By Greg Peel

The Dow rose 37 points or 0.3% to 12,959 while the S&P was little changed at 1371 and the Nasdaq lost 0.2%.

The US rolled into summer time over the weekend. Relevant Australian states will roll off summer time on April 1 so until then the NYSE will close at 7am Sydney time, and thereafter at 6am for the southern winter.

There were no economic releases of note in the US last night and a strange vacuum of headlines from across the pond. It's going to seem a bit weird for a while if the answer to the question "What happened in Europe last night?" is "Nothing". The only point of market focus was China's surprising plunge into trade deficit in February to a shortfall not seen in yonks ? news which had the local market looking a bit sick yesterday.

The impact of that news on Wall Street was not dissimilar to that in Australia in that it's probably not something to be too concerned about ? we know China's slowing, there's plenty of policy ammunition available to Beijing, New Year in January distorted the numbers ? and as such there was a mild "risk off" response with the material, energy and banking sectors drifting lower. The reason the Dow was up and the S&P square was that the flipside trade last night was to buy defensives. And that's not a particularly bullish sign.

Wall Street's rally to February has exhibited a typical switch out of defensive names which had been havens for some time and into cyclicals and risk stocks to ride economic improvement. As such, the rally has seen US defensives such as utilities, telcos and consumer staples somewhat beaten down. So far in the month of March, however, defensives have regained popularity at the expense of cyclicals, and not just on the day the Dow fell 200.

Wall Street has grafted back from that sharp drop to see the Dow again looking at the 13,000 psychological barrier. The average tried and failed so many times in February a pullback and consolidation was pretty much a given. This fresh assault is not, however, being led by risk stocks but by defensive stocks. What does that tell us?

While we're contemplating that one, note that last night the VIX volatility index fell below 16 for the first time since July, to 15.65. July was when we then had the infamous US credit downgrade ahead of Europe threatening to implode once more. The VIX has never fallen below 15 since 2007. Indeed, every time the VIX has fallen as low as 15 between now and then, eventually "something" happens. I'm not suggesting the VIX is a bizarre crystal ball, just that complacency always settles in before the next market jolt.

Each time since 2007 that jolt has been negative. It is nevertheless possible the next jolt we see, whatever that may be, could be positive for a change, sending the VIX back up as traders rush into call options and sending the Dow through 13k and the Nasdaq through 3k. But, of course, there's always stairs and elevators.

Consider also that current volumes on the NYSE are woeful. We know that retail investors are MIA, and that there is nothing like the leverage in the market there used to be for hedge funds and the like, but aside from the 200 point down-day the volume meter in New York has struggled to register. So if we add it all up ? Dow again approaching a psychological level at which it has failed several times, defensives not cyclicals driving the recent push, volumes anaemic and the VIX squarely in complacency territory, then you'd have to say all the elements are there for a correction.

Unless, of course, everybody's plain wrong, and the next piece of devastating news we're about to hear is devastatingly positive ?something which hasn't happened since well before 2007. It would certainly be enough of a surprise to break the lethargy cycle and perhaps shock everyone back into the market lest they miss out. If you think of something let me know, but in the meantime we'll recall that bull markets never start with a bang, they just quietly evolve while no one is paying much attention.

Other markets were a bit of a yawn last night, and we note that the Fed will release a policy statement tonight. No point in getting too carried away ahead of that little gem, particularly considering there's little agreement this time on just what the Fed might say.

The US dollar index slipped 0.2% to 79.84 but gold drifted off US$11.20 to US$1700.50/oz and the Aussie, in response to the Chinese deficit, has fallen 0.6% to US$1.0515.

Base metals were all but dead in London, while Brent oil lost US91c to US$125.34/bbl and West Texas fell US94c to US$106.46/bbl.

The SPI Overnight gained 12 points or 0.3%.

NAB's monthly business survey will be the point of interest locally today while tonight sees a not dissimilar survey in the eurozone in the form of the ZEW, ahead of the Fed "rate decision" and US retail sales.

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