Monday Morning - 6 Unemployed People Per Job?
by Phil - September 28th, 2009 8:26 am
The number of unemployed people per job opening has climbed to 6:
Six is a lot, as you can see from the above chart. 6 means that if you get a job, 5 people absolutely will NOT be able to get a job because you just took the last one. Notice Job Openings are still falling and people without jobs are still rising - this is not a good combination, despite how great you hear things are getting on TV. In the first 6 months of this year, there are half as many manufacturing jobs available, 17% less Government Jobs, 21% less Professional Jobs and 21% less Educational Jobs.
Call me old-fashioned but I still think you need people to work in order to have a strong economy. If we have 10% unemployment (the "official" number) and only 1 in 6 people COULD get jobs if they filled every single available opening tomorrow. That still leaves us with 8.5% unemployment. We are miles and miles away from creating jobs and that is very scary.
As I predicted in the Weekend Wrap-Up, Merkel won her election in Germany and the new "Pro-Business" coalition is making investors happy but Germany has some silly rule about balancing their budget so it will be a long time before you see the massive tax cuts that investors are salivating over. Also, one would think people would sober up and short the Euro if their plan is to start running the German printing presses in a US-styled Spendocracy but no action in the currency markets so far. I wrote some extensive commentary on the German situation in Member Chat so I won’t get into it again here.
This weekend, I also posed the questions "Are Fundamentals Making a Comeback," or are we just resting before the next big push to 10,000? We’ll be keeping a very close eye on our 5% rule levels next week, especially the retrace levels from the 20% run-ups since early July:
| Dow | S&P | Nasdaq | NYSE | Russell | Trans | HSI | Nikkei | FTSE | DAX | |
| Fri Close | 9,665 | 1,044 | 2,091 | 6,824 | 599 | 1,932 | 21,024 | 10,266 | 5,082 | 5,581 |
| 2.5% Up | 9,950 | 1,077 | 2,160 | 7,034 | 617 | 2,001 | 21,577 | 10,808 | 5,206 | 5,745 |
| Prev Close | 9,707 | 1,051 | 2,108 | 6,862 | 602 | 1,952 | 21,051 | 10,544 | 5,079 | 5,605 |
| 2.5% Down | 9,465 | 1,025 | 2,055 | 6,691 | 587 | 1,903 | 20,524 | 10,281 | 4,952 | 5,465 |
| July Base | 8,200 | 880 | 1,750 | 5,600 | 480 | 1,650 | 17,500 | 9,200 | 4,200 | 4,600 |
| 20% Up | 9,840 | 1,056 | 2,100 | 6,720 | 576 | 1,980 | 21,000 | 11,040 | 5,040 | 5,520 |
| Retrace | 9,512 | 1,020 | 2,030 | 6,496 | 556 | 1,914 | 20,300 | 10,672 | 4,872 | 5,336 |
We can see from the chart that only the Nikkei has blown it’s retrace level but they have also never hit their 20% level. All the other indexes have hit 20% up and the Hang Seng is in the most immediate danger of giving it back but the NYSE and Russell are playing it close to the bone while hitting the 2.5% line off Thursday’s close would put most of the indexes under the 20% mark so we are a small slip away from a very red chart.
The DAX should do…
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Wild Weekly Wrap-Up - August in Retrospect
by Phil - August 29th, 2009 8:28 am
It has been a crazy few weeks!
I went back over our Long Shots list from August 9th, thinking all our picks must be doing great but really only C, with a 67% gain, is really outperforming. Long spreads on UYG and BHI are on target for nice gains but haven’t moved much. Looking at our original picks in Pharmboys Phavorites from the same week, GSK is on track and up nicely already, our AZN cover is up 45% and MRK flew up 19% already. On the riskier Biotech side, ARIA’s stock is up 16% and our spreads are all performing well, ONTY has been flat, OGXI is up 33% and the Jan $17.50s are up a rockin’ 63% with that "cautious" spread up a surprising 75% already.
SPPI had a wild ride (as we predicted with TSCM’s failed assassination attempt) and the buy/write is already up 24%, the Feb vertical is up 50% and the naked Jan put sale is up 27% and our Feb hedge play is right on track so all good there and a fine example of how following Cramer and his lackeys and and doing the opposite of what they say can be very profitable! Congrats to Pharmboy for a very fine set of picks, proving once again that there is room for research and fundamentals - not a single loser in the bunch in a choppy market! It was very timely as I had mentioned just that week in my interview with AOL Finance that XLV was my favorite sector and our IHI pick of 8/10 is up 28% on the naked Feb $45 put sale while the Feb $45 calls have already jumped 16%. It was a great call as IHI outperformed XLV and all our major indexes.
So our energy service pick (BHI) and overall financial pick (UYG) have not done much in 3 weeks and those were our leading sectors into my call to cash out our exposed long calls on Aug 13th, ahead of expirations. The Dow was at 9,400 on that day and now, a bit more than 2 weeks later, we’ve gained another 144 points but to listen to the MSM, you would think you are missing the rally of the century the past couple of weeks. This is one of the reasons I’ve gotten a bit more cynical about the rally - there is so much hype and so little actual progress, something must be wrong.
Back on Thursday, Aug 6th,…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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