Overnight News Was Friendly. Market Down On Fed Speak. Stocks Should Rebound Today

I am tempted to post yesterday's comments a second time. As I mentioned, there are events and releases, but the results are highly predictable and they are not moving the needle. Stocks are caught in a very tight range and there is no momentum. The ECB released its LTRO results and European banks borrowed €530 billion. That number was considered "not too hot, not too cold" and traders yawned. This was one of the most widely anticipated releases of the year and it did not produce a reaction. European banks have loaded up and 800 financial institutions took advantage of the offer versus 523 back in December. The negative stigma is no longer associated with the loans and they all stepped up to the trough. Short-term sovereign debt auctions should benefit from this maneuver. The first revision to Q4 GDP came in at 3%. That was better than expected. Chicago PMI rose to its highest level in 10 months and it also exceeded expectations. Both releases had no market impact. Tomorrow, initial jobless claims, ISM manufacturing and auto sales will be released. I'm not expecting any market reaction from this news although the numbers should be positive. Flash PMI's for Europe and Asia were released last week and they were in-line. The official results will be posted overnight and this news should meet expectations. Job growth has been improving and I believe there will be a bid to the market heading into next week's Unemployment Report. Asset Managers have been hoping for a pullback, but they are not getting one. Each day the market creeps higher, they get more anxious. Chairman Bernanke is getting grilled by the House. Deficits and inflation are being addressed and that has cast a small dark cloud over the market. By the end of the day, buyers will step back in. There aren't any major news events to spoil this rally in the next week. The market has fallen into a very tight trading range and it will take a surprise event to break it out. I am long in the money calls on strong stocks and I am long VIX. This is a hedged position and it is providing decent results. Mind you, nothing is moving and the gains are relatively small. One day the stocks in my portfolio move higher and the next day they give back some of those gains. Keep your size relatively small and wait for a breakout. The S&P 500 is moving through 1370 and the path of least resistance is up. Stocks will rebound from this early decline and they should finish in positive territory today.

Daily Bulletin Continues...