True to December, we’ve had another whippy response to a better than expected Un enjoyment report.
We had some inkling that the number would be higher because of the ADP number released earlier this week. ADP had figured in a good bump, based on the number of paychecks they processed.
Now the argument between the left and to right as to “whose responsible”, or better yet, what about the number of people not even counted because they are considered not looking for work. Throw in the record number of people on disability ( we have more people on disability than the entire population of Greece) Over 10 Million.
Obviously, the measurement is the measurement and we are now at 7%.
How the number is reached and if it really measures what it should? that’s for politicians, pundits and AM radio talk show hosts both on the left and the right. I personally don’t have time to listen to either side’s bullshit anymore. I am too busy focusing on looking for opportunities to make $ and also keep from stepping on land mines which lose money.
Dow futures had taken a little correction off of the recent highs, but I cautioned against trying to sell the top in a bull move. Its great when you re able to hit that sale, but what you miss are the 6 or 7 failed attempts where you sell it, cover it for a small loss, then re-load. Traders will always tell you how they sold it then covered it 300 pts lower. What they neglect to tell you is how many times they got stopped out before they caught the inevitable correction.
For the past 6 months I have been cautiously bullish. I think its been a better strategy to maintain your net long stock positions and manage them with put options when the market ticks off new highs. You’ve lost the premium you paid for the put. That’s a fact. However, you’ve had down side protection in place while the market has whipped around but trended to new record highs.
No one knows where the top will be or what political or economic black swan will trigger the correction. No one.
The stock indexes are being fueled by zero interest rates, 85 billion a month in fed pumping with QE ad infinitum, and an economy that in 2009, 2010, 2011 squeezed out every inefficiency it could find.
The Dow index looks content to end this year around this 16,000 level. As I write this, we are at 15,950.
Ironically, a week ago today we were at a record high tick 16,162. So that remains resistance. Sell it against there if you must, but make sure you have a good stop loss.
Support?
Wednesday, just two trading days ago, we printed 15,785. so 220 pts ago. In the grand scheme of things, 220 pts, when then market is at 16,000 is almost insignificant.
Which brings me to my final point this AM about the stock indexes. Get ready for bigger moves.
A 220 pt move will get the chatter class gabbing. But 220 pts with the dow at 6500 is a lot bigger percentage move than 220pts at 16,000.
don’t get caught up in the number of points of the move, look more at the percentages.
At 16,000 a 10% correction will bring us 1,600 pts of pain. 20% gives us 3,200 pts of pain.
Its looming out there on the horizon. No one knows when it will come, however.
We may continue to climb the wall of worry, disbelief and fear another 1, 2 or 3K pts. But the reaper will come.
When it does, those who are short will tell their friends and family they picked the top, and knew all along the rally couldn’t last. What they won’t talk about is the 5, 10 , 30 or 50 times they sold it and took small losses.
CER