David Ristau's  Instablog

Ah unemployment claims. The fact that the market is rallying today proves what I have grown accustomed to at this point...the market has no fundamentals in it whatsoever.

Let's look, unemployment is starting to rise again, but we are...raising stock prices. I know that its just a small gain, but its a gain. If more people are losing jobs, less consumers, less $ to spend, worse for retail, less demand for oil and gas, less demand for services, etc. etc.

I can't comprehend why some traders find this information in any way a reason to buy. I mean for daytrading maybe you can buy, but in the long run, how can we increase on worse than expected data. We rose on slightly better worse than worse before. Now, we are rising on worse than slightly better worse. What?

I don't get it.

David Ristau
President, The Oxen Group
Editor, The Oxen Report

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The retail sales unexpectedly fell. I am not surprised at all by this, and the estimates were way too high. What is some of the data we have seen that should have signalled this.

Savings rates continue to increase. Average salary has decreased for the American worker. Continuing rise in unemployment. Lack of government stimulus besides Cash for Clunkers. Weak revenue on retail earnings released.

I think that while its negative, it is not all bad. July is a slow month in retail, but people way too much faith in Cash for Clunkers to somehow transform every sector of retail, and it just did not happen.

While this data is weak, I think it is what should have been expected. Once again, however, analysts get all excited about unemployment numbers and the success of cash for clunkers and pump the #s only to be disappointed. But I will say, we are on the right track. To think that unemployment is near 10% and salaries are down, and we only see retail decline 0.1% from last year...crazy awesome.

Its really a hidden bullish signal, but the market should take it down.

Longterm - Great for the market and health of economy.
Shortterm - See you in the red.

David Ristau
President, The Oxen Group
Editor, The Oxen Report

The trade deficit made a large move and gapped up. We saw a rise in imports at 0.1%. This is great news because a rise in imports, even if it is just 0.1% because it shows a return of normal buying patterns of the consumer, which is crucial to the market's strength. You can say what you want about Fed commentary, deficits, and other government data, but when the consumer returns to normal buying patterns, the economy is pumping again.

I look at this as some of the greatest news we have seen in awhile. The recession was started by financials and housing, but it will be led out by you and me buying goods, importing goods, and exporting goods.

Exports rose 2%, as well. This news also shows a healthy global economy, and it is strong news for American manufacturers. Global consumers will help us get out of this recession, as well. Rise in exports means the European and Asian consumer is ready to buy, as well.

More exports and more imports means we are seeing better things across the world, which is positive for everyone.

If you aren't bullish on this, then you are just being a bear to be a bear.

David Ristau
President, The Oxen Group
Editor, The Oxen Report
www.philstockworld.com/author/david_ristau/

Today is the day before GM and eBay begin to sell products together. Is it a good thing or a bad thing? Like most opportunities, it is a double edged sword. Here are some of the positives:

1. Gives GM a number of new ways to market their cars, which is good for sales...it would seem.

2. Allows people to buy cars at a price they want versus having to hope to negotiate with auto dealers, as well as, being able to buy out of the comfort of their own home.

3. The situation is at least something different for a company that has not taken a bold step in a long time.

There are a number of major issues I foresee, though:

1. Can GM actually end up losing money on this if people have the opportunity to bid and demand prices things too low? The company has little power here. What will be the starting prices? MSRP or lower? I can see this becoming a situation where GM suddenly realizes no one wants to pay MSRP for their products, and GM is left with their mouths agape saying ... um...

2. Is EBAY secure? I have an account and its ridiculous with what buyers can get away. What types of power does the buyer have? If they get the car and don't like it can they just complain like any other product and then get  a refund. How will this work? Buyers can complain about a book having a small tear on a page and get a full refund. This should be interesting

3. The main issue, however, I see is in the long run. Imagine it is successful - does this undercut the entire dealership? Is this just a ploy to save money at the expense of the dealer? Is this just another way the car companies are looking to save money to eliminate the workforce?

I think these are some major issues that auto dealers, the American public, etc. should be considering with this plan.

Disclosure: I have no positions in GM or EBAY.

David Ristau

President, The Oxen Group
Editor, The Oxen Picks Report

How about AIG?

Crazy. Crazy.

So, what is happening? Here is my take. We had some good news on Monday with the CEO coming out, and the company is starting to price in earnings. But that wouldn't be more than at top 4-5% on a normal stock. Well, enter the big guns...With this good news and the earnings coming up, we see a lot of big sellers start to cover shorts, which sets an upward swing.Then, that makes more and more short squeezes occur. At this point, the little guy starts to buy up on small 2-3% upward movements and sells off, pushing it even higher. The stock is sooooooo underbought for so long  that this movement and process that should happen over several months, is happening all at once.

My take.

David Ristau
President, The Oxen Group
Oxen Newsletter Editor, Phil's Stock World
www.philstockworld.com/author/david_ristau/