This morning the August employment report was released and it has given a nice boost to the stock market today. The private sector job growth for the month was 67,000 jobs. Analysts had been expecting the private sector job growth to be only 20,000 jobs. The unemployment rate stayed edged up to 9.6% in August.

The past few weeks has seen all kinds of important economic information whipsaw the market in both directions. We have seen weekly jobless claims reach 500,000, which hurt the market badly. We have seen impressive manufacturing numbers, which helped the market in a big way. For the individual investor, it is certainly hard to tell what to make of the recent economic numbers.

What should you do in this kind of environment with uncertainty about the state of the economy? At this point it seems the economic recovery is still continuing, albeit at an extremely slow pace. As I have said many times before, the biggest key will always be the employment market. If employers start hiring on a larger scale, the growth for the overall economy will definitely show up.

Keep in mind that often times in a recovery from such a terrible recession like the one we saw in 2008 and 2009 it takes quite a while for the growth to get back into high gear. Why is this the case? Quite frankly, everyone is a little scared to invest their money. Personal investors are worried that the same market crash could occur that happened in late 2008. Institutions and money managers are waiting for more clear signs that the economy is strengthening. At the same time, corporations are also scared to put their cash to work. This is precisely why we see so many companies with huge amounts of cash on their balance sheet today.

I think for the next few weeks and months it would be wise to take a wait and see approach to the state of the economy and the stock market. Watch the weekly jobless claims number and the important economic data closely. If you need to be invested in the market in the short-term, it would be wise to consider high dividend yielding stocks because of their relative safety.

Sales of previously owned homes fell 27.2% from June to a seasonally adjusted annual rate of 3.83 million, the National Association of Realtors said Tuesday, the lowest level since the industry group started its tally in 1999. (Source: Wall Street Journal) Job growth is going to be the key to economy recovery. Although the number of home sales went down, I don’t see any drastic reduction in home prices.

Everyone keeps talking about great bargains of $20,000 houses available in Detroit. If you are not living or working in Detroit area, what is the point of buying those houses anyway? Some may try them as investment properties. However, everyone needs affordable homes in the area where they have a job. If you are in the market for home in San Francisco bay area, you would know how difficult it is to find a decent single family house for less than $600,000. That’s not a bargain. It’s just not affordable at all for many of us.

I don’t see a dramatic fall in home prices anytime soon. The prices may stabilize in the next 12 weeks. I won’t be surprised if the prices move up a little bit next year. If you have a stable job and are able to find a decent home at a fair price, it’s a good time to buy the house especially given the low mortgage rates.

Related Link: Is it the right time to buy a house?

Is there a crash coming to Wall Street? Wall Street Journal thinks so.  When your stocks tanked to new low, you probably would think that stock prices are cheaper than justifiable prices. However, when you read stocks are priced 20-times cyclically-adjusted earnings, you are not going to like it! See the article here.

The article also cautions that too many people are too bullish. Really?! When Dow sinks every day, it doesn’t look like it.

Only thing I would agree with this article is that Job market is still in bad shape. Economy would turn around only when the job market gets the life. Things may get worse before they get better. But, a crash? I don’t think so.

A mutual fund is a great way to invest in the stock market without needing a large amount of cash to get started. A mutual fund also offers a terrific way to diversify your portfolio if you are an individual investor. Over the years mutual funds have multiplied and there are now thousands of mutual funds available for purchase. That isn’t necessarily a bad thing, but it does mean you need to do your homework before you purchase a fund.

Three Steps to Take Before Purchasing Mutual Fund Shares

1. Determine Your Objective- If you don’t know what you are looking to do with your money, there is no way to research mutual funds properly. Consider your personal financial situation and what you need this mutual fund to accomplish before you even start researching where to put your money.
2. Consider every single fee or expense that will be taken from your account-  There is a huge difference in the fee levels of mutual funds, and if you don’t find a fund with lower expenses you are really hurting yourself. Avoid funds with any kind of load, and make sure the annual expenses are less than the category averages. Remember, fees and expenses will quickly eat away from your earnings if you allow them to.
3. Mutual Fund Performance- The upside to having so many different mutual funds to choose from is that you should always be able to find a solid mutual fund that has a great track record on performance. Many investors simply look at what the fund has done in the last few months or year, but I think it is much wiser to look at the three, five, and ten year averages for mutual fund performance.

