Bulls in Charge, but........

George Brooks |

   I headlined yesterday’s post, “Market Crossroads – Up ?  or Down ?”  The market responded emphatically with  solid gains across the board, exceeding my projections for the day, which were anything but conservative. .

   I expressed my concern for  how easily the blue chip DJIA and S&P 500 dropped  between January 21 and February 5, giving the benefit of the doubt to the bulls.

   Even so, the market rose well beyond my “projected resistance” levels for the day.

   The DJIA recouped close to two-thirds its 2014 loss, but the S&P 500 and Nasdaq Composite  recouped far more than two-thirds, blowing through levels that should produce enough sellers to stop the advance.

   This action is atypical of  the norm. I can only conclude the market was ripe for a correction; a number of investors opted to take profits in the 2014 tax year; and concerns for China’s economy, turmoil in the Emerging Market currencies and Fed taper produced a vacuum which enabled stocks to drop abruptly, all of which facilitated an easy recovery.

   Fed Chief Janet Yellen’s testimony before the U.S. House Finance Committee can be credited with some of that recovery though there shouldn’t have been any surprises.

   Short covering deserves some credit, but a good part of the advance was institutions scooping up the bargains that a 7% drop in prices produced in late January and early February.

CONCLUSION:

   Nine days ago investors regretted not locking in gains after a 29% rise in the S&P 500 in 2013. Worse yet, they agonized over whether they should be selling after a 326-point plunge in the DJIA on Monday, February 3.

   Now, after a sharp rally, investors agonize over whether to BUY.

   The risks of going “all-in” or “all-out” at any one point in time are high. Risk can be reduced by being selective and taking only a “partial” position, rather than a full one. This enables one to participate in an advance, but be less vulnerable in the event of a decline.  What’s more, it tempers the urge to “do something” because the market is rising.

   Support is DJIA 15,925 (S&P 500: 1,812). While the Bulls have taken charge – no need to panic.

Investor’s first reada daily edge before the open

DJIA: 15,994

S&P 500:  1,819

Nasdaq  Comp.: 4,191

Russell 2000: 1,129

Wednesday, February 12, 2014, 2014   9:12 a.m. 

   

FED CHIEF YELLEN TESTIFIES

   Fed Chief Janet Yellen testified before the U.S. House Financial Services Committee on Tuesday and will do so again Thursday before the Senate Banking Committee Thursday at 10:00 a.m..

 

  JANUARY BAROMETER

As January goes, so goes the stock market for the year, according to the January Barometer (JB).* The 3.6% drop in the S&P 500 in January suggests a very challenging year for investors and clearly not as rewarding as 2013 when the S&P 500 rose 29% after a 5.8% rise in the preceding January.

   The JB boasts an 89% accuracy rate over the years with most of its misses explained by unpredictable events, such as war and  extreme bull/bear turning points.

   The rationale for the JB  having predictable value is that a new year is accompanied by year-end and new year portfolio adjustments and decisions based on  projections for the year ahead. It is also a time when institutions receive a lot of new money that must be put to work.

DEBT CEILING DEBATE

   The U.S. House extended the debt ceiling until March 15, 2015.  This has been a contentious, white knuckle issue in the past, no more.

……………………………………………………………………….

THE ECONOMY:

The economic calendar  is lighter this week,  but Fed chief Janet Yellen, testified before the U.S. House Financial Services Committee Tuesday and will do so again Thursday (10:00 a.m.) before the Senate Banking Committee (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: No major reports

TUESDAY:

NFIB Small Business Optimism Ix (7:30)  Jan. index was up slightly to 94.1 from 93.9 in Dec.

ICSC Goldman Store Sales (7;45) Impacted by weather w/w for Feb. 9 was off  0.3 pct vs, plus 0.3 pct. Jan.  y/y is plus 2.3 pct.

 Release of Fed’s semi-annual monetary policy (8:30)

Fed’s Plosser speaks (9:00)

JOLTS –Job Openings Labor Turnover (10:00) Hire rate Dec. was 3.2 pct. Separation rate 3.2 pct.

Fed Chief Yellen Testifies U.S. House Financial Services Committee (10:00)

Wholesale Trade (10:00)Dec. inventories increased 0.3% offset by 0.5% increase in wholesale sales

Fed’s Lacker speaks (8:00 p.m.

Fed’s Fisher speaks (8:10)

WEDNESDAY:

MBA Purchase Apps (8:00 )

THURSDAY:

Jobless Claims (8:30)

Retail Sales (8:30)

Fed Chief Yellen testifies before Senate Banking Committee (10:00)

Business Inventories (10:00)

FRIDAY:

Import/Export Prices 8:30)

Industrial Production (9:15)

Consumer Sentiment (9:55)

2014

Jan 28   DJIA  15,837  A Very, Very Key Juncture in the Market

Jan 29   DJIA  15,928  Mini-Bear ?

Jan 30   DJIA  15,738  Risky Rallies

Jan 31   DJIA  15,848  2014 – An Ominous Start – How Far Down ?

Feb 3    DJIA  15,698  January Warning for the Market

Feb 4    DJIA 15, 372  A Rally !  How Far ?

Feb 5    DJIA  15,445  Slower Economy to Delay Further Fed Taper ?

Feb 6    DJIA  15,440 Will BIG Money Step In or Step Aside ?

Feb 7    DJIA  15,628  Easy Does It – Rally Failure Possible

Feb 10  DJIA  15,794  Critical Week for Bulls

Feb 11  DJIA  15, 801   Market Crossroads – Up ? or Down ?

  George  Brooks

 

“Investor’s first read – an edge before the open”

*Stock Trader’s Almanac

sensiblesleuth@gmail.com

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.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
NOSTD null n/a n/a n/a 0

Comments

Emerging Growth

Kiwa Bio-Tech Products Group Corp

Kiwa Bio-Tech Products Group Corp develops, manufactures, distributes and markets, cost-effective and environmentally safe bio-technological products for agriculture in China.

Private Markets

Ozobot by Evollve Inc

Ozobot is a world leader in compact super intelligent robots that entertain and educate through fun interactive gaming.

Santo Diablo Mezcal

Santo Diablo Mezcal has been created to capitalize on a boom sector of the beverage market currently full of many small unmemorable products by producing one sexy, household, easily recognizable…