The jobs report will be announced early Friday. The estimates are for 220,000 new non-farm payroll jobs being added in March. We've talked in the past how surprises are not greeted warmly by the market, whether higher or lower than estimates. The closer we come to 220,000, the better off the market will likely be.
It would be nice if the indices took off from here but it may not be that easy. But just about all of the pieces are in place. You never get all your ducks in a row but one indicator I really like is that AAII Investor Sentiment Survey. Thursday's new survey showed 51% of those polled said they were bearish. That has not happened for two years, back then the market was coming off of the three year bear market and sentiment was about as bad as you get. Of course that is exactly when the bear ended and this recent bull market started. (Some argue that the bear market has not officially ended but for argument's sake, I'll call a 50% gain in the S&P 500 a bull market).
Chart provided courtesy of www.decisionpoint.com
So while the market could remain choppy, I think the downside remains limited and the risk / reward play here is to be in stocks. That could change in a few weeks, but right now it looks pretty good. Here is what could happen to scare us right now...
Chart provided courtesy of www.decisionpoint.com
Last year we had four similar situations. At points 1 and 2 a strong drop in the market saw a short rally move up to the 20 and/or 50 day moving averages (purple and green lines). There was one more push down both times before the rally took off. It could happen again although the bottoms made after point 1 and point 2 did not see that little fake out reversal. Like last year's action, I believe we are still in a consolidating a period and we could move right back down in a few weeks so we may have to this all over again.
The dollar was down Thursday helping out the I fund. The U.S. stocks hung pretty tough considering the big gains Wednesday. After all was said and done, I ended March with a .25% loss.
With the jobs report looming it's difficult to make any kind of short term predictions. I'll just say have a good weekend. Currently 50% C, 50% I fund.
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