Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
I said late yesterday, a bit tongue in cheek, that we’d see how the market reacts tomorrow after the morning gap up … well of course that is exactly what the market did. I didn’t really see any reason news wise for the action, but we rarely have seen a gap down in 2012 and with that very obvious gap in the chart to fill it seemed almost fait accompli that this was the scenario “they’d” create. So with that the S&P 500 has jumped back over its 20 day moving average and thus far the ceiling has been the 10 day. (I am using the SPY ETF rather than the index chart as it shows gaps better) Filling such a dramatic drop down in “1 day + 1 premarket” is mighty impressive. Surprising but as I said yesterday, no longer shocking.
The Russell 2000 continues to be the fly in the ointment as it has not even recaptured that 810-830 range it had been in during the month of February. At this point it sits around the 50 day after breaking through it Tuesday. It remains the worse of the major indexes, and continues to showcase a market with flagging breadth.
With the payroll data tomorrow morning, one would expect a lot of people to be sitting on their hands waiting for that data point to be in the rear view mirror. Expectations seem to be for a very good number north of 200K with some whispers far north of 200K. As always it is not so much the data but the reaction to said data that matters.
Bulls would like to see the Russell at least get back into the lower end of that 810-830 range which would coincide with a run to or above new highs for the year on the more large cap oriented indexes such as S&P 500 and NASDAQ.
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