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Kaminsky's Call: 3 Factors to Help Navigate the Choppy Market

Published: Friday, 3 Sep 2010 | 8:26 AM ET

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By: Gary Kaminsky
CNBC Capital Markets Editor

There was simply too much focus on the jobs number this morning. As far as I'm concerned, expectations had already been baked in these last days of summer.

Businessman with crystal ball
Fredrik Skold | The Image Bank | Getty Images
I'm looking at three other factors that will tell us where September is headed. Consider this a back-to-school checklist. Monitor how these unfold and we'll have a fine idea for autumn's direction.

1. Volume (both stocks & high yield): We touched upon this in yesterday's K-Call. Volumes were at record lows last month and were certain signs of portfolio manager frustration. When liquidity is lacking on sells, the motivation to buy evaporates. If volumes pick up substantially when investors return from their holiday, this could trigger a mini melt-up.

2. Deal Making (more M&A, IPO Pricings): Opposite to the disappointing volume figures, we had the surprising burst in M&A activity. True, the syndicate calendar took a vacation these past couple of weeks, but overall, the surge in dealmaking is promising. Even if its not always the most successful method of deploying cash, M&A signifies corporate confidence. If this continues, the markets could lift. More successful IPO's? Even better.

Gary Kaminsky
CNBC Capital Markets Editor

3. No Earnings Warnings: There's no doubt about it August was a bad month for stocks. But if we can avoid any earnings warnings from companies toeing the line between acceptable performance and the contrary, again we can speak of melt-ups.

As everyone goes into Labor Day Weekend thinking "jobs," stash this list in your backpack instead. A three-for-three could lift stocks out of the summertime blues.

Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.

DISCLOSURE:
Gary Kaminsky does not hold any equity positions.

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