The See Saw Continues

As has been the case for the past three weeks now, the equity markets are finding support after a slightly negative session the prior day.  With the Fed still the primary focus of investors, this morning’s jobless claims numbers (434,000 vs. expectations of 455,000) and positive earnings data from 3M, ExxonMobil, and Motorola are once again relegated to the periphery.  While not unexpected given what we’ve seen over the past few weeks, sooner or later the fundamentals are going to have to matter again.  Whether or not the fundamentals in focus will be earnings or economics remains to be seen.

One item worth noting this morning is the equity, gold, and Treasury markets’ bullish bias this morning despite better than expected jobless claims numbers.  Crazy as it may seem, I would have expected a positive economic data point like this to raise concerns about the size of the Federal Reserve’s upcoming monetary stimulus program.  So far today, that doesn’t seem to be too much of a concern.  Again, with so much hinging on what materializes next week, it’s hard to read much into these day to day gyrations.

I’ll continue my focus on the U.S. Dollar Index today as well as keep an eye on the VIX.  After creeping up rather steadily over the past couple of weeks, the implication would be that equity investors are growing more cautious in their outlook, which would be a negative development for equity prices.  That said, yesterday’s spike and subsequent reversal in the VIX tells me that concerns are only moderate at this point and are not yet in danger of reaching a panic level.  With corporate earnings looking as good as they have, perhaps these are the assurance that is keeping stock investors somewhat optimistic.  But as to the remainder of today’s session, I continue to expect a firming trade through the morning with a pullback towards the unchanged line about an hour prior to close.  Until we know for certain what the Fed will/won’t do, traders will continue to rule the intraday volatility and keep a lid on any larger trend.

Until later…..