Last week we saw mixed economic reports and the market went up another 2%.

On Wednesday was the ADP report showing 189,000 new jobs. This was followed up on Friday with the unemployment report showing a net 94,000 jobs. But lets take a look at the report details. 24,000 construction jobs were lost in November along with 11,000 manufacturing jobs lost. These were replaced with 100,000 seasonal retail and temporary jobs for the Christmas season. Temporary/retail jobs simply do not pay what construction/manufacturing jobs pay. So realistically, it was a bad report..and the market went up

This last week the Bush administration announced a compromise for subprime mortgage holders who have variable rate mortgages ready to reset higher on January 1, 2008. While it sounded good on the surface, by the time they eliminate those who do not qualify, only about maximum 10% of the subprime mortgage holders qualify. 10% — and that’s the maximum. So what did the Administration really accomplish other than sugar coating a tough situation?

This is the last week before December bonuses are awarded. Probably Merrill Lynch exemplifies the absurdity of the bonus awarding process. One year ago, Merrill was trading over $100/share. It is now trading at about $60. That is a 40% drop in price. Merrill is anticipating another $4.5 billion write-down at the first of the year due to falling market valuations. Merrill just had its earnings estimates lowered. Merrill is replacing their CEO and CFO. And they are awarding their current CEO, Stanley O’Neal quite the severance package! With over 20-years of service, O’Neal leaves a wealthy man: 1.75 million in unexercised options with exercise prices ranging $39.80 - $59.85 per share, $24.8 million in accumulated benefits in his pension plan, and $50.79 million in aggregate balance in his deferred compensation plan. Not bad for crashing a company by 40%. Who loses here…hmmmm, the investor of coarse.

This coming week is full of news that could raise the Dow above the 14000 mark, just ahead of the bonuses on December 15. On Tuesday, the Feds will announce whether they will reduce interest rates again. The Market was counting on a 50 basis point reduction, but after the unemployment news, they will be lucky if they get 25 basis points. And that will be contentious. Careful trading Tuesday at 2:15pm. The Market will go wild.

Next week we will also see PPI and CPI. We already saw the Consumer Confidence report showing that consumer confidence hit an all time low. Yet the Market ignored the consumer and went up. Even if CPI is down, don’t expect the Market to go that low now. Not before December 15th. For the next week, expect to trade Long. Regardless of what the economic reports really show.

Again, for us as traders…trade the day. If the day is up, go long. If the day is down, go short. Don’t try and predict the Market, just trade what you see in front of you.