Amid all the year-end cross currents – tax selling institutional portfolio beautification efforts, we are faced with the results of U.S. budget negotiations by Congressional committee with a deadline set Friday, as well as a Fed taper decision on Dec. 18.
CONGRESS:
The idea is to slash $100 billion – $200 billion in spending cuts over the next two years. Failure to decide on something to send on the Senate and House could lead to another shutdown (unlikely) and wouldn’t raise the nation’s debt ceiling, or significantly alter sequestration.
Both parties will have problems with it no matter what. Based on all the “bobs and weaves” by lawmakers in Washington, I can’t draw any conclusion good or bad about an outcome. Ideologically, these people are polarized and so far apart.
The Street has to separate what they do or don’t do from other considerations going into an investment decision. What a shame to jeopardize a recovery from a near meltdown of every asset we have, by this.
The European Union mess looked like utter disaster, but the financial communities got through it. Yet here we are ideologically paralyzed. Grow freaking up you guys, you have a country to run !
FED TAPER:
Bloomberg survey: 12 of 35 economists expect a December 18 taper; 9 expect a January 30 taper; and 14 expect a March 20 taper.
Any meeting when the FOMC announces a taper would have to be accompanied by a Fed Char press conference and business summary. January’s FOMC meeting does not have that scheduled. If the Fed were to suddenly schedule a press conference for January, it would be a tip off in advance..
I have urged readers to be prepared for an early taper (Dec.) but not sure the housing and consumer confidence/retail industry are ready for the psychological impact. I’m not convinced QE looks like a eunuch at this time to me.
FOMC meetings next six months:
December 17 – 18
January 29 – 30, 2014
March 19 – 20
April 29 – 30
June 17 – 18
July 29 – 30
So, we have two dates to deal with, Friday, Dec. 13 and Wed. Dec 18.
That should assure volatility along with the usual December stuff. Christmas comes on a Wednesday, so Monday, Tuesday and Thursday, Friday are in the blotto category.
Nevertheless, DO NOT take your eye off what is happening, especially to overly depressed stocks. While you are shopping, enjoying lunch-time “cheer,” or scrambling for one thing or another, THINGS WILL be happening. That stock you were planning to buy, but felt there was plenty of time to buy it, could easily rise 3% -4%, even in a down market.
TODAY:
Both DJIA and S&P 500 hit mu upside targets yesterday. Today I can see a retracement down to DJIA 15,984 (S&P 500:1,802)
Investor’s first read– a daily edge before the open
DJIA: 16,025
S&P 500: 1,808
Nasdaq Comp.4,068
Russell 2000: 1,129
Tuesday, Dec. 10, 2013
NOT ROCKET SCIENCE !
This doesn’t have to be rocket science. Common sense and sensitivity to the emotions that are driving stock prices is key, because the level of the stock market, and stocks, is a matter of opinion. For proof, look at the varying levels and valuations the market and stocks reach over months, years. Confidence rules – too little, too much, a change for better or worse. Step back, ask, what drumbeat is the market marching to right now ? It would be nice to have a perfect formula for all the calls needed, but that would simply cause everyone to do the same thing at the same time, negating its value.
NOTE: Anyone seriously interested in a very heavy, but very readable monthly
analyses of the economy and financial markets should subscribe to A. Gary Shilling’s “INSIGHT.” This is super crunching, but a MUST read. No punches pulled, but not always the best bedtime read.
Most honest analyst in the investment business. Well, OK, that really isn’t a big compliment. Let’s say, just a refreshingly honest, straight shooter with an excellent staff. Web: agaryshilling.com. Ph: 973-467-0070.
TIMING – OPPORTUNITY STOCKS
The following are based on technical analysis only and are not to be taken as buy or sell recommendations, but as one of many factors that must be considered in the decision process. Comments do not take into consideration earnings reports, or changes in institutional ratings, company guidance. Technical analysis is based on one’s interpretation of the impact buying and selling have on the price of a stock and is therefore not an exact science. News and events can change an interpretation instantly.
Apple (AAPL: $566.43) Positive.
Thursday’s reversal and Friday’s drop look like a combination of selling into the news (China/iPhones) and selling into a strong market rally. Yesterday’s bounce off $560 support improves AAPL’s pattern enough to enable a run across$570 and on to 52-week high $575. Yes, but this is December crosscurrents and all, so beware.
Facebook (FB:$48.84) Positive
Still some life in this one. A move across $49.75 Raises chances it can push into the low 50’s. Support is $48.20
IBM (IBM: $177.46) Neutral/Negative
No change: IBM is still struggling with an irregular base. Overhead supply between $178 and $181 is very formidable. IBM trying to stabilize at $175. Failure indicates a test of $172.60. This is painful to watch. I plan to replace IBM.
Pulte Homes (PHM: $18.33) Positive
Little change from Friday’s post – While PHM got a big boost from Fed Vice-Chair Janet Yellen’s assurance the Fed will continue to accommodate the economic recovery and especially housing, the industry must now demonstrate it can gain traction. That may be in the works with the big jump in October’s New Home Sales. PHM should attract buyers in this area. if housing is a “go.” Yesterday’s spike up ran into a wall at $18.65 and muddied PHM’s technical picture. Support is $18.20.
First Solar (FSLR:$56.07) Positive
FSLR has done an about face from its stellar Sept. – Nov. action Its drop may be related to the plunge in photovoltaic producer, ReneSola (SOL) which got hammered when it reported greater than expected Q3 losses. Resistance drops to $58. Support uncertain – $54.60. FSLR desperately needs an institution to step up and explain if its fundamentals are at risk ala what happened at ReneSola. Maybe it’s apples and oranges, but FSLR needs help. No earnings until Jan. 30.
Nike (NKE:$79.78) “the inchworm” Positive
Small wonder why I named NKE the inchworm ? – little moves in both directions but generally up. Resistance is $80.10. Support is $79.70
Hewlett-Packard (HPQ: $27.25) Positive.
Consolidating surge two weeks ago. Support at 27 must hold or HP slides to $25.80 – $26.20.
Polaris Inds. (PII:138.80) Positive
Nice breakout on increased volume raises support to $138.40 Should punch into low 140s unless year-end profit- takers/ institution portfolio adjustments put a lid on it.
Performed as expected, hitting new 52-week high Friday. Support is $135.90. Needs good buyer there or slip to $135.30 possible.
Amazon (AMZN: $384) Positive
Break above $388 paves way for$394 and possible new 52-week high $399.
Pandora Media (P:28.22) Positive.
This is like following a drunk driver. Sellers used Thursday’s rally to sell and sold into the surge in the stock market Friday, which did some technical damage. Needs a buyer above $27. Definitely not a stock for light sleepers. Has its lovers and haters.
THE ECONOMY:
A much lighter week this week. The Street will parse words from Fred speakers Monday (see below)
For detailed analysis of both the U.S. and Foreign economies along with charts, go towww.mam.econoday.com. Also included is an explanation of each indicator. If you want to know when the next Employment report or any other key report will be released that info is also there under “event release date.”
MONDAY:
Fed’s Lacker speaks (12:30 p.m.)
Fed’s Bullard speaks (12:50 p.m.)
Fed’s Fisher speaks (2:15 & 6:30 p.m.)
TUESDAY:
NFIB Business Optimism Ix. (7:30)
JOLTS (10:00) – Job Offers & Labor Turnover : Openings forecast for Oct. 13, 3.905 million vs. 3.913 million Sept.
Wholesale Trade (10:00) Oct. +0.4 pct.
WEDNESDAY:
Treasury Budget (2:00 p.m.)November -$155 billion
THURSDAY:
Jobless Claims (8:30) November 325,000 week end 12/7
Retail Sales (8:30) November +0.6 pct., excl auto: +0.3 pct.
Import/Export Prices (8:30) Nov. -0.8 pct import price, -.03 pct. export prices.
Business Inventories (10:00) Oct. =0.3 pct
FRIDAY:
Producer Price Index (8:30) Nov. -0.1 pct.
RECENT POSTS – 2013
Nov 12 DJIA 15,783 “Get Ready for Year-End Cross Currents”
Nov 13 DJIA 15,750 “Money Manager Dilemma – Your Problem, as Well
Nov 14 DJIA 15,821 “Feeding Frenzy in 2014’s Winners ? Big Day for “TECH
WATCH” Stocks”
Nov 15 DJIA 15,876 “Yellen – No Taper – Surprise January Correction ?
Nov 18 DJIA 15,961 “Green Light to Load Up on Stocks ?
Hospital
Nov 25 DJIA 16,064 Fetch the Blinders – Here come the forecasts
Nov 26 DJIA 16,072 Time to Shop for New Winners and Old Winners Getting
Whacked by Profit-Taking”
Nov 27 DJIA16,072 “December Head-Fakes Galore – Raises Risks”
Nov 29 DJIA 16,097 “Stock Market Bubbles Don’t Pop to a Full House”
Dec 2 DJIA 16.086 “Serious Stuff Coming This Week and Next”
Dec 3 DJIA 16,008 “Hunting Season – Be Armed and Ready”
Dec 4 DJIA 15,914 “Holidays, Or Not, DO NOT Take Your Eye Off This Market”
Dec 5 DJIA 15,889 “December’s Two Dilemmas – Watch Your Back”
Dec 6 DJIA 15,821 “No Fed Taper=December Rally – Correction Q1 ?
George Brooks
“Investor’s first read – an edge before the open”
*STOCK TRADERS ALMANAC: The new annual Stock Trader’s Almanac is off the press. This is a “must,” always has been, if you are a serious investor, or intend to be a serious investor. Visit stocktradersalmanac.com for details
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The writer of Investor’s first read, George Brooks, is not registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk. Brooks may buy or sell stocks referred to herein.
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