Buying a mutual fund is a good idea for most investors, but before you jump in with both feet make sure you take these three steps. These steps will help ensure that the fund you purchase is the right fit for you.

Are you keeping track of the corporate earnings results from home? If you are an invested in this market, I strongly suggest you keep a close eye on earnings reports. So far the earnings news from this quarter has been quite good. Some major companies such as UPS, Caterpillar, 3M, AT&T, Intel, and American Express have really topped analyst’s expectations quite easily.

What is most encouraging about the results thus far? The single most encouraging thing about the positive surprises this earnings season is that they are spread out among many different industries and sectors. If a company like 3M is surprising to the upside, it speaks well about several industries. Caterpillar and UPS have struggled for several quarters, so for them to be so upbeat is a welcome change for the market.

If you look closely at American Express and their earnings report, they mentioned that customer spending is almost back to pre-recession levels. As I pointed out in last week’s post, Intel was upbeat about business spending rising in a big way. This combination certainly speaks well for the long-term prospects of the recovery.

Make no mistake about it; there are plenty of obstacles yet to overcome. The unemployment rate is still extremely high and consumers and investors need to regain confidence in the economy and the market. In the short-term I think you should expect continued volatility as the economic news remains fairly mixed. Remember, this is a time of year that the stock market does not typically fare very well. August and September are notorious for being bad months for the market. In light of the fact that corporate earnings results are starting to come around, it may be prudent to start putting together a shopping list of stocks you may want to purchase in the fall after the market has discounted some high quality names.

Over the last few weeks the bulls on the stock market have been looking for a catalyst to drive the stock market higher. The hope was that earnings reports might be able to do just that, but in recent days the hopes had pretty much turned to fear that the news might be bad. As it turns out, Intel absolutely knocked the cover off the ball when it reported its second quarter earnings after the bell earlier today.

How good was this Intel quarter? The consensus estimate was for 43 cents per share, and the company raked in a hefty 51 cents per share. Maybe the most impressive number of all was Intel’s gross margin, which sat at 67% in the second quarter. In their conference call Intel said that demand was higher than expected in all areas of the world, including Europe. The company raised expectations for the current quarter and the year. Intel is now expecting its sales to set a new record this quarter of somewhere between $11.2 billion dollars and $12 billion dollars. The quarter was so good that the company CEO actually called it “the best quarter in the company’s 42 year history.”

Is Intel hitting a home run on the earnings front going to be a catalyst for the stock market going forward? In the short-term it is likely to give investors reason for optimism about the rest of the earnings season. The big question now will be whether other major technology companies like Microsoft, Dell, and Cisco are seeing the same types of good times. The fact that demand is so strong for Intel, especially on the business side, makes me wonder if the corporate world is starting to feel a little more comfortable about the economy. At the same time, it is completely plausible that technology could be in a period of outperformance and the rest of the market is still in the doldrums.

For now, Intel’s earnings report is only a start, but it sure is a great way to start the earnings season! Keep a close eye on earnings reports in the next couple weeks, because they will certainly move the markets in a big way!

The last few months, and even the last few weeks, has been packed with all kinds of stock market volatility. The Dow Jones Industrial Index has been jumping above and below the key 10,000 level on what seems like a weekly basis. Overall, the trend of late has been downward, but powerful short-term rallies have been present as well. What should you do? As an individual investor I think it is unwise to try to time the market right now. Many participants have been burned when trying to time the market. I think a much wiser solution is to try to combat the stock market volatility with consistent dividend paying stocks.

As I have said before, you must always remember that not all dividends are created equally. Some stocks have an “attractive” dividend yield simply because they have lost so much market value in recent trading. These aren’t typically the stocks that you should be looking for when trying to find a safe haven. On the other hand, some stocks have a solid dividend, typically in the range of 3%-5%, and are also consistently growing that dividend. Often you’ll find that these are companies that have a great deal of cash on the balance sheet, and are diversified nicely in their business sectors.

