Bulls in Wings - Market Needs a Spark

George Brooks |

Bulls in Wings -  Market Needs a Spark

Investor’s first readDaily before the open

DJIA:  16,695.47 New 52-week high

S&P 500:  1896

Nasdaq  Comp.:4,143

Russell 2000:  1,133

Tuesday, May  13, 2014      9:05 a.m.

SUMMARY:  

     The markets want to run, all that is needed is for the economy to explode out of its winter doldrums, and that includes a pick up in the housing sector.

      On Friday, I called attention to a prospective “Head & Shoulders” top formation, but warned readers to be careful, that it could abort to the upside.

I also noted the same pattern did not exist in  the DJIA, SP 500, and Russell 2000.

      Yesterday’s sharp rebound in Nasdaq stocks suggests my warning was valid. A move above 4,250 would pretty much eliminate the likelihood of a H&S top from following through on the downside, which could carry it to 3,550.

      Institutional money managers would love to buy aggressively, but need more assurance the economy will charge out of the gates in coming months.

      Support today is:  DJIA: 16,765; S&P 500: 1,889; Nasdaq Comp.: 4,109

      Resistance today is: DJIA: 16,765; S&P 500: 1,903; Nasdaq 4,188

 

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Sell in May and Go Away ??

   A popular jingle this time of the year for newsletters and journalists.

   May has offered a number of timely exits, but I don’t buy the  “stay away” part, clearly not until November.

   Essentially, it is the backend of the “Best Six Months”* to own stocks (November 1 to May 1). Obviously, the message here is of the two six month periods,  May to November is the worst for stocks. 

   This is true, but as I have noted with the Best Six Months, a lot can happen in the interim.

   This bromide can’t be taken as a “given.” Of the 26 years I studied a “top” occurred in May on 10 occasions ranging from May 1 to May22.  Two occurred in June and two in July.  No meaningful top occurred in 12 of the years studied.

   On far too many occasions over the last 26 years a May top was followed by a decline, but within months (well before Nov. 1) the market rallied sharply.  I see it more as a trading opportunity – i.e. “Sell in May,”  but be ready to buy back after a plunge.  

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HOUSING:

PARTIAL LIST

BZH was slow out of the gate yesterday,  but the other four acted positively.

Beazer Homes(BZH) Monday  $19.60

PulteCorp(PHM) Monday  $18.84

Toll Brothers (TOL) Monday  $34.76

KB Homes(KBH) $16.12

DR Horton(DHI)  $22.62

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THIS WEEK’s ECONOMIC REPORTS:

   A much lighter schedule this week with only one housing related report – MBA Purchase applications coming early Wednesday. Today we get the PMI Services Index and ISM Non-Mfg. Index,   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.”

TUESDAY:

NFIB Small Business Optimism (7:30):Surged 1.8 points to 95.2, highest  since 2007.

ICSC Goldman Chain Store Sales(7:45): Mixed for May 10 week at minus 0.1   

                    pct., but y/y up 3.9 pct.

Retail Sales (8:30) Rose only 0.1 pct. In April following March’s 1.5 pct. surge

Import/Export Prices (8:30):

Business Inventories (10:00):

WEDNESDAY:

MBA Purchase Apps (7:00):

PPI FD (8:30):

Housing Market Ix. (10:00):

THURSDAY:

CPI (8:30):

Jobless Claims (8:30):

Empire State Mfg. Ix. (8:30):

Industrial Production (9:15):

Philly Fed. Svy (9:55):

FRIDAY:

Housing Starts (8:30):

Consumer Sentiment (9:35)

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RECENT POSTS:

Apr 21 DJIA   16,408  A Very Important Week for Stocks

Apr 22 DJIA   16,449  Stock Market – Coiling Spring ?

Apr 23 DJIA   16,514  Today – a Test for the Bulls

Apr 24  DJIA  16,501  Surge in Stocks – Is Economy Next ?

Apr 25 DJIA   16,501  Bears Put to Test

Apr 28  DJIA  16, 361 Pivotal Week – Economy – Stock Market

Apr 29  DJIA  16,448  Market Direction – Still a Toss Up

Apr 30, DJIA   16,535  Sell in May and Go Away ??

May 1   DJIA  16,580  Money Manager Dilemma – Plunge Now

May 2   DJIA  16,558  Big Move in the Offing ?

May 5   DJIA  16,512  Bear Calling Bulls Out

May 6   DJIA  16,530  Wild Ride to Continue

May 7   DJIA   16,401  Tech Headed For Slaughterhouse – Huge Selling Climax  

                          Buy Looms

May 8   DJIA   16,518   Major, Major Bull/Bear Crossroads

May 9   DJIA   16,550  Head & Shoulders Top Nasdaq ??   Careful !

May 12 DJIA   16,583  Market Really Wants to Run, but…..

*Stock Trader’s Almanac

A Game-On Analysis, LLC publication

George  Brooks

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

Brooks007read@aol.com

Investor’s first read, is a Game-On Analysis,LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  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. References to specific securities should not be construed as particularized investment advice or as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

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

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ESKDY ESKOM (South Africa) Global Dep Rcpt Ser E 170 n/a n/a n/a 0

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