Chris Lau - Seeking Alpha

Monday, November 10, 2008

Job Losses a Concern

Personal Notes:
I briefly celebrating a top-5 position with an "elite" ranking on FSX Player, a stock trading game on Facebook, before falling to 8th for the week. I strongly recommend that even seasoned, experienced investors join the trading game. Investors may test trading strategies without real-world losses.

Now on to the Negativity:
The U.S. reported unemployment rose to 6.5%. The total job loss for 2008 is now 1.2 million. Both GM and Ford reported very poor results, and announced intentions to layoff staff. The theme for the economy remains unchanged. This ongoing theme might be hidden amongst all the headlines about bailouts and stimulus packages from other global nations.

The economic theme is as follows:
  • The automobile market is experiencing a "depression-era" economic downturn, precipitated by but suffering more than the housing sector
  • The financial sector will benefit from loosening liquidity in borrowing
  • Housing is severely weak in the U.S. and its problems are only slowly showing up in other nations (Canada, Europe, China)
The unemployment report needs to be assessed. Growing job losses is now only beginning to feed into the consumer sector. I had already noted that semi-conductor/IT companies warned on weaker revenue last month. This leading indicator makes it no surprise that consumers will spend far less in the months ahead. Christmas is only one month away, but consumers have already been cutting back.

At this time, day traders would benefit most from a market moving in no particular direction. I continue to monitor and search for longer-term plays, as I prefer to hold a few quality companies/ETFs that will make money over an extended period of time.

Investor interested in products/sites I promote, or for my research report should email me at chrispycrunch [at] gmail [dot] com.

A Long Idea: Activision

Activision is displaying a technical signal. A rally to $14US is possible. The stock is trading relatively stronger to the S&P500 (not shown). Fundamentally, the company has a very good basket of products that will appeal to the consumer. The product success and mix is important for the company, because weakness in consumer spending in the next few months is expected.