Sunday, December 07, 2008

Jobs Are Not the Stock Market

Top Line: The Asian markets are higher this evening and should help the rest of the global markets head higher as well. The jobs' report is now behind us and as bad as it was the stock market couldn't stay down long. We are looking at a pretty good up week...

Friday morning, several things happened, all negative. But, after the market went down about 250 points, the sellers decided to vanish from the premises. From there, the market headed up about 500 points from the lows to close up 250.

The other market we are interested in is the Treasury bond market. This market confirmed the reversal in the stock market by rising at the same time the stock market was falling and then reversing to the downside as the stock market was rallying. The 30 year Treasury bonds hit further highs in the early trading and then reversed.

Speaking of Treasury bonds, we think that the highs in these T-bonds have made are going to hold for a while. These long bonds had a yield just about down to 3% on Friday morning and the fundamentals really do not justify those prices at all. For those of you who have good credit are in a position to refi your mortgage have a great opportunity right now. The past two weeks have seen mortgage rates drop significantly. Otherwise, for those of you who own Treasury type bonds should be leaving that party.

Even as the Treasury bonds are making gigantic highs, the stock market is grinding out its lows of 2008 and is showing some strength, strength that is not being noticed by many. The volatility of the past couple of months has scared people into "waiting" for a good buying opportunity. We're quite sure they will be anxious to buy in January after the market has "proved" that it can go up. We've seen the Dow put in lows around 7500 and now we are up to 8600, but those 1100 points are still being questioned.

You may have surmised that we are bullish on stocks but in case you haven't gotten that message, then we are telling you that we are right now. Stocks are going up in a violent bear market rally that will shake the bears and put them back into hibernation sometime next year. Right now these bears are all the rage. Every time you look at the financial news, there are all kinds of bearish comments. These comments are made about the economy which are then translated by most people to mean the stock market will "follow" the economy. Who ever thought the stock market followed the economy?

We know that the stock market is in a counter trend move, which happens to be a rally in a bear market. When counter trends are happening, there are very few news items that match up with the stock move. When they finally do, that will signal to us that the market is about to stall and go the other way. January 20th is our target for now. Don't wait until then.

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