The Wall Street Digest Trader's Hotline Update for Thursday morning, July 1, 2009.

The markets ended June with an up day. The Dow, S&P 500, and Nasdaq were all about .5 percent yesterday. This morning the S&P Futures were trading down around 5.0 points before the Jobs report. June's jobs report is being released a day early due to the holiday tomorrow.

June's non-farm payrolls report was, down 467,000 vs. estimates of 350,000. The overall unemployment rate continues to climb, rising to 9.5 percent. Jobs were lost in every sector except Education and Healthcare. Thirty percent of the 6.7 million unemployed have been out of work for six-months or longer.

The S&P Futures doubled their losses after the jobs report, to down 12.0.

The full effects of the high unemployment rate have not yet hit our economy. Most people who lost their jobs in the past 12 months, and have not found another one, (which is most of them), have lived off savings, severance packages, unemployment, and lines of credit. All these sources of capital are drying up.

The housing market remains in a slump and is likely to see a third wave of foreclosures this fall. The majority of the U.S. housing market is likely to have zero appreciation for the next ten years.

The second quarter rally was impressive, but most bear market rallies are. A classic bear market rally is 50 percent from a recent bottom. In early March 2009, the S&P 500 traded a low of 667, on June 9th, 2009 the S&P 500 traded 956, a total of a 43 percent move up.

Today many investors are like "deer in the headlights." Those who stayed long the markets for the past year, are feeling relief with the 40 percent bounce, but nervous about what to do now. Investors who have been in cash for a year or longer, are feeling good, but are anxious about missing the recent rally, and contemplating when to reinvest, and where?

The next Hotline Update will be on Monday morning, July 6, 2009. Have a safe and pleasant 4th of July holiday.

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