9:00am (EST)

The other curve ball will be Friday.  The Unemployment Rate is due out and an uptick could cause panic as investors feel the recovery could be stalling.  If the number is flat or moves lower, it will help the bulls case for higher prices.  The problem is the market will be closed on Friday so we will have to wait until the following Monday to see how Wall Street reacts.  Followed by the start of earnings on Tuesday.

We are expecting a continued rally this week with Thursday being the wildcard. (4/1/12 Weekly Wrap, Monday Morning Outlook)…

The bulls got off to a solid start on Monday as they made another run towards our near-term fluff targets for the market (Dow 13,500; S&P 1,425-1,450; and Nasdaq 3,250).  Much of the momentum came from the prior week’s strong finish as the Dow traded up to 13,300 and closed at 13,264.  The S&P and Nasdaq hit fresh 52-week highs of 1,422 and 3,123, respectively.

There was a little follow through by Tech on Tuesday morning as the Nasdaq reached 3,128 but the other indexes were lagging heading into the FOMC meeting minutes.  Wall Street seemed a little hesitant to buy stocks ahead of the news despite Ben Bernanke’s comments on the possibility of further stimulus help during the prior week which sparked a rally to new highs.  Needless to say, the bulls were shocked when the minutes came out later in the day after hearing the Fed say it was “less inclined” to do another round of quantitative easing (QE).  This caused a pullback as all of the major indexes finished the session lower but still holding support.

Overseas markets took their cue from the U.S. and finished sharply lower on Wednesday which can be blamed for some of the continued weakness here at home.  This and the fact that Spain is now back in the picture after an uneventful bond auction earlier that morning.  Spain is a lot bigger than Greece so their debt crisis does matter and it showed.  The market fell 1% for the day with the Nasdaq falling 1.5%.

Futures were pointing towards a weak open on Thursday following the release of the Jobless Claims numbers which were better than the prior week but only because of revisions.  Initial claims came in at 357,000, which was down 6,000 from the previous week’s upwardly revised 363,000 claims.  The 4-week average fell over 4,000 to just below 362,000 but analysts were expecting a print of 355,000.  The figures are still at 4-year lows but Wall Street took it as a sign that initial claims could be on the up from February’s lows.  This made traders a little nervous ahead of Friday’s Nonfarm Payrolls and Unemployment Rate numbers which lead to a mixed session.  

Although the market was closed for Good Friday, we still went to the office and we still went through our usual pre-market morning rituals as we eagerly awaited the numbers.  Futures were slightly up heading into the reports but turned on a dime once they came out.  Make no mistake about it, they were absolutely atrocious. 

Nonfarm payrolls for March dropped to 120,000 versus expectations for 205,000.  It was the lowest jobs showing since October’s reading of 112,000.  The unemployment rate dipped to 8.2%, down from 8.3%, but only because another 165,000 people threw in the towel on finding a job. 

The news sent futures spiraling which were open until 9:15am (EST).  The Dow futures were down nearly 150 points to 12,830 while the S&P 500 futures fell 20 points to 1370.  The Nasdaq 100 got crushed for 30 points and stood at 2,720 going into the weekend. 

We did some chart work Thursday night that we will get to in a moment which clearly shows the break in the uptrend lines for the major indexes even before Friday’s headlines. 

We had a good feeling the market was going to be disappointed and we took the rest of the day off on Friday to celebrate because we have been preparing for a pullback.  We have been opening quite a few put option trades over the last week or two to take advantage of a possible pullback, including one on Thursday, and if things hold up, our subscribers will be loving the open today despite a possible 1%+ decline.

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