Tuesday, April 10, 2012 9:08 a.m. ET
DJIA: 12,929.59 S&P 500: 1382.20
TODAY: Yesterday’s market probed my support levels of DJIA:12,914 and S&P 500: 1381 for the second time in two days, rebounded unimpressively, then started to sell off at the close. I said I didn’t think that level would hold, that the market would drop further to DJIA 12,795 (S&P 500: 1369).
What we have here is two new negatives and one uncertainty. A very disappointing Employment Situation report Friday and an increasing concern for Spain’s survivability, have combined to send investors to the sidelines and trigger selling. Q1 earnings, the uncertainty, will start to be reported today and at this point the Street doesn’t appear to know what to expect.
This means that the market will have to probe lower until these two negatives and one uncertainty are discounted, or until we get some clarification.
There are no major economic reports scheduled this week, so we can’t expect help there. The magnitude of Spain’s problems are still not clearly defined, but the fact it is the euro-area’s 4th largest economy demands respect.
Iran has agreed to re-enter negotiations, so that is not a problem now, and it may prove to be a positive insofar as the rise in oil prices is concerned and worries about a military confrontation.
What is needed is “time” to ascertain if the Employment Situation report was an aberration, that the European Community can head off a Spanish meltdown and of course whether Q1 earnings are better or worse than projected.
Whether job growth rebounds or remains disappointing throughout the year is debatable. Analysts at Bank of America (BAC) see it running closer to 100,000 new hires each month, analysts at JP MorganChase (JPM) and Deutsche Bank (DB) see it closer to 200,000 per month.
ECONOMIC REPORTS this week:
ICSC Goldman Store Sales (7:45)
Wholesale Trade (10 a.m.) U.S. Treasury budget showed a February budget deficit of $231.7 billion. As a result of increased corporate income taxes and reduced interest payments, the deficit is running 3.3% below a year ago.
Import/Export Prices (8:30) jumped 0.4% in February due to higher oil prices which were up 1.8% in February alone, 18.4% year over year.
Beige Book (2 p.m.)
Jobless Claims (8:30) Declined 6,000 for the March 31 week to 357,000 bringing the four-week moving average down 4,250 to 361,750.
International Trade (8:30)The international trade gap expanded in January to 52.6 billiom from $50.4 billion in December. The increase in the gap was accounted for by a widened deficit in petroleum goods.
Producer Price Index (8:30) Surged in February 0.4% powered by a 1.3% spike in energy. Core PPI was off 0.2%.
Consumer Price Index (8;30)Jumped 0.4% after a 0.2% gain in January. Excluding food and energy, it was up 0.1%.Gas prices were up 6.0%, food prices flat.
Consumer Sentiment (9:55 a.m.) The Reuter’s Univ, of Michigan Consumer Sentiment Index for March rose to 76.2 vs.75.3
Mar.13 DJIA: 12,959 “ Threshold of a Big Move ?”
Mar.13 DJIA: 12,959 “Market Ready for a Big Move”
Mar. 14 DJIA: 13,177 “Money Ready to Flee Safe Havens in Search of Stocks”
Mar 15 DJIA 13,194 “Safe Haven Investors Ready to Bolt ?”
Mar. 16 DJIA: 13,252 “A Little Inflation Can’t Hurt”
Mar.19, DJIA 13,232 “ BIG Week for Housing”
Mar.20 DJIA 13,239 “ Market Treading Water as Pols Gird for Warfare”
Mar 21 DJIA: 13,170 “Has Long-Term Bond Market Topped Out ?”
Mar.22 DJIA 13,124 “Euro/China Slowdown Concerns – Just Another Stone in the Wall of Worry ?”
Mar.23 DJIA: 13,046 “Inflation Worries Premature”
Mar. 26 DJIA 13,080 “Buyers on Dips”
Mar.27 DJIA: 13,241 “Bullish Fever Starting to Pick Up Steam”
Mar.28 DJIA 13,197 “Wealth Effect Improving”
Mar.29 DJIA: 13,126 “Big Bounce Today”
Mar.30 DJIA 13,145 “Bulls Still Have the Ball”
Apr. 2 DJIA 13,212 “Corporate Earnings to Take Center Stage”
Apr. 3 DJIA:13,264 “U.S. Economy Regaining Global Leadership”
Apr. 4 DJIA 13,199 “It’s Not the Fed – Market Concerned About Coming Earnings
Apr. 5 DJIA 13.074 “ Uncertainty Over Pending Earnings Reports”
Apr. 9 DJIA 13,060 “ New Negatives + Uncertainty of Earnings Reports”
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.