That Was The Week That Was- 1st Week February

 Last Week Started Rocky - First Trading Day of the Second Month of The Year- Right After an NFC Team beat an AFC Team in the Biggest Sporting Event in The World- a Bullish Indicator- The Stock Market Falls over 300 points! As of the 5th of Febr Dow is off over 7% for the year and could drop to the S&P 500 Index 200 day average before finding a foothold and then meandering around for another month or so. We also could have a repeat of 2012 where stocks were up and down for the entire year and then got their act together in the final quarter, ending positive for the year. Looking back- In 2013 bad news that should have had stocks pull back were ignored as the entire investment community became uber-Bullish. Jack Bogle, founder of Vanguard and  Index investing recently said before yesterday, in case of a market drop, ‘ Don’t do something, just stand there.’ Which is good enough for me. We have been waiting for a correction, which is healthy for stocks and now that we have it we have to know what to do with it. Remember to be wary when others are greedy and  be greedy when others are fearful.

Wednesday Morning Saw a Slight Pop in Tuesday’s Markets. Still most experts are calling for more pain. I’ll have reported that to those that attended my breakfast client meeting this past Saturday. Barron’s reported 2/5 more technical pressure is on stocks and Art Cashin told Bob Pisani, of CNBC, that what was needed was to get passed Tuesday’s ‘half-hearted’ bounce. Technically the markets could have problems at the S&P levels of 1765-1770. Market closed at 1755 on Tuesday. Remember need to break 1800. Could see a real reversal at 1710-1720 on the S&P.

HEADLINE:

ObamaCare Will Cost 2 million jobs! The news that the Congressional Budget Office released is not that there will be employers laying of 2 million people but workers will either take early retirement or work only part-time with the comfort of knowing that they have health insurance. Many people today work or continue to work because they need health insurance and the only way to get it is at a reasonable price is through an employer. With the Affordable Care Act people now have greater flexibility in doing what they want to do. This according to the CBO.  And in Thursday’s WSJ more men in the prime of their working life are unemployed. Globalization and technology are moving faster than men can adapt through education and training. 2/6

Markets Down- Again- Wednesday…. Several companies down more than 10% – well into correction territory. The little blue bird company fell 24% on Wednesday/Thursday. Social media stocks were hurt during and after the trading day.

Barrons.com Had a Good Piece on Options Trading in their ‘The Striking Price’ – 2/5/2014. The article was an educational piece explaining how investors could increase yield by selling ‘puts’. If you know of or hold a stock that is moribund in a tight trading range an investor could ‘sell’ puts and get a premium for that sale. If the stock is selling above the price that the put was sold the investor gets to keep the premium and if the price is below when the option expires has to buy the stock. For more information on trading options call or email me.

Thursday Markets Rallied Over 188 Points on the Dow. Earlier in the year, the WSJ reported 2/7, investors ran from stocks to bonds, according to Lipper, in the fastest clip since the financial crisis of 2008. In one week traditional bond ETFs attracted $1.2 billion. This after seeing 7 straight weeks of outflows from bonds to equities. Investors have to know you cannot time corrections. Mark Hulbert in MarketWatch.com reported 2/7 that the oldest market timing service in existence, Dow Theory, remains signaling a buy.

Preaching to Keep One’s Head While Others Lose Theirs is Often Lost in the Clatter of Investors Rushing for The Exits.  Story time…I told an investor friend, who reads the tea leaves, that I bought a chunk of XYZ on its punishing dip and he said, smugly, ‘It’s going to go lower.’ Only he doesn’t know that for sure. His charts show the stock could come back and test the number beneath the price I paid. What he doesn’t know is when. It could be later this year or five years from now. So when someone says buy something when it gets cheap you decide what price you’d like to pay. The fact that the stock could get cheaper, or not, is always a fact of life but if its something you’d like to own more of there is nothing wrong with buying it at a price you find attractive. The winners will be those investors that didn’t panic and held what they owned or bought more.

Jobs, non-farm payrolls, came in far less than expected showing weakness  that is more than the weather cooling things off. Still, there were bright spots, as construction, manufacturing, professional and business services all did better. Complaints from some owners saying that quality, experienced people were not available, were common in the construction and manufacturing sectors. (CBS news 2/7/2014).  Bloomberg reported 113,000 new jobs while the consensus called for 188,000. One of the problems is that governments kept shedding jobs. The report concluded that even after 4 1/2 years of economic growth the U.S.A. is still 1 million jobs lower than it was before the recession. and we have added more workers…

 That poor jobs report didn’t detract investors who bid Big Friday, driving stocks up across the major indices. The rally left the S&P a smidge under 1800. Art Cashin reported on CNBC that the markets had to rally from that closing number this week. Well Fargo expects the February numbers to be more volatile and the markets to be lower. Wells downgraded their annual expectation for the year while speaking on CNBC 2/7/2014.

Finally: Thanks to All Who Attended The Breakfast Meeting Last Saturday.

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com Share this blog with someone who cares about their money.

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