Thursday, February 02, 2006

January Jobs Report

Thursday was not a good day for the stock market. The only news that might have weighed on the market happened to be the productivity number which was down for the first time in five years. Since that news was promptly disregarded by analysts, I don’t think that was the reason for the stock market’s drop. But then, what was the reason?

This type of day is much like the worst event for bulls due to the drop "without a cause". While we argue with the price of oil having much effect on the stock market, the price of oil was down on Thursday, too, without much impact on the decline in stocks. When the media has trouble figuring out “Why” the market went down, then there is a Reason it went down but it can usually only be explained by general selling.

The market ended the day with earnings news from AMZN which wasn’t very good. That’s not going to be enough to push the market down, especially if GOOG’s news was not enough to move the market down. The week’s news does seem to have a negative tilt to it so the market has tried to keep a positive attitude (Fed reasoning). What’s coming on Friday morning is the jobs report. There is not much riding on the number but, for the bulls, the number shouldn’t be very good or the old “Fed has to raise rates because it’s too good” trading environment may occur. If the number is not so good, the market can go merrily along, as in whistling past the graveyard.

All of this talk tonight will have no bearing until we can see what the trading will be like in the morning After the jobs report. Thursday was a scary day due to no proximate cause for the decline. Normally this time of the month brings some strength to the market and looking back over the past two weeks we have seen a pretty good rally but today was a different story.

We remind you of our normal position that we take: The market has set a goal for itself during the first few weeks of the year. Then a pullback occurs, a strong pullback, and the market needs to try to overcome that pullback and try to rally above it. We talked about the rally that “couldn’t” this week and today helped confirm that thought. Friday is an important day so Be careful out there and we hope you have sold into this past week’s rally.

Dow Industrials: 10,851.98 -101.97
RYVNX: 18.51
RYAIX: 21.87
TLT: 90.21
BEGBX: 13.18

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