Floating Bias

Markets opened with stocks higher on the first open market day of December, but then dropped back to flat after the ISM Index came in lower than expected.  The manufacturing survey came in at 49.5, which indicates contraction when below 50.  Spain has also made a formal request for financial aid, as Europe continues to be on the minds of global investors.  The U.S. market will continue to hinge on the Fiscal Cliff talks, and it appears that both parties have their heels dug in.  The Dow is trying to hold onto the 13,000, so any announcements regarding progress or breakdown will push the index either way.  The big economic report for the week will be this Friday with the monthly Labor Department’s Jobs Report.  mortgage bonds are trading in a tight range, yet are still above the 25 and 50 DMA, so we will continue with a cautious floating bias.