Quiet Day as Stocks Ramp Up Further in Advance on NFP Data

It was a very quiet, lackluster session for US stocks after yesterday's flash rally in the final hour had the desired effect of cooling off the shorts and the sellers, at least for a day. There was scarcely a peep coming out of Europe, the main culprit for increased volatility in US markets, and the upside play was enhanced when ADP released its September Employment Change report, showing job gains of 91,000 over the past month, though the number was 89,000 prior to that and the official US Labor Dept. non-farm payroll survey came up with a big, fat zero, so hope for significant job gains this month will depend on how drastically federal, state and local government jobs were slashed in September. The non-farm payroll report comes out before the markets open on Friday and estimates are in a range of gains of just 30,000 to 90,000.

Another boost to confidence was applied when the ISM Services Index fell less than expected, from 53.3 in August, to an even 53 in September. Of course even though the employment picture for private employers may be exhibiting signs of renewed hope that the US economy may avoid a recession by a hair, the report from Challenger, Gray and Christmas painted a different picture, with an increase of 211.5% in mass layoffs over last year. The planned job cuts of 115,000 were the highest reported since April 2009, at the depth of the latest recession and were 126% higher than those reported in August.

Regardless, stocks marched higher throughout the day, on strong volume. This two-day rally has to be put into perspective, however, as it began as a desperate bounce off new lows, was more than likely the work of a number of insiders and scared short sellers back into hiding, though a few more days of gains might just bring them out once again.

Everything seems to be heading for the non farm payroll report on Friday, but Thursday's weekly reading of initial unemployment claims, if they continue heading lower, as they did last week, should give stocks more lift.

The oddly-quiet nature of today's trade, when combined with the incidence of solid volume sets up an interesting trading regimen for the remainder of the week. Of course, that could all be scuttled by more negative news out of Europe, which has developed the nasty habit of showing up just in time to kill numerous rallies over the past two months.

With market reactions to every bit of news, trading stocks have become about as reliable as an old fashioned craps shoot on a Bowery back alley. Real money has retreated into cash, gold, treasuries or other hard assets, where merely holding onto what one's got has become the mantra of a new, risk-averse generation of money mavens.

This current rally is nothing but flux and fluff and, like so many before it, will probably end up in tatters before long. Deflation has reared its ugly head and won't back down until Bernanke gives in and goes for another round of quantitative easing, the worst of all possible solutions.

Dow 10,939.95, +131.24 (1.21%)
NASDAQ 2,460.51, +55.69 (2.32%)
S&P 500 1,144.04, +20.09 (1.79%)
NYSE Composite 6,843.41, +120.43 (1.79%)
NASDAQ Volume 2,457,121,250
NYSE Volume 5,855,495,000
Combined NYSE & NASDAQ Advance - Decline: 4664-1866
Combined NYSE & NASDAQ New highs - New lows: 18-138
WTI crude oil: 79.68, +4.01
Gold: 1640.70, +16.50
Silver: 30.43, +0.20