Back on January 11th we penned a piece called ‘Fundamentals of a Market Correction’, in which we recommended shares of Genworth Financial (NYSE:GNW), then trading at $13.10, along with the corresponding sale of her February 14 call options.  We expected the total take on the trade to be 11.37% in thirty days were the stock to be assigned.

And so it was upon expiry last Friday.  GNW shares traded higher than even we expected, closing at $15.35.

Because we spoke again two weeks ago regarding re-establishing a position in Genworth, we received a number of emails inquiring to that end over the weekend.  We responded in the negative at this juncture, for two reasons: 1) the calls aren’t nearly as rich as they were when the original trade was set, and 2) the stock has already seen a significant boost, hitting new highs as late as last Thursday.  To our eyes, it appears as if the risk/reward for the trade is decidedly not as favourable as it was back after New Year’s.

Take a quick look at Genworth here:

Genworth looks bullish but a little tired here.  We suspect it may take a…

We are not ambulance chasers.

We must concede, however, that when the media worrywagon is in full blare, we relish the opportunity to take an investment position.  One of the greatest investors in history, the British Baron Rothschild, put it best. Amidst the panic of 1871 he declared, “Buy when there is blood in the streets.”

Our focus today is somewhat to the east of the French capital. On the other end of the European continent, there has been a great gnashing of teeth of late regarding the Greek government’s ability to service its national debt.

Just look at the New York Times:

“Europe Weighs Possibility of Debt Default in Greece”

and

“Is Greece’s Debt Trashing the Euro?”

The mostly sober Wall Street Journal led last week with:

“Fears Rise of Euro Government Default”

And here’s the ever-conservative Forbes magazine’s take on the issue:

“Greece Leads World Stocks Down as Doubts Resurface”

All told, there’s a good measure of anxiety over the situation, and it may be more than just partially responsible for the recent pullback we’ve seen in the broad stock market indexes.

Here’s the S&P 500 for the last three months.  Note the coincidence…

A very interesting development is occurring in the market, and although signs of it first appeared some time ago, they revealed themselves with even sharper clarity this last Friday.  This is a development that we have alluded to several times in this space and that we have come to feel even more strongly about it with as it has come into maturity.

Last Friday, we witnessed the power and the speed with which the U.S. dollar can rise when economic conditions turn favorable.  In this case, a jobs report released by Washington revealed two important trends: a slow down in the number of jobless claims filed (we’re still losing jobs, but at a slower rate) and an improvement in the headline unemployment number.  Pictorially, it looks like this:

A mere 11,000 souls filed for first-time jobless claims, and the trend appears to have flattened.  The report also showed the unemployment rate declining to 10% (not on the chart).  Most were expecting no improvement from the previous month’s level of 10.2% – a 26-year high.

For those of us who read statistics for a living, there’s no reason to suspect the next few months won’t bring both positive job…