Non-Farm Friday - Time to Spring the Stocks Bear Trap?
Stock-Markets / Stock Markets 2010 Sep 03, 2010 - 12:34 PM GMTBy: PhilStockWorld
I was up last night putting together a dozen stock selections for Members with 2 or three trade ideas on each one, generally on a shorter-term than usual and with less hedging than usual, almost a downright bullish assortment just in case we get good jobs numbers today because those bears are going to find themselves in one hell of a trap if we do!
"Experts" are looking for a very pessimistic 110,000 job losses for August with a 9.6% unemployment rate. Obviously, traders have pretty much already decided to ignore that so anything but a big dip is not going to be good news for those silly old bears, who were making me feel very lonely last week when I once again had to blame CNBC and the rest of the MSM for allowing the bears to control the message and terrify the masses over what is, essentially not a big deal in the data.I called the top of the bond bubble on August 23rd but TLT had 2 more up days before reality took hold. We were fortunate to be able to revisit our 9 Fabulous Dow Plays (from July 7th) as well as our old, reliable Buy List (from June 26th) which gave our new Members a chance to get in on our main plays for the first time since I last blasted CNBC (July 6th) for being nothing but a tool of the fund managers who make their money spreading fear and panic among retail investors. Perhaps we should thank CNBC for allowing us to BUYBUYBUY while the sheeple who follow them were SELLSELLSELLing but, no, they are a despicable collection of media thugs who should be shut down for the benefit of the American people - I know this because I watch them every day…
You HAVE to watch CNBC BECAUSE they move the markets. We make tons of money jumping on news trades and we make even more money betting against Cramer so it’s kind of fun yet they are all so SICKENING to listen to and I’m so anxious to make the blathering stop by the day’s end that I programmed my TIVO to automatically switch to Dylan Rattigan at 4pm so the minute that bell rings, I don’t have to listen to them anymore.
8:30 Update - Non-Farm Payrolls were "only" down 54,000 - WOO HOO!!! PARTY TIME AMERICA!!! Actually, this sucks as we need 150,000 jobs a month just to keep up with population growth but it’s "better than expected" and the futures are flying! This will be great for our copper futures play ($3.75) and great for our USO longs (selling into the excitement today) and bad for gold, as they are counting on the end of the world and dilution of money and all that, which is less likely if the economy isn’t going off the cliff.
Dissecting the jobs report we see unemployment unchanged at 9.6%. The good news is the private sector added 67,000 jobs and was offset by the expected loss of 121,000 Government jobs as 114,000 census workers finished up their assignments. Also nice is July was revised UP to -54K from -110K and average hourly earnings crept up 0.06 to $22.66, another indication that there is upward pressure on jobs and wages (which we got a heads up on from the productivity numbers).
Meanwhile, it’s been so long since we’ve looked at our upside levels I almost forgot where they are. Let’s not get too excited until we start greening our 2.5% marks to the upside. The 2.5% set around our midpoint is:
- Up 2.5% (we hope): Dow 10,455, S&P 1,100, Nas 2,255, NYSE 7,000 and Russell 650
- Middle Range (MUST hold): Dow 10,200, S&P 1,070, Nas 2,200, NYSE 6,800, and Russell 635.
- Down 2.5%: Dow 9,945, S&P 1,043, Nas 2,145, NYSE 6,630 and Russell 619
We will still exercise a degree of caution into the weekend but if we make it through into a follow-through rally next week, we could be well on the way to reversing the August dip. As I’ve mentioned before, there is not much data next week to spook us (but there is a Beige Book, which gives PSW Members a huge advantage, as we know how to read them) so it’s really just a weekend event to worry about but, if I were a bear, I’d be a lot more worried about Obama’s upcoming jobs initiative than anything else - that trap could spring at any time.
The Hang Seng and the Nikkei were up about half a point this morning with the Shanghai and the BSE flat. Our 3am trade failed this morning as the Yen dropped all morning, touching 85 to the Dollar on our jobs number and that was foreshadowed by a nice move in Japanese export stocks.
Over in Europe, they seem very excited by our jobs numbers and the EU markets are up about 1.5% just ahead of the US open. The ECB also raised their 2010 economic growth forecast while leaving thier benchmark rate at 1% so happy days for Euro-business too. Consumer spending is driving the growth adjustments, of all things…
Lots of excitement this morning and now we’ll have to look for some shorting opportunities to get some balance into the long weekend as we’re banging on the 5% rule but things sure are looking better than they were just a few days ago. As I said on Tuesday, fortune does indeed favor the bold…
Have a great weekend,
By Phil
Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)
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