(By Rich Bieglmeier) It was back to business for Wall Street on Wednesday following a two-day Sandy hiatus. Traders didn't take long to fall into the same routine that's plagued bulls for the last month, early buyers swamped by sellers taking the indexes underwater.
While many experts believed the day would be light on volume, it turned out to be a typical October day; so, there is no discounting the day's activity. The green turned red day placed the NASDAQ right on its 200-day moving average of 2,976.
The next two days of jobs numbers are likely to have a significant impact on stock price and President Obama's re-election chances. The health of Thursday's Jobless claims, a confusing ADP Employment Report, and Friday morning's Employment Situation announcement will either pull the NASDAQ away from the 200-day cliff's edge, or send it over like Paul Ryan pushing a wheelchair. For all my Republican friends, it is just a joke.
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Economists believe 369,000 people filed for initial claims. That's where the number came in last week; however, the pattern has been up one week down the next. Last week was a down week, you know what that makes this week, don't' you?
As for the ADP report, news was leaked on Wednesday that ADP joined forces with Moody's and will change the way they calculate the results. The new math will result in substantial revisions lower from previous reports. It's likely to be a mess and confusing. For the record, the street is at 155,000 new jobs, but who knows what the actual number will be.
It will all be mute once Friday's results are announced; it will be interesting to see how Sandy impacts the results. We will have more on it tomorrow.
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While economic news still has a chance to turn things around, earnings are steadily heading downhill. With more than 50% of S&P 500 companies' quarterly scorecards on the books, things are not looking so good. Sales for the third-quarter are down 3.21%, Operating Earnings are up 2.61%, and as reported profits up a measly 1.59%.
If the trend continues, earnings could join sales in the red by the time Q3 reporting season closes. It's been our experience that the back-half earnings season is weaker than the first-half. It could get ugly.
That's it for today. The single most important thing to watch in our view is the NASDAQ and its 200-day MA. From what we see on the index's chart, a support failure and the NASDAQ could flirt with losing another 100 points.