"IH ALERTS" -- by InvestmentHouse.com Editor Jon Johnson

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MARKET SUMMARY

- Jobs beat expectations, provide additional strength to the rally.
- As DJ30 knocks on the door, NASDAQ, SP600 kick the son of a (expletive) in and break to post-bear market highs.
- There are no doubt more jobs, but just how many and what quality? A look into the manipulation of the internal numbers providing the results.
- January ISM shows strong employment gains in the midst of a banking layoff binge.
- Factory orders quietly slip in December, matching the decline in other data, but no one cares as all eyes are on the lagging jobs data.
- Iran preparing a 6,000 mile range 'Great Satan' missile. No, we don't need a missile defense system in the 'modern' era of terrorist warfare.
- More upside or time for a test? At least the indices are dealing more from a position of strength.

Jobs send the indices on a further run with no signs of any selling into the news.

I am starting with the NASDAQ as my initial chart, and you probably know why. Unlike SP500 that was bumping up against the February highs, and unlike the DJ30 that was trying to get through its prior bear-market high but failed, NASDAQ and the SP600 borrowed an old expression from Bum Phillips, the coach of the former Houston Oilers. After a tough loss to arch rival Pittsburgh in an AFC Championship game, Coach Phillips made the famous statement, "Last year we knocked on the door, this year we beat on the door, and next year we're gonna kick the son of a [blank] in." While the Dow was knocking on the door over the past two weeks, NASDAQ and the SP600 took control of the market. They took leadership in the market and they kicked the son of a [blank] in.

Of course it was the jobs report that fueled the action. The market had already risen substantially, and when jobs and unemployment both came in better than expected, stocks gapped to the upside and ran higher. There was no sign of selling on the day. Stocks started higher, quickly ran to the upside, and then slowly bled higher into lunch. After that it was more of a holding position for the back half of the day. All afternoon stocks traded in a narrow range, but they never gave up ground. There was no inclination to sell. Even after the run to this point and breaking through resistance, the sellers were not to be found. We did do some selling. There were some stocks that did not participate. There were some stocks that have earnings coming up, and we used the nice pop in the market and the increase in volatility to take some gain in options.

Overall it was just some position maintenance. We let our stocks run because they are running well. We did not want to get in front of the move, particularly when no one really wanted to sell. Perhaps it is all about the jobs and the belief that the economy has turned the corner and is going to improve. Jobs are lagging, however, and we have seen slowdowns in the economic data across the board over the past month-and-a-half to two months. We even saw more of that on Friday with the Factory Orders, but that was just ignored. There is no reason to worry about downers when you have jobs going. But jobs lag and the other data leads. It is softening. It has not turned over, but we have to keep an eye on it in the future.

On Friday that was not the question. It was nirvana. Jobs were up, things were looking good, and we would probably have another "recovery summer" as Tim Giethner put it on the day when he addressed some issues with respect to the economy and the dollar. Without a doubt, the markets liked the news and closed up.

SP500, +1.5%; NASDAQ +1.6%; Dow, +1.25%; SP600, +2.1%; SOX, +1.8%

Very solid gains pushing the indices to the highs, beyond the highs, and leaving them in a position of strength if there is going to be a test. Yes, the indices look overbought a bit, but as we have often seen, they can be overbought for a long period of time before they ever decide to come back. If the market will go up, we will go up with it. That is why we were not getting in front of the move. We were letting a lot of our positions run and build up some great profits. If we need to take them next week, we will. But right now we were not going to get out, break off this run, and be the sacrificial lamb so others could make money.

We took positions when times may not have been so clear-cut and wonderful. Stocks were saying "buy us" at this interim bottom when they were forming their rounded bottoms. They looked like they were going to break up while the market was still trying to come back to the downside. Well, you buy when stocks say "buy me," regardless of what your guts are saying. They are probably saying "Do not even look; I am getting sick." If you have to, keep the Pepto-Bismol buy your desk and buy when your head tells you to move in. Then you can enjoy these kinds of runs - these runs that even extended beyond what our thesis was.

Remember, we were expecting a run up toward these highs, no doubt. We were not expecting them to take them out. That does not mean they will hold the gains. It does not mean they will not reverse and sell off. But we will not step in front of it. If we think we are smarter and start picking tops and bottoms, that is when we end up missing out on the moves.

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Here's a Trade from the "IH Alerts" and our current analysis.

Chart by StockCharts.com

GLD (Gold ETF--$167.64; -3.41; optionable)
After Hours: $167.55
STATUS: Test BO. GLD put in quite the January tear higher, and as it takes a breather early in February we want to be ready to jump in if we see the chance. Given more time to develop, the correction off the August/September highs through December forms a rough, larger ABCD correction to the 61% Fibonacci retracement of the 2011 bounce. With the little double bottom in December GLD put in the D point, and after breaking higher through the first part of 2012 it is taking a test for an entry point. With our current entry point we can buy it on the pivot higher that holds, looking for a bounce to just under the prior peak (in September) as our initial target. That is a natural target off the 61% retracement. However, GLD could very well continue this pullback another session or so. If that is the case, we will adjust our entry as it tests to either the November lows/December gap (163ish), or the 20 day EMA (164ish). A bounce off any of these levels is good for an entry.
CHART VIDEO
Volume: 23.363M Avg Volume: 12.844M
BUY POINT: $168.56 Volume=19M Target=$182.88 Stop=$166.21
POSITION: GLD 12F167.00 - June $167c (55 delta) &/or Stock