MV Sports Report: Bulls Hit Employment Grand Slam

By Matt Theal  AUG 07, 2009 4:20 PM

Rain or shine, we review the day's biggest stock stories.


The story of today was the employment number and boy was it impressive. The Nonfarm payrolls came in at 247k vs. the previous expected 325k. Last night we discussed that Goldman Sachs (GS) upped its forecast on the number, predicting a loss of 250,000 jobs—pretty good call if you ask me. Let’s put all the speculation to rest...Goldman is the Government.

Today on the Buzz and Banter, Mr. Practical gave his thoughts on the number:

“Today I arrived to see we had a great non-farm payroll number that has the market excited and every bear covering their shorts. Well a deeper look into the numbers sees very heavy seasonal adjustments by our friends at the BLS, adjustments that should make the next few NFPs much worse as they are unwound. Most of the jobs, about 100,000 additional are coming from stimulated auto production and unexpected census hires. Nothing to hang your hat on. And that better unemployment rate is exclusively due to people falling off the employment rolls permanently.”

Here nor there, the market loved the news as traders sent the S&P 500 up 1.33% before closing at 1010, making a new high for this amazing rally off the March lows. This has been an impressive move from 666 all the way to 1018. Even more rousing is that in less than a month, the S&P has rallied from 875 to 1018, leaving most investors in the dust.

If you missed out on this amazing move, then you're probably having similar thoughts seen in this Sean Udall Buzz.

“Here is the real crux of the market currently with respect to what has been working and what is highly probable to work given future upside. Do you have the moxy to buy stocks now? And if you don't buy them now, what and when is your entry? Forget all the reasons and logic and knowing you missed a great move (either from non-participation or under-investment) but also knowing that another move of a similar magnitude may lie ahead?

“Specifically, do you pay $164-166 for Apple (AAPL) knowing you may be able to buy it for $155 but also knowing it’s going to $215-240 and higher? Do you buy Google (GOOG) for $450 knowing you might get a shot at $425, knowing it’s probably worth $650 minimum and could go $150 north of that? Do you buy Intuitive Surgical (ISRG) at $230-235 knowing you may get the $200 shot (and I personally feel the pain on this one!) also knowing that the 52 week highs are in sight and it could get just taken out and then crushed. How about SunPower (SPWRA) at $31 after they just ran nearly 50% in a month but are still likely exceedingly cheap? Or Baidu (BIDU) at $342? I won’t touch BIDU but many times the strongest stocks still have the most upside on the next leg higher -- as the well valued names become the “most overvalued” names. Now apply that logic to another 10 or 20 or 40 market leading companies across various sectors and you have the crux of this market in spades.”

I think Sean did a wonderful job capturing the current psychology of the market. A pullback has to be coming, but when? And exactly how much pain are you willing to take?

Something to think about going into the weekend. Have a great one!

No positions in stocks mentioned.

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