Global equities were mixed overnight with the Nikkei, All Ordinaries and Russian stocks weaker and the rest of the markets higher. Apparently the trade saw the removal of Chinese circuit breakers as a supportive development while others might have garnered some confidence from the Chinese move to “raise” the peg on their currency. The highlight of the US economic calendar is December jobs data, with Non-Farm Payrolls expected to show a gain of around 200,000, slightly below the 211,000 jobs added in November, while the unemployment rate looks to hold steady at 5%.
S&P 500: We aren’t confident in the quasi double bottom low in the March E-Mini S&P at 1928.50 because the markets failed to exhaust on the downside and recover sharply yesterday. However, we do think the bull camp dodged a bullet this morning with calm in the Chinese equity markets. Perhaps the March E-Mini has found some form of support from the 1950 level but we also see somewhat thick overhead resistance up at 1974.75. Slack GAP same stores sales figures, weak guidance from Bed, Bath & Beyond and a decline in urban outfitters comp sales leaves a bearish fundamental tilt in place. However, with the markets significantly oversold from a fundamental and technical perspective, it might not be difficult to lift the March E-Mini up to 1978 in the face of a non-farm payroll reading above 205,000
Other US Indexes: The March Mini-Dow has managed to respect its prior session’s low in the early going today but to finish the week on a positive note probably requires an as expected payroll gain without seeing an uptick in wages. Critical support in the March Mini-Dow is seen down at 16,500 and resistance to start today is seen up at 16,620. Technically the Mini-Nasdaq forged a lower low overnight and that would seem to leave the bear camp with a slight edge. In order to facilitate more technical short covering probably requires an early move today back above 4342.00.
TODAY’S MARKET IDEAS: A measure of technical short covering is expected today in the wake of the outsized washout to start 2016. However, the trade doesn’t have an all clear view toward China and therefore a morning and early afternoon rally might be met with somewhat aggressive selling ahead of the close by longs afraid of a restart of the Chinese debacle on Sunday evening.