Monday, September 1, 2008

Psychology of the Week's Upcoming Economic and Earning's Data

Good morning and good evening to all who enjoy this weekly piece we call the "Psychology of the Upcoming Week's Economic & Earnings Data." Welcome back to the Island Where Forward Thinkers Evolve and monoliths like gold bugs and perma-bulls just vanish in the churn, whipsaw, and noise of normal market cycles ~ The following analysis assumes adherence to the 11 Commandments and no unforeseen market inversions as addressed in Commandment #10, but especially related to geopolitical or terror events. Monday, Sept 1st brings the U.S. Labor Day Holiday, all markets are closed except for commodities, and what a bearish day for crude oil, currently down $4.15/barrel. It’s now evident Gustav will cause a lot less destruction than Katrina. More importantly, we have great faith the loss of human life will be close to zero this second time around! POTC has turned slightly bullish, at least until Thursday afternoon and then we believe being long into the monthly employment report on Friday carries too much foolish risk. We don’t anticipate any upside surprises to Friday's 5.7% unemployment forecast. Also, holding long positions into a September weekend (historically the worst for stocks), coupled with the current geopolitical atmosphere would not be justified. Even though we are in an election year, we refuse to hold unhedged long positions into "Employment Fridays" and weekends just yet. We will offer you a hedged trade idea shortly, one we are confident you can hold into Friday and the weekend. IF crude continues to break down, retracing below $110/barrel, and the S&P sells off, we would definitely begin going long select technology and select retail, as a majority of the recent pain has been the direct result of the weak greenback and energy bubble, and both are showing signs of turning toward the bullish campfire. We recommend exposure to technology and retail names that enjoy 70% or greater of their revenues/sales inside the U.S., as the strengthening greenback and falling gas prices will be synergistic. A slight positive for stocks is the fact we are in an election year stretch. With the Republican National Convention underway, conservatively run institutions, which dominate Wall Street, will no doubt be influencing trading, so a positive bias is expected at least up to Friday's unemployment release. ------------------- If you would like to receive this and future posts and market analysis, please send an e-mail to and make sure that your e-mail client will not consider messages from that address as spam.


lotto winners said...

To the owner of this blog, how far youve come?You were a great blogger.

Anonymous said...

"Greatness never dies, it only upsets the fringe as time goes by"

My wife Juie and I appreciate your analysis, very refreshing compared to the screaming Jim Cramers of this world. We will definitely help spread your blog address to three close friends, you deserve it!

Anonymous said...

Man, don't even mention Cramer here, he's a loud-mouth. Interesting call on the hedger and the CIEN, I'll watch. But I thought you guys were short s&p minis?