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Morning Thoughts
While the focus today will be on the September "Employment Situation" report, don't lose sight of the true market mover: the European Sovereign Debt Crisis. Make no mistake about it; this holds the key to the next big move in stocks. And with talk of a coordinated bank recapitalization plan being discussed by "Merkozy" in Berlin on Sunday and at the EU Summit on October 17, stay tuned for any and all updates, rumors, and headlines on this subject.
As to the employment report the expectations are for a net gain of about 60,000 jobs for September. As usual consensus expectations do vary depending upon the source (Bloomberg.com shows the consensus at +65,000). Looking deeper, the private sector is believed to have added roughly 100,000 jobs for the month. Reflecting the continuing government level cutbacks, estimates are for the public sector to have reduced payrolls by approximately 40,000.
There is one special factor which for the second month in a row may be affecting the numbers: the Verizon strike. For this month the strike's resolution may have distorted the numbers in a positive way as 45,000 striking union members returned to work.
From various bits and pieces I have seen and/or read it seems that the old Wall Street adage of "Buy the Rumor, Sell the Fact" will be in full force today. I get the feeling that Wall Street is poised to "Sell the Fact" today almost without regard to the actual employment data that is released.
Here is my thinking, which is complete conjecture on my part.
If the numbers provide a positive surprise then we could get a moderate bounce before the selling hits in full force. However, if the actual employment figures for any reason are below expectations then the selling could be extremely intense and the decline could be quite large.
This is in part why late Wednesday and throughout Thursday I took profits and did some hedging of my "longer hold" bullish positions. I actually also moved some of my "serious money" back into cash as of yesterday's close.
I guess overall I am basically following my own advice:
- Keep positions small.
- Stay flexible.
- Stress risk management
"I am more concerned with the return of my money than I am with the return on my money." - Will Rogers
Have a good one...
Curtis Bergquist
Options Manager: Daily Decision-PRO
P.S. Here's an unabashed pitch for Daily Decision-PRO Service - It's beaten the market handily for four months running now.
S&P 500 - Last 12 Month
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