Market Feeling: Negatives Outweigh The Positives

Some quick midday thoughts:

1) Commodity based stocks getting hit hard again midday. Alcoa down 5.3 percent, AK Steel down 4.6 percent, oil service down 2.3 percent. What's up? Underlying commodities are weak for a second day in a row--the CRB index (a basket of commodities) has fallen almost 2 percent the past two days on concerns that a U.S. slowdown will finally curb commodity consumption. This theory has been wrong for months, since global demand remains strong.

2) Elsewhere, the tone is better but the mood is not. Traders are looking for something that will create new leadership. How eager are they for a new talking point? The main discussion is a hope for some kind of fiscal stimulus package to come out of Washington. Unfortunately, traders were disappointed when none materialized Friday. But as we approach the State of the Union speech (January 28th) bulls are hoping something will be announced. What kind of stimulus? Targeted tax cuts, make previous cuts permanent, anything to get some momentum back. Certainly, the Democrats will be presenting plans of their own.

The problem: we're losing the positives for the economy. Consider the positives: cheaper dollar and the Fed cutting rates. What's missing? Job growth! That started to evaporate with the Friday report.

Now consider the negatives: housing collapse, $100 oil, and tight credit conditions. The worry is the negatives are starting to outweigh the positives, so losing jobs growth in the positive category was a big loss.

That's why something seemingly as trivial as fiscal stimulus has taken on more weight.

Questions? Comments?