Wild Week for Stocks Comes to an End
Today’s market activity was mainly driven by the Jobs report — which contained good and bad news. Good news being that employers cut less jobs than expected, 216,000 vs the analyst expectations of 225,000. That’s actually great news for the market because as we all know, the market looks ahead. The report suggests that we could see improvement in the labor markets soon. The bad news was that the unemployment rate rose to 9.7%, higher than the 9.5% that analysts were expecting. I think investors generally expected the unemployment rate to rise so the slightly higher-than-expected rate didn’t shock anyone.
It’s interesting to see the psychology of the market at work here, yet again. People chose to focus on the positives, which drove the market up today. The momentum that’s been building will likely carry into next week when people come back from the holiday weekend.
For those of you that didn’t panic-sell during the big drop earlier this week, kudos to you for hanging tough. I myself kept most of my positions in tact and even though it’s rattling to see your portfolio drop in value, if you focus on the big picture (improving economy, more stability in the financial system, better real estate market, improvements in the global markets, etc.), you should be fine.
As I’m writing this, I see that the market is going to close around the highs of the day. That’s a very good sign for next week. Have a very safe and enjoyable holiday weekend everyone!
Well lets be careful now about statistics, which especially coming from the goverment fall into the category of “there are lies, damn lies and then there are statistics.” Let’s peak behind the “job less” number. For instance do you know these numbers are compiled every month to include a hypothetical “birth-death model” which assumes a hypothetical level of job creation and subtracts that job losses. For August, the “birth death model” ADDED 118,000 jobs (http://www.bls.gov/web/cesbd.htm) mostly in Construction, Leisure/Entertainment and Professional Services. I don’t think so.
Trying to predict anything from hypotethical stats is an exercise in futility. What does count, and Ken is right on, is the market reaction. The only thing that matters is price and time in the markets. Everything else is noise. We ARE in coonfirmed market rally which could go far, as I have said even with a slight 10% correction coming soon.