Friday, September 30, 2011 9: 17 am EDT
DJIA: 11,153.98 S&P 500: 1160.40
TODAY: Yesterday’s strength was solely due to better-than-expected Jobless Claims and Q2 GDP data.
Early trading today should produce a loss of 100 points in the DJIA. The market has been locked in a wide trading range (consolidation) since August 9. Bulls need to blow it out above DJIA 11,740 (S&P 500: 1220). Bears gain control on a break below DJIA 10,572 (S&P 500: 1101).
The September Chicago ISM report, due out at 9:45 is expected to drop to 55 from 56.5 in August. A reflection of manufacturing and non-manufacturing activity in the Chicago region, it has been down five out of the last six months. We need a surprise here, i.e., up, not down.
While U.S. economic indicators are not indicating a rush to recession, they are borderline, at best. The risk of a European recession is gaining traction. A Bloomberg News survey indicates that two-thirds of international investors believe the economy is deteriorating, up from 18% in May. The delay in arriving at a meaningful solution to the euro-zone debt crisis is a big contributor to this sagging sentiment which undoubtedly is contributing to a softness in their economies.
It’s important that I repeat yesterday’s “On a more positive note,” since I am looking for an October upturn, but most likely from lower levels.
We are more than two years into the official business expansion, unimpressive as it has been. Expect more of the same, but BEWARE ! At some point, the BIG money will look out and see something the average investor can’t see - an economy that is beginning to gain traction. The BIG money will begin to buy aggressively, even pay up for targeted stocks.
At that point, the market will run, and investors will wonder what is happening. After all, aren’t there a lot of negatives out there ??
12-member SuperCommittee timeline:*
Oct. 1- Dec. 31: Both houses of Congress must vote on a Balanced Budget Amendment.
Oct.: 14: Deadline for House and Senate Standing Committees to submit recommendations.
Nov. 23: Deadline for both houses to vote on a plan with a 10-year deficit reduction goal of $1.5 trillion Dec. 2: Deadline for committee to submit report and legislative language to President Obama and
Dec. 23: Deadline for both houses to vote on committee bill.
Jan. 15, 2012: Date that the “trigger” leading to $1.2 trillion of future spending cuts goes into effect if
the committee’s legislation has not been enacted.
Feb. 2012: Approximate time when first $900 bn of debt ceiling runs out.
Feb./Mar.2012: Deadline for Congress to consider a resolution of disapproval for the second tranche
($1.2 – $1.5 trillion) of debt limit increase.
Fall/Winter 2012: When additional $2.1 - $2.4 trillion of borrowing authority from this law runs out.
Jan.2, 2013: OMB orders sequestrations for defense and non-defense categories of spending necessary
to meet spending cuts required by the “trigger.”
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