(By Rich Bieglmeier) The setup is in place for Friday's Employment Situation report to light a fire under bulls. Hopefully, the news will be good for investors. Wednesday's ADP Jobs report was better than expected, and so were the ISM non-manufacturing survey results.
This morning, Jobless Claims will have to the opportunity to build on the better than expected news streak. Wall Street anticipates that 370K people filled out new claims last week. Results have followed a jagged, up, down, up, down pattern in the last few weeks. Last week's report was far better than expected, if form holds true, then today's number will be more than 380K. We see something in the range of 368,000 to 372,000.
While the economic news of the day was decidedly positive, the index performance is mixed. The S&P 500 appears set to move higher and retest its 2012 high. The Dow is acting with indifference; it sort of wants to go higher, but wiggling around. Meanwhile, the NASDAQ's range is tightening, and taking the shape of a pennant. Whichever side of the sideways triangle the NASDAQ breaks away from is the way the index is headed. It's our view that the Dow and S&P will follow.
Let's hope the S&P is just a little early to the party. If stocks do turn green, the indexes still have to contend and do-away with their respective highs, all three of them. Remember, without confirmation, it doesn't mean a thing.
Third-quarter earnings are likely to dictate whether the markets breakout or breakdown. We can't wait for Alcoa to "officially" start the parade of profit report cards next Tuesday.
Readers can expect to find a weekly update on the pace of earnings in the Thursday morning stock market report. We will highlight emerging trends, sectors that are succeeding and failing, and compare sales and earnings versus the 3rd quarter of 2011. Hopefully, you'll find the information to be helpful.
Finally, it will be interesting to see how Wall Street reacts to last night's presidential debate. The consensus prior to the showdown was the President Obama has re-election locked up; however, most of the post-debate commentary, from the right and left, was that Mitt Romney scored big enough to get back in the game.
For the last few weeks, investors have been positioning their portfolios for a continuation of the same policies. There might be some rethinking in store for the next few days; especially if economic news deteriorates and forward guidance is weak. Isn't political season fun?
See you tomorrow with our first taste of iEstimates for Q3.