For a few hours last week, a tired feeling market finally looked ready for a correction off foreshadowed ‘technical’ and underlying market faults that had become prevalent over the past few weeks. But that didn’t really occur, what happened was only a repeat (shallow pullback) of January’s 3 day/~35 SP handle drop, including a 200+DJIA decline day followed by a complete reversal to within 4pts of February highs.
Mid -week it was about "Jobs, Jobs" and not about the so -called Greek 'massive' event risk propaganda into end of week.
The late Tuesday, ‘Ahead of the open’with the market at weeks low of SP1340 with NFP just 2 trading days away, asked, “Question now, is it better to wait on NFP#’s now or buy the dip now below broken support???. And concluded with, ...“Still, if you believe in the recovery, it's hard not get in on a ~35SP move off highs in front of the NFP# sooner than later”, which followed previous days,” The NFP# hype should bring in some buying soon. All in, if excuses and not true market drivers are cited for falls, it usually is reversed quite quickly. As has been speculated since late February, we’ve been looking for market to hold with window dressing end of Feb.month followed by a LTRO end induced pullback and,…”Last Thursday before reversal day…“In all, the expectation was for limited upside >1370SP if reached and today is likely enough for a short term 'healthy' pullback. Let’s get it over with as the market has been fatigued, divergences playing a hand….build back up to an NFP# on 03/09”.
The reasoning and importance put on the 03/09 NFP# was while all the ‘better than expected’ economic data had stalled (we use consolidating) recently, the NFP# still had a chance to be ‘ better than expected’ due to the ‘Initial claims’ hitting new cycle lows(4 wk avg.) to show recovery is still in place. Friday’s number didn’t disappoint coming in at 227k vs. 210k consensus and prior revised to 284K from 243k. The case here has been that there is sufficient accommodative actions globally and that an economic recovery is still in place. Here the belief is simply there is sufficient doses of both at this point for the market and after last week’s pullback and reversal, many more will likely believe this off the latest jobs#'s. Can the market stand on its own two feet (economic #') without massive QE ahead is the question/ debate for the longer term?
The only headwind to SP1400 is ‘technical’, which includes recent poor price performance of (ie. RUT needed to get back into 812-833 range, closed 817, >833 break leads to SP 1400. An eye on emerging markets is needed after early March declines, while European worries subside. A pretty quiet week on the economic (retail #'s Tues and a few regional surveys late in the week is all) calendar ahead should benefit the market.