Yesterday, I said investor’s should “raise some cash,” that politics will get uglier in coming months. That is not a change from my belief that this bull market has much further to run, and that speculation will run rampant before it is over.
I think dysfunction, obstruction and hostility in Washington will be what’s hitting new highs this summer, not the market.
I think the political environment will get so hostile between Congress and the White House, nothing will get done – nothing !
From here on in, it is all about the mid-term elections in 2014.
Recently, the Street took the likelihood of a correction OFF the table. I am putting it back ON the table, suggesting investors raise some cash, especially as stock prices rise.
A correction can involve a sharp plunge in prices, or a sideways-to-down slide over a period of months. I favor the latter, since there is so much cash seeking stocks to own.
For the same reasons, it may take weeks for it to develop. Now is the time for investors to accept that possibility, so denial doesn’t dominate one’s decisions once it occurs.
TODAY:
Yesterday, I projected a rise in the DJIA of 65 to 130 points. It rose 86 points and closed up 60.
Today’s market must be watched closely for the ability to follow through. A strong push would indicate new highs; a rally failure would be an early indication fatigue is setting in.
Today’s economic reports were “mixed.”
April Housing Starts declined 16.5%, but permits rose 14.3%, The CPI was down 0.4%, and Jobless Claims rose 32,000 to 360,000. At 10 o’clock, we get the Philly Fed report, tomorrow Consumer Sentiments comes at 9:44 and the Leading (economic) Indicators at 10:00.
Minor support is DJIA 15,243 (S&P 500: 1,647).
NOTE: I will be traveling next week and may not be able to post
Investor’s first read – an edge before the open
DJIA: 15,275.69
S&P 500: 1,658.78
Nasdaq Comp.: 3,471.61
Russell 2000: 988.54
Thursday, May 16, 2013 9:08 a.m.
Apple (AAPL: $428.85)
As expected, AAPL had a buyer in the $435 area early in the day, but sellers were just too persistent, pounding the stock down to its next support level at $425 – $431. The selling was intense but sharply increased volume and a rebound late in the afternoon suggests AAPL has attracted some buying, raising hopes the stock will stabilize in this area. It will have to overcome pre-market selling, which has knocked it down 3-points.
FACEBOOK (FB – $26.60)
FB failed to attract a buyer big enough to hold off the seller who has been there for the last 9 days. Resistance drops to $26.90 as FB probes for support, probably a bit above $26.
I am not long or short Facebook.
SEQUESTER: Stay tuned, it is starting to hit. Erskin Bowles told CNBC Squawk Box recently sequester is a “stupid” way to handle deficit reduction.
At some point, the question will be raised about the sequester’s impact on the economy, notwithstanding the uncertainty it brings to persons at risk, directly and indirectly.
It is too early to expect anything to show up in the indicators, and it may never be a major issue if our economic recovery gains traction.
It is one of those potential negatives one has to consider along with other ingredients that lead to a decision to buy or sell.
Employers (government or private) may opt to furlough employees without pay, cut back on hours rather than release them to unemployment at the expense of the government. Even so, several weeks without pay has an impact on the economy.
This is one of those uncertainties that, along with a few others, can trigger a consolidation or pullback in the stock market.
ECONOMY:
We have a full docket of economic reports this week. For access to information including charts and graphics go to www.mam.econoday.com .
This week it highlights the JOLTS report, an acronym for Job Openings and Labor Turnover Survey, a Bureau of Labor Statistics (BLS) survey collected from employers each month encompassing employment, job openings, recruitment, hires and fires (separations). The data is used by the government for analyzing the state of the economy and planning. The guidance section of the FOMC is more and more indicator-based and JOLTS is one of the indicators it tracks.
It tends to lag the Employment Situation report by one month.
There were 3,844 million jobs openings at the end of March, vs. 3,899 the month before, suggesting a continuing soft job market.
THURSDAY:
Consumer Price Ix. (8:30) Proj. -0.3% ex food/energy +0.2%
Housing Starts.(10:00) Proj. 969,000 rate Permits 945,000 rate
Jobless Claims (8:30) Proj. 330,000
Philadelphia Fed Svy(10:00) Proj. 2.2
FRIDAY:
Consumer Sentiment (9:55) 78.0
Leading (economic) Indicators (10:00) Proj. +0.3%
George Brooks
“Investor’s first read – an edge before the open”
[email protected]
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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.
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