Data Dive

The market is trading on technicals heavily right now. That's why, despite the volatile and uncertain economic circumstances in the US, Europe and China, the S&P is stuck in its 1050-1100 range. Over the past few days, the market rallied only to hit its head on the 200 day moving average (1106-ish) and then fall back down a bit.

This morning - the market affirmed the reality that we all know. Europe has debt issues that are going to take awhile to pan out (and pan out pretty negatively overall). The US "recovery" (and I use quotes simply b/c we're the world's backup currency and that alone has let us delay the recognition of our own debt issues for the time being) is stable but barely growing. A double dip recession is unlikely, but all the market hopes and V-shaped run based on the idea of a thriving US economy are simply wrong. All I hear are historical comparisons. This isn't a comparison b/c its not a normal recession. This is a 1929 recession and the historical recovery patterns just aren't going to pan out -- they'll all happen (manufacturing rebound, inventory rebuilds, credit expansion, etc) but very very very slowly, and in the face of serious headwinds that will further limit the speed of the recovery (i.e. global credit issues, US debt issues, rising taxes, high unemployment, social programs, etc).

Today's jobs data is not a bad report - its a realistic description of the economy, and that's a simple fact that people have to adjust to and accept. If you want to see a market run above 1150, you'll have to identify the economic reports that will produce positive news (albeit in the face of European concerns). I don't think corporate profitability will cut it anymore, and I just don't see mega numbers coming from housing reports or employment anytime soon. That's why I believe that we revisit the 1050 support level again before testing the 1150 "right shoulder" ceiling.