Thursday, January 04, 2007

December Jobs' Report on Friday

The stock market, as measured by the Dow, was relatively calm in the price department compared to Wednesday’s wild ride.  But, over in the tech department, the NASDAQ decided to have a big price day, now sitting in a position to break out above the November highs.  We are not confident about this move because we think Thursday’s rally in tech was a little overdone.  Before getting ahead of ourselves, we should see how the gains are assimilated on Friday particularly since Friday morning brings us the monthly jobs’ report.

The WSJ reports that the jobs’ estimate is running around 100K for December after last month’s 132K.  At this point we’re not sure what the market may be looking for.  Are they pretending that the Fed still matters?  If the number comes in lower, will they focus on the possibility that the Fed won’t have to raise rates?  Or, will they be concerned about the possible recessionary implications?  If the number is higher, then the opposite questions could occur.  

All we know for sure is that it is the first week of trading for 2007 and it has been nothing short of expectations for wild.  We know that the market has the right to do whatever it feels like doing but on Thursday, the reckless abandon in the tech world was hard to imagine.  So much speculation should not be rewarded in our opinion, and we know the market doesn’t pay much attention to our opinion or anyone else’s.  

For example, one of our favorite shorts is INTC (but we are not directly short INTC at the moment) and with good reason, it was the biggest Dow loser of 2006 with about a 20% loss for the year.  The recommendations are that since INTC was a loser last year, it will be a winner this year.  With logic like that, how can anyone disagree?!?  Apparently this is what passes for good analysis these days.  We reiterate our 12 target on INTC.

Gold stocks took another hit on Thursday, with the HUI dropping over 7 points after yesterday’s 13 point drop.  We are looking at a current level of 317 with potential to drop to around 250 or 260.  We will be watching for a good point of entry but we don’t think it will occur for a while.  

Dow Industrials:  12,480.69  +6.17
VIX: 11.51
QQQQ:  44.06
RYVNX:   16.53
RYAIX:  21.11
RYCWX:  35.31
TLT:  89.60
BEGBX:  13.71

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