Thursday, January 13, 2011

Market comments for Jan. 13th: Higher Initial Jobless Claims!

The Initial Jobless Claims numbers this morning was a surprise to many because they rose to 445,000. If you remember the spin over the last 2 weeks was that these numbers were coming down and the recovery was getting stronger. I argued at the time (Dec. 30th) that these numbers were actually larger than one would expect given the shortened work weeks for Christmas and New Years. Well now we have "clean numbers and while the seasonally adjusted increase was more 35,000 jobs lost from the previous week, the unadjusted number is actually 109,000 additional jobs lost this week, said Rick Santelli, of CNBC. This is the biggest jump in 6 months.

Yesterday's surge in the market was not believable, as to me it occurred on lower volume than the previous day. All three indexes, the Dow, S&P 500, and Nasdaq all peaked simultaneously yesterday, with the Russell 2000 also hitting 800. The stars are aligned now but will the market roll over as I have been exclaiming it will now for many months? I don't know.

Two phrases, often used with respect to the market, are very true you. One is "You can't time the market!" and the other is, "Don't fight the Fed!" I have trying to do both unsuccessfully. However, as far as the Fed is concerned, they have never gotten it right yet. They didn't prevent the bubbles nor the crashes and I don't see them getting any better at preventing real pain for all of us, anytime soon. Secondly, I may not be able to time the market, but I wouldn't be a buyer of stocks with this market so overbought with Investor sentiment running so optimistically. Both are a recipe for a major market drop. And remember this, when the market drops it is much quicker than when it is going up. It happens suddenly and precipitously and scars the heck out of you.

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