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us stock market, trade stock
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3/02/10 Stock Split Report
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Stock Split Report Subscribers:
MARKET ALERTS:
Targets hit alerts: CMG; NFLX; PCLN
Buy alerts: BWA; NLST
Trailing stops: None issued
Stop alerts: None issued
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the SSR alert service you can sign up at the following link:
http://www.investmenthouse.com/alertssr.html
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The Market Video is DIVIDED into component parts: Market Overview, Technical Summary, Economy, and the Next Session. This allows you to choose the segments you are interested in without having to find the segment in a longer video. Click on the link to the portion you wish to view.
MARKET OVERVIEW
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
http://investmenthouse1.com/ihmedia/MarketOverview.wmv
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
http://investmenthouse1.com/ihmedia/TechnicalSummary.wmv
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
http://investmenthouse1.com/ihmedia/NextSession.wmv
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SUMMARY:
- No news is good news I suppose.
- Financial stations, pundits very sanguine about the rally, concluding the correction is over.
- Indices still have business to do at this important point.
Market rallies again, but has a harder time holding the move.
There was a gap higher at the open as the market continued its good feelings from the solid rally on Monday. There was not a lot of news on Tuesday. There was M&A activity, the Pound was down at a 7-month low against the dollar and the dollar was down in the afternoon after posting gains early on. There none of the typical bad news we have heard of late such as something out of the EU or something to do with Greece. The lack of bad news was the good news. The market has spent the last two weeks overcoming bad news and rallying. For one day, it had no bad news and continued to move higher, but it was not the strong move we have seen before. Looking at an intraday chart, the market gapped higher and tested mid-morning as it often does. It rallied back through lunch and through early afternoon, but then tailed off late in the day. The indices did not close negative (outside of the fractional loss on the SOX), but they gave away a significant amount of their upside. Even with that giveback late in the day, the financial reporters and the TV pundits were all rather sanguine about the market. They say the correction is over because the SP500 has closed above the 1115 mark, marking the top of the November and December 2009 consolidation. There is some support for this notion, given that the SP600 small cap index has moved to a new closing high, as well as the SP400 mid-cap index. They look solid, and it is hard to argue with the success and the new leadership they have shown for the market. That bodes well for the economy overall because small and mid-caps are the economic canaries with respect to stocks and how they perform and predict future economic activity.
We are enjoying this move as well. In the past few days, we have taken a lot of nice gain off the table on positions that have rallied and brought gains in the run up toward the January highs. That said, however, the overall picture has not changed. SP500 and NASDAQ still have to deal with the January highs; how they handle those highs will be key as the market moves ahead over the next few weeks. NASDAQ rallied up to the bottom of its January range and has done a nice job with a consolidation and strong break higher with the gap on Monday. Volume was strong again on Tuesday. It is trading in the lower realm of this range right now. SP500 has not made that level yet. It is over the closing high in the November and December consolidation, and that is a positive move. Some are saying that has changed the correction into something more positive. It has carved out a reverse head and shoulders pattern, and maybe that will turn into something. This move is a minor victory, however. The big move starts with the test of the January consolidation lows, just as NASDAQ is testing the lows in its January consolidation as well.
There is a distinctive pattern on both the SP500 and NASDAQ charts from Tuesday. There is a gap higher, even on SP500. That is unusual, but it did so, and then rallied nicely above the November and December consolidation. However, it reversed and closed with a much more modest gain of just .25%. The pattern is a tombstone doji, or it can be classified as an evening star. They are very descriptive names and are not necessarily positive. NASDAQ saw the same action, and its chart shows it more clearly. There was the gap higher, the rally, the reversal, and then the close near the low of the session. That is the tombstone or evening star. "Evening" would connote that the move is setting.
There has been a good rally, and now that they have run into significant, important resistance, they bucked on Tuesday. These doji do not necessarily mean the move is over, but they raise a caution flag. Everyone has suddenly turned very sanguine about the market, but this is the same scenario I have talked about for the past several weeks: the indices testing the January consolidation. Nothing has changed at the point, and indeed the SP500 has not made it to that level yet. Again, these doji do not mean the move is over, but they are very important to note. If the market continues higher from here, that is fine. I am happy to take advantage of it just as we have been doing, but do not get overconfident. It is not fait accompli that we will take out the January peaks. Many of the pundits are very positive that the correction is over and we will rally from here, as is always the case when things look better. They will bring out the negative guys when things look worse. What we need to keep straight is where we are in this move.
NASDAQ is testing where it had to test -- this is the lick log -- while SP500 is not there yet. There is no relative change to the position of the market. There has been a nice rally back from the correction that started in mid-January, but it is not resolved yet. It is trying to, and there is leadership stepping up in many areas, but there are other leaders struggling. Do not assume what the market will do, but just take advantage of what it does.
OTHER MARKETS
Dollar. The dollar started the day a bit weaker than it did on Monday. It improved in strength as the morning wore on. It was up against the Pound all session because the Pound is -- pardon the pun -- getting pounded. By the close, however, the dollar had lost its mojo (1.3605 Euro versus 1.3561 on Monday). It was a fairly substantial move that moved the dollar back over 1.36 Euro on the close. It had been trading in the 1.36-1.38 range. It broke below that for a few sessions and then weakened on Tuesday to close back below that level.
The dollar is moving laterally. It has been trying to surge and is being pushed back. It is always interesting when there are long shadows. There is a series of two moderate shadows and two long shadows on Monday and Tuesday. There is selling pressure on the dollar when it gets over 81 and moves toward 82. The question is whether this matches any other level, and it does. There is the June 2009 consolidation it is trying to break through as well as a June 2008 consolidation range. The dollar is trying to work its way through heavy overhead resistance. It is getting pushed back but is still moving laterally for now. This is the first serious resistance the dollar has hit since its initial rally off the lows and its consolidation in December and early January.
http://investmenthouse.com/ihmedia/dxy0.jpeg
Oil. Oil had a solid day, but it was still within the same range (79.72, +1.02). Oil has moved laterally for the past two weeks in a consolidation range that roughly matches the November consolidation range. It is not giving up any ground, but it is unable to make a sustained move over 80. It looks solid and still has momentum behind it, and it could easily break to the upside of the range near 83 based on this pattern. It is not hurrying to the move, but it is bouncing back and forth each day. It is very much bound in that range, trying to pressure for a breakout.
http://investmenthouse.com/ihmedia/xoil.jpeg
Gold. Gold had an excellent day. Gold had been struggling, but it never gave up the breakout over its downtrend line. It held the test and broke out of its two-week lateral consolidation on Tuesday. It was a very strong move ($1,135, +16.70). This may be the move that makes the breakout for the run back up over 1200 to test the December high. It has set up a solid base and is now making the break higher.
http://investmenthouse.com/ihmedia/xgld.jpeg
Bonds. Bonds had an interesting session. They were selling premarket (the 10 year reached 3.65% versus the 3.61% close on Monday), but they righted themselves by the end of the day. There was no data to impact bond sale, and the 10 year closed flat at 3.61%. Looking at the TIPS, they were up a bit and driving yields lower, but they remain in the same range they have traded in over the past two weeks. That range marks the bottom of a larger trading range it is trying to hold. With the Fed indicating it will raise rates down the road, you would expect to see bonds start to sell and interest rates rise, but they are not doing much of that right now. They are definitely stuck in a range in the 3.6% area, unable to move. There is still indecision about the future of the economy. Even though the economy is recovering according to what the Federal Reserve is saying, there is still a lot of doubt as to what will happen in the summer. Everyone would feel more comfortable if Europe was out of trouble. If that happens, then there would be no worry of the US catching what it has, and our slow, plodding recovery can continue.
http://investmenthouse.com/ihmedia/tip.jpeg
TECHNICAL
INTERNALS
Breadth. NASDAQ 2:1 advancers over decliners; 2.5:1 advancers over decliners on the NYSE. With the SP600 and SP400 hitting new rally highs, you would anticipate that the new highs on the NYSE would expand. After all, there are a lot more small and mid-cap stocks than there are large cap stocks.
Volume. Volume was up, rising 13% to 2.6B on NASDAQ. That puts it well above average. Volume rose almost 11% on the NYSE to close just over 1B shares traded. That did not make average on the NYSE. This move has had fits and sputters of decent volume, but NYSE volume has been stinky through the rally in February overall ("stinky" is a technical term that means "pretty crappy"). The NASDAQ volume was higher, and it surged nicely above average. Its trade has been a lot better on the move, but it has been mixed. There has been downside on big volume and upside on big volume as it consolidated to end February. It has shown excellent volume this week.
CHARTS
NASDAQ. The doji means that if there is a gap lower, there could be problems. NASDAQ is at a resistance point -- this is the inflection point for the index and perhaps the market. NASDAQ did not want to put the pedal to the metal and drive into the January range, and it ends up showing the tombstone doji on high volume. It did not close negative -- it still posted a 7 point gain. It was not a complete renunciation of the buyers, but it pushed them back. They lost over 12 points from the high, so the sellers were in play. This is concerning at this resistance level, and not only because of that, but because everyone seems to think nothing can go wrong. That is just when you should look for things to go wrong. The market has enjoyed an almost four-week rally and we have banked good gain on positions. When that starts to happen, you should start looking for a pullback. NASDAQ did make a new breakout of this consolidation, so it has that going for it, but this consolidation range is still the key move. It did not totally spit the bit on the first test of it, but it came well off the high and showed a candlestick pattern. You have to take that into consideration.
