Investor’s first read – Brooksie’s edge before the open
Friday, March 30, 2012 9:08 a.m. ET
DJIA: 13,145.82 S&P 500: 1403.28
Nice rebound, but I would have liked to see more volume. The DJIA closed higher, the S&P 500, Nasdaq Composite, Russell 2000, and SPDR S&P500 ETF didn’t, though they did rebound sharply.
TODAY: Look for a positive open.
The Chicago PMI and Consumer Sentiment reports will be released within the first 30 minutes of trading. The latter is self explanatory, the former is a regional business report which bulls would wish would reinforce their contention that the economy is gaining traction, the bears hope it doesn’t.
If the bulls are happy with the numbers, expect the rally to push up to DJIA 13,235 (S&P 500: 1414).
If a ho-hummer, look for volatility with support around DJIA: 13,086 (S&P 500: 1398.
If very disappointing, look for a break below DJIA: 13,040 (S&P 500:1390.
As important as these two reports are, they are not “huge.” Their importance is derived mostly from the fact they come as the market has started a rebound after a correction and needs a goose to follow through.
The strength of the U.S. stock-index futures before the open indicate the Street is thinking positive.
Anytime you have a correction that comes unexpectedly without accompanying news, it is wise to wonder if the “news” is yet to come. Most time it is purely “technical.”
The price of a barrel of oil dropped briefly this week only to rebound yesterday. Sanction against Iran’s possible development of a nuclear capability suggest yet higher prices as the second biggest OPEC producer (exports $100 billion) in 2011) withholds oil exports or shuts down the Strait of Hormuz, which would cause a military confrontation.
I still think the price is topping out. But, I am not an expert in this area, and do not have access to info other than what is reported by the news media.
On Wednesday the U.S. Energy Department reported its stockpiles of crude jumped significantly more than forecast.
While the world’s largest consumers of Iranian oil are finding ways to skirt the sanctions, however Iran’s economy is reportedly collapsing as it is denied the flow of major currencies such as the U.S. dollar, euro and yen.
Something is about to give, though there may be a brief crisis in the interim, and it may be partly military. That spells uncertainty, just something that should be factored in with other considerations.
MONDAY: Pending Home Sales Index (10 a.m.) – a leading indicator to housing activity. Dipped 0.5% in February to 96.5 from 97.0 in January, but 9.2% ahead of a year ago. “An uneven but higher sales pattern”: Lawrence Yun, National Ass’n Realtors.
S&P Case Shiller Home price Index (9 a.m.) – tracks monthly changes in residential real estate in 20 metropolitan regions. January’s index fell 3.8% from January a year ago, in line with expectations and a slight improvement vs. the 4.1% decline in December (yr/yr).
Consumer Confidence ( 10 a.m.) –Based on consumer perceptions of business and employment conditions , as well as six months hence. The Conference Board’s index of Consumer Confidence dipped slightly in March to 70.2 from 71.6, higher gas prices were blamed. February’s index jumped 9.3 points to 70.8 well above the recession low of 25.3.
MBA Purchase Applications (7 a.m.) Applications for mortgages. It is a leading indicator for single family home sales and new home construction.
Durable Goods (8:30 a.m.) Durable Goods were ahead 2.2% in February vs. a decline of 3.6% in January. The gain fell short of the projected 3.0%. Ex-transportation February was up 1.6% vs. a decline of 3.0% in January.
GDP (8:30 a.m.) – Last estimate for Q4 was plus 3.0% and that is what the final number is – official today.
Jobless Claims (8:30) Dropped 5,000 for week ended March 24. With revisions to last week’s numbers, the four-week moving average is now 365,000,
Personal Income and Outlays (8:30 a.m.) Increased 0.3% in January after a 0.5% gain in December. Nice gain expected in February report.
Chicago PMI (9:45 a.m.) Purchase managers survey of regional business conditions. Rose 3.8 points (6%) to 64 in February. New orders index jumped 8.8% a good omen for this week’s report.
Consumer Sentiment (9:55 a.m.) a survey of 500 households regarding financial conditions and attitudes about the econo9my. Slipped 1.0% in a preliminary March survey.
*Stock Trader’s Almanac
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.