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Panic On Claims Not Supported

OK, so the market doesn’t like the claims number, which missed analysts’ estimates by a wide margin. Let’s look at the facts.

Not seasonally adjusted, in other words, actual, claims rose by 102,000. Continuing claims wk ended 12/31 up by 361,000. However, before you get too excited, initial claims were better than last year when same week was up by 194,600. It was also way better than the 157,000  in 2010 and 225,000 in 2009. The continuing claims increase this year was about the same as last year. 2010 was much worse, at an increase of 520,000.

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This seems like a not bad report, at least relative to last year. This week is the peak week for claims seasonally, and the trend is bullish with new claims declining at a faster rate than last year.

Initial Claims Chart- Click to enlarge

Continuing state and total claims continue to trend down at about the same rate as the 52 week moving average.

Continuing Unemployment Claims Chart - Click to enlarge
However, this chart, with continuing state and total claims on inverted scale vs. SPX suggests that there might be a problem, especially for stocks, in view of what looks like a trend break. The S&P tends to trend in the same direction as the inverted scale continuing claims.

Note: extended claims are a week behind state claims.

Continuing Claims vs. Stock Prices Chart- Click to enlarge

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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