Morning Market Thoughts

Good morning. Yesterday’s weakness look more ominous than it really was. We are used to daily trading ranges that are so tight and print short little boxes with tiny wicks on the top and bottom and any increase in the size of the box looks really back. Well, from the intraday high on March 1st, the S&P is down 1.56%. That’s over a 5 day period. So I think it’s a mistake to read too much into this pullback. It’s a natural reaction to the moves we’ve seen in the past 3 months.

As noted last night, oil prices have gone off the end of the dock as oil inventories have increased for the 9th consecutive week. Don’t look for any bullish action in oil until this trend reverses itself. And by the way, a build up in oil inventories is a counter argument to the “things are gonna be sooooo great!” argument. I’m not saying that they won’t be great, or that they aren’t great. I’m saying that economic activity consumes oil. And so far, it’s not consuming very much of it.

You may have missed it last week, but the February jobs report was delayed until tomorrow due to the calendar. February was a short month, and that doesn’t provide enough time for the Dept. of Labor to massage their numbers and get the report out on time. So it will be coming out tomorrow, and that should be a market mover. If the number is hot, then look for increasing chatter about the Fed’s rate hike the following week, and how it might be the first in a string of rate hikes designed to keep a damper on the economy. We want it to be “good again”…because “great again” can lead to an inflationary environment, and nobody benefits from that (except those who own basic material stocks).

Keep yourself in check. If you buy a stock, make sure that you ask yourself whether you are buying it because it is an opportunity, or because you desperately want to do something, and this is the least bad setup you see. When you can make that distinction, you’ll start seeing different results.

See you in the forum today.


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