You need to try to make money from everything that is thrown at you. Today you have to try to make money from the nonfarm payrolls report, which first sent the market down and then, upon further review, made it roar back to life.
How do you play something that's as dry and convoluted as the Labor department's release? Simple. You look for outsized gains in certain segments of the report and you extrapolate.
Which ones showed truly standout growth?
First construction. The economy added 37,000 construction jobs in March, with the heaviest concentration in residential specialty trade.
Second, retail. This segment added 48,000 jobs. The biggest gains besides general merchandise? Ten thousand new jobs in building materials and garden supply stores.
Bingo. You have your pay off: Home Depot (HD). It dovetails perfectly into the release. Now we know Home Depot said it was hiring more than 80,000 people for the spring selling season, to ensure that its 2,000 stores are staffed. So, profit point number one is HD, which is, not coincidentally, breaking out here.
Second? Lumber, appliances and tools. Which are huge sellers? Weyerhaeuser (WY), Whirlpool (WHR). WHR got a big number bump today from Bank of America Merrill Lynch on strong sales and a strengthening real -- the beleaguered Brazilian currency that rallied hard this past week, perhaps in reaction to a "throw the bums out" political groundswell.
Then there is Action Alerts PLUS holding, Stanley Black & Decker (SWK), which is THE tool play. It's been so strong that we had to trim it back in the portfolio just to rightsize the position.
Other takeaways? Employment in health care increased by 37,000, with ambulatory health care services and hospitals doing the hiring. Think AMN Healthcare (AHS), the staffing service for those jobs, and the fabulous Susan Salka, CEO of the company. It's three points off its high, and I bet it breaks out.
Finally, the release states "employment continued to trend up in food services and drinking places." If that's the case, go with Sysco (SYY), the food supplier, and Darden Restaurants (DRI). Darden reports next week, and I think will have another excellent quarter.
You do the homework on the companies, you get the release, you know the profit points. That's how calculated risk plays out -- and that's how money can be made.