markets were down over night; China holiday, Hong Kong down -0.7%, India down -0.5%, South Korea down -1.3%, Taiwan down -1.1%, and Japan down -0.5%.

European markets are down with the average in a range from 0% to -0.6% this morning about half way through their day.

US pre-market futures down about -0.3% today at 8:00 AM EST.