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Market Plays Defense

How to trade: sell bad news rumors, then buy, but buy good news rumors, then sell. Traders sold stocks going into the nonfarm payrolls number, then when it was not as bad as the worst case scenarios (240,00 reported, but 300,000 was feared) bought stocks, but not enthusiastically.

Then they bought the perceived good news ahead of the Obama presser, but sold as soon as it was over...though again on light volume.

Obama presser: President-elect Obama, in his first press conference since his election, said that he would support a second stimulus package, that he wanted more help for the automotive industry, but offered few specifics.

GM: reckoning has arrived. General Motors reported a loss twice what was expected, and made it clear it was burning through cash ($2.3 b a month) at a rate twice that of just a few months ago. With $16.2 b in cash left, and with their prior statements that they need $11 to $14 billion to keep operating, GM is out of time.

GM Continues to Fold

Standard and Poor's reflected this concern when they lowered GM's debt rating this afternoon: "Our concern is that the company may not have the liqudity to endure the economic downturn..."

As for government assistance, S&P does expect it to come, but even here "we would likely view such assistance as buying more time for GM rather than solving its fundamental business risks." GM down 25 percent this week.

Next week. We get retail sales for October, which will be down, and earnings from big retailers, like Wal-Mart, JC Penney, Kohls, Macy's, Abercrombie, and Nordstrom.

Symbol
Price
 
Change
%Change
XXICM
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JCP
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JWN
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KSS
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M
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WMT
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For the week, the major industries saw uniform declines: Dow Industrials down 4.1 percent, S&P 500 down 3.9 percent, NASDAQ down 4.3 percent. However, financials were down 8.1 percent, while consumer staples were down only 1.2 percent.

Bottom line: market displayed a decidedly defensive posture.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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