SP500. SP500 had the same action. It gapped higher and showed the tombstone doji on higher volume, but it was not massive volume. The sellers pushed back the buyers. They are still holding over the November-December closing high with the close at 1118, just below the 1119 that occurred that session in December. That is what makes many of the pundits and analysts more confident about this rally, and maybe they are correct. It has been a good move. There is a reverse head and shoulders pattern which is positive for a further move higher. It may deliver, but when everyone says everything is fine, that is when to look for problems. We are just going to be aware that if there is a gap lower, this doji could send it back to a test of 1100. Nothing looks bad right now, but I want us to be cautious.
SP600. The rally has been good, the volume has been so-so, but we have had great leadership from the SP600 and SP400 as they rallied to new highs. The smaller, economically-sensitive stocks are still leading to the upside, and that would suggest that NASDAQ and SP500 will follow. I do not want to assume that will be the case, however. We will continue to look for good plays to the upside, but we may get a pullback before getting those good plays. That would be fine because the gaps to the upside this week have taken a lot of plays out of good buy position. I would welcome a pullback to get better entry points; I do not care if it goes up or down. I would like to see our upside plays make more money before they run out of gas, but what will happen will happen. We will play what the market gives. We just need to be ready and not get caught sleeping. As soon as people decide what the market will do and it has confirmed it, they get lazy. That is when they get slapped around a bit.
LEADERSHIP
We will run through a few sectors that have been performing well and some that are not performing so well.
Retail. ANN is moving up and showing a doji on the session. I wanted to throw that in to show that you can get the doji that indicates a turnover after good moves. You do not always know exactly when it will turn up and be the big mover, but in December it was a fulcrum point for that move. You can see a similar action in September. They do not always mean a big selloff. In October it sold off somewhat, but it was not a huge selloff. You have to be aware of what is going on, and if you see one after a strong run, be ready to take action (whatever your game plan may be.) DBRN gapped away from us, but we were able to get some gain on stocks like CMG and PCLN, but look how it gapping to a doji on Tuesday. NFLX is also making money over the past couple of days. I have no complaints there.
Healthcare. Healthcare continues to be strong. BABY has broken over its downtrend on good volume. RMD has been a winner for awhile. SCLN had a flat day but is showing good action. It has had a good selloff around the consolidation. It is bouncing, testing, and looking solid.
Technology. Technology was a mixed bag. AAPL has zoomed higher. It shows the same pattern as the indices, rallying back up over the October and November peaks and to the January consolidation range. It is bumping in that range right now. It rallied up to it and is now showing a doji on the candlestick chart. It may hold and make a modest test down to 205 and break higher, or it could turn over and head lower. It could also just pause and continue higher. These doji that show up are a warning flag, although it is not as clear as on the NASDAQ and SP500. They are not anything written in stone, although the evening star doji on the NASDAQ is one you can bet more on than just the run-of-the-mill doji like we are seeing on AAPL. QCOM had its shareholder meeting and said things would not stink as bad as the chart pattern made it look. This is an ugly pattern, but maybe something will develop here. If you look way back, you may find this is a consolidation range. It has held in the heart of that on the low and is making a bounce. Note how it tried to hold on the peak over those levels, it could not do it, and now it is trying to make a bounce at the mid-range. QCOM has not been in that great of shape, but you should always look at those kind of moves because you where the support is and figure out why it turned. You can then see what kind of upside potential it has. This is a big gap to fill, and it might be interesting if it develops more. MSFT had news about its browser in Europe, but it had a negative day. It came back to prior resistance levels and reversed on volume. That could be key for NASDAQ. INTC is bumping up against resistance itself and reversed on the day on stronger volume.
Industrials. Industrials have been a mixed group. CMI is doing well. TEX is hanging in there, but not doing so well. JOYG is hanging in and fighting to move higher, but it is not a great move just yet. It is scratching out what we want it to do, but now it has resistance. I was hoping to see more momentum at this point, and it may come in. Monday was a good volume day, but remember the caveat for all those Monday moves: It was first-of-the-month money, and it may not last.
THE MARKET
MARKET SENTIMENT
VIX: 19.06; -0.2
VXN: 19.51; -0.08
VXO: 18.03; +0.21
Put/Call Ratio (CBOE): 0.79; -0.15
Bulls versus Bears:
This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market doesn't have the cash to drive it higher.
Bulls: 41.4%. Significant jump in bulls, rising from 35.6%. 35% is the threshold level below which suggests bullishness. After the move bulls moved up. Perhaps this lateral market consolidation will be enough to send the indices back up. After peaking at 53 on this move the bulls lost some nerve, falling to a new low post- July 2009. Once again bulls peaked out near the 50% level. Bulls have bumped at 50ish since late August 2009, falling to 45ish and then rebounding. Getting close to the 35% level that is the threshold for what is considered a bullish climate. Hit a high of 47.7% mid-June on the run from the March lows. Again, to be seriously bearish it needs to get up to the 60% to 65% level. Dramatic rise from 21.3% in November 2008, the bottom on this leg. This last leg down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator.
Bears: 23.3%. As with bulls, a significant change in bears, falling from 27.8%. That indicates more overall market bullishness. Of course it comes after the rally, but at least the market is holding the gains with a consolidation. Down from 26.1% the prior week and 22.2% before that. Over 35% is considered bullish for the market, so still a ways off even though bulls are falling to a bullish level. Continuing the rise from 16%ish on the lows this leg where it held for several weeks. Peaked near 28% in November, falling short of the 35.6% hit in July 2009. For reference, cracking above the 35% threshold considered bullish. Hit a high on this run at 47.2%. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.
NASDAQ
Stats: +7.22 points (+0.32%) to close at 2280.79
Volume: 2.674B (+13.38%)
Up Volume: 1.726B (+6.104M)
Down Volume: 1.025B (+292.629M)
A/D and Hi/Lo: Advancers led 1.98 to 1
Previous Session: Advancers led 2.92 to 1
New Highs: 225 (+26)
New Lows: 14 (-5)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: +2.6 points (+0.23%) to close at 1118.31
NYSE Volume: 1.072B (+10.83%)
Up Volume: 670.977M (-110.857M)
Down Volume: 365.417M (+188.03M)
A/D and Hi/Lo: Advancers led 2.5 to 1
Previous Session: Advancers led 3.51 to 1
New Highs: 411 (+62)
New Lows: 32 (+9)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: +2.19 points (+0.02%) to close at 10405.98
Volume DJ30: 217M shares Tuesday versus 173M shares Monday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
WEDNESDAY
The Challenger layoff survey will come in on Wednesday as well as The ADP Payroll Employment survey and the ISM Services. ISM Services is the sister of the ISM Manufacturing Report. It is the larger of the two, since most of our economy is service-oriented, but it does not get a lot of respect. Crude inventory supplies will also be out. Those will provide some color to the day, but they will not be hugely moving. These are warm-ups for the Friday jobs report where the consensus is looking at a 20K job loss and a 9.8% unemployment rate. Everyone is guessing on those numbers right now, and Larry Summers was hinting that things could be a lot worse because of the weather. He was talking 100K-200K worse than expected.
We have been taking some gain off the table on this rally, and that is our standard operating procedure. We have been doing that because, as the stock market moves higher, there are issues with respect to the resistance in the bigger picture. NASDAQ is there right now, SP500 has not made it, and they are showing candlestick patterns that warrant respect. It does not mean we should wring our hands and think things will sell off. That might not be the case at all; these are just warning flags after a strong move higher. The sellers came in and shoved stocks back down after gapping to the upside, and I just want to take some precautions there. If the market gaps lower, we will honor our stops on our upside plays. We have good gain built into a lot of them. We have decent stop points and will not lose a lot of money. There could be a problem if there are massive gaps lower, but that not likely to be the issue unless something really ugly develops that no one expects (i.e., Greece collapsing overnight).
There will likely be some kind of pullback. There might not be a deep test, and we just have to see what kind of reaction there is to those doji. A lot of stocks have been setting up well and are in good patterns. These are new areas and not necessarily the old leaders, such as industrials, that led the last move higher. We may get some rebound plays and will be looking for those as well. We have been sticking with the pattern plays on this last part of the move because they set up well and can hold their gains. We have picked up some new positions over the past couple of days as well as taking some off the table. Again, we will honor our stops. We will continue to look for upside plays that set up, but now is the time to be patient. You do not want to jump in on the first day of pullback (especially when the indices are showing the kind of action they are at important resistance points that we have been watching for a test all along). You can take a little position here and there if you want to get some exposure, but do not load the boat at this kind of inflection point. We will look for opportunity and have some downside plays in our pocket if they come our way. Again, we do not want to get impatient here. The market has made a good rally, showing decent volume on the way up, and this may just be a pause. We will let the plays set up, and as they show us, we will move in.
