Feeding Frenzy - Pressures Mount to Buy

George Brooks |

Has it really been four years since the bear market bottom? Seems longer? The “wall of worry that this bull market had to climb since the bear market bottom March 9, 2013 was steeper than any since the 1930s. I don’t think that “bottom” was that hard to call. It was as classic as any bottom could be. All the signs of extreme bearishness were there – textbook stuff. If the “TOP” in this bull market gets to an extreme comparable to the March 2009 bear bottom, this bull has a long way to go.

4 Years Ago - Headlines from Investor’s first read blogs

“Does the Cauldron of Fear Have to Boil Before This Market Turns” DJIA: 7,114 Feb 24, 2009
“When the Fear of Owning Stocks Turns to the Fear of Not Owning Stocks” DJIA: 7,350
Feb 25, 2009
“Big Money in the On-Deck Circle” DJIA: 7,270 , Feb 26, 2009
“Lock and Load” DJIA: 7,183, Feb 27, 2009
“9 Trillion Cash on Sidelines vs. $8 Trillion NYSE Market Value” DJIA: 7,062, Mar 2, 2009
“Ready….. Aim….” DJIA: 6,832 Mar. 2, 2009 SPECIAL BULLETIN (12:55P.M.)
“Big Money Reaching for the Bushell Basket” DJIA: 6,818, Mar. 3, 2009
“Once Off Sidelines, Big Money Good for a 1,500 – 2,000-point Rally” DJIA: 6,726 Mar 4, 2009
“Climactic Buy Possible by Tuesday” DJIA 6,875 Mar. 5, 2009
“Just Be Ready for a Big Buying Opportunity” DJIA: 6,626, Mar. 9, 2009
“Will Big Money Wait for the Numbers to Improve to Buy ?” DJIA 6,547, Mar. 10, 2009
“FIRE ! (BUY)” DJIA: 6,805 Mar. 10, 2009 SPECIAL BULLETIN (10:25 a.m.)

(Bear Market Ended March 9, 2009 down 55% (intraday) from the October 11, 2007 high)

Investor’s first read – an edge before the open
DJIA: 14,296.29
S&P 500: 1,541.46
Nasdaq Comp.: 3,222.36
Russell 2000: 929.96
Thursday, March 7, 2013 (9.12 a.m.)
A correction in the stock market can happen at any time. It could start as a normal technical correction that runs its course (3% - 5%), but is extended by unexpected bad news that hits the market at the moment it is ready to rebound.

It could be triggered by bad news out of Europe, the Mid-East, Washington (!), the economy, etc.. What is sure is, there will be corrections/consolidations along the way. Institutions will welcome them as an opportunity to buy.

Now that the major market averages have posted all-time highs, expect the headlines to trumpet every new high going forward, which feeds investors’ impulses to jump in. This is the kind of stuff that leads to a buying panic.

The U.S. House passed a continuing resolution to keep the government funded through the end of its fiscal year (September 30). The U.S. Senate will present a different version next week, it is expected the two chambers will reach an accord before March 27.

APPLE (AAPL: $425.66) AAPL rebounded sharply in early trading Tuesday and yesterday but ran into resistance at $435. We are seeing some buying interest between $425 and $430, but the bears are still in charge. AAPL needs a high-volume move across $444 to improve the technical pattern and prevent a slide below $420. I have no position in Apple

FACEBOOK (FB - $27.45) Monday, Tuesday and Wednesday were consolidation days with trading between $27.35 and $28.13. Sellers hit the stock in early trading in each of the last three days a little above $28. FB will need some aggressive buying to sustain a move across $28. It looks like FB will now test support at $27.25.

I don’t own, nor have I ever owned FB.

This will be a heavy week for economic reports. But the Street is heartened by favorable economic data on employment, personal income, consumer sentiment, auto sales construction spending, durable goods manufacturing, and housing.

I am going to list the economic reports below but will not include the numbers from the last report, since those numbers are often revised significantly and therefore are potentially misleading.

I strongly urge you to access the website: www.mam.econoday.com for detailed reports on this week’s calendar and an excellent recap (plus graphs) of last week’s reports. The site does a great job graphically illustrating key indicators.

International Trade (8:30)
Jobless Claims (8:30)
Productivity and Costs (8:30)
Employment Situation (8:30)
Wholesale Trade (10:00)
George Brooks
“Investor’s first read – an edge before the open”

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.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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