With job numbers pointing down, whats next – August 2010?

An article by pgupta    No Comments

On Friday, the government released the job numbers and the unemployment is still hovering around 9.2% which is actually pretty bad if you consider the recovery. But somehow the market does not seem to be that bearish. Few bullish things to notice in the market:

1. Down Jones is hovering around 10,600 range, inching towards 11k which should mark a significant buy point for investors. If DOW hits 11,000 mark and stays there for few days, we will see significant volume increase. Currently market is behaving as if not a whole lot of institutions are participating in the trading. Volume in all the major stocks seems to be really kind of sluggish.

2. S&P is about to cross 1130 mark, which will definitely confirm the bullish market trend and should attract investors from all territories back in the market.

3. Major earnings improvement across industries: recent earnings announcement from several large market leaders ($aapl, $MSFT, $amzn, $v  all have posted major increase in their earnings statements. That just means companies are starting to see growth, jobs will just follow the suit. Jobs always trail behind because companies start their cost cutting during economic slumps.

Investment Strategy in slow motion market:

In a slow economy like this, any negative news gets exaggerated and stock gets smacked down suddenly. You can almost ALWAYS take great advantage of such a move. When $amzn dropped 10% pre-market after their EPS missed analyst’s estimates, it presented a perfect opportunity of quick bucks. It recovered almost entire slump within intra-day trading. Within next week, $amzn moved 5-6% up, so totally a return of 15% if you bought on the sudden drop. Bottom line is, look for overreaction of traders on negative news and you can almost always make quick money. Obviously there is no guarantee, do your own DD before putting your money in the line of fire