Are todays job numbers a sign I should be short this market?
Can anyone give me a reason why I should not be short the Stock Market?
Best Answer
4075 points
EthanR answered 2 years ago …
Dragonsbane, I won't shoot down your reasons, but I do stand by my first week of January as a portender of the year to come. However, it turns out that we are both right!
"According to the January Barometer theory, January monthly performance sets the direction for the year. Some have taken this a step further by suggesting that the first trading week of the year predicts the year’s performance, particularly for rising markets. Before accepting this premise on the heels of a good showing during the first week, let’s consider the current market conditions." http://www.thestockgroup.com/etf/20060109/index.htm
I also found this quote, and the link to it:
"In the first week of this year however, the S&P 500 actually fell 2.1%, a rather odd event. In a single week not only were nearly a third of the election rally’s gains stripped away, but the stock-market performance in the first week of the year is considered to be a key metric for one variation of the popular January Effect. As goes the first week, so goes the year per this particular barometer."
http://www.zealllc.com/2005/nofear2.htm
Answers
4075 points
EthanR answered 2 years ago …
I agree, John. I am feeling very bearish at the moment. See my question "will the Dow hold support at 12,800"? from the other day. I think it closed around that level today, so the early part of next week could be quite significant. You might want to take a small position in a shorting ETF, either the QID or the DOG, and add to it if the market continues to move southward. Isn't there an old saying on Wall Street that the first week of January portends the market's direction for the year?
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825 points
Dragonsbane answered 2 years ago …
I believe the saying is the first month of the year tends to be representative of the year as a whole.
As for the jobs number, I would say yes, but I would have said yes without the jobs number, so I guess you could say my opinion is "biased". I can also give you a number of reasons not to be short the market though I'm not a big fan of any of them.
1. It is extremely difficult to successfully "time" the market in the short term.
2. Many professionals have been broken, betting against the US consumer.
3. All short positions involve a limited reward (100%) with far more risk (markets can rise nearly infinitely).
4. The market may have "decoupled" and China, Latin America or Europe could pick up the slack of the US slowdown allowing World GDP to continue to grow.
Those are just a few reasons... feel free to shoot them down.
3943 points
MNSL answered one year ago …
It is very risky to short market during unpredictable market environment. Even professionals have failed in this practice. If you are 100% sure you can short. However I still believe markets will bounce back no sooner current situation change to better. At least this great bull market will last for another two years. Rather than shorting I will buy undervalued stocks exposure to countries like China and Indonesia. Also it is better to buy soft commodity stocks which are not appreciated yet. There are companies in UK New Zealand and some other countries have their assets such as soft commodities, animal production in countries like Indonesia, China, and South America etc. In addition to some soft agriculture stocks there will be opportunity to invest in financial stocks with strong balance sheet through out the world. These are great opportunities in the final stage of this great bull market.
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