How Much Does It Cost to Create a Job?

Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Tuesday, the 27th of September.

How much does it cost to create a job?

According to Martin Feldstein, a Harvard economist, each job that is created by the "American Jobs Act" would cost taxpayers about $200,000.

I think that most small businesses could produce three times as many jobs on the same amount of money. It seems the government is jumping into an area where it has proven in the past to have no expertise.

You would think the government would argue that it's going to cost a lot less than $200,000 to create each new job, but according to Timothy Geithner in a recent ABC interview, he didn't dispute that number at all!

We have been saying the markets were very oversold and ripe for a rally. I believe the rally we have seen in the last two days is basically a short covering rally. Last week, we saw a tremendous liquidation of all risk assets across the board in most markets. This week, we're seeing some of those short positions being covered with very little selling above the market. This is all predicated on a potential solution to the Greek/European problem.

Mr. Geithner also claimed in the same interview that if Europe went under, the US banks would stand to lose $41 billion. So here we are again, borrowing money to bail out the banks. We used to have legislation on the books that would have prevented the current problem with the banks. That law was put into place I believe, right after the great depression and was lifted because all the bankers felt that it would never happen again. Well, history repeats itself, just like the markets do. There is an old Hungarian proverb that says, "The past is the teacher of the future." This has never been more true than it is today.

Now let's go to the 6 major markets we track and update every trading day and see how we can create and maintain your wealth in 2011.

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S&P 500 INDEX
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 55
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The powerful two day rally in the S&P 500 this week has pushed the market back up to an area where it should begin to have some problems. The rally has also changed the dynamics of our Trade Triangles which now show a -55 Chart Analysis Score, indicating a trading range. We would use our Williams % R indicator and the Donchian Trade channels to work with this market. Overall this market is trapped in a trading range bounded by 1120 on the downside and 1220 on the upside. We are looking for this market to continue on the defensive for the next several weeks. Intermediate and Long-term traders should continue to be short this index.
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Suggested S&P 500 Trading Instruments:
Non Leveraged ETF's: (Long SPY) (Short SH)
2 x Leveraged ETF's: (Long SSO)(Short SDS)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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SILVER (SPOT)
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trend = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 100
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The volatility in the silver market has been extreme, to say the least. We see no reason to participate at the moment. With all of our Trade Triangles in a negative mode is hard to make a compelling argument that this market is headed higher. We want to continue to just watch this market and see how it plays out. Traders who are following our Trade Triangle technology should be short this market with appropriate stops.
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Suggested SILVER Trading Instruments:
Non Leveraged ETF's: (Long SLV) (Short the ETF SLV)
Leveraged ETF's: (Long AGQ) (Short ZSL)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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GOLD (SPOT)
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Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 70

The only Trade Triangle that remains in a positive position for gold is the longer-term monthly Trade Triangle. Both our intermediate and short term Triangles are negative and have been at much higher levels. This market has seen massive liquidation and profit-taking in the past few weeks. We expect gold will regroup at or around current levels. We do not anticipate this market going straight up from here. Only long-term traders should maintain long positions with the appropriate money management stops in place.
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Suggested GOLD Trading Instruments:
Non Leveraged ETF's: (Long GLD) (Short the ETF GLD)
Leveraged ETF's:(Long UGL) (Short GLL)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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CRUDE OIL (NOVEMBER)
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 75
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The crude oil market has been finding support around the $78 a barrel level. Today's move to the upside helped alleviate some of the oversold condition that this market was experiencing. The rally triggered our short term Trade Triangle into a positive mode. This was not enough based on both our long-term monthly and intermediate term weekly Trade Triangles which remain in the negative column. As you may recall we are tying the crude oil market with the equity markets. As the equity markets go, so does crude oil at the moment. Intermediate and Long-term traders should continue to be short the crude oil market.
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Suggested Trading Instruments:
Non Leveraged ETF's: (Long USO) (Short the ETF USO)
Leveraged ETF's: (Long UCO) (Short DTO)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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DOLLAR INDEX
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Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = + 75
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The dollar index pulled back from its recent highs and fell to a five day low. However, this index is still significantly above the original breakout point of 76.10. We were somewhat disappointed that we did not see further upside action, as that was blunted by the potential rescue package for Europe. Longer-term this market looks poised to move much higher. This index is coming from a large energy field that is capable of carrying it much higher, possibly up to the 80.00 - 81-00 area. Intermediate and Long-Term traders should maintain long positions with the appropriate money management stops in place.
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Suggested DOLLAR INDEX Trading Instruments:
Non Leveraged ETF's: (Long UUP) (Short UDN)
Leveraged ETF's: (Long) (Short)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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REUTERS/JEFFERIES CRB COMMODITY INDEX
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 90
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As we indicated in yesterday's commentary we felt there could have been an interim of low put in place for this index based on the support at 300. With all of our Trade Triangles negative, we feel that this market has a limited upside potential at the moment. The move back into the Donchian trading channel helped alleviate the extremely oversold condition that this market was in. It is still too early to call this a major turn for this index Remember the trend is your friend, and we expect the trend to continue until our Trade Triangles inform us that the trend has changed. Short, Intermediate and Long-Term traders should maintain short positions with the appropriate money management stops in place.
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Suggested REUTERS/JEFFERIES CRB COMMODITY INDEX Trading Instruments:
Non Leveraged ETF's: (Long CRBQ) (Short the ETF CRBQ)
Leveraged ETF's: (Long UCO) (Short CMD)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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This is Adam Hewison for MarketClub and I’ll see you tomorrow, right here with my mid-day update. Have a great trading day.

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub