Bears have continued to hold the upper hand through today’s European and North American trading sessions. European markets had tried to rally on better than expected PMI data out of Italy and Spain but were unable to hold early gains and closed down again. US markets have been unable to get very far either with the S&P flat at the time of writing and the Dow up only marginally. Most significantly, however, the Russell 2000 is down again today, confirming yesterday’s major breakdown. This is particularly important because at the beginning of the year the Russell had led US markets to new highs and now it appears to be leading them into a correction. It also suggests that the troops have gone into retreat meaning that if the narrower large caps did move higher, they would be doing so on lower breadth, a bearish sign. Commodities have also been under pressure today with the energy, metals and grains groups all getting pounded down again. Disappointing US jobless claims continued the growing case made by US PMI and ADP payroll reports that suggest the US, one of the few bright spots in the world lately, is starting to stagger and stumble as well. This has raised concerns that tomorrow’s nonfarm payrolls may also be disappointing which could cause the large cap US indices (which increasingly look like they are being propped up by EQ) to give up the ghost as well. Falling resource prices have dragged on the resource weighted Canadian market. With limited news scheduled Australian markets could also struggle today, particularly if traders decide to go to the sidelines ahead of the US employment report. Japanese markets may also be active again today. Yesterday the Nikkei staged an explosive rally while JPY collapsed after the Bank of Japan’s new Governor Kuroda delivered on the promise of aggressive monetary action to fight deflation and stimulate the economy. While the old mantra of don’t fight the central bank may hold for the longer term, the huge moves made yesterday have left room for some profit-taking in today’s trading. One big exception to the broad market trends has been EUR which has jumped nearly 2 cents against USD and 5 big numbers against JPY. This type of explosive rebound, however, has the feel of being more of a bear market rally than the start of something new. Economic News Highlights of overnight announcements include: US Challenger layoffs 49.2K up 30% over year vs previous 55.3K US jobless claims 385K street 353K US natural gas (94 BCF) vs street (91 BCF) Spain service PMI 45.3 vs street 44.3 Italy service PMI 45.5 vs street 43.3 France service PMI 41.3 vs street 41.9 Germany service PMI 50.9 vs street 51.6 UK service PMI 52.4 vs street 51.5 Upcoming significant announcements include: 4:00 pm AEDT Japan leading indicator street 97.3 9:00 am BST Italy debt to GDP Q4 street 3.7% 10:00 am BST Eurozone retail sales street (1.2%) 11:00 am BST Germany factory orders street (1.5%) 8:30 am EDT US nonfarm payrolls street 190K vs previous 236K 8:30 am EDT US private payrolls street 200K vs previous 246K 8:30 am EDT US manufacturing payrolls street 10K 8:30 am EDT US unemployment rate street 7.7% 8:30 am EDT Canada jobs change street 6.5K vs previous 50.7K 8:30 am EDT Canada full time jobs previous 33.6K 8:30 am EDT Canada part time jobs previous 17.2K 8:30 am EDT Canada unemployment rate street 7.0% 8:30 am EDT US trade balance street ($44.6B) 8:30 am EDT Canada trade balance street $0.1B 10:00 am EDT Canada PMI street 52.5 vs previous 51.1 3:00 pm EDT US consumer credit street $15.0B


Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.