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Jobless Claims Decline, But Still Too High for Major Impact Employment Outlook

New U.S. Weekly Jobless Claims declined last week according to the government, but were still too high to have a strong impact on the weak labor market.

The number was good enough to push Treasury yields slightly higher, driving down December Treasury Bonds. This market has been trading in a tight range for six days indicating impending volatility. On the downside, 130'17 to 129'11 remains a potential downside target. The top at 135'19 seems to be closely guarded at this time.

Equity indices are rising on the jobless claims news. It seems investors like the number. Stocks are likely to remain firm as long as downside pressure remains on the debt market.

The strong close in the September E-mini S&P 500 has put this market in a position to rally further with a cluster of Gann angles and a .618 retracement level the next potential upside target.

On Thursday the cluster will be formed at 1086.75 to 1088.00, an uptrending Gann angle/retracement level combination. The downtrending angle will fall between these two levels at 1087.75. This could be indicating that this market has more room to run to the upside tomorrow.

The September E-mini S&P 500 soared to the upside Wednesday morning boosted by strong economic data from Australia and China. Although the ADP employment outlook surprisingly missed analyst estimates, investors shrugged off the news. Thin trading conditions may have contributed to the rally. Many large traders and institutions have been on the sidelines this week due to Monday's Labor Day holiday. In addition, other key market players have chosen to stand aside in front of Friday's August U.S. Non-Farm Payroll Report.

The strong rallies in the Euro and the three major risk-linked currencies finished sharply higher and near their highs while showing no signs of a letup into the close. Whether it was short-covering or fresh buying, investors celebrated good global economic news by driving the U.S. Dollar lower and most major markets higher.

Upside momentum is expected to continue overnight, but traders will have to face a decision about whether to keep up this robust pace so close to the U.S. Non-Farm Payrolls Report on Friday. In addition, investors get a chance to assess more U.S. economic data on Thursday including weekly initial claims, Factory Orders and Pending Home Sales.

 

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