SO FAR SO GOOD

The markets surged today as the European Central Bank's Mario Draghi provided enough fodder for the markets to get excited about.  While the ECB did not announce anything much different than what had already been discussed, the markets obviously liked what they heard and were pleased to see the ECB taking some action to forestall the Euro Zone crisis.  It also didn't hurt that the ADP payroll report came in much hotter than expected.  ADP reported 201,000 new jobs.  Attention will now turn to tomorrow morning's government payroll report.  The ADP report can be a harbinger of the government number but can also be significantly different.  Last months numbers were very close but in June the ADP report came in at 172,000 versus the government number of 73,000.  Needless to say, expectations have been raised for tomorrow morning.  A reading equal to the ADP number would provide support and additional fuel for today's rally.  A disappointment in the government's number could result in giving back some of today's gains. 

The rally today forged new highs for the year and broke significant resistance so the bulls will look to fight hard to keep the gains.  The German Constitutional Court meets next week and could throw a wet blanket over Draghi's comments.  The Fed is also lurking next week and the good data would make another round of easing harder to justify.  Then again, better economic data would be the best of all worlds though Fed intervention would lead to more of a sugar-rush type of gain.  Tomorrow's report takes added importance with today's solid ADP report.  Conflicting data would only make the Fed's job harder (as if it wasn't hard enough).  We'll see what tomorrow brings and will post further updates as warranted by the markets or the economic news.