One of the most important time series that I’m following is the employment situation in U.S. The other one is related to housing. In this post I’m updating my charts with the latest data. On Thursday initial jobless claims data was better than expected with 365,000. Expectation was a range between 365,000-380,000. What is the importance of this data and how should we read it? Since the beginning of 2009, initial jobless claims have been trending down. Over the past few months downward momentum has weakened. In other words the pace of an improving job market has slowed down. That’s why it is crucial to see the resumption of the last 3 year downtrend.  A critical threshold is the 52-week moving average which is now at 380K. As long as we see the initial jobless claims below its long-term average we will expect better jobs market. A trend reversal (to the upside) would occur only if jobless claims break above the 52-week moving average.

Unemployment rate dropped to 8.1% in August. Payroll jobs were anemic even though the unemployment rate dipped.  The unemployment rate slipped to 8.1 percent from 8.3 percent in July due to a sharp drop in the labor force. Is this positive? Well any number that helps the unemployment rate maintain its downtrend is positive in my opinion. After we have seen the 1 & 2 year moving average crossover (bearish crossover suggesting lower unemployment rate) on the unemployment rate, our expectation was to see better numbers month after month. However, unemployment has been sticky and took longer to drop from 9% to 8% levels. What we need to see is the continuation of this downtrend. For now donwtrend remains intact and we should expect better numbers in the following months.

Gold is shining again… read the headlines over the weekend and today. I’ve updated metal charts in August and drew attention to possible strong breakouts. Now is the time for some long-term charts. This time I wanted to put Gold price in euros. The chart below is very powerful and gives a very important message. Since the beginning of 2009 strong uptrend formed a clear parallel trend channel and over the past year price formed a perfect symmetrical triangle. We are now seeing a clear breakout from a year-long consolidation range. If we are going to see the Euro strengthening in the next couple of weeks than Gold is going to outperform the Euro. Gold in euros is likely to start a new uptrend. This chart is telling us that yellow metal is breaking out of a medium/long-term consolidation range and price can target 1,500 levels. (please note that price scale is denominated in euro).

Jobless claims rose by 4,000 for a second week to reach 372,000 in the period ended Aug. 18. Unemployment has been above 8 percent since February 2009 – – the longest stretch in the post-World War II era. Last week I drew attention to the loss of momentum on the U.S. Jobless Claims data. There is a downtrend, and yes Jobless claims have been going down when compared with April 2009 peak. However, the pace of the downtrend has been decelerating. As of this week, the 52 week moving average is at 382,000 level and I believe this technical resistance should be respected. Further weakness in unemployment data has the risk of breaching 382,000 level and reversing the 3 year-long downtrend. This could result in higher unemployment rate.

Will Coffee price reverse its decade-long uptrend or is this another major medium-term low? We are looking for an answer to this question. I attached two charts of Coffee price, one with a long-term view and the other with a medium-term. Coffee is testing the lower boundary of its 10 year-long upward trend channel. A break below 158-148 area could reverse the long-term uptrend and push prices much lower in the medium term. Until we see a decisive break below 148-158 area we will expect the uptrend to resume. However, weekly close below 148 level would be a medium/long-term sell signal. If price can rebound from the support as it did in the previous tests, we will expect a spike towards the 200 day moving average, which is now strong resistance at 190 levels.

COFFEE (PDF Document)