Technical Picture - Markets Bounce Back

The markets shrugged off negative data with the indices opening firmly higher despite weaker than expected Non-Farm Payrolls (-598 K, largest decline since 12/74 vs. consensus of -540 K). Markets put together a minor extension into midday with another minor round of buying in the afternoon. The weak data wasn't surprising, but traders are now focused on the potential vote/passage of the stimulus package/plan to stabilize the financial system. Short covering has been key in the recovery over the last few sessions as some of the most heavily shorted sectors (finance, banking, homebuilders and transports) have been providing upside leadership.

According to IBD we're in a confirmed rally with caveats, as the markets contuinue to live and die with headlines and runours. The NASDAQ is outperforming as we can see from the chart above. It is positive for the year, but still needs to take out and hold the January reaction highs to confirm a reversal. For now the markets are somewhat extended.



In the meantime, Geithner postponed his unveiling of the administration’s plan to shore up the financial industry from Monday to Tuesday, as officials focus on getting approval for the economic stimulus plan.

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2008 was a bad year all round - economy, movies, and music. In a year with too few really good films, and even fewer good discs, tonight's Grammy's promise to be a bit of a snooze. Coldplay (always a favorite here) shouldn't have any trouble sweeping.