Playing the Employment Report Friday – 5 Longs and 5 Shorts.  Also, A way to play the Russian Wheat export restrictions.

Tomorrow at 8:30 a.m. the government will release the headline unemployment number.  Analysts expect the number to come in up one-tenth of a percent at 9.6% and a loss of 70,000 jobs.  If the number jumps to 9.7% or the job loss number is above 150,000, the market will most likely drop.  If the market is going lower you can make money getting short the following stocks;

Simon Property Group (SPG) – Real estate is married to the unemployment market these days and SPG has run up from the mid 77 to the mid 93 in the last month.  Today the ProShares Ultra Real Estate ETF (URE) got hit and was one of the weakest ETF’s.  You could short this ETF or simply buy the ProShares Ultra Short Real Estate ETF (SRS).  No jobs equals lower real estate prices.

Research in Motion Ltd. (RIMM) – The chart looks very weak and they have got a lot of bad press lately about Middle Eastern governments banning their Blackberry smart phone functions.  While I think RIMM will correct this problem, this stock is weak and a good short term play if the overall market is weak tomorrow.

H&R Block Inc. (HRB) – Weak chart and it is a long way to their big annual payday at tax time next April.

J.C. Penney Inc. (JCP) – Analysts expected J.C. Penney same store sales to rise by 3.4% today and they fell 0.6%.  The stock has got hit this week on the economic retail sales reports and today added fuel to the fire with their own sales release AND they have a weak chart.

VEECO Instruments Inc. (VECO) – The stock got hit today on reports that flat screen TV makers are cutting back on their orders to the LED sector.  The chart is weak and has a good 3 more points to drop before hitting its 200 day exponential moving average (EMA).

 

If the Employment report comes in strong and the unemployment rate stays at 9.5% the market could rise as the worry of a bad report recedes. The following stocks are well positioned to rise should a good report provide a tailwind;

Netflix Inc. (NFLX) – This is a great fundamental stock that got hit recently on their earnings report.  The stock dropped from $119 to below $96 and has since bounced back up to $110.53.  Today the stock broke above its 50 day EMA and has more room to run higher.  If you are a Facebook friend of mine you got the update to wait to buy this at $100 as the stock was dropping from $119.  The stock only closed below $100 one day so I hit that one pretty solid.  I think with a positive market tailwind, this stock hits $120 easy.

Consolidated Edison Inc. (ED) – This stock closed at a 52 week high today and is positioned to go higher.  The stock is carrying a 5% dividend and if you do not have any dividend stocks in your portfolio this is a solid company to own.

Fiserve Inc. (FISV) – This stock has one of my favorite patterns; a Pennant.  This stock trades above $51 and it is a buy, buy, buy.  A pennant pattern is a measuring pattern (for more on Flags and Pennants go to www.StockTradingCards.com) and this pennant is targeting $56.15 or up 10.3%.

Merck & Co. Inc. (MRK) – This stock trades above $35.35 and it’s a buy and a break above its 50 EMA.

 

Cramer did a segment on his show about Agricultural stocks and the recent ban on wheat exports by Russia.  A heat wave has crippled Russia’s wheat production and wheat has spiked to a 23 month high on the export ban.  Also, Cramer cited China having to import a large percentage of their soybean stock.  As a result Cramer likes DuPont (DD), Monsanto (MON), Deere and Co. (DE) and Potash (POT) as Ag plays.  Cramer also mentioned Bunge (BG). 

While these all may be good plays, if you want to play the ‘soft’ commodities straight up you can buy the PowerShares DB Agricultural Fund (DBA).  Here is a short description of this ETF;

“The index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities; corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector.”

 

On Tuesday in my Wall Street Wrap, I mentioned the GAO’s report on their probe into the for-profit educational industry.  This investigation uncovered a variety of bad practices and since the stocks in this area have been getting hit.  Apollo Group Inc. (APOL) and ITT Educational Services (ESI) are hitting 52 week lows or close to it.  In a weak market resulting from a bad employment number tomorrow these stocks should go lower.

Thursday, August 5, 2010 - 7:15 p.m.