Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Futures were sharply higher overnight on the Chinese data, but Europe came in this morning with a big thud as their PMI contracted for the 8th straight month. The U.K. was a bright spot amongst the “Big 3”.
- Markit’s euro-area manufacturing gauge dropped to a three-month low in March. A manufacturing gauge, based on a survey of purchasing managers, fell to 47.7 in March from 49. A German indicator fell to 48.4 from 50.2 the previous month, while in France the number slipped to 46.7 from 50. In the U.K., a manufacturing gauge rose to 52.1 from a revised 51.5 in February.
Unemployment was also sickly:
- The jobless rate in the 17-nation euro area rose to 10.8 percent in February from 10.7 percent a month earlier. That’s the highest since June 1997.
No real surprises, but nothing positive either. This kicks off a big week of economic data, even as U.S. markets close on Friday during a jobs report.
Today at 10 AM ISM Manufacturing is released with expectation of 53 vs February’s 52.4. Construction spending is also announced, but most eyes will be on the ISM data.
Tuesday FOMC minutes released at 2 PM. Wednesday morning ADP employment premarket, and ISM Non Manufacturing at 10 AM; this one calls for a decrease to 56.7 from a very strong 57.3 in February.
Friday of course is the employment data – weekly claims have been holding steady so a reading around 200,000 makes sense although the unemployment rate is a wildcard based on if the participation rate increases as it did last month for the first time in a long while. Expectations are for 201,000 versus last month’s 227,000 with the rate unchanged at 8.3%.
As for the market Friday marked an interesting day of relative weakness among the NASDAQ, and especially the tech stars of Q1. The QQQ ETF is now up 13 weeks in a row, something not even seen in 1999. A healthy market would want to see a rotation into other groups as the technology sector, especially large cap, needs to digest some huge moves. But if that happens, and the indexes hold up, one wonders what group(s) can take the baton. Small caps continue to struggle as the Russell 2000 is nearly unchanged from where it was 2 months ago, as the large caps in the senior indexes take all the spotlight and breadth continues to narrow. Actually prices closed lower Friday on the R2K than on February 3rd, but you wouldn’t know it by the grind up in the DJIA, S&P 500, and NASDAQ.
Important levels to the downside for the S&P 500 are this 1404 level that we continue to be attracted to both from the upside and downside, and last week’s lows of 1391 which also is now the 20 day moving average. The NASDAQ has 50 points to the downside before it would hit its 20 day…
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