Top Line: We are probably at or within shouting distance of the lows in the Dow. We want to comfortably sit back and watch a violent rally erupt.
Fear of a bad jobs' report pushed stock prices down on Thursday. There were other news items but the fear factor superceded all of them, regardless what the media tells you.
There was a news item that people had to scratch their heads on and that was the regular Thursday morning announcement of new claims for unemployment in the prior week. The news...new claims dropped and the total number on unemployment benefits dropped as well, unexpectedly says the media. The truth is that the media actually believes all the stuff they report. Worse, so does the public.
We noted that the Europeans are getting on board with the stimulus as both the Bank of England (BOE) and the European Central Bank (ECB) lowered rates on Thursday morning. In fact the BOE said it would promote bank lending by buying some 75 billion pounds (about $100 billion) bank assets. That news did not excite the markets as most European stock markets were down about 5% on the day. The news was widely expected...
Friday's news will bring a bit of crazy trading at least for a few minutes. The problem is that the news comes out before the market opens. Still that may be one of the best times to buy some more of your favorite stocks.
Today's drop in the market probably signifies that we need at least one more rally and drop before we see the end of the current downturn. With the lows in place this afternoon, there is little reason for the market to continue down too much further.
Anyway, the news for tomorrow will dominate trading in the short run so we expect that the market will quickly make up its mind on the jobs' report. The overnight markets are not doing much except that the Asian markets are selling off a bit after the selloff on Wall Street. It's Friday there and they can't wait until the US jobs' report is out, they have to sell now and wait for the news and then wait for Monday's trading.
We think that the reaction to the news will be to buy stocks, especially if it's worse than expected which is pretty larger number already, up in the 650K area. We'll be watching for a worse number than that but February was a short month so it's anyone's guess. For our part, we think a rally can ensue out of the early morning lows. It may not hold but it should appear.
Thursday saw gold and miners going back up which is nice. Balance...It's a good thing.
Yes, it's time to buy again. We would like to see a selling opportunity but here is another buying opportunity. Relax and buy...in few months all will become clear.