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Weekly jobless claims edge lower

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Traders are looking at a lower open for stocks after the recent week's jobless claims show a labor market that continues to struggle.

The Labor Department said that jobless claims for the week ended December 12 fell by 11,000 to 433,000, but has the four-week average for initial claims rising by 12,750 to 400,750, the highest level since the first week of November.

The Labor Department said the jobless claims figures are being distorted by seasonal factors that the government is unable to completely adjust for. The government is trying to adjust for the odd timing of Thanksgiving and Hanukkah this year, as well as adjust for lat years surge of September 11-related layoffs. A new methodology for adjustments is compounding the difficulties in the reading of the data.

The four-week average for continuing claims for benefits fell to 3.46 million, the lowest since Oct. 20, 2001. In the most recent week, however, continuing claims jumped 229,000 to 3.5 million, the biggest increase in 12 years.

The continuing claims figures do not include 788,000 workers receiving additional federal benefits that are available to some workers who exhaust their state benefits, typically after 26 weeks.

The federal benefits program expires on Dec. 28. President Bush called on Congress to renew the program when it convenes in early January.

The figures suggest that the labor market is slowly improving. Layoffs may have settled near the 400,000 level, while the number of workers collecting benefits drifts lower slowly. The jobless rate rose to 6% in November.

While the labor market continues to struggle, stock futures are lower with S&P futures (sp03h) are off 7.5 points at 884, NASDAQ futures are down 12 points at 1,012 and Dow futures (dj03h) are lower by 75 points at 8,360.

Fair value for the S&P 500 today is $0.00. That price will not change during the session. HL Camp & Company has their computers set for program buying at $0.52 and set for program selling at $-2.26. Fair value for the NASDAQ-100 today is $4.25.

After reporting Q2 earnings that beat estimates by 2-cents a share, software maker Oracle (NASDAQ:ORCL) $10.63 are bidding higher by 30-cents at $10.93 in pre-market action, which is down slightly from late session trading near $11.15 yesterday.

Acquisition news has defense contractor General Dynamics (NYSE:GD) $78.13 saying it will buy defense-related operations from General Motors (NYSE:GM) $36.37 for $1.1 billion in cash.

Yesterday's trading had the S&P 500 Bullish % ($BPSPX) from www.stockcharts.com falling by 2% (net loss of 10 stocks to point and figure sell signals), which has this broader market indicator reversing lower into "bull correction" status and signaling further internal weakening taking place in the equity markets. Yesterday's reversal follows the December 4th reversal lower in the narrower S&P 100 Bullish % ($BPOEX), which reversed to "bear alert" at 69% and has fallen to last night's reading of 60%.

Of the major market index bullish % charts, only the very broad NYSE Bullish % ($BPNYA) and NASDAQ Composite Bullish % ($BPCOMPQ) remain in a column of X and "bull confirmed" status. Still as noted in past years, the pattern of the narrower bullish % reversals often proceeds the turns in the broader bullish % indicators and have been signaling a more defensive posture since earlier this month and continue to signal a more defensive approach to trading.

A key level of support to monitor near-term is the Dow Industrials (INDU) 8,447. A trade at 8,400 would break the bullish support trend and trigger a spread-triple-bottom sell signal. With the very narrow Dow Industrials Bullish % ($BPINU) in "bear alert" status (December 10th), a break at 8,400 would be viewed as bearish.

Jeff Bailey

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