The simple fact of knowing that you can receive a much higher rate of return from these dividend yields than you can from any bank money market or certificate of deposit is very encouraging. Additionally, these stocks that have a history of hiking their dividend payout in all economic environment’s are much more likely to hold up than a speculative stock.

Use the current stock market volatility to learn an important lesson in the power of consistent dividend paying stocks. These are the stocks that will help you get through the tough market and build up a nice savings in the long run.

It’s been talked about for months now, but today the deal was finally reached by negotiators early this morning. The negotiation wasn’t easy and it ended up lasting through much of the night, but lawmakers finally came to a compromise and now the United States Bank Financial Reform Bill is ready to go to a vote in both the House and the Senate.

There is much debate in Washington as to whether this move was the right one to make, with democrats saying it will avert another financial disaster and republicans saying it will slow down the economy in the long run. The only thing that is definitely true at this point is that the landscape is about to change for banks in the United States. The financial industry as a whole is about go through the biggest changes in many years.

There is a delicate balance that needs to be reached where economic expansion can continue without too much regulation, but some regulation needs to be in place in order to keep Wall Street and the banks under control. Derivatives trading will be watered down quite a bit, which is probably a good thing for the safety of the economy. Many lawmakers said that the goal of the bill is to regulate areas where banks and investment firms have found that there was no regulation. These areas were used to run up record profits, but when these markets collapsed, we ended with firms that were “too big to fail.”

In the short-term it is hard to say how this will affect the stock market in the United States. It’s quite unclear as to how this will change the business of some financial firms, but the certainty that a reform bill is now set should help the overall trading pattern in financial stocks. The true test of this bill will be in the long run, when we determine whether or not adequate steps were taken to keep us out of another credit crisis like we saw two years ago.

Stocks posted their second straight week of gains, as the euro regained ground on signs the European debt crisis is being contained with both governments in the region and global banks being able to access the markets and raised debt for their financial needs. Weak economic data in the U.S. limited the upside in the market, on concern over the strength of the economic recovery.

Apple is still on fire. Apple moved to the upside as Kuafman raised its estimates and target price a day after the company announced it logged 600,000 pre-orders for its iPhone 4. Apple closed at $274.

CBOE Holdings Inc’s IPO received enthusiastic response from the crowd, it’s slightly off from its first day close. It has good potential to be as profitable as ICE when it comes to trading. I own ICE, I am waiting to buy CBOE on weakness.

Federal Reserve policy makers meet this week to discuss their target for the federal-funds rate. They are likely to keep the interest rates unchanged. Meanwhile, the growth rate of the Economic Cycle Research Institute’s weekly index of leading economic indicators has fallen into negative territory for the first time since May 2009, indicating the froth has come off the recovery, at the very least.

China surprised with a pledge to make its exchange rate more flexible, but quickly damped the idea that the move would trigger a dramatic revaluation of the yuan by saying it would make the adjustment “gradually.” Whether this is a political game or real thing, we need to wait and see.

Related Link: Searching for stability in stocks

Though it may sound like it, the title of this post isn’t meant to be a tongue twister. The stock market truly is looking for stability right now. The volatility that has occurred since the Flash Crash of May 6th has been a negative for investor confidence and what we now need is some solid footing to build a base from. The summer trading season is coming soon and that generally means lighter volumes and it can lead to increased volatility when news breaks. Right now the stock market doesn’t need a huge catalyst on the upside, rather it just needs the bad news to stop pouring in.

The oil spill in the Gulf of Mexico and the constant concerns about the European crisis and the plunge of the Euro have led to a whole lot of uncertainty about where things will go in the near-term for stocks. It hasn’t helped a bit that the jobs data and the retail sales reports have come in weaker than expected, since many have been banking on a healthy recovery in the economy. The European fears may be overdone here in the United States, but I can’t fault investors for worrying about the oil spill and the economic data.

While traders may see volatility as a great thing since they are able to make more money during these times, I am fully convinced that for the average investor stability and a nice quiet market is much healthier. You’ll find that those days with huge swings in the market tend to end up negative more often than not.

The game plan for investors should be to be ready to scoop up quality names during significant drops in the market, but don’t jump in with both feet until we see a little bit quieter action in stocks. There’s no sense trying to be a hero in this market. Play it smart and be cautious with your investments!