Support and Resistance
NASDAQ: Closed at 2280.79
Resistance:
2273 to 2282 marks bottom of January 2010 lateral peak
2275 - 2278 from the February 2008 and April 2008 lows
2292 is a low from January 2008
2319 from the September 2008 peak
2320 to 2326.28 is the January high
2324-2370 is a range of resistance from early 2008
2382-2395 from 2008
2412-2415 represents a series of peaks and lows in 2007, 2008
2453 is the August 2008 peak
Support:
2245 from July 2008 through 2260 from late 2005.
The 50 day EMA at 2216
2210 (from September 2008) to 2212 (the July 2009 closing low)
2205 is the November 2009 peak
2191 is the October 2009 peak
2177 is a low from March 2008
2169 is the March 2008 closing low (double bottom)
2168 is the September 2009, intraday peak
2167 from the July 2008 intraday low
2155 is the March 2008 intraday low
2143 is the October 2009 range low
2099 is the mid-September 2008 closing low
2070 is the September 2008 intraday low
2060 is the August peak
The 200 day SMA at 2060
2048 is the early October 2009 closing low
2015 from an early August 2008 peak
S&P 500: Closed at 1118.31
Resistance:
1119 is the early December intraday high
Bottom of the January 2010 consolidation 1131 to 1136
1133 from a September 2008 intraday low
1151 is the January 2010 peak
1156 is the Sept 2008 low
1185 from late September 2008
1200 from the July 2008 low
Support:
1114 is the November 2009 peak is breaking
1106 is the September 2008 low
1101 is the October 2009 high
The 50 day EMA at 1100
1084 to 1080 (September 2009 peak)
1078 is the October range low
1070 is the late September 2009 peak
1044 is the October 2008 intraday high
The August peak at 1040
The 200 day SMA at 1035
The early October 2009 closing low at 1025
The early August intraday peak at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
Dow: Closed at 10,405.98
Resistance:
10,496 is the November 2009 high
10,609 from the Mid-September 2008 interim low
10,730 is the January 2010 peak
10,963 is the July 2008 low
Support:
10,365 is the late September 2008 low
The 50 day EMA at 10,298
10,285 is the late December consolidation peak
10,120 is the October 2009 peak
9829 is the September 2008 closing high
9918 is the September 2008 peak
9855 is the early September peak in its lateral range
9835 is the late September 2009 peak
9654 is the November 2008 high
9625 is the October 2008 closing high
9620 is the August 2009 peak
The 200 day SMA at 9640
9430 is the early October low
9387 is the mid-October peak
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
March 01 - Tuesday
Personal Income, January (08:30): 0.1% actual versus 0.4% expected, 0.3% prior (revised from 0.4%)
Personal Spending, January (08:30): 0.5% actual versus 0.4% expected, 0.3% prior (revised from 0.2%)
PCE Prices - Core, January (08:30): 0.0% actual versus 0.0% expected, 0.1% prior
Construction Spending, January (10:00): -0.6% actual versus -0.6% expected, -1.2% prior
ISM Index, February (10:00): 56.5 actual versus 57.9 expected, 58.4 prior
March 02 - Tuesday
Auto Sales, February (14:00): 3.8M prior
Truck Sales, February (14:00): 4.4M prior
March 03 - Wednesday
Challenger Job Cut Survey, February (07:30): -70.4% prior
ADP Employment Survey, February (08:15): -20K expected, -22K prior
ISM Services, February (10:00): 51.0 expected, 50.5 prior
Crude Inventories, 2/26 (10:30): 3.03M prior
March 04 - Thursday
Initial Claims, 02/27 (08:30): 475K expected, 495K prior
Continuing Claims, 02/20 (08:30): 4617K prior
Productivity-Rev., Q4 (08:30): 6.2% expected, 6.2% prior
Unit Labor Costs, Q4 (08:30): -4.4% expected, -4.4% prior
Factory Orders, January (10:00): 1.2% expected, 1.0% prior
Pending Home Sales, January (10:00): 1.7% expected, 1.0% prior
March 05 - Friday
Unemployment Rate, February (08:30): 9.8% expected, 9.7% prior
Nonfarm Payrolls, February (08:30): -20K expected, -20K prior
Hourly Earnings, February (08:30): 0.2% expected, 0.2% prior
Average Workweek, February (08:30): 33.7 expected, 33.9 prior
Consumer Credit, January (15:00): -$3.8B expected, -$1.7B prior
End part 1 of 3
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