6 Gut checks before market opens

Need to Know APRIL 09, 2013 6 crucial gut checks before the market's opening bell   Good morning. So far, so good. Alcoa Inc. may not be the bellwether it once was, but it's estimate-topping profit doesn't seem to be hurting equity markets Tuesday morning. But with earnings season now under way, the bigger concern surrounds the fact that more than 100 S&P 500 companies have provided negative earnings guidance for the quarter so far, while just 23 have provided positive pre-announcements, says Jim Reid, strategist at Deutsche Bank in London. "A glass half-full view of this may say that it has reduced the chance of negative surprises during the earnings season itself but for firms with global exposure we also start to wonder how the continued weakness in Europe and the [U.S. dollar] strength is going to impact on their final numbers," Reid writes. "It will be an interesting few weeks." Key market gauges: Asia got the ball rolling, with most stocks advancing in the wake of the Alcoa earnings and restrained Chinese inflation data. European shares are on the rise , while U.S. stock index futures are holding on to some modest gains. It's been a pogo stick market . The S&P 500 ended higher Monday, marking its 13th consecutive day of alternating up/down closes -- the first streak of its kind on record according to preliminary data. The economy: Consumer prices in China slowed in March, though economists were divided on whether it ensures monetary policy won't be tightened any time soon. Investors may pay a little more attention to an often overlooked gauge of small-business optimism index after a component of the gauge was credited with signaling last Friday's disappointing March nonfarm payrolls figure. The broader index fell 1.3 points to 89.5. The hiring component, which measures private-sector hiring plans over the upcoming three months, suggests the pace of new job creation may not be that hot in the next few months, either. Two Fed speakers are also on the calendar Tuesday: the Richmond Fed's Jeffrey Lacker and the Atlanta Fed's Dennis Lockhart. The buzz: Sometimes bold and "outside the box" just isn't the right prescription. JC Penney  threw CEO Ron Johnson  -- the man who helped create  the Apple Store -- under the bus late Monday, replacing him with his predecessor. Hedge-fund investor Bill Ackman, who had handpicked Johnson, last week acknowledged that efforts to transform the dowdy retailer into a chicer competitor had been "something very close to a disaster." While the whole episode will make for case-study fodder at the nation's business schools, investors who got burned should look at themselves in the mirror, wrote Joshua Brown at The Reformed Broker . "If you've been long the stock, you have no method, no process or discipline. You basically buy what other people are talking about and take shots on things because they went down a lot. This is evident because there was nothing technically or fundamentally straightforward about this morass, ever," Brown said . Money manager BlackRock , which has been a big advocate of government debt in recent years, now says the Fed needs to rein in its bond-buying program quickly, telling the Financial Times that the central bank is distorting markets and could stoke inflation. The chart of the day: Where are these new highs when it comes to individual stocks? That's what J.C. Parets is asking over at All Star Charts : "New market highs they tell me. But the market of stocks says otherwise. New highs minus new lows peaked in January. 'Stocks.' if you will, have been rolling over for a few months while the 'market' is still making new highs." Here's the S&P 500 compared to the 52-week high list: The call of the day:  It's all about surfing the great flood of central bank liquidity, Global Macro Monitor argues in a post on Barry Ritholtz's Big Picture blog. The liquidity surge has distorted traditional market indicators and compromised the global compass they provide. "The wave of liquidity will only get larger before it crests when the Fed changes policy," according to the blog. "The key, then, is to pick the spots where to surf the liquidity.   Dollar/yen, Japanese equities, and U.S. large cap stocks with mature cash flows  seem to be the bonzai pipeline of financial trading for now." Random reads: The debate over Margaret Thatcher's legacy continues. Roger Bootle argues that while "Thatcherism" was more a set of "loosely related ideas than a coherent economic philosophy" it was both "substantial and essentially about political economy." Why there are more Margaret Thatchers than Marissa Mayers . "Trickle-down stupidity:" Jared Bernstein says it's best to ignore David Stockman. Annette Funicello : A critic remembers his first dream crush . Why you shouldn't chase the hedge-fund lie . --William L. Watts Follow on Twitter: @wlwatts Get the latest news on our mobile site: http://www.marketwatch.com/m MarketWatch has sent you this newsletter because you signed up to receive it. To ensure you receive this newsletter in the future, please add marketwatchmail.com to your list of approved senders. Sent to: alanrussell@princetoncap.com Unsubscribe | Subscribe Copyright 2013 MarketWatch, Inc. All rights reserved. MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc. By using this site, you agree to the Terms of Service and Privacy Policy (updated 6/26/07). MarketWatch - Attn: Customer Service, 201 California St., San Francisco, CA 94111