Premarket 8/5/05: Goldilocks is Schvitzing

Goldilocks ate from the porridge and burned the roof of her mouth a bit this morning. The nonfarm payroll number was a little stronger than expected but more importantly the payroll component was HOT. In a market where sentiment seems to have turned bearish in the last couple of days, any excuse is all it would take for the Bears to start getting aggressive. Remember, the tail usually wags the dog in the stock market. It's not the news that sparks movement in the market but often it is the markets inclination to move in a direction and search for confirming news.

We however, were pleased to see the strong economic report this morning which is aligned with our thesis of strong growth. The slightly hotter than expected payroll component which emboldens the Federal Reserve hawks is most likely a minor gyration in the overall scheme. As long as productivity continues to be robust we will not concern ourselves with minor blips in wage inflation. There definitely seems to be stronger underlying growth in the economy than expected. As long as inflation does not get out of hand the upside surprises in earnings should eventually more than offset market inflation concerns.

Since we correctly predicted that the market was in a growling mood, we will sit back with our strong cash position and let our favorite names come to us. Our long-term thesis is still very bullish but our short-term tactical position is still bearish.

-Good Trading-

___________________________________________________
The analysis, opinions and/or forecasts expressed on the Kcap Trading Blog (“KTB”) are for informational purposes only and should not be relied upon in making investment decisions. By using this site you agree that Kleiner Capital Management, LLC (“KCAP”) and its principals are not liable for any action you take or any decision you make in reliance on any content. Please be aware that there is no commitment by KCAP to update the KTB. Furthermore, there may be inconsistent timing and follow up (if any) of posts.
None of the information on KTB is considered individualized investment advice and should not be construed as a recommendation or solicitation to purchase any securities. Reliance on information provided on KTB in no way establishes an advisor-client relationship. Investors are encouraged to seek the advice of a qualified investment professional prior to investing funds.
Clients of KCAP, as well as the firm’s principals and other employees, may be invested in securities discussed at KTB. However, any mention of said securities is not intended to influence market conditions for the security to the benefit of KCAP clients and/or principals and employees. KCAP is not affiliated with any advertisers on this site and does not endorse any of their content. For additional information and disclosures, please visit www.kleinercapital.com.
The information on KTB has been furnished from sources we consider to be reliable, but no guarantee is made with respect to accuracy.
___________________________

Click Here To E-mail Comments