Stock ETFs were set to open lower Monday after the holiday weekend on disappointing jobs data. The Labor Department on Friday said the U.S. economy created 120,000 jobs in March, much lower than expected.

Last Thursday in our morning strategy note to trading clients, our market technician David Chojnacki pointed out a number of key technical occurrences that were evident in broad market indices that may shed some light on near term activity in equities. The DJIA closed below its 20 day SMA for only the second time since December of last year and MACD’s in the DJIA, the SPX, and the Nasdaq 100 have continued to turn down and remain below signal. The SPX did manage to close above the 1397 support level we have pointed out recently (support also lies in the 1385-1388 area) last Thursday although indications of futures have them falling significantly from previous levels, in the 1375 area. Late last week Chojnacki also pointed out in our strategy note, which perhaps was a harbinger for the week to come, “I’m watching the 1385 level in the S&P as a barometer for additional pullback (perhaps at least a 5-6% correction).”

From an options standpoint, we have noted steady buying of downside puts in two broad based products, SPDR S&P 500 (NYSEArca: SPY) and iShares Russell 2000 (NYSEArca: IWM) over the past several weeks, but for the most part there has simply been a lack of call buying in any one given sector or sectors, which shows us that institutional options players may be simply laying off equities at current levels. The VIX marched higher throughout last week as well, bumping up against its 50 day moving average on two occasions last week and surged above 17 before retreating somewhat to close on Thursday at $16.70. Selling pressure was evident once more last week in longer dated U.S. Treasuries, as we saw iShares Barclays 20+ Year Treasury (NYSEArca: TLT) once again fall to its 200 day moving average, but it saw technical support there and rallied later in the week.

Additionally, the Euro felt pressure against the U.S. Dollar, and fell rather sharply during the last two trading sessions of last week, with FXE closing below its 50 day moving average for the first time since early March. Recurring European debt concerns have sent the Euro back to the $1.30 level versus the U.S. Dollar and a phenomenon that we pointed out several weeks ago as having seemingly derailed, once again “took over” last week as equities began to move together with the price of the Euro. Judging by overnight action in the futures markets and overseas equity markets, we can see that this Euro weakness will likely again negatively affect equities heading into this new week as well.

From a fund flows standpoint, nearly $1.7 billion left SPY via redemptions, followed by other broad based and sector equity products including iShares MSCI EAFE (NYSEArca: EFA), iShares S&P 400 Midcap (NYSEArca: IJH), SPDR DJ Industrial Average (NYSEArca: DIA), and SPDR Financials (NYSEArca: XLF), with net redemptions in those ETFs collectively totaling $2.3 billion. On the creations side, IWM and Vanguard MSCI Emerging Markets (NYSEArca: VWO) led the pack, taking in $1.3 billion collectively. VWO is no stranger to near the top in weekly creations in 2012, as we have pointed out this occurrence along with similar flows in iShares MSCI Emerging Markets (NYSEArca: EEM) especially throughout January and February of this year in these recaps. The iShares Investment Grade Corporate Bond (NYSEArca: LQD) also registered a strong week, taking in over $400 million in new assets.

It appears that the European debt crisis is far from “dead and buried” and we will be mindful of any correlation between the Euro and equities so as to give us some color on potential near term trends in the markets.

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