This major economic release often moves the market.

PRE-OPEN MARKET COMMENTS THURSDAY – The market is searching for a catalyst and it has been trapped in a trading range for the last month. In the last week we’ve had mega cap tech earnings, an FOMC statement, the threat of tariffs and major economic releases. The market has been able to tread water, but it has not been able to advance.

The employment data leading up to the jobs report suggests that it should be steady in the 170K range. Initial jobless claims were 219K today and during the last 4 weeks it has not changed much. JOLTS showed a steady decline in job openings (-500K) and it fell to 7.5 million. The trend is clearly lower, but that is still a good number. This morning, Challenger reported that planned layoffs increased month/month, but fell year/year. January has a seasonal component where many workers are laid off. In general, the number was not as bad as feared. Consequently, I feel the jobs report tomorrow is going to be inline with expectations and it won’t move the needle. Even if the jobs report did come in weak, it would prompt the Fed to cut sooner than later and the market would receive the news well. It would take a prolonged decline in jobs before investors become concerned.

ISM Services declined to 52.8 yesterday. It is still in positive territory, but it is trending lower. Home inventories are at very high levels and mortgage applications are extremely low.

AMZN is the last of the mega cap tech giants to report earnings. After the close it is expected to report revenues that will be higher than WMT for the first time ever. Stock valuations are “rich” at current levels and earnings have been excellent. Stocks are holding recent gains, but they are not advancing.

This morning the BOE cut interest rates by 25 basis points and they signaled more cuts ahead. England’s GDP grew at a meager .1% in Q4 after declining .1% in Q3. Given that inflation is running at 2.5%, their economy is contracting on a real basis. The entire EU is in a similar situation.

The market is in equilibrium. Good news is priced in and the news has been good. There’s an economic undertow, but on the surface all appears to be fine. The market has been in a 100-year up trend so Asset Managers err on the side of being long. It is going to take a lot to reverse this bull market and it would take a steady dose of negative economic releases over a period of months before we see sustained selling pressure.

With four years of experience, the market has adjusted to Trump’s tactics. They know that the initial statements are extreme and instead of reacting to them in full force, they wait for them to be “walked back”. During his first term the market took all of the comments at face value and the reactions were violent.

I’ve been cautious on a swing basis and that has been prudent. If you look at the D1 chart for the SPY you can see a spattering of green and red candles. I still feel that the global and domestic macro backdrop is deteriorating, but the pace is slow. If you are market neutral, you can sell OTM bullish put spreads on strong stocks. Distance yourself from the action.

I am sticking with day trading. I like the flexibility and I feel there are opportunities on both sides. To be honest, it is much easier to find good longs than it is to find good shorts. That will change if the market stays in this sideways range.

Look for a fairly dull trading session ahead of AMZN and the jobs report.

Support is the close from yesterday and resistance is $610.