Jobs number

August payrolls fell 4K, first drop in 4 years. Market expected an increase of 112K. And July's number was revised down from 92K to 68K, and the most surprise of all, I kid you not, was the June's number was revised down from 126K to 69K. Nasdaq and Dow were off 1.9% and S&P 1.7% to 1453.

1. Most traders were expecting a rally after weaker jobs number, but not this weak! If we revise the number down again next month, we can have another 100K less job than we thought, I hope not.
2. If you add these three months numbers together, we have 200,000 less jobs than the market expected in three months. We have every indication that this economy is heading to a recession.
3. Hank Paulson said he was not surprised and was confident strong growth in the later of the year, wow! Nice spin.
4. I think the reason we don't have a panic sell off is the rate cut. Traders think we may get 50 basis points rather than 25 basis points rate cut on Sept.18th.
5. Like I said yesterday, the rate cuts won't make a difference in terms of asset bubble and major economic cycle.
6. We should see August low before Sept.18th, barring a surprise Fed cut next week, which I think is highly unlikely, since that shows Fed is panic and rescues a market still within 6% of all time high.
7. This week I did pretty well by holding these losing put positions, knowing it's likely to have a down day like today soon. Mental toughness is very important! My problem is too early, this is another area I need to improve.
8. Good thing I added puts on Wednesday, which lowered the average of my cost.

Next:

1. My first target is 1420-1430 area, then 1400, and then 1380. I think 1380 is a very likely September target.
2. If the market drop too fast, I'll consider take some puts off the table.
3. I won't be surprised the market sell off hard if we only have a 25 basis points cut on Sept.18th.
4. We have a 20% drop from high in 1998 and 36% drop from high in 1987. And some considers today's condition is worse than 1998, so don't be surprised we have another 15% to go on the down side.
5. If we do have a 20% correction, S&P500 will be at 1250; and 30% drop S&P 500 will be at 1090.
6. On the other hand, the market can make sideways and push higher if the economy is indeed strong and all the issues are turned out to OK, which I think the probability is less than 10%.