So the spike down is getting bought. But the pulse down was steep enough for more fireworks ahead. Good spike in volatility. No danger of a reduced volatility market. Ranges will be good for 2 sided trading. I expect a range from 1360 to 1300 as discussed earlier going into the end of August.
Get ready for the Fed and the Government to save the day. Not to mention the realisation that corporate profits don't correlate very well with jobs in the short run.
If you're waiting for the Fed or the Government to save the day, I sure hope you're hedged. Because it aint going to happen until things get much, much worse. Not this time. As for corporate profits - forget about jobs. Two words for you, and one that we (at my company of 22,000 people) are experiencing right now: Margin Compression. I get that you want to be bullish to the core, and that's fine, but please come up with better reasons that these. Because if that's all you've got, you're in for a nasty surprise.
Given the market's reaction, I think a much higher (no typo there) number was priced in, which caused bears to be trapped in the fast rise and are now reducing the selling pressure by their covering.
I don't disagree and I really am not that interested in being bullish to the core. The reason I'm bullish is basically because macro surprises are trending upwards, economists have been overly optimistic and it seems like they may be becoming overly pessimistic (which is a good environment to be a buyer), because we are still in a bull market in the US at least and because the market ripped off the faces of everyone who thought we were going to crash a few weeks ago and rallied to something near the highs inside of a week and because despite the rally we're still seeing mutual fund outflows. Basically we are seeing a depressed professional community (pessimistic economists), a depressed retail community (mutual funds) so you have to wonder if it is the first time in history that most people are right about the future. Other reasons to ignore this jobs report is that I always ignore jobs because it has pretty light correlation with the stock market except on an intraday basis and you can never really predict these things. My main concern going forward in this uptrend was that oil was trending up again but now that is getting fixed as we speak as well. And like I mentioned in another thread, are oil long holders dumb or something? You can't win. Either you lose because the economy tanks and oil goes down due to no demand or you lose because it'll turn out that supply is really not that constrained as previously thought. Because it's impossible for the economy to sustain oil above say $90. And on a final note everybody and their dog and its fleas are short financials that have anything to do with European debt and it is getting a little excessive. I got my SocGen position back today. The ECB has already put the rating agencies on ignore for all intents and purposes and I would hope that it does not take the investment community long to do the same because the rating agencies are obviously broken (totally pro-cyclical and offer no predictive value except to the downside when they are able to make their own predictions come true due to risk management rules). Edit: 17:10 US ECONOMIC COMMENTARY Print Obama calls for infrastructure projects to help construction Earlier Goolsbee was already saying "something needs to be done". I think we can expect the government to step in now.
No job creation, unemployment going up. Seems politically viable enough. The fear of 10%+ is good enough. Then again, the political class has become utterly and completely incompetent. I've been baffled over this debt ceiling bullshit lately as well. The debt ceiling has been raised dozens of times in the past decades and it has never been a problem. I wouldn't be surprised if the uncertainty that goes out from this contributed to the poor jobs report. It ties in very well to my mass-psychosis theory. Everything these days is a conflict (ceiling), nothing could possibly ever be resolved (PIIGS) and everything sucks (don't think this requires any explanation). And @tradingjournals: No, government propping up the economy does not add any downside.