A Return to Rational Fridays?
In many ways the market has been acting irrational these last few months, but in order to prove me wrong the market almost acted rational today. The poor jobs report did for some reason provide a bounce at the beginning of the day so my prediction was partially correct. However, it was the absolutely terrible report and the revisions to the previous months were nothing less than stunning! As the day has continued on the market correctly identified the jobs report as bearish and has now lost about 2%. If you sold on the rally this morning, as I did, the jobs report Friday theory worked. Regardless, WFC was not the way to play the market these last few days, that was a bad assumption.
Update on the Bullish Case for Friday
Part of my theory on jobs reports and the stock market came true today and part of my way to benefit was wrong. The ADP report suggested that 697,000 jobs were lost in February which is a staggering amount… but the stock market was up convincingly. My individual play of WFC however failed miserably. Not due to the jobs report so much as they were put on the ratings downgrade watch by some of the ratings agencies. The whole financial sector was weak today in contrast to the market as a whole which was up across the board.
A Bullish Case for Friday!
Call me crazy, but with the jobs reports as bad as they are, you would think that the markets would be cringing every time that they are released. It is also safe to say that there have been no upside surprises, so why has jobs report Friday been the safest trade since the 3rd of October. That’s right, the last time that the S&P 500 finished lower on a jobs report Friday was the 3rd of October, 2008. I am not necessarily advocating going out and getting ultra long the S&P, but if you think there is a bear market rally coming, why not chose Friday as the launching point. One of the stocks I particularly like is Wells Fargo, they have a huge new short interest that I think are late to the game and will want to get out at the earliest sign of a rally. So this Friday watch the markets with the jobs report, I would love to see what would happen if we had a positive surprise in the jobs numbers, it could be one of the messiest upside days in the history of the market.