Investor’s first read – Brooksie’s edge before the open
Monday, February 13, 2012 9: 01 a.m.
DJIA: 12,801.23 S&P 500 1342.64
Don’t be surprised if the market doesn’t surge after the weekend announcement that Greece has agreed to the terms of the bailout. The fact it did not drop on Friday in face of doubts about an agreement, and before a weekend, indicated, the Street expected an agreement, myself included.
Nevertheless, we’ll take it.
The doomsters will counter, saying “Yes, Greece’s government has accepted strict austerity measures, but those will penalize growth. What’s more, what about Italy, and Spain, aren’t they vulnerable, as well ?
They’re right, but is punishing growth anywhere as bad as a default ? And to what extent doesn’t averting default in Greece boost confidence that default in other troubled countries can be averted ?
Bottom line, the doomsters stand to benefit from everyone’s else’s demise – nothing personal, it’s “business” ! One of the first lessons I learned in this business is, watch your back and relentlessly scrutinize the reasons for your position. Are you bullish because you are intense on making money ? Are you bearish for reasons other than pragmatic assessment of stock values, the economy and political scene.
IMHO, TV and print news was excessively negative on the stock market prospects in the early months of this bull market in 2009 and I think it all had to do with their distain for President Obama. Also IMHO, their editorializing discouraged a lot of investors from buying, perhaps encouraged them to sell prior to an outstanding rebound. SHAME on you guys !!
They did a disservice to their viewers/readers. An individual can do a disservice to themselves if they have this kind of tunnel vision.
CONCLUSION: So, do traders sell into the good news today ? There will be some of that after an opening rally. Good news is the market rebounded from my support levels Friday and never returned, not even late in the day, which I think was justified.
Resistance starts at DJIA 12,895 ( S&P 500: 1358). Support is DJIA 12,775 (S&P 500: 1340).
Stepping back to look at a bigger picture, the market has had an uninterrupted 13% upmove since mid-December and twice that since early October, so some sideways action here would be normal where traders lock in some profits and move on to new opportunities, providing a continuing flow of opportunities, though one’s that require good timing of entry and exit.
This will be a busy week for economic reports, what’s important is that there is no serious evidence of slippage in the U.S. economic recovery, which is one of the key reasons for the stock market’s recent strength.
- Retail Sales (8:30 a.m.): Up 0.1 pct in Dec, 0.4 pct in November and 0.7 pct in October, however latest strength came from autos, up 1.5 pct.
- Export/Import Prices (8:30 a.m.): Trending down in last 5 mos.
- Business Inventories (10 a.m.): Inventory/sales ratio unchanged last 5 mos.
- MBA Purchase Applications (7 a.m.): Measures mortgage applications at lenders
- Empire State Manufacturing Survey (8:30 a.m.): Rose sharply in December and January.
- Industrial Production (9:15 a.m.):
- Housing Starts (8:30 a.m.): Dropped 4.1 in December after a 9.1 pct rise in November.
- Jobless Claims (8:30 a.m.): Dropped another 15,000 for week ended February 4, bringing the 4-week average down to366,250.
- Producer Price Index (8:30 a.m.): Dropped slightly in December after November bounce.
- Philly Fed Survey (10 a.m.): Notched higher in January, though new orders were off
- Consumer Price Index (8:30 a.m.): Unchanged in December for second month in a row reflecting lower energy costs.
- Leading Indicators (10 a.m.): positive
Jan 23 DJIA: 12,720 “Europeans Seeking Long-Term Economic Cure“
Jan 25 DJIA: 12,675 “Consolidation, Correction Likely though US Stocks Hold Strong Against EU Turmoil“
Jan. 26 DJIA: 12,756 “Fed Would Raise Interest Rates If Inflation Picks Up“
Jan. 27 DJIA: 12,734 “Warning! Tradable Market Action Lies in Waiting“
Jan. 30 DJIA: 12,660 ““HUGE” Week for Economic Indicators“
Jan. 31 DJIA: 12,653 “All That Is Needed Is a Spark“
Feb. 1 DJIA: 12,632 “Week’s Economic Reports Could Be The Springboard“
Feb. 3 DJIA: 12,862 “Investors Beating the Bullish Tune“
Feb. 6 DJIA: 12,845 “Follow the Money as It Exits Safe Havens“
Feb. 7 DJIA: 12,878 “Market Held Up By Sneaky Buying“
Feb. 8 DJIA: 12,883 “Is It Safe For Bulls to Come Out and Play?“
Feb. 9 DJIA: 12,890 “BIG Money Buying the Future“
Feb. 10 DJIA: 12,801 “Can a Greek Deal Be Accomplished Over the Weekend?“
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.