Don't Get Too Bearish - Look for Sept./Oct. Bottom

George Brooks |

Wall Street SignInvestor’s first read   - Brooksie’s edge before the open

Friday, July 6, 2012        9:09 a.m. ET

DJIA:  12,896.67

S&P 500:  1367.58

Nasdaq  Comp.: 2976.12

Russell 2000: 817.48

The Employment Situation Report  came today and it was far short of many projections.  Only 80,000 jobs were added in June following increases of 69,000 in May and 77,000 in April. Economists expected 100,000 to be added.

The Employment report is the drummer, the market and political spinners will march to until November.

Politics aside, it is important to note that part of the soft numbers we are getting is due to seasonal adjustments, a bigger part is due to Europe’s brinkmanship and an even bigger part is due to the fact world economies are crawling out of the worst recession since the 1930s, one that nearly  took all of us down for a 10-count.

So, what’s my point ?

Don’t get too bearish !

Enjoy the political spin if it brightens your day and ensures a better night’s sleep, but step back from all the hype we may be closer to the good numbers that others would want you to beleive.

While the BIG money has political preferences, it will be very objective where an opportunity to make big money is involved.

Odds favor a  test minor support at DJIA 12,690 (S&P 500: 1342).

I still believe the market will probe lower with an upturn in the fall, which really isn’t that far away.

   Facebook (FB)  FB has plenty of doubters, which suggests it needs to bump along between $28.50 and $32 until all the disappointed buyers on the overpriced IPO and at higher level than present are gone. The stock needs a highly credible source to recommend  its purchase to override the bad press it has gotten.  That is what it will take to jolt it out of the doldrums. None of its underwriters appear motivated to do that at present. I don’t own, nor have I ever owned FB, I was bearish when it traded at $34 shortly after the IPO, thought it was a risk down to $24 - $26 and thought readers would benefit from my technical input.

ECONOMIC REPORTS:

MONDAY:

ISM Manufacturing (10:00) - The Index plunged to 49.7 in June from 53.5 in April.

Construction Spending (10:00) - Gained 0.9% in April following a revised gain of 0.6% in March.
TUESDAY:

Factory Orders (10:00) – May Factory Orders rose 0.7%  to $469 billion, 43.5% higher than the recession lows in March 2009.
WEDNESDAY: Holiday
THURSDAY:

ADP Employment Report – June private payroll employment increased  176,000 vs 133,000 in May.

Jobless Claims – Claims dropped 14,000 to 374,000 vs a drop 6,000 for the June 23d week to 386,000, bringing the 4-week average to 386,750.

ISM Non-Manufacturing Index – declined 1.6 percentage points to 52.1 in June. New Order declined 2.3 points to 53.3., however the employment index rose 1.5 points to 52.3.
FRIDAY:

Employment Situation (8:30)– Rose a disappointing 69,000 in May after a rise of 77,000 in April.

July 2    DJIA 12,880    “Now, Back to the U.S.”

July 3    DJIA 12, 871   “New Quarter = Institutional Buyers”

July 5    DJIA 12,943    “Difficult Summer Ahead for Stocks”

George  Brooks

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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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Companies

Symbol Name Price Change % Volume
EFN.PR.C:CA Element Financial Corporation 6.50% Cumulative 5-Y 25.02 0.02 0.08 11,200

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