Jobs Report: What To Watch For Next Week…

| July 1, 2011 | 0 Comments

Here it is…

Today’s the start of the third quarter.  And that means the markets have been subjected to the ‘window dressing’ effect in recent weeks.

What’s that mean?

Mutual fund and portfolio managers use the final days of each quarter to buy into top performing stocks.  You know, the ones they didn’t have in their portfolios the past three months.

It’s a sneaky little trick many professional money managers use…

In a nutshell, they dump their biggest losers and purchase the quarter’s high flyers.  The idea is to trick investors into believing the fund owned many of the quarter’s best performing stocks.

Like it or not, it’s a common practice.  The good news is the window dressing effect usually gives the markets a boost at the end of each quarter.

Just like what happened this past week…

Last Friday I mentioned we had a great opportunity to buy select stocks at multi-month lows.  I specifically highlighted Caterpillar (CAT), Home Depot (HD), and Intel (INTC).  And as I expected, all three have all performed very nicely this week.

So what’s the plan for next week?

The markets are closed Monday for the Fourth of July.  I hope all you have a great and enjoyable holiday.  I know I’m looking forward to spending a long weekend with my family.

As far as the markets go, the holiday shortened trading week is likely to be a little choppy.  Since portfolio managers are done “dressing up” their portfolios, we’ll likely see some indecision for stocks next week.

Investors will be waiting for very important economic news…

The ADP Employment Report hits the wires on Wednesday.  Investors will be watching this report for a hint of what the Bureau of Labor and Statistics (BLS) Monthly Employment Situation report holds for Friday.

The Friday jobs number is extremely important…

Maybe you remember last month’s disappointing jobs numbers set off the “June Swoon”.  The broad markets dropped quickly on the discouraging news of May’s weak job growth.

Now June’s jobs number will set the tone for July…

So what should you do next week?

If you’re already long the market, consider holding tight through this week.  See if the basket of stocks you bought last week can get a little more upside.

But when Friday rolls around… be ready to take action.

If June’s jobs numbers are wildly disappointing, we’ll see a big sell-off in stocks… just like last month.  But if the number comes in as expected (or better than expected), the markets will likely rally to close out the week.

If we get a rally, consider adding to some of your profitable positions.  If the jobs number is a big miss, lock in your profits from last week.

Now keep in mind…

These trading plans are meant to help you decipher the markets from week to week.  If you’re a long-term investor committed to holding stocks for the long run… do just that.

But if you like taking money out of the markets on a short-term basis, knowing how to decipher important market information is an essential key to profits!

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Category: Stocks

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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