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Forget QE3 — We Need Smokin' April Payroll Number

Help! Forget QE3 — we need a smokin' April payroll number next week.

Why am I on my high horse about not liking the markets today? Because a whole bunch of indicators are flashing warnings:

1) Of 45 companies in the S&P 500 reporting today, 18 missed — 40 percent! Huh? Prior to today, only about 20 percent were missing.

2) Brent crude, after dropping through most of April, is rising again, nearing $120;

3) there is a 2 percent divergence between the Dow Industrials (up 0.9 percent) and Dow Transports (down 1.2 percent)...that is VERY UNUSUAL.

4) yields on the 10-year Treasury are near 2-month lows, and well below 2 percent.

So why are stocks up? Mr. Bernanke's assurances he would help if things got worse, and some are clearly looking for a housing bottom: March pending home sales were strong, and there were good reports from Pulte and Ryland .

Most maddening of all are technical, machine-driven factors. At about 1:20pm ET, as the S&P futures passed 1390 (highs for the day), there was a spate of futures volume that kicked futures up 7 points in a half hour...what happened? Nothing...just buying programs kicked in.

So what happens from here? Never mind that we are heading into a seasonally slow period for stocks — let's not fall back on old rules-of-thumb.

With the economic data looking wobbly in April, April nonfarm payrolls, due next Friday, will be key. Forget QE3: we need a smoking payroll number next week — like 250,000 and above, but estimates are around 170,000.

If we don't, problems are going to start about earnings estimates. Not this quarter. The second quarter is another quarter where analysts are only expecting 2 percent growth (gimmee a break: Apple alone will blow that away).

The problem is the second half of the year, where there are expectations of 16 percent growth in Q3. Now you're talking real numbers.

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