GO FIGURE

By Charles Payne, CEO & Principal Analyst



NEW YORK, NY

Not for nothing but what in the hell is going on with the market? There is a ton of excitement but that doesn't begin to explain the kind of action seen in the last few days. Yes, I'm speaking first and foremost about American International Group (AIG), but other names as well. It's crazy. It's also somewhat amusing too, having investors brag about making money in the stock after they've been losing in it massively for months, maybe years. But, once something gets a spark in this market it's like the movie "Field of Dreams", build a little momentum and they will come...and buy...and believe (even if they aren't sure what they are believing in). You know the old saying (and song from Billy Preston) nothing from nothing leaves nothing? Well, not for nothing, but in the stock market nothing from nothing can leave you with a lot of money in your pocket if timed right.



By the way, I've always hated that saying: not for nothing. I can only recall New Yorkers using it, but it makes no sense. Now, "go figure" I like. And, these days, I'm always saying to myself go figure, but don't waste too much time in the process. You have to suspend a fair amount of intellect.



In this kind of atmosphere behavioral analysis should play a much larger role in your trading decisions.



Technical View



1,000, 1G, or a grand are the kinds of numbers that carry a lot of weight, they always have. The number is now resistance for the S&P 500, and the last time it was resistance the inability to break through resulted in heartbreak. Back in November last year the S&P 500 made another stab at breaking through 1,000 and failed again. The pullback was swift and punishing. On the other hand, a breakout should mean the index has a clear shot to 1,300. In other words, this is the proverbial crossroads.







Economic Data



Non-Farm Payrolls



Who would have thought the day would come when calling a load of job losses "good" was acceptable. Well, that's exactly the path we are charting right now, as July non-farm payroll data was good all things considered. The U.S. economy shed 247,000 jobs in July, much better than the consensus estimate. The unemployment rate actually improved ten basis points to 9.4% from 9.5%. The return of autoworkers in the month looks to have added 28,000 jobs, but if one wants to adjust accordingly the July non-farm tally was improved versus prior months. Healthcare added a solid 20,000 jobs. If anything, hourly earnings were weak, implying a sluggish recovery is forthcoming as consumers remain cost minded.



The jobs report numbers and revision are big positive surprises, even though most Wall Street firms were lowering their expectations all week long. What I find odd is the initial reaction; I thought the market would be higher.







Apparently, the move in AIG was legitimate, and obviously the news was leaked earlier in the week. Most of the better known companies that released earnings since yesterday's close saw better-than-expected results.