Too Much Noise...

A lot of noise hit the wire today but that didn't stop the market from closing mixed near yesterday's close. The Dow was down marginally by 27.24 points at the end of the trading day.

All the bad news hitting the wire, including the highest jobless claim number since 1982 and a string of bad earnings expectations (see economic calendar), did not stop the market from continuing its short and intermediate term neutral trend. In fact, I suspect that much of the pessimism surrounding higher unemployment numbers have already been priced in yesterday. The Dow has been trading within an extremely tight short term neutral trend since early December 2008 bounded by 9000 - 8500 points and nothing has been able to break the stalemate despite all the news all month. However, as we all know, extremely tight neutral channels don't last forever. It will breakout soon enough and with the level of support in the market so far, I would say that the upside potential is now greater than the downside potential. It could be time to take a toe dip using some hedged bullish options strategies to limit the downside risk and open up the upside potential.

It would be interesting to see how the market react to tomorrow's unemployment number and I suspect we could see some more buying into higher unemployment numbers as investors continue to speculate on peak unemployment reversal.