Stock Option Trading and the Unemployment Number

Option trading will be lucrative today. Buy stock options on the leaders; commiodities, heavy equipment, tech and biotech. This breakout to new all-time highs looks bona-fide. Well, now we know the Fed panicked. The unemployment report showed an increase of 110,000 jobs. What's more, August’s number was revised higher by 118,000 jobs. From my perspective, the half-point ease was a giant mistake. The economy is fine and credit risk simply needed time for adjustment. Yes, there were losses, but that's just part of doing business. Yes, some people overextended themselves and they bought more house than they can afford. I feel bad for those folks, but 25% of them were speculators. I'm sure there are plenty of Americans that are overextended on their credit cards as well. Will they be bailed out when the collectors come knocking? All this is done is to devalue an already weak dollar. The market now has the best of both worlds, lower interest rates and moderate economic growth. Next week kicks off earnings season and the first round of releases is pretty light. We are only a week away from major announcements and if the numbers were going to miss substantially, we would already be getting warnings. I believe earnings growth will be moderate and guidance will be cautious. This should set the table for a year and rally. I expect the market to close at a new all-time high today. For a day trade, consider retail and restaurant stocks. They have been beaten down and they are amongst the strongest groups today. Also consider tech, biotech and medical supplies. I also think the Chinese stocks are worth a look since that market has been on holiday the entire week. There is bound to be some pent-up demand when it reopens. The main point is, buy this rally.

Daily Bulletin Continues...