Tuesday, March 2, 2010

Stuck In Neutral

By tomorrow morning's opening bell, there will be some sense of direction, and that sense is likely - based on observations from market sources - to be lower. The reason stocks may not be such good buys as of tomorrow morning is fear that Friday's non-farm payroll data for February will disappoint, and that tomorrow morning's 8:30 am ET release of ADP's private payroll figure will offer a sneak preview.

The Obama administration, rather than actually trying to mend the broken employment conditions in the US, has been resorting lately to downplaying expectations, which can only mean that Friday's numbers will be somewhere below estimates of the economy shedding 20-45,000 jobs. Some have actually suggested that the figure could fall into a range of 175-200,000 more job losses, of which the Obamanites will claim had much to do with recent snowstorms that plagued the Northeast through the month.

Well, if there's anything politicians can do well, it's disappoint, and blame it on the weather. Snowstorms, hurricanes, droughts, windy conditions do not affect a stable employment picture, and what we've got is an unstable one. Add to that the utter incompetence at the top - not only the administration, but congress as well, and there's a sure recipe for disaster.

In the meantime, investors and traders marked time in anticipation of the results. Wednesday's warm-up with the ADP report will surely shed some light; how much is unknown, though the gauge, issued at the beginning of each month two days prior to the government data, has proven highly reliable in its short life (less than a year).

Dow 10,405.98, +2.19 (0.02%)
NASDAQ 2,280.79, +7.22 (0.32%)
S&P 500 1,118.31, +2.60 (0.23%)
NYSE Compos 7,135.97, +35.22 (0.50%)

Making the tiny headline numbers appear understated, gainers outpaced losers on the day by a good spread, 4477-2023, better than 2:1. The number of new highs was once again elevated, at 624; there were only 48 new lows. Those number will change dramatically by the end of the month, more than likely in favor of new lows. Volume on the session was very strong on the NASDAQ, not so good on the NYSE.

NYSE Volume 4,788,700,000
NASDAQ Volume 2,683,460,000

Commodities are once again acting like demand is robust, though the current price regime is more about trading, seasonality and short-term profits rather than real supply-demand metrics. Oil was up $1.02, to $79.72. Gold gained $19.00, to $1,137.30, while silver shot up 59 cents, to $17.06. While pricing in the energy complex can be chalked up to seasonal conditions (doesn't fuel always go up when people drive more in the Spring?), the metals are retracing their gains from last year in a technical move that probably will end up pushing against new highs. At some point, gold investors will realize that their precious metal is in just another bubble, created by speculators and quick-buck artists. After rising for nine straight years, gold's price is reflective of two things: greed, and widespread distrust of current monetary and fiscal policies of countries using fiat currencies.

If the detractors of floating exchange rates, the Euro experiment and gobs of debt around the world are correct, the precious metals will be even more so in months and years ahead. The wild card in their calculations, however, is global deflation, which would undermine almost any asset, including gold, silver and platinum. Time will tell.

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