Bulls Stalling?

George Brooks |

As daunting as sequester should be, the Street is ignoring it.
A year ago, the following Bloomberg headlines would have had an adverse impact on U.S. stock prices.
“European Stocks Decline on Economic Concern”
“U.S. Stock Futures Decline as Euro-Area Recession Deepens”
“U.K Stocks Decline as German, French Economies Contract”
While Asian stocks rose overnight, it was in expectation that the Bank of Japan would continue its asset purchase plan in face of an unexpected contraction in Japan’s economy.
This bull market is within a month of being four years old. During that time, it climbed a “wall of worry” with nasty corrections along the way, triggered by what I referred to as a “news whipsaw.”
Why is adverse, or potentially adverse, news not impacting stocks now?
Essentially, it is because the market has risen even in face of an endless string of bad news and the assumption is - SO WHAT.
Then too, stocks are the only place investors have a chance to earn a return; clearly they aren’t getting it in T-bills, CDs, and money markets. Long-term bonds ? Nice while it lasted, but that bubble is bursting with the likelihood investors will suffer a loss in the value of their bond portfolio.
The market acts like it wants to run sharply upward – but is isn’t ,and that should be cause for some concern, i.e., don’t go “all-in.”
This bull is far from over, but corrections will occur as a normal part of a bull market, and it is likely one will come unannounced, a small pullback that feeds on itself and becomes a nasty 8% -11% correction.
Support is now DJIA 13,912 (S&P 500: 1,508). Resistance is DJIA: 13,997 (S&P 500: 1,522).
Investor’s first read – an edge before the open
DJIA: 13,982.91
S&P 500: 1,520.33
Nasdaq Comp.: 3,196.87
Russell 2000: 920.58
Thursday, February 14, 2013 (9:13a.m.)
APPLE (AAPL: $467.01)
TODAY: An attempt to rebound from $463 yesterday lacked enough buyers to reverse AAPL’s recent slide. That can happen today after it slips to $465 first. Resistance starts at $473.
Support lies in the $457 - $461 area.
I do not own, nor am I short Apple’s stock.
FACEBOOK (FB - $27.90)
Buyers showed up yesterday at $27.31 to reverse a 12-day, 17% slide. FB looks like it can move across $28.50 in coming days.
I don’t own, nor have I ever owned FB. Generally, I don’t recommend or comment on individual stocks. I started covering FB technically after its IPO because on May 21. I felt at $34 it was very vulnerable in face of all the misunderstanding and hype. I warned of a drop to $24-26, which it did shortly thereafter. Following a rally back into the 30s, FB dropped into the low 20s where on August 2, I forecast a low of $16.88. On September 4, it hit $17.55, its low since its IPO at $38. I’ll continue technical coverage for a while to accommodate readers.
As for Apple, well it is a big-name stock that got shellacked in a short period of time, I wanted to help target a bottom as with FB. Comments are based on technical analysis only.
This will be another light week for economic reports.
But the Street is heartened by favorable economic data on employment, personal income, consumer sentiment, auto sales construction spending, durable goods manufacturing, and housing.
I am going to list the economic reports below but will not include the numbers from the last report, since those numbers are often revised significantly and therefore are potentially misleading.
I strongly urge you to access the website: www.mam.econoday.com for detailed reports on this week’s calendar and an excellent recap (plus graphs) of last week’s reports. The site does a great job graphically illustrating key indicators.
Jobless Claims (8:30)
Empire State Mfg. Svy (8:30)
Industrial Production (9:15)
Consumer Sentiment (9:55)
George Brooks
“Investor’s first read – an edge before the open”

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.

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