主题：11/06/2009 Market View -- 宁子

Jobs lag. The economic data is fading. Jobs are going to follow the economic data. Thus jobs will be bad. The furor, and that is what it is right now, is building with each bad piece of economic data (factory orders, ISM, ADP, same store sales). -200K are now expected, a number moving higher, following the bouncing ball of bad economic reports. Whispers (fears?) of 250K are out there. 300K as well.

As is often the case when there is speculation gone wild, exposing the bare facts is appropriate and somewhat titillating. It is always more profitable. There are three outcomes possible, at least three I am looking for. There is so much hype that the number will actually be anticlimactic if it is 300K or less. With 10% downside in two sessions leading up to the report, a reading at 300K actually results in a positive open. That is likely the worst outcome unless the positive open turns into a scream back to the upside. That would suggest a bottom. If it opens higher but hems and haws, prepare for more downside and a full test of the prior lows.

Second possibility. The numbers are bad and the market opens lower with an immediate crash to or near the prior lows that holds. Time to close your shorts and we are not talking about after relieving yourself. Then look for a strong bounce. If so then some upside plays on the indices and stocks that hold up are in order. Aggressive but not a bad risk/reward ratio. If it bounces modestly but stalls, watch out for more downside. We will call that scenario 2.5.

Third possibility. The indices crash below the prior lows, rally back to the lows, and fail. That means the bottom attempt at this level is most likely over and the economy is heading even lower, and the market does not see it bottoming in the first half of 2009. Bad news indeed.

Of course we are going to look at playing these scenarios. We will put some index plays on that pick up a move off the prior lows. May have to adjust them if we get a number within all the expectation ranges and the market looks to try and open actually higher. That is not the likely scenario so we are focusing more on the second situation involving testing the prior lows to some extent and then surging back up. After an anticipated 3 days and down nearly 15%, the upside seems more probable even if it is just a short term relationship.

The gloom is high, the economic data is as bad as it has been in maybe ever. The federal government is taking over the financial institutions. The balance of power in Washington suggests there is only more to come. Thursday some democrats were saying that tax rates should not exceed 50% because the worker should be the majority stakeholder of his or her own check. Not even going into the plethora of federal excise taxes on phone service, gasoline, cigarettes, travel, etc. that push the current tax bite well in excess of 50% on all of us, that is a rather horrifying statement. Thanks for letting us keep some of our check so we feel good about getting reamed. Never a discussion about cutting waste or corruption, just how much to take from the workers. No wonder the market is down 10% in two days, democrat or republican in charge.

The point is everything seems about as bad as it can get. At the same time the sentiment indicators spiked to historic levels, some we have never seen before. It hardly seems as if the prior lows can hold given all of the very bad news in the world. In other words, the time is right for the market to put in some kind of bottom. That is why a bad jobs report that sends the market crashing lower early has the potential to reverse the trade. Would prefer a Monday or Tuesday, and that could still occur as well. It is just that the jobs report is such a perfect set up for such a turn.