Weekly Market Assessment
This morning we received the August jobs report. It came in a little lighter than expected with 169,000 jobs created compared to the consensus of 180,000 jobs. The big surprise was the drop in the labor participation rate (63.2%) which hit a low not seen since August of 1973! All of the sudden, after the market disseminated this report, the market dropped..... fast. The Dow Jones dropped 150+ points and the 10 Year Treasury Bond dropped 12 basis points off its high of 2.98% to 2.86%. This was an obvious sign that people were running for safety! Then, along comes a small comment from the G20 Economic Summit in Russia, where President Putin voiced his continued support for Syria. This comment made its way to the media outlets and the Dow Jones continued to drop until it found support at its 100 day moving average where the buyers regained control and brought the Dow back into positive territory. With all this commotion, the market had quickly forgotten about the jobs report, however it regained consciousness after realizing what Putin said was nothing new. Almost completing the trifecta with positive data from new car sales hitting a 6 year high, and a superb ISM (Institute of Supply Management) report, the less than stellar August jobs report kept this from being accomplished. In 8 days we will find out if the Federal Reserve will begin the long awaited taper. Analyst believe that the data is right, however, will the Fed give the thumbs up that the economy is ready and take away the much loved punch bowel?
From the Trading Floor to the Option Pit: A quick look at what's on the trading desk
E-Mini S&P 500 futures- Another difficult week of trying to find direction and work off my signals and market sentiment, I was able to squeeze in a small option gain of 9%.
Joy Global (JOY)- engages in the manufacture and servicing of mining equipment for the extraction of coal, copper, iron ore, oil sands, and other minerals. Last week I bought shares in JOY at $48.25 for a short term trade, today I exited the trade at $51.40 for a weekly gain of 6%. I am now looking to Caterpillar to see if this play will translate into a move similar to JOY.
Netflix (NFLX)- NFLX has an insane P/E (price to earnings ratio) of 368! I believe in the reversion to the mean and how a stock reacts when at previous levels. Its current price trades 58% above its 200 day moving average, along with all other studies showing it being overbought. NFLX traded near this level in June of 2011 before taking a huge plunge. Investors who held will feel like its time to exit to break even after 2 years of pain. I am shorting NFLX thru September $280 "PUTS", right near its 20 day moving average. Its current price is $291.57.