Thursday, July 31, 2008

Thursday Update

Thursday, July 31st brings Gross Domestic Product (GDP) for Q2 at 8:30 ET.
We have GDP "failing to signal recession" in the positive column in the "POSITIVES vs negatives" piece, and that doesn't look to change. We feel this report will reinforce sentiment, and perhaps even put a floor in below many large financials, especially BAC and JPM! Although the market will be nervous before Friday's Unemployment hammer drops, we believe bulls will be dancing in the streets after this GDP report. Are you positioned long in anticipation of market open Thursday?

Initial Claims for Unemployment for week ending 7/20 at 8:30 ET.
Last week's 406K report derailed the bear rally, so this report is probably already discounted with the 280+ point Dow drop last Thursday. This is the type of trading psychology we hope you accept and take advantage of. Please understand that markets churn on the way up, and on the way down. Imagine the washing machine affect. Your clothes are still dirty in the first cycle, yet you know they will soon be clean. So making money being a perma-bear or perma-bull is painful, as markets have never gone down or up indefinitely. If you're that dirty shirt going through the first cycle, there's obviously little chance of optimistic thoughts. POTC prefers our readers become heavy duty type thinkers, not simply brain washed into a buy and forever hold or always be short strategy, as market mechanics are deep and dynamic.

Before market earnings: Automatic Data Processing Inc. (ADP), estimate $.42, Mastercard Inc. (MA), estimate $2.02, and Tesoro Corp. (TSO), estimate $.38 After market earnings: Monster Worldwide Inc. (MNST), estimate for $.35. We believe MNST is oversold.

Friday, August 1st brings the Unemployment Report for July at 8:30 ET.
This data is in our negative column in "POSITIVES vs negatives", and we do not look for that to change. Although we believe a number north of 5.6% will derail the rally, we also feel institutions have accepted the sad fact unemployment is rising and could peak at 6% by year end. Quick Psychological Financial Fusion: POTC outlined in the "Four NEW Scenarios for Optimism" the potential ramifications of an infrastructure stimulus plan. Be wary of the possibility. We would be buying IF the market is sold off following this data.
Please do not forget we are in an election year, so politicians must legislate and pass economic friendly bills, even if they are not along their party lines. Partisanship with rising unemployment is a cocktail for suicide. Is your candidate doing anything besides making public appearances? Which candidate would the United States feel most secure with and which candidate would initiate a dynamic/multi-pronged energy strategy that would incorporate drilling for oil, coal technologies, nuclear, wind and solar? Please understand that politics behind money & banking are critical to the health of the free market system. All the stock and bond markets in Europe are but a small fraction of the United States' markets, so although we must respect all partners, should our focus not be on the United States first? You decide when casting that vote in the November rain.

Before market earnings: Chevron Corp. (CVX), estimate $3.01

The Psychology of the Call team wishes all our readers exhibit greater patience in their trading/investing behavior, as we are certain the market will be around next week and next month. We urge you to not force trades, as we've learned from that disastrous recipe before.

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