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Non-Farm Friday – Will Jobs Come Back?

Posted on the 07 October 2011 by Phil's Stock World @philstockworld

As David Fry noted yesterday: "The rally is clearly the HFT algos at work and only reviled when markets decline but little mentioned on rallies. Nevertheless these volatile program trades are causing many investors to flee markets as noted in this article. In fact, nearly $200 billion has been withdrawn from equity mutual funds since 2010 according to the ICI (Investment Company Institute). "

We got a little additional rocket fuel at 2pm as Tim Geithner once again said that there is no chance of another Lehman-type even being caused by a default of EU sovereign debt.  This is the exact same thing he’s been saying for two months now only this time investors were suddenly in the mood to believe him and some of our beaten-down Financials like MS and BAC took off.

As I mentioned last week to Members and now Doug Kass agrees with me, insurance companies are "stupid cheap" and that’s why we’ve maintained our bullish stance on XLF, still one of my favorite longs.  Moody’s downgraded 12 UK Financials this morning but it had little effect on the sector – a pretty good indicator that we may have finally found a bottom.   Moody’s also put the hit on 9 Portuguese Banks – they downgraded the whole country last month.  

Non-Farm Friday – Will Jobs Come Back?
None of that really matters, of course.  As you can see from our Big Chart, we are right on track to test the levels we expected for the week but we’re right at the top of our declining range so we got a little more cautious into yesterday’s close – just in case.

8:30 Update:  Non-Farm Payrolls came in hot at 103,000 AND last month was upgraded from zero to 57,000 and the futures are LOVING IT!  Unemployment holds steady at 9.1% and hourly earnings were up 0.2% as private sector jobs were strong at 170,000 added and the subtraction, as the President warned us yesterday – came from a 34,000 reduction in Government jobs.

Interest rates are kicking up on signs of economic strength and that’s great for our TLT puts.  While gold isn’t getting much of a pop (why should it – no fear?), oil and silver are moving up nicely and we played both of those bullish so – yipeee!


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