All Eyes on Non-Farm Payrolls, But ECB and FOMC Hold More Intrigue for Stocks

Following Wednesday's low-volume advances (lowest of the year), stocks followed a similar pattern in Thursday's trading regimen, slumping at the open, only to rise through the day and close modestly green.

While the talking heads on Bloomberg and CNBC are hyperventilating over the February non-farm payroll report due out tomorrow morning, the true market-moving events concern central banks and they don't occur until next week and the following, beginning with the ECB policy announcement on March 10, and the FOMC meeting March 15-16.

After ADP's February private sector number coming in at 214,000 Wednesday morning, the market is expecting something in that range from the BLS, with consensus just a shade below 200,000.

Whatever the number, it should weigh on any rate decision the Fed has planned or is considering. Another 25 basis point hike in the federal funds rate at this meeting has been largely discounted by the market, meaning, that if the Fed stands pat on rates, then it is tacit understanding that their goal of four more hikes by the end of the year is very much being scrapped.

There are simply too many negative forces pulling at the Fed for them to do another rate hike. Everything from the fragile US economy to the cratering Yuan and Chinese GDP growth to the nut-case presidential primaries are under consideration by the most politically-motivated central bank in the known universe.

That is to say nothing of the 1500-point hissy fit thrown by the DJIA after the most recent rate increase, in December of last year.

Stocks continue to keep to the script here, with the S&P within hailing distance of 2000, and the Dow closing in fast on 17,000. Both are admirable short-term goals, but they will hardly prove to be persistent. Stocks are becoming severely overbought and overvalued, and charts show all kinds of evidence that the bull run from 2009 has ended. Besides, there's growing fears of a recession looming, especially after the poor performance not only of the past two quarters, but of the general seven-year-long recovery.

The key level is 17,200 for the Dow, a point at which there is a significant patch of heavily-fortified resistance.

The Bureau of Labor Statistics (BLS) will release the February non-farm payroll report at 8:30 am ET, Friday.

S&P 500: 1,993.40, +6.95 (0.35%)
Dow: 16,943.90, +44.58 (0.26%)
NASDAQ: 4,707.42, +4.00 (0.09%)

Crude Oil 34.60 -0.17% Gold 1,262.10 +1.63% EUR/USD 1.0963 +0.89% 10-Yr Bond 1.83 -0.97% Corn 355.50 -0.21% Copper 2.21 +1.26% Silver 15.23 +1.38% Natural Gas 1.64 -2.09% Russell 2000 1,076.05 +0.97% VIX 16.70 -2.28% BATS 1000 20,677.17 0.00% GBP/USD 1.4178 +0.71% USD/JPY 113.65

Market Steady Ahead of NFP; ADP Reports Jobs Creation Strong

The snapback rally in stocks off the January lows cannot be understated, nor can it be stopped. There are simply not enough reasons to not own stocks, being that commodities have been decimated, bonds are beyond the reach or intellect of ordinary investors, and the fact that most of the investment advisors and fund managers of the world are reaching for yield, putting stocks first, to the detriment of everything and anything else.

But, today was a day for repositioning, after ADP got the party started by reporting that private employers added 214,000 jobs in February. [Full report here]

Stocks initially had the blues, trading in the red for most of the morning, until European markets closed, then quickly erasing all losses, hugging the UNCH line for the remainder of the session.

While stocks were lacking in volatility and volume, commodities got a bit of a boost, with oil, gold and silver headed handily higher.

It was a lackluster session due to uncertainty about next week's FOMC meeting, one which the Fed could conceivably raise interest rates, though analysts have largely dismissed that possibility.

The interim rally in stocks has, since the middle of February, clawed back more than two-thirds of the losses incurred during the six-week decline from the start of January to the middle of February. Nothing seems to be able to send stocks back to their 2016 lows, though getting back to all-time highs would be something of a surprise, considering the slow growth rates of economies around the world, and especially in developed nations.

There's a week left before the FOMC meeting, at which point sentiment may take a turn to the negative, though, if the Fed continues to keep rates at their abnormally low rates, the party crowd on Wall Street is likely to break out the champagne, hats, and favors, bidding up equities beyond reasonable valuations (some say they already have).

This is just normal churn, but no time to either stake out new positions nor panic. The markets seem content - like the US economy - to muddle along, delivering unsensational profits in a low-inflation, low-growth environment.

Friday's non-farm payroll report - as meaningless and unprovable as their spurious numbers might be - may provide some idea of sentiment going forward, but, at this point, the Fed is holding the most volatile hand of all the players, and they're not likely to bluff or fold. In typical Fed fashion, they'll be more likely to check, rather than raise the ante or call the hands.

Wednesday's Sleeper:
S&P 500: 1,986.45, +8.10 (0.41%)
DOW: 16,899.32, +34.24 (0.20%)
NASDAQ: 4,703.42, +13.83 (0.29%)

Crude Oil 34.65 +0.73% Gold 1,241.70 +0.89% EUR/USD 1.0867 -0.01% 10-Yr Bond 1.8480 +0.76% Corn 355.75 +0.07% Copper 2.19 +2.21% Silver 15.01 +1.69% Natural Gas 1.67 -4.13% Russell 2000 1,065.67 +1.06% VIX 17.12 -3.28% BATS 1000 20,677.17 0.00% GBP/USD 1.4079 +0.91% USD/JPY 113.38

Stars Align for Markets Amid Super Tuesday March Madness

While the Dems and Reps fight in various primaries for the right to represent as a party leader of the USA, US equity markets calmly said adieu at the opening bell and never gave a backward glance.

Tuesday's advance was one of the top three of the year, pushing off from the 50-day moving average on the Dow, which may well have been the anointed starting point for this leg of the extended rally. The close today was at the best level in nearly two months, something of a needed salve for banged-up bulls.

While there was little in the way of encouraging news for stocks to sound off so vociferously, there was certainly no absence of chart-wise subjectivism from which to spark.

As for a relationship to Donald Trump's or Hillary Clinton's seemingly unstoppable rise to become the nominee of their respective parties, there is probably none, though wiser people have made dumber bets that Hillary will be the eventual next president and further take out the case that she will be good for the economy. That happens to be the confirmed thinking of the status quo, which sees more Clinton-esque policies as somehow good for Wall Street (note: big hitters on the street have given heartily to her campaign and to the Clinton Foundation, whereas Mr. Trump has been largely self-funded).

Even bonds were in alignment with the general mood, the 10-year note closing at a multi-week high of 1.83%.

S&P 500: 1,978.35, +46.12 (2.39%)
Dow: 16,865.08, +348.58 (2.11%)
NASDAQ: 4,689.60, +131.65 (2.89%)

Crude Oil 34.39 +1.90% Gold 1,236.60 +0.18% EUR/USD 1.0871 -0.12% 10-Yr Bond 1.83 +5.40% Corn 356.00 -0.28% Copper 2.15 +0.63% Silver 14.92 +0.01% Natural Gas 1.74 +1.46% Russell 2000 1,054.49 +1.99% VIX 17.70 -13.87% BATS 1000 20,677.17 0.00% GBP/USD 1.3950 +0.17% USD/JPY 113.9270 +1.32%

Stormy Monday Portends Trouble for Bullish Case

It's the last day of February. The market bulls could have added a little window dressing to make their case, but, instead, stocks vacillated from the open until just before noon, with losses mounting through the afternoon and into the close.

Not only is this an end of month Monday, but it is also the start of "jobs week," wherein all eyes will be peeled open in anticipation of Friday's non-farm payroll report for February. The structure of the market and the charts suggest that the rally of the prior two weeks has not only stalled out, but lost its bearings, since oil was markedly higher on the day. Stocks did not follow.

The problem with the oil/stocks pairing is that they are not and should not be aligned. Lower oil prices, have, over time, proven to be a boost for economies, but not necessarily the stock market. In reality, lower oil and distillate prices should be an overall boon for businesses, lowering a variable cost, thus potentially boosting profits. With the massive, global oversupply of crude that exists presently, the natural price of oil should be closer to $20 per barrel than $30.

Since the oil/stocks dichotomy is likely a false paradigm, the decoupling exposes the rigged market for what it really is: front-running algos, insider trading, forced trades at stops, short-covering rallies on vaporish volume and insidious surprise rebounds off questionable low points.

That's what makes today's slide all the more concerning. Perhaps the masks are coming off and the knives are coming out. We are undoubtably at the beginning of a secular bear market, with the long-toothed bull dying back in May of 2015. It's been downhill - with assorted fits and starts - since then, and markets are still in a search for the bottom.

Perhaps a one-off isn't enough to convince the bulls that the party is over. Stocks may well resume their rally as the week continues. As noted in Money Daily's weekend recap, the rally should have legs through the FOMC meeting before capitulation commences. However, it won't be the first time to be proven wrong, and surely not the last.

S&P 500: 1,932.23, -15.82 (0.81%)
Dow: 16,516.50, -123.47 (0.74%)
NASDAQ: 4,557.95, -32.52 (0.71%)

Crude Oil 33.89 +3.39% Gold 1,239.30 +1.55% EUR/USD 1.0877 -0.50% 10-Yr Bond 1.74 -1.25% Corn 357.25 -0.63% Copper 2.13 +0.19% Silver 14.94 +1.50% Natural Gas 1.71 -4.63% Russell 2000 1,033.90 -0.32% VIX 20.55 +3.74% BATS 1000 20,677.17 0.00% GBP/USD 1.3919 +0.41% USD/JPY 112.7050 -0.88%

Stocks Gain For Second Straight Week; Rally Should Continue to FOMC Meeting

Chalking up another week of gains, US equity markets are putting the disaster that was January in the rear view mirror and moving on. The week ending February 26 was the second consecutive week of gains for the three major indices, though this one was not as potent as the first, signaling that while the rally in stocks may continue for some time, its momentum almost certainly is on the wane.

Over the past two weeks, the indices have clawed back roughly half of the losses suffered in January and the first week of February, a significant advance. Chart-watchers will be looking at key levels on the Dow and, especially, the S&P, seeking exit points before the eventual next downturn.

For the Dow, the next critical level is in the range between 17,200 and 17,350, about a two percent gain from where the market closed on Friday. The S&P is eyeing the 1985 to 2015 level, where significant resistance resides, again, roughly two percent from the close on the 26th.

The NASDAQ, already bumping up against its 50-day moving average, may have already lost momentum, though a move through the 4,620 mark could convince bulls that there's more upside on the horizon. The NASDAQ was the big winner, percentage-wise, on the week, but it remains at the heart of skepticism, loaded with risky energy and tech stocks, which comprise a hefty share of its index.

If the NASDAQ rolls over, this mini-rally could end quickly. A resumption of already well-established bear market conditions could extend into the Spring. One way or another, it's difficult seeing stocks surpassing the points from which they opened the new year. There's still much more risk to the downside than there are opportunities for a continuation of any rally.

While the past two weeks may have been "buy the dip" conditions in an oversold market, the converse, "selling the rip" should become apparent by the end of next week or, if the market and its participants grow increasingly patient and/or greedy, after the FOMC meeting on March 15-16.

A move to the downside prior to the meeting would signal a growing unease concerning Fed policies, which, to this point, have been less-than-reassuring to bullish plungers. While there's not much conviction among Fed-watcvhers that another rate increase is forthcoming, the risk remains. Another 25 basis point hike in the Federal Funds rate would send stocks to a semi-permananet shower. That's why the Fed won't move at this meeting, and the market pretty much knows it, so stocks are free to rally and investors are also free to take short-term profits.

With options expiration - a triple witching event - coming quick on the heels of the FOMC meeting, things could get very interesting on the 16th and 17th, as Fed policy is unveiled and the bulls have another chance to slaughter the shorts.

Look for stocks to gyrate at current levels, without much in the way of conviction, this week and into the next. Of course, the BLS non-farm payroll report for February will be closely followed, even though it has cemented its status as the worst barometer of both labor conditions and the general economy. The massaged numbers from the BLS are so statistically insignificant that they may well become more of an asterisk than an important inflection point as time progresses and the bear market resurfaces.

For now, however, the bulls have found a sweet spot. The smart money will be getting out shortly, the smarter money will squeeze out even more gains, and, as usual, the unsuspecting buy-and-hold muppets will be mercilessly stabbed, slashed and burned at the top of the short-term rally. The last two weeks of March and the advent of Spring should convince even the most optimistic that stocks have nowhere to go but down.

For the Week:
S&P 500: +30.27 (1.58)
Dow: +247.98 (1.51)
NASDAQ: +86.04 (1.91)

Friday's Foibles:
S&P 500: 1,948.05, -3.65 (0.19%)
Dow: 16,639.97, -57.32 (0.34%)
NASDAQ: 4,590.47, +8.27 (0.18%)

Crude Oil 32.84 -0.70% Gold 1,223.00 -1.28% EUR/USD 1.0932 0.00% 10-Yr Bond 1.7620 +3.83% Corn 358.75 -0.49% Copper 2.12 +2.29% Silver 14.71 -3.22% Natural Gas 1.79 +0.11% Russell 2000 1,037.18 +0.54% VIX 19.81 +3.66% BATS 1000 20,677.17 0.00% GBP/USD 1.3872 +0.03% USD/JPY 113.9850 0.00%