Bears Find Victory in Expectation of Bad Employment Numbers Tomorrow


It is sure hard to fight off those bears right now. As much as this market wants to go on a good 8-10% rally, I believe there is too much bad news out there to get the momentum behind it. Even, with most of the major websites preaching that there should probably be a pretty big rally the next few weeks, it just can’t seem to kick into gear. Today, you see a lot of people preparing for the big kahuna tomorrow, unemployment numbers. I think analysts are trying to prepare people for just how bad this number will/could be, so that hopefully when it hits, the market doesn’t sail down and maybe even goes up off of over expectation. I see so many analysts on TV trying to cover up the news we keep receiving and put in under the rug to try and spark this rally. However, I think people are slowly becoming overwhelmed with continual bad news coming out day after day.

Another element making the market nervous right now is the auto bailout meetings. The media is doing a very good job of portraying the bailout as “skeptical” or “not likely”, but I believe there is no way the government won’t strike some sort of deal. In my opinion, people are just trying to lower expectations, so that when it does pass, it will ignite this market. Either way, the outcome of these meetings will most likely jump start the market in either direction, depending on what is decided. Failing to help with a bailout/loan, could ultimately tank the stock market. So my guess, is that they will come to some sort of agreement.

I noticed today, more people seem to be realizing the doom that lies ahead in 2009. Like I’ve said before, I do not know how people could be optimistically buying right now with knowing what could possibly happen to our economy and small businesses next year. Sure you can try to gamble and get some quick gains on the expected bear market rally we may get at the end of the year, I just find it very risky. The market could turn on us at anytime.

I have noticed some performance jumps in some of my IRA stocks that are worth noting and should be pretty safe buys for this economy. I like owning some long positions to stay balanced and try to pick stocks that should weather pretty well to our economic condition. PSS (Payless Shoes) had huge gains today, after posting better than expected earnings. These discount retailers should remain fairly strong (at least not get hurt as much) during the recession. Brands like Wal-Mart, GAP, McDonalds, Coke, I feel are pretty safe bets in this market. As the middle and lower class begins to gain in numbers, there should be more shoppers at these discount retailers. A lot of them got a lot of love today, so I am going to wait for them to steam off a bit before buying some more shares. For all you big profit hunters, this may not be your cup of tea, but I enjoy having some safer long buys in my portfolio as well.

Retailers that I plan on staying away from are stores such as: Best Buy, Office Max, Staples, Sit down restaurants (Brinker, etc), Nordstrom, and others. I believe retailers(especially electronic and high end clothing) will have one of the worst years in the past 50 years in 2009. Having credit cards so easily accessible these days will help some spending for people. But many of those people are just spending debt, not real money, and that will eventually catch up with us.

Even though we aren’t seeing a massive sell off right now, the fact that the market is not running with this strong rally like everyone expected, shows me that there is a lot of speculation and doubt still, even in this bull season. If we don’t see a run to end this year, that could set up an even worse beginning of 2009. In any case, I am still bullish in my short positions and will continue to buy them as prices get lower. FXP and EEV were both fairly strong throughout today’s trading, even with the upcoming rate cuts. SRS fell today but recovered, due to some strong gains from some REITS and house builders. I picked some more up at $104. Overall, it was a good day for me today, which is a good sign for me in this bull season.

I believe the next big problem after we figure a lot of the banking stuff is inflation. This could be a global inflation. That’s why I am trying to stock up some commodities in the next few months like GLD, GDX, POT, SLVR. We may see interest rates creep close to the teens again, ouch! Another thing worth pursuing in fears of inflation is currency trading. It is indeed a bit more complicated, but a lot of money can be made during the right market. If you want to pursue getting into that market, I would recommend this guys online crash course. You will come out a professional. Learn more at Forexmentor.com.


Well, have a good night everyone, Happy Trading and we’ll see you tomorrow.

9 comments:

  1. andy Says:

    SRS was VERY frustrating today... I missed my sell window at 150 this week, but have been weathering the storm until we see it again... I put positions in at 100 but they never triggered... I'm okay with that... But at this point in time, reading articles about "the market is stabalizing" "ups and downs wont be as bad from here on out" etc are all out the window based on what we saw at the 3pm window...

    I could be wrong... It could go bull and run right up adn stay at 9000... But then what fun would that be? lol

    I'm hoping SRS can make some ground tomorrow... That would be great... If not, no rush, the market isnt going to be fixed overnight...

  2. t Says: This comment has been removed by the author.
  3. Anonymous Says:

    dow to retest 7800 tomorrow! big drop incoming!

  4. Anonymous Says:

    "Failing to help with a bailout/loan, could ultimately tank the stock market...."maybe that is what we need to spark a market.

  5. t Says:

    I posted this in the SRS GoogleFinance forums/threads but I thought I'd post it here too to see what FF thinks. :)


    To be honest, I don't think news of the big 3 getting bailed out will
    do much.

    For one, like Congress has stated, the current bailout is only a
    temporary relief, and will not be near enough to reverse the poor
    performance of Ford or GM.

    Secondly, Chrysler is looking like it will be left out, as it's
    'market strategy' has been revealed to be one praying to be bought out
    or merged with another car industry (which isn't going to happen at
    this rate).

    Even if the bailout passes, the automakers still need to cut enormous
    amounts of jobs to restructure the organization. They claim profits by
    2011, but that can be easily shattered in 'sub optimal' conditions. I
    do not believe that they were being conservative when they stated that
    date.

    Finally, the 'plans' that were proposed were enormously vague.
    Statements like 'shared sacrifice' and 'concessions' don't mean
    action. The parties were unable to even explain their course of action
    in the situation that they don't get bailed out. I believe GM said
    'You don't have a choice.' It feels like the CEOs are trying to corner
    Congress into taking action, but Congress will not throw more money to
    save something in a self-destructive cycle unless they are SURE that
    it will help turn things around; at this point automakers can not
    assure them of that.

    I cannot say what will happen tomorrow. Obviously I am still holding
    my short position, but I don't find it unreasonable for even stronger
    manipulation in the market. People want to desperately believe that
    the economy is going to recover, but when unemployment has JUST
    started ramping up, I think it's easy to realize that it's only
    getting started.

    "“The chances of the economy turning around in the first half of 2009
    are declining rapidly because unemployed people can’t spur economic
    growth.”

    http://search.bloomberg.com/search?q=Diane%0AGarnick&site=wnews&clien...

    On a slightly more irrelevant tangent -
    "It's only after we've lost everything that we're free to do
    anything." - Tyler Durden, Fight Club.

  6. Finance Fanatic Says:

    Andy,
    Ya SRS has taken a hit recently with the lowering of mortgage rates and these global rate cuts we're experiencing. But it is still my favorite out of them all. I was pumped to be able to get back in it so low again. I think it should be right up in the 200's again.

    t, good post, as I agree with you about the bailout fundamentally not fixing any problems we have, I still think it will be taken as positive news with the not so smart consumer. I don't think the optimism will last long, however. In any case, we have a lot of woes ahead. Great posts.

  7. t Says:

    well that sucked. (240PST, Friday).

    market is officially crazy. for every day of bad news, it jumps another 200 pts up. maybe 40% from 14000 is all the dow can take?

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