The aftermarket trading was down yesterday. Today, the unemployment report came out, and the numbers were poor. However, Wal-Mart made a positive statement about holiday sales, which was good enough for anyone looking for positive news. Sentiment is so negative right now that good news is guaranteed to surprise to the upside. There’s also the fact that yesterday was a low close, and people are still looking for the bottom. Don’t be surprised if the initial bounce fizzles, though. These two news items (along with yesterday’s Intel news) are going to battle it out today.

Bloomberg has the jobs story, U.S. Jobless Claims Reach Seven-Year High of 516,000:

First-time claims for U.S. unemployment insurance rose last week to the highest level since September 2001, when the economy was last in a recession, as weakening demand led companies to fire more workers.

Initial jobless claims increased by 32,000 to a larger- than-forecast 516,000 in the week ended Nov. 8, from a revised 484,000 the prior week, the Labor Department said today in Washington. The total number of people on benefit rolls jumped to the highest level since 1983.

Restrictive credit and slumping demand are causing companies to retrench by trimming payrolls and investment. Rising joblessness will further squeeze consumer spending, which accounts for more than two-thirds of the economy, and threaten a protracted downturn, economists said.

“The labor market is only reinforcing a very pessimistic picture,” Linda Barrington, a labor economist at the Conference Board, said in a Bloomberg Television interview. “When you start to see the downward pressure on wages as well as the credit crunch, that’s only going to make consumers much more nervous.”

Though the forecast was too low, I don’t know if this actually qualifies as a surprise.

Bloomberg has the Walmart story, Wal-Mart Says It’s ‘Optimistic’ About Holiday Shopping Season:

Wal-Mart Stores Inc., the world’s largest retailer, said it’s “optimistic” about the holiday shopping season even as declining consumer spending may send the U.S. to the worst recession in at least three decades.

The retailer’s outlook came as it reported today a 9.8 percent gain in third-quarter profit, beating analysts’ estimates, and lowered its earnings forecast for the year because the stronger dollar is eroding overseas revenue.

The pronouncement signals Chief Executive Officer H. Lee Scott’s strategy to emphasize lower prices is working, enabling Wal-Mart to win customers from Target Corp. and Macy’s Inc. as shoppers curb spending. Investors have rewarded Wal-Mart with a 11 percent increase this year, the only one of 30 companies in the Dow Jones Industrial Average to rise.

Wal-Mart has some pretty good management. They really tighten the thumbscrews on their suppliers, and require just-in-time shipments. This nearly eliminates any risk associated with excess inventory (think “homebuilders”). They track everything, and respond to trends as soon as they are noticed. For example, they noticed that pop tart sales skyrocket after hurricanes hit (along with the obvious bottled water sales), and responded to that trend after every hurricane since it was noticed. This makes Wal-Mart worth listening to.

That said, if holiday sales at Wal-Mart disappoint, everything will collapse.

Anyway, let the battle begin. I’ll start buying puts once (if) the market crosses up 200. I might start looking at expiration dates after March.