Wednesday, November 11, 2009




WOW, it was a great day in the market today. It is interesting to listen to the catalyst for the surge. After a 10.2% unemployment report on Friday, we should have seen a dump on Friday and today. It’s not the case. There is even casual talk today about 12-13% unemployment figure for first quarter 2010 and the market kept rising. The why? is hard to find.

It seems as though there are some looking back at last Thursday’s nonfarm labor and productivity report. The number came in at more than 30% above expectations and there is quite a bit of talk about it today on Bloomberg and in the Journal. It is confusing since this info is now 5 days old and no one is mentioning that last Thursday everyone explained the jump away because of cash for clunker and the new home subsidies. So, why the euphoria today? It is anyone’s guess.

It didn’t hurt that the G-20, you know all those head of state and bankers from all over the world, having met in Scotland indicated they will continue a stimulus mentality. That might indicate that people who missed the March to November surge are looking to get in before it is too late. Looking deeper at what is actually being done by certain members of the G-20 this “stimulus mentality” rally may be short-lived. (The UK is talking up an additional 2.5% bump in VAT, they, Germany and US are talking about new tax brackets for high earners, and there are indications that European central bank is rumoring about prime rate hikes. The Fed and BOE-Bank of England, will find that hard to ignore.)

I set some training stops on my gains in GLD, IBM, GOOG, and CVX. I am finally in the money with a huge block of CHU. As I mentioned, my short on MCD is headed in the wrong direction quickly. In listening to the earning report, I discovered top line revenues were up 3.3 percent. Most of their forward looking optimism had come for cost cutting and low commodity costs. Now that I see 3+ per cent growth, I had to close my short position (a 2.6% loss) and see a possible top at 65-66 a share. I also took a nice profit on a January call of BP.

There was a 15% bump in Radio Shack. Remember I called RSH way up on June the 12th. Ok I know it had nothing to with the fact they will be the next distributor for the iPhone and I got out of RSH in August with a stinging loss of 6%. The question is will this mean Verizon is not getting the iPhone next year? I do not own RSH at the time and did not like the fundies in June when I bought it.

So tomorrow what will this crazy market bring. Keep an eye on the consumer confident report released out of Germany as that might set the mood for the opening tomorrow as we wait for the Labor Department to report job openings and turn over. Other than that, protect some of the nice gains we made today.

Salve Lucrum


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