The recession is bottoming out according to economists. The market recovery has started. Raw material suppliers are getting busy and the price of energy is starting to go up again. So, what is your game plan today? Which aspect of the market recovery will be the most promising to trade? Where should you focus your attention?

The papers are full of bad news, as usual. Continuing job losses, foreclosures, and businesses closing their doors are the focus of the press. However, it appears that the recession is bottoming out.

It has to do with cash flow. As companies guard cash or credit in anticipation of a recovery they defer purchases, which hurts their suppliers and lay off staff, which hurts their employees and becomes the focus of the news. As their current and anticipated sales warrant these companies rehire workers. The stock market decline and stock market recovery always precede unemployment and rehiring. Raw material purchases will precede employment whereas the price of energy will go up when more folks are working and the job market recovery is well underway.

For trading the question is which of these companies will recover first and how well. We have talked previously about those with cash and credit weathering the recession. Those same, well managed, companies will have a jump start on the recovery. However, when will their customers start to buy?

The market recovery for those who mine and process copper to sell to China has already started. China is importing refined copper at record levels in anticipation of selling a lot of consumer electronics in the next year or so. They are buying cheap as prices are currently down.

An alternative example of a market recovery stock is Williams Sonoma, the high-end home products and cookware company. Williams Sonoma has no debt, just cash reserves. Williams Sonoma laid off ten percent of its staff recently. Sales are down but they always are mid year because Williams Sonoma makes its money over the holidays at year’s end! And, Williams Sonoma sells to folks who own stocks.

When the news of a job market recovery is just starting and the stock market recovery is well on its way Williams Sonoma will, in all likelihood, have a good 4th quarter. This is not to promote Williams Sonoma’s products but to use this well run company as an example of market recovery timing.

Companies will just start hiring by year’s end as sales increase. So employment figures will have just begun to go up. However, Williams Sonoma relies heavily on temporary help to set up for the holiday rush and will be prepared to sell. As the stock market is recovering, as it always does before the job market, folks who buy from Williams Sonoma are going to be more likely to buy this coming holiday season than last. Probably, a number of successful traders will be among their best clients.

On the other hand the vast bulk of United States consumers will not be buying high-end cookware this next holiday season and maybe not consumer electronics, just yet. Thus you may have a few months longer to wait to trade a move in consumer electronics supplies in North America. However, trading in raw materials, mining and metals processing, right now may be lucrative. Trading based upon the price of energy probably will heat up more at year’s end as manufacturing ramps up and more hiring takes place.

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