Actionable insights straight to your inbox

Equities logo

Big Money Pondering Market’s Next Move

Investor’s first read   - Brooksie’s edge before the openThursday, June 21, 2012        9:18 a.m. ETDJIA:  12,824.39S&P 500:  1355.69Nasdaq Comp.: 2930.45Russell 2000: 

Investor’s first read   – Brooksie’s edge before the open

Thursday, June 21, 2012        9:18 a.m. ET

DJIA:  12,824.39

S&P 500:  1355.69

Nasdaq Comp.: 2930.45

Russell 2000:  784.05

Wall Street didn’t get QE3 from the Fed; instead it got the extension of “Operation Twist” through year-end on top of lower projections for the GDP and inflation rates.

The Fed sees real GDP for 2012 running between 1.9% to 2.4% vs. 2.4% to 2.9% as previously projected. Unemployment is now expected to run between 8.0% and 8.2%, vs. 7.8% to 8.0%Inflation relating to personal consumption expenditures is seen between 1.2% and 1.7% (core at 1.7% – 2.0%).

For 2013, the Fed sees GDP growing at a 2.2% to 2.8% rate.

TODAY:  The stock market is hanging tough in face of bad news across the board. The U.S. economy continues its softness as reflected in a miniscule drop of 2,000 jobless claims.  The Fed didn’t give the market more than assurances and Spain and Italy are getting closer to needing a bailout in the opinion of some economists.

At this point, the market is telling us not to sweat it, that bad (economy/Europe) is good.  That’s tough to buy, but the market is an ornery cuss to deny.

The Street appears to conclude that U.S. equities are the only place where any kind of return is possible, however they must be purchased selectively and after a pullback or long consolidation.

Resistance starts at  DJIA 12,865 (S&P 500: 1360).

Support at DJIA 12,750 (S&P 500: 1346) must hold or the maeket I in for a nasty tumble.


Jobless Claims were down 2,000 to 387,000 for the week ending  June 16. At 386,750, the four week moving average  was the highest since December 3, 2011.

The PMI Manufacturing Index dropped to 52.9 in June from  54.0 in May, yet another indication the U.S. economy is slipping.

Existing Home Sales, the Philly Fed Survey, FHFA House Price Index and Leading (economic) Indicators come at 10a.m.

Facebook (FB): No change from yesterday, FB has a “lid” on its stock in the 32 area as a result of profit takers who bought it under 30, sellers who bought it on the IPO or in the 30s and were upset when it plunged below 26 and short sellers trying to keep from running up further, or just shorting because they believe it is going lower. A break above 32 may “chase” the shorts and result in a run to 35-36. Support is 30.80, which I think it will test today or tomorrow.

ECONOMIC DATA:  Big week for economic data, especially Thursday (see below).  The Federal Open Market Committee (FOMC) meets Tuesday with commentary and Fed chief Bernanke’s press conference Wednesday at 2:15 p.m.


Housing Market Index (10a.m.)-Rose to 29 in June from a revised 28 in May.  Currently, tight lending conditions and inaccurate appraisals are to blame for fewer closings, according to David Crowe, Chief economist for the NAHB.


Housing Starts (8:30a.m.)– declined 4.8% in May to 708,000 vs a revised 744,000 in April. Both multifamily and single house sales were good, apartment house construction adversely impacted the number for May.


FOMC Meeting Announcement 12:30p.m.)

FOMC Forecasts (2p.m.)

Bernanke Press Conference (2:15)


Jobless Claims (8:30)-dropped 2,000 in the June 16 week to 387,000 claims. The 4-week average was up 3.500 to 386,750.

PMI Manufacturing Index (9a.m.)-Slipped 2.1 points in May to 52.9 in June from 54.0 in May.

Existing Home Sales (10a.m.)-Up 3.4% in April after a 2.8% drop in March. Gains were solid across all regions, however year-to-date is flat.

Philly Fed Survey 910a.m.)-Dropped in May to a negative 5.8 from a positive 8.5 in April.  New Orders dropped 3.9 points to a negative 1.2 for the period. A year ago, this  Index plunged from the 40 level in February to a negative 25 in August, rebounded  to a positive 10 until March 2012 after which it declined. Its behavior in 2010 was similar. I took the data from a chart so the exact numbers may vary slightly.

FHFA House Price Index (10a.m.)-Rose 1.8% in March after a 0.3% gain in February. Year over year rate also surged to a plus 2.7% reflecting a pronounced increase in home prices.

Leading Indicators (10a.m.)-Declined 0.1% in April after a 0.3% rise in March and 0.7% jump in February. Building permits and jobless claims were the big contributors to the April decline.


George  Brooks


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.

When the Fed begins to lower rates and the greenback cools, I believe dollar-denominated gold will shine. Investment in gold and mining stocks is another matter.
Equities short logo
Equities short logo