Caution Ahead Of US Employment Report

The market continued where it left off yesterday and we are into day two of the Obama Sell-Off. The Dow (^DJI) closed down 443 points or 4.9% at 8695. The S&P 500 (^GSPC) tumbled 5% or 47 points to 904. The NASDAQ (^IXIC) actually held up the best despite negative news from Cisco (CSCO) last night, falling 72 points or 4.3%.

THE BOTTOMLINE: The markets have given back about two-thirds of last week’s gains and are now in danger of falling back to the lows of October. This would not be the end of the world and as a matter of fact might be a great buying opportunity to continue building long-term positions in solid companies. But I will touch on that if it happens. Personally I feel the market has priced in a much worse than expected jobs report tomorrow and there is a chance of a rally. The consensus is for about 200K job losses and I agree with many on the Street that it will be worse, but again I feel that 250K has been priced into stocks. A very bad number would definitely hurt the market, but it could be an opportunity to go long early tomorrow morning.

Obama is also planning on speaking tomorrow afternoon. The way the last hour of trading has been lately and heading into a weekend - this scares me more than the employment number. In the end, be ready for a very volatile day on Wall Street.

ONLY ONE DOLLAR!!!!

According to the monthly sales numbers today it appears the only places consumers are spending their money is the discount retailers like Wal-Mart (WMT). The country’s largest retailer posted decent numbers, all things considered, and after trading in the green for the majority of the day, fell 1.2%.

THE BOTTOMLINE: No surprise that one of the best performing retailers today was Dollar Tree (DLTR), which rallied 8% and is within 7% of a new 52-week high. There are not many retailers or stocks that can say that. Family Dollar (FDO) closed higher by a few pennies, but also has a very solid chart. If a dollar is too much, the 99 Cents Only Store (NDN) was down less than 1%, but did hit a new 52-week high last week.

I honestly must say that I do not shop at the dollar stores, but maybe I should to save more money for my little piggy bank. Apparently I am the only person not joining in the discount craze. I think it was the years of growing up as a child on discount clothing that now has turned my psyche against it. But, what I will do this weekend is venture into one of the discount stores to do real-life research on the companies before I recommend the stock to my clients. Depending on how it goes I will fill you in next week!

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Comment by Mike Sorensen

2009-01-26 10:00:41

Hello there,
I stumbled accross your site this morning as I was contemplating the current situations. I am an investor in the housing market and will continue to work my plan. Buying houses at this moment is very nice, moving them not so.

I’ve be involved in manufacturing for several years, employing many hispanics for our low training positions(assemblers) I have not heard much in the media or from anyone on the subject of bringing jobs back from outside the country. We like many others began to produce in other countries, for cheap labor, materials costs, etc. In Indianapolis for example, abundant numbers of unskilled laborers are present, seemingly waiting for work. I understand that many of them would not work, why should they, as they receive great benefits for sitting on their thumbs. I detest that mentality, but it is engrained by our government that “THE GOVERNMENT WILL SAVE YOU”. Another topic, sorry, back to the labor issues. Since NAFTA, we ship a lot of our no brain manufacturing to Mexico with no gain to the US. We spend billions in manufacturing there, then allow illegals to come and work here as well. I acknowledge that Illegals seem to be filling jobs that no one wants, but at present, that mentality is changing.

Do we collect any type of tariffs from imported products currently? If not, why not, and wouldn’t this serve for multiple gains to the US Economy? Slight rise in prices for imported products might make companies look to local plants once again, more competive costs here would keep the Money in the US, wouldn’t it?

I see our country becoming split more and more every day. Those with education high tech, and those with no education who can’t even or don’t even want to get a job that they are qualified for(McDonalds, etc). The “middle class” job market seems to be shrinking as jobs are exported.

My major concern and hope for cure is regaining some of our manufacturing here in the US. Earn money as a country for allowing other countries to import. We should not be feeding the rest of the world jobs, money, when our own plants are shutting down. I don’t believe in Unions by the way. They should be abolished.

Thanks for the ear and the informative site, I will continue to follow.

Mike

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