There are plans out there to address sequester from both parties. Yesterday Erskin Bowles and Alan Simpson proposed a new plan to cut the nation’s debt by $2.4 trillion over the next ten years on top of the $2.7 trillion in savings already enacted by the White House and Congress. The Bowles/Simpson plan seeks tax reform and spending cuts on Medicare, Medicaid, reduced COL adjustments for Social Security, curbs on farm subsidies and increases in civilian and military contributions for health and retirement plans.
The market is telling us not to worry, that it doesn’t matter what happens in Washington, that the pols will work something out. What’s more, neither party is expressing concern, other than to make statements that the other guy is to blame if sequester wreaks havoc.
This suggests, they pretty much know what to expect and what action will be agreed upon and taken shortly before and after March 1.
Technically the charts are bullish, though trading volume should be heavier with the market averages breaking out on the upside. Everything looks great. Careful.
Investor’s first read – an edge before the open
S&P 500: 1,530.94
Nasdaq Comp.: 3,213.59
Russell 2000: 932.00
Wednesday, February 20, 2013 (9:13a.m.)
APPLE (AAPL: $459.99)
Sellers returned Friday to press AAPL shares lower in spite of the fact hedge funders George Soros and David Einhorn announced they had recently increased their positions and Piper Jaffray’s Gene Munster messaged clients that AAPL may host a product event in the spring. Selling was brisk at the open yesterday, but support above $454 held. That is where it attracted huge buying February 14 when it surged from $456 to $484 in less than two days.
Fortunately, AAPL’s stock attracted some buying yesterday to offset selling following a comment by Barclays analyst, Alan Rifkin indicating it may introduce a mini iPhone for $330.
Again today, sellers are there before the open, testing the $455 support level. Minor resistance starts at $460. This is a critical juncture for AAPL’s stock, a moment of truth.
I do not own, nor am I short Apple’s stock.
FACEBOOK (FB - $28.93) FB’s attempt to cross $29 failed Friday and the stock gave up most of the nice gain it posted at the open. FB’s rally failure last week was a bad sign. Yesterday, I said FB must move across $29.50 on heavy volume to reverse its negative pattern. It got to $29.08 late in the day.
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.
Housing Starts (8:30)
Producer Price Ix.(8:30)
FOMC Minutes (2:00 pm)
Jobless Claims (8:30)
Consumer Price Ix.(8:30)
PMI Mfg. Ix (8:58)
Existing Home Sales (10:00)
Phila. Fed. Svy (10:00)
Leading Indicators (10:00)
“Investor’s first read – an edge before the open”
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