Where Is The Market Heading this Week? Down Down Down

               Wow what a week, a massive 300 point drop on Monday followed by huge triple digit gains on Thursday and Friday. Add in a cloudy jobs report, mixed earnings, and an announcement by the Secretary of the Treasury that the U.S might run out of money by February 27^th and it makes for a wild and potentially very volatile future.

                Personally I had a very flat week, until Friday when a wrong bet against three major DOW components (J.P Morgan Chase, American Express, and Intel) left me treading water when the rest of the market soared. This just goes to show you how volatile and unpredictable the current Market really is. But instead of venting my frustration I want to discuss what Friday’s shady jobs report really means for the future of the U.S stock market and the recovery of the American economy.

                Realistically after taking a close look at the report, which stated that the U.S economy added 113 thousand new jobs in January (way below estimates of 180-185 thousand) I saw that many things could of negatively impacted the jobs report.

First thing, which many over optimistic bulls have labeled as the reason the jobs report disappointed in both December and January, is the frigid weather. The weather might have played a small part in the poor jobs report, but job sectors that traditionally lose jobs to weather such as construction, actually added jobs in January. My opinion as to why the jobs report disappointed was that January was a bad month for just about everyone, I am not just talking about the stock market that lost over 5% in the first month of 2014 I am talking about small businesses and the world wide picture in general. With the emerging markets falling part, the winter storms hammering our Country and the stock market in decline it is easy to label January as an off month.

So as to whether the January jobs report was a good or bad indication about the strength of the rest of the economy I am obliged to say that it does not show as bad of a picture as the headline suggests. I consider the jobs report as another indication January shaped up to be a terrible month, but what really shocked me was how the stock market reacted to the news.

When I got the alert on my phone that the jobs report missed expectation I immediately checked the futures which all fell after the news, and I was overjoyed (considering I had puts betting against several DOW components). Unfortunately for me, the market quickly reversed itself and in the day climbed to the triple digits and closed with a 163 point gain. What I do not understand is why? I agree the jobs report might not have painted as bleak a picture as at first glance it suggested but neither did it warrant such rapid gains. After doing some digging I came to the conclusion that investors bought on the presumption that the Fed will suspend its taper and continue pumping money into the economy. This might help stocks in the short term but in reality it is bad, by suspending the taper the Fed would acknowledge that the U.S economy needs support. And if the current moodiness of the market is any indication stocks will react violently.

For those of you who made money on Thursday and Friday I would take your profits and run. Volatility in the market has returned and I expect the gains made will be reversed in next week’s trading. Plus the market will not be helped by the fact that the U.S will not be able to pay its debts unless the debt ceiling is raised by February 27^th. But that topic is probably going to be discussed in next week’s blog entry.

So my analysis of the current market is that the gains made on Thursday and Friday will be wiped out next week when a number of factors, such as a reevaluation of the jobs report and possible debt ceiling problems starting up again, converge and send the market lower.

But in the words of Jim Cramer “there is a bull market somewhere” so read my page on possible investment opportunities, to see how to make money even in this wild unpredictable market. (That page should get posted sometime next week.)

 

I WILL BE POSTING ONCE EVERY WEEKEND ABOUT MY OPINIONS ON THE MARKET AND VARIOUS INVESTMENT OPPORTUNITIES I HAVE FOUND.

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