The market must be prescient, it rallied yesterday ahead of comments about QE after the close by Fed Vice Chair, Janet Yellen, candidate for Benjamin Bernanke’s chairmanship.
Yellen said she would plan to continue monetary stimulus, that the economy and labor markets must improve before taper can begin.
Yellen goes before the Senate Banking Committee at 10 o’clock today for her nomination hearing.
Does this mean, no taper until the March 18 – 19, FOMC meeting as forecast by a great majority of economists ?
Yes, unless the economy gains significant traction in the interim.
WHAT INVESTORS WILL NEED TO KNOW:
What will the stock and bond markets do when the economy does gain significant traction ? If these markets are going up in a slow economy, goosed by Fed stimulus, will they go down when the Fed begins to taper out of QE ?
As I see it now, the markets will take a nasty hit. The hit would be greater if the stock market has had a huge run right before the announcement of taper. Otherwise the hit would likely be scary, but short-lived.
TODAY:
Deduct 20 points from the DJIA from Cisco’s (CSCO) 3-point drop at the open. Otherwise, the markets should be positive with the potential for an up move by the DJIA to 15,895 (S&P 500: 1,795). Support is DJIA 15,768 (S&P 500: 1,775).
Investor’s first read– a daily edge before the open
DJIA: 15,821
S&P 500: 1,782
Nasdaq Comp. 3,965
Russell 2000: 1,112
Thursday, Nov. 14, 2013 (9:01 a.m.)
TECH WATCH: BIG DAY WEDNESDAY !
FB +4.5%, PHM +1.6%, FSLR + 2.5%, NKE +1.3%, HPQ + 1.0%, PII + 4.7%, AMZN + 1.9%, P +3.6%
The following are based on technical analysis only and are not to be taken as buy or sell recommendations, but as one of many factors that must be considered in the decision process. Comments do not take into consideration earnings reports, or changes in institutional ratings, company guidance. Technical analysis is based on one’s interpretation of the impact buying and selling have on the price of a stock and is therefore not an exact science. News and events can change an interpretation instantly.
Apple (AAPL: $520.63) Positive.
Remains in consolidation, with trading range narrowing ( $521.60 to $518.35). Break above 522.50 raises odds of move across $530. Looks like AAPL has an early year-end profit-taker in which case a brief slip below $510 is remotely possible to flush out the selling.
Facebook (FB: $48.71) Positive
Got just what I was looking for – a one-day reversal off support at $46. Support now rises to $47.85. Move into low 50s likely. Move also reduces risk of head & shoulders top, which I thought was a crock anyhow. Often an aborted head & shoulders precedes a sharp move. I wouldn’t put the vacation stash on that one, since this usually happens in the earlier stages of an extended rise in a stock or the market.
IBM (IBM: $183.55) Now positive
Firmed up after a brief pause with a rise to $185.65 a good shot. Support is $182.60.
Pulte Homes (PHM: $17.03) Positive
After three attempts to drop below $16.50 support, PHM moved across $17 and looks ready to take on some ugly resistance starting at $17.50. Stock is dancing to the taper drumbeat, as are all housing-related stocks. This industry is critical to the whole economic recovery and the Fed knows that !
First Solar (FSLR:$64.20) Positive
Strong fundamentals and shorts sellers who are getting crushed spell one breakout after another. Support rises to $63 – $64.
Nike (NKE:$77.85) Positive
Late day spike in volume Tuesday was the tip off to Wednesday’s jump in price. Stage is set for a move into the low 80s.
Hewlett-Packard (HPQ: $26.49) Positive.
Firmed up yesterday. Break above $26.70 raises odds of higher prices, but stock needs a pick up in volume for that to be meaningful. Recent strength due to its $3.5 billion U.S. Navy order.
Polaris Inds. (PII:) Positive
PII’s ability to plow through formidable resistance yesterday between $130 – $132 was very impressive. May pause here to consolidate its six-pointer. Support is $135.35.
Amazon (AMZN: $) Positive
The big hurdle will be $360. Raymond James’ Aaron Kessler raised his rating to Strong Buy from Market Perform. There could be some year-end selling here. Support is $344 – $346. Yesterday’s firming may well set the stage for a run at low $360s.
Pandora Media (P:$29.25) Positive.
Wednesday, I reasoned that it is characteristic for P to have a lot of false starts. But yesterday was a breakout with chances good for a move into the low 30s. Support is $29.15.
THE ECONOMY:
While the economic reports released this week are few in number, they are significant. Though the accuracy of these reports may still be suspect due to the shutdown, the Street will be watching for clues about the economy’s strength, since it will influence the timing of Fed taper. With renewed concern about an early Fed taper, Fed. Chief Bernanke’s speech Wednesday, 7:00p.m. will be parsed for clues. For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com
TUESDAY:
NFIB Small Business Optimism report (7:30) Down sharply in Oct. to (1.6 from 93.9
Fed’s Fisher speaks (3:00a.m.) ?
Fed’s Narayana speaks 1:00p.m.
Fed’s Lockhart speaks (1:50a.m.)
WEDNESDAY:
Fed. chiefBernanke speaks (7:00p.m.)
THURSDAY:
Jobless Claims (8:30) Proj. 330,000 for week ended 11/9
Productivity/Costs (8:30) Proj.: Q3 +2.3pct.
Fed’s Plosser speaks(9:a.m.)
FRIDAY:
Empire State Mfg. Svy (8:30) Proj.: Index Nov. 5.5 vs. 1.52 Oct.
Import/Export Prices(8:30) Proj. Oct. -0.5 pct.
Industrial Production (9:15) Proj. Oct. +0.1pct. vs. +0.6 Sept.
Wholesale Trade (10:00) Proj. Sept. +0.4pct.
RECENT POSTS – 2013
Oct 25 DJIA 15,509 “Best Six Months for Owning Stocks”
Oct 28 DJIA 15,570 “Do I Detect Speculative “Fever “ ? If So, What Can
Happen”
Oct 29 DJIA 15,568 “ When Will the Small Investor Plunge ?”
Oct 30 DJIA 15,680 “Don’t Rule Out Fed Taper by Year-End”
Oct 31 DJIA 15,618 “Easy Does It ! Market Nervous, Needs Breather”
Nov 1 DJIA 15,545 “Rally Failure, Correction to Continue ?
Nov 4 DJIA 15,615 “Room to Run – Just Ditch the Blinders”
Nov 5 DJIA 15,639 “Market Crossroads – Which Way ?
Nov 6 DJIA 15,618 “Bulls Hold the Edge, But What About Interest Rates ?
Nov 7 DJIA 15,747 “Early Profit Taking or Warning of a Correction ?”
Nov 8 DJIA 15,593 “Time for the Street to Get Off the Fed Teat”
Nov 12 DJIA 15, 761 “The Economy, Interest Rates, The Fed, Stock Market”
Nov 12 DJIA 15,783 “Get Ready for Year-End Cross Currents”
George Brooks
“Investor’s first read – an edge before the open”
*STOCK TRADERS ALMANAC: The new annual Stock Trader’s Almanac is off the press. This is a “must,” always has been, if you are a serious investor, or intend to be a serious investor. Visit stocktradersalmanac.com for details
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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. Brooks may buy or sell stocks referred to herein.
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