Bulls in Wings – Market Needs a Spark
Investor’s first read– Daily 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”
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.