NOTE: The market will close at 1:00 p.m. today and be closed Thursday for the July 4th holiday. Wishing you a safe and happy 4th.
Suddenly, there are several obstacles for the Bulls to surmount. The biggie is the Fed and when is it likely to begin withdrawing from QE.
Additionally, there is unrest in Egypt contributing to rising oil prices, and weakness in the euro stemming from concerns about sovereign debt issues and governance issues in Portugal, where the 10-year bond yield rose above 8%.
Friday’s unemployment report looms. The Street will ( but shouldn’t) view a drop as bad, since it indicates the Fed may be edging closer to a withdrawal from QE.
The Street will be relieved if unemployment is flat or up.
CONCLUSION:
My message for a month has been beware of the news whipsaw where stock prices get whipped in one direction by news only to reverse in the other direction by news that counters it.
The Street’s “Fed watch” will continue to generate irrational volatility, which means buying or selling on news has its timing risks.
At 8:15, we got the ADP Employment report which came in at 188,000 new hires in June, better than the 160,000 projected by economists.
Does this suggest the Employment Situation report at 8:30, Friday will indicate an acceleration in new hires and in time, a drop in the unemployment rate ?
The reaction in the futures market to the ADP report was restrained, we will have to wait until Friday.
Resistance begins at DJIA 14,996 (S&P 500: 1,621).
Investor’s first read – an edge before the open
DJIA: 14,932.41
S&P 500: 1,614.08
Nasdaq Comp.: 3,433.39
Russell 2000: 989.47
Wednesday, July 3, 2013 (9:06 a.m.)
Apple (AAPL: $418.49)
AAPL got a pop again yesterday following news Monday it filed a trademark application in Japan for iWatch, as well as from a Raymond James upgrade to “strong buy” from “outperform.”
The stock was due for a bounce, having plunged 17% in less than two months.
The stock may also have benefitted from institutional buying during the first day of Q3.
Odds favor AAPL has seen its lows for 2013, but it has had 5 false moves since its September 2012 high of $705. Minor support is now $412. Resistance starts at $432.
FACEBOOK (FB – $24.41)
Pattern is positive, but some slippage likely with support now down to $24 after yesterday’s drop. A seller came in around $25 on June 19 and Monday. FB
could slip below $24 in a soft market. The rebound that started in early June is getting a bit disorganized, the stock needs a big buyer to blast it beyond $25.40.
NOTE: Generally, I don’t recommend or comment on individual stocks. I started covering FB technically on May 21, 2012 after its IPO, because 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.
I picked up AAPL late last year when it was in a tailspin with an objective of targeting a bottom. Both were widely followed, and I thought my input would help. I would like to add more stocks to my “technical” following, but the deadline nature of this letter , which is market-focused, make it difficult. That is still a possibility.
ECONOMY:
The Street is now faced with a choice – Is it hoping for disappointing reports and an increase in the likelihood that the Fed won’t back away from QE soon ? Or will it hope for upbeat reports, a sign that QE has been helping. It can’t have it both ways – For access to information including charts and graphics go to www.mam.econoday.com .
Note: Time of release not available
MONDAY:
Markit PMI Mfg.Ix (8:58): June was 52.5 up from 51.5 in May
ISM Mfg Ix. (10:00); Was up to 50.9 from 49.0 in May.
Construction Spending (10:00): Was up 0.5% in May
TUESDAY:
Motor Vehicle Sales: Proj: Domestic12.2 mil. Ann. Rate: Total 15.5 mil. Ann. Rate.
Factory Orders (10:00): Up 2.1% in May vs. 1.3% April in line with projections
WEDNESDAY:
ADP private payroll employment (8:15) June was an increase of 188,000 jobs
ISM Non-Mfg. Ix. (10:00) Proj: 54.5
THURSDAY: July 4 Holiday
FRIDAY:
Jobless Claims (8:30) Proj :345,000
Employment Situation Report (8:30) Proj: 161,000 nonfarm; Private: 175,000
Unemployment rate: 7.5%
Note: The FOMC: Federal Open Market Committee: 12 voting members, 7 from the Fed. Res. Board, 5 from the 12 F.R. Banks.
Tasks: Oversee open market operations (buying and selling U.S. Treasury securities); make key decisions on interest rates and money supply. Establish a target level for federal funds rate (rate commercial banks charge between themselves for overnight loans between institutions that have surplus balances and those that don’t.
George Brooks
“Investor’s first read – an edge before the open”
[email protected]
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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.
