The market enters the week on autopilot, but it’s facing its biggest post-election challenges from an array of economic data leading into Friday job’s report (see calendar below).  Last Friday’s short session underscores the growing anxiety as many feel that the market is due to pullback. And more are even dismissing the Trump Rally altogether.

Friday’s Yellow Flags

There was a move into safety with the biggest gains in utilities (+1.4%) and consumer staples (+0.8%).

Complacency, however, underscored by the dip in the Volatility Index (VIX), the so-called fear Index was down 9.6% last month.

Then there’s another end of the spectrum with the continued surge in the Russell 2000 index of smaller names. 

The index began its rebound into the election, and it has climbed 16.5% since the November 3^rd bottom.  I think the move speaks to the index being more of a representation of the domestic economy.  It’s Americana in the sense that smaller names are driven by small investors. This combination naturally draws scorn from professional investors.

I admit the market has made a major move, and it could be due for a pullback; however, I think it’s a mistake for folks to keep waiting for the perfect dip to jump in, partly because they’ve never done it before and they won’t do it the first time the ‘Trump Rally’ is challenged.  This doesn’t mean we won’t adjust cash and take profits, but don’t fall for the Wall Street experts and their array of reasons for the rally to fail.

Economic Calendar

This week, we will get an update on confidence and other underpinnings of the economy as it is the most consequential for the rest of the year.  We’ll get the health of the economy from the Gross Domestic Product (GDP) and more housing data, along with construction and manufacturing.

The biggie, of course, is the employment report. The last report wasn’t exactly a barnburner:

• Nonfarm Payrolls: 161,000
• Unemployment Rate – Level 4.9 %
• Participation Rate – Level 62.8 %

The calendar should bring more volatility to the market, but it would take a major series of disappointments to derail the rally.

Today’s Session

Equity futures have been under pressure all morning long in part to general Monday morning blahs and angst associated with Friday, but there is also some rubber necking at OPEC (will they or wont’ they) and Italian politics – a train wreck that could get worse.

Meanwhile, Wall Street missed the entire Trump Rally and is now busy with some downgrades and words of caution. 

So, stocks are opening with some pressure, but it’s nothing to panic about.  On the contrary, I would love some consolidation and pullback; although, we don’t need to go back to former resistance for all the major indices.