Entering April, will a well-employed bull be taxed by Friday’s monthly jobs report? For the five day period the SP-500 (SPY) is up 0.81% as bulls close out a less-than-mad March, quarter and an ‘early and truly’ best six on a confident note.

THE WEEKLY NUTSHELL     

• “Bullnanke Free Throw Monday.” End of quarter, buzzer-style dialogue before NABE finds Fed Chief Bernanke allowing investors to have their cake and eat it too in stating improving economy and jobs market but one, contrary to recent indications, still in need of additional monetary support. In turn, renewed optimism for QE3 or likeminded actions prompts opening gap of about 0.80% and sees willing buyers throughout the session as the SP-500 finishes up 1.34% at marginal fresh intermediate highs which break an overbought weekly doji decision in favor of more bullish March Madness.
• “Technical Time-Out for Bulls Tuesday.” Light news session marked by choppy tight trade sees marginal new highs for SP-500 before mild profit-taking of 0.28% sets in as bulls take to the bench. Mostly in-line economic data on housing from Case Shiller which shows 3.8% decline and 70.1 consumer confidence reading do little to sway investors. VIX ($VIX) climbs 9.33% to less surly-sounding 15.6% near highs of two week consolidation pattern developed at five year lows.
• “Quant Easing, Bullnanke Rebound Wednesday.” March Madness style intraday profit-taking or rare profit-taking of about 1% in SP-500 is cut in half in rebound off 1400 and Monday’s Bernanke “free throw” to bulls. Pressuring investors in game’s first half, Britain’s Q4 GDP declines by 0.3% compared to flat estimates and prior 0.2% forecasted drop. Along with mixed durable orders showing total goods for February climbing by lighter-than-expected 2.2% versus 2.8% estimates, traders call into question strength of global economy…or at least react in a disappointed capacity. Black gold (USO) sees stiffest pressure as it finishes off 1.28% but holds key weekly support in hammer pattern despite surprise weekly inventory build of 7.1M barrels compared to Street forecasts of 2.7M.
• “Two in a Row, Second Half Zone Offense Play for Bulls.” First half March Madness and net, net—2 to 3 session pullback of 2% removed from bulls quarterly hoop dreams gets snapped up after halftime for a hammer close in SP-500 and minor loss of just 0.16%. Assisting in the early bout of investor-based quant easing, EU economic sentiment slips 0.8 after back-to-back gains for March. Citizens of Spain strike and take to the streets in front of forthcoming austerity measures to be addressed in government’s budget plan. In-line 3.0% Q4 GDP and 0.9% deflator reading and lighter-than-expected dip of 5,000 in weekly claims to 359,000 are pooh-poohed as well. For a second straight session, bulls rebound in second half off less-than-key low of 1391 fueled largely by program-driven, window dressing.
• “March Madness Win for Bulls Friday.” SP-500 closes out less-than-mad March with 0.38% gain and quarterly 12% win with headline banners of “Best Since 1998!” in tow. One even larger than you thought Apple (AAPL) nearly bites market intraday with 1.69% bow to profit-taking despite price target lift to $675 at BMO and new labor standards agreement at China’s Foxconn. Word of Eurozone’s firewall fund beefed up to 800B euros helps market with bid, while mixed, in-the-ballpark triple play of stateside income and spending, Chicago PMI and consumer sentiment data work a little of this and a little of that on investors intraday.   

WEEKLY CALENDAR OF KEY UPCOMING EVENTS

Monday:
Economic: ISM (53.0), Construction Spending (0.5%). Ongoing Middle East geopolitical / oil stresses and potential wild card credit market drivers out of Europe.

Earnings: NA.

Tuesday:
Economic:  Factory Orders (1.4%), FOMC Minutes, Auto & Truck Sales.

Earnings: NA.

Wednesday:
Economic:  Weekly Crude, MBA Mortgage Index, ADP (213K), ISM Services (56.9).

Earnings: Acuity Brands (AYI), Monsanto (MON), MSC (MSM).

After Hours: Bed Bath & Beyond (BBBY), Global Payment (GPN), Ruby Tuesday (RT).

Thursday:
Economic:  Weekly Claims (355K), Continuing Claims (3.35M), Challenger Jobs Survey.

Earnings: CarMax (KMX), Constellation Brands (STZ), Pier 1 (PIR), Schnitzer (SCHN).

Friday:
Economic: BLS March Jobs Report (200K, private 215K, unemployment 8.3%), Consumer Credit ($14.0B).

Earnings: NA.

TECHNICAL OUTLOOK

Figure 1: SP-500 (SPY) Weekly Chart

A midweek two day, two percent pullback was met with a hammer finish Thursday and a modest bit of follow-through confirmation on Friday to close out a less-than-mad March and first quarter for bulls. Entering April, our view remains one of “buyers beware”, except those seeking fairly cheap protection to accompany portfolio decisions.

Seasonally speaking, bulls have the last month of the Best Six period left on the calendar. But, cognizant of an “early and truly” best six style run off the early October corrective lows, a potential bearish Fibonacci butterfly completion and sentiment ($VIX) still set at five year lows and fear M.I.A; an expected and less simple pullback looks like something to prepare for, before having a good defense becomes a bit more obvious and less easy to secure.  

MARKET LAB
Bullish Technicals

• First Week Effect 2012.
• Final month of Best Six Nov – April cycle.
• Anticipated testing of 1343 – 1371.

Bearish Technicals

• 1930 Bear Market Rally repeat states EW Intl.
• Bear market time and price still in effect.
• Historically weak FTD signal.
• Fibonacci based butterfly completion around test of 1400.
• VIX hits 5-year lows and recent short-term complacency signal.
• Failure of Transports (IYT) and small caps (IWM) to confirm rally.
• “Early” Best Six from October corrective lows.

Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.