The market experienced a morning sell off amid the lackluster job report. Expectations were dashed as the job report only showed 70k private sector job gains vs analysts’ hopes of 90k. The government also killed more jobs than expected resulting in a whopping 100k+ drop in NFP.
DOW dropped to its support level at the trendline drawn above. Furthermore, news that the FED would help struggling mortgages sparked a late afternoon rally. Investors are hoping that the FED will do something to lift this economy up.
Leading signs that our recovery is not taking place smoothly
- OBAMA’s speech wasn’t convincing, he was only proud that private businesses could struggle to keep up and maintain job growth.
- FED is in search of new policies to help spur this recovery
- Unemployment claims reached a 3 month high yesterday.
Opinion
The DOW has been pumped up by retail traders late afternoon as institutional traders have already packed their bags at 2pm. This was aided by some fund managers as seen by the volume.
Nevertheless, this rally is similar to a panic buying. I will still watch the markets.
MARKETs are overbought. Correction will take place. This rally was just a technical rebound, the next drop would break that trend line.
Disclosure: Bought BAC at $13.80, Short LVS at $28.80
Watching:
AA, CENX, RIMM, MU, BYD, MGM, CHK, FCX, X
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