Both the DJIA and S&P 500 hit my projected highs early yesterday before giving back half of the day’s gain. I urged readers to watch rallies for signs of fatigue, that failure to hold most of the day’s gain suggests the rebound from last week’s correction is suspect.
Yesterday’s market action was NOT a rally failure where all of the day’s gain was given up.
While a number of technical indicators that track internal strength/weakness in the market turned negative last week, they also did in mid-April prior to a 9.8% surge in the S&P 500.
That is no guarantee of a repeat performance this time but the benefit of the doubt should be given to the bulls at this time.
Odds favor a drop to DJIA 15,306 (S&P 500: 1,647) followed by a sharp rebound to close on the plus side for the day.
If a short-term top is forming here, it will be characterized by rally failures. The bulls have been quick to retake the field after brief corrections this year. Any change in that behavior would signal market weakness. Ironically, THEY will be the one’s to signal the onset of a correction, not the bears.
Investor’s first read – an edge before the open
S&P 500: 1,660.06
Nasdaq Comp.: 3,488.88
Russell 2000: 997.35
Wednesday, May 29, 2013 (9:04 a.m.)
Apple (AAPL: $441.43)
Looks like a seller used AAPL’s high-volume breakout above resistance at $445 at the open to sell. Technically, its close at the day’s lows after a sharp rally is what is referred to in tech talk as a “one-day reversal,” which in this case indicates a further drop to $433.
FACEBOOK (FB - $24.10)
At $23.50, FB will have retraced two-thirds of its Nov. To Feb. 72.2% surge. That’s a significant correction and may suggest some serious concerns for its near-term fundamental outlook. As noted here a number of times, the $19 to $22 area represents important support. When buyers didn’t show at $25, a reasonable support level selling intensified. If Buying doesn’t develop in the low 20s, FB may have problems not yet known. Resistance begins at $25,.60.
We have a full docket of economic reports this week. For access to information including charts and graphics go to www.mam.econoday.com .
There were 3,844 million jobs openings at the end of March, vs. 3,899 the month before, suggesting a continuing soft job market.
ICSC Goldman Store Sales (7:45)
Jobless Claims (8:30)
Corporate Profits (8:30)
Bloomberg Consumer Confidence (9:45)
Pending Home Sales Ix. (10:00)
Personal Income & Outlays (8:30)
Chicago PMI (8:30)
Consumer Sentiment (9:55)
“Investor’s first read – an edge before the open”
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