Investor’s first read – Brooksie’s edge before the open
Thursday, April 19, 2012 9:08 a.m. ET
S&P 500: 1,385.14
Nasdaq Comp.: 3,031.45
Russell 2000: 803.32
TODAY: Look for a mixed open as the Street tries to balance a flow of Q1 earnings with concern for the strength of our economic recovery and the potential for more bad news out of Europe.
Yesterday’s market sold off and rebounded as expected, but couldn’t hold its gain, suggesting the need for a pause or more slippage.
The pattern traced out by the major market averages is still slightly positive, within a consolidation pattