Today’s job report is a sobering reminder of the fact that we’re not growing fast enough. None of this is new news, and hasn’t stopped the markets in years past from soaring higher. Corporate profits were robust enough to keep us going higher, but how good are they now? We clearly see the situation in Europe is falling apart even quicker, and China is now joining in this shit storm. In spite of all that bad news the bulls have stepped up to the plate in the last few sessions buying up every dip. Make no mistake, if you’re bearish you have to be scared by the exuding confidence the bulls are displaying by the continued buying. There are many trying to give excuses for why this might be; maybe it’s QE3? LTRO again? who cares, fact is they are stepping up, but for how long?
It has become almost standard now to BFTD on any breakdown that you have to be cautious as the market is good at turning on a dime. Even though the hopes of QE3 can bid this market higher, if your individual stock has being killed by multinational exposure it won’t matter. Consult a NKE chart about how it feels about QE3, I don’t think it gives a shit. The flipside though this market is very tricky to short as well so what can you do? I’m looking for pair trades. Shorting very weak companies and buying long positions into names that will have good chance of decent earnings. This way if the market breaks down, the short positions should give you plenty of gains. The long position, if a company of any value (say, AAPL?) dip buyers will probably step up and pick the name at a discount.
Pair trades for this week: SHORT BAC, LONG AAPL
All of this is still leaving me with a bad feeling..