DJIM #48 2010

There’s no denying the jobs report was abysmal, but as alerted before the open, it may be a blessing for the market as Washington will be forced to act on Bush rates etc./ +weaker USD.  We also noted the Bernanke appearance which may offset a bomb of a report as upside risk would remain from what he could say over the weekend.  Late in Friday’s trade, some transcript was leaked and the market made a late move higher.  Importantly, one month data doesn’t make a trend and the disappointing NFP# was offset by many positive/ consistent shifts in economic data.   So, if even if you don’t believe in Santa Claus, there is the growth pickup building to believe in until a ‘trend' change is evident. 

Before the rally, noted a possible break to the upside possibility if European fears eased and if we got more eco’ drivers…”market needs to do it soon and gain some momentum as ‘important eco' data’ wind down after NFP on Friday into year end”.   Well, the market did it and it should be enough momentum as sentiment has definitely shifted last week, but the problem is a lack economic news ahead (upcoming week, we don’t have anything of substance until Thursday’s Initial Claims).  There will downside risk to this # following last weeks #(rose 26,000) and the sobering NFP for the Bears to jump on.   Also, this idleness in data leaves the market a little vulnerable to anything viewed as negative coming out of Europe/China this week.  Also, watch for more signs of the ‘cyclical’ and bond to equity trade discussed after Thursday’s trade in Journal to see if it’s continuing.   Part of this group is the Financials and there is a conference this week where the market will be looking for updates into 2011 and their earnings.  A few important China IPO’s are scheduled for early in the week.

In all, newsflow will be light and trading pretty dull until a fresh catalyst emerges.  A good start on Monday would be some M&A of significance showing confidence among corporations into ’11.