Good Data = Rally
Everything is okay, right? Granted the data points yesterday were better than expected on many levels and confirmed in some investors minds, the needed restoration of the uptrend. I am not completely convinced this is true and I still have my concerns looking forward. However, what I think or believe doesn’t always agree with the market or the trend the market takes near term. This is why I constantly say - take what the market gives. I look at yesterday as an opportunity on two levels. First, my current plays went up in value (adjust stops) and second, I was able to take advantage of some short term opportunities I have been watching.
What’s on tap today? Jobs report is the main issue facing investors squarely at 8:30 am. Regardless of how positive the retail sales, productivity, Cisco earning, or FOMC announcement, a bad jobs report will impact the market today. Estimates are for 150,000 lost jobs in October. The key number is likely to be the rate of unemployment. Expectations are for number near 10% (9.9%). Breaking the double digit point could have some psychological impact to investors. Average hourly earnings will be looked at as well. Just what you want after a week full of data is more to end the week!
Let the news play out and then make you decisions. I made a comment last week that a rally off the lows would be a good point to take some money off the table and lessen the overall risk of your portfolio. This can be accomplished by raising your stops into the rallies. If and when the rally fades, you will hit your stops. I have been doing this with positions in weaker sectors like financials and semiconductors. This gives me additional cash to put to work in the leading sectors. Find methods for managing your money that accomplishes your goals, plain and simple.
Today I am interested in the retail sector. The sales data was not rewarded by a move higher in the sector. I am looking for more upside moving towards the end of the year. I covered this last night in the Sectors to Watch video.
Financial stocks are on my watch list as well. They have reached a breaking point on the downside. The Chart of the Day covers this item if you want to review more.
Energy stocks moved higher with the broad market yesterday and this could be a sector to watch as well. High crude prices in conjunction with cutting overhead could lead to a solid quarter financially for these companies. The conglomerates have my attention to the upside.
The pullback is in play relative to a bounce and move towards the October highs. Plenty of resistance and challenges to meet on the way, but yesterday gave some optimism to investors. A solid follow through today will help reinforce and put the move firmly in play. Be patient, focused and discipline in this market the direction is still being determined and news is playing a big role day to day.
Have a great day investing.
TIP OF THE DAY:
The move higher over the last six months has helped many 401k/retirement accounts recapture losses. Now is a great time to revisit those accounts and make adjustments. Evaluate the risk of your current allocation relative to the risk of the market. Re-balancing your portfolio and future allocations is important - as many investors learned last year. This is money for your retirement manage it! Don’t fall into the trap of - “I’m in it for the long-term.” When it takes years to recapture previous levels attained - you will be in it for the “long-term”. For help send your questions to info@SectorExchange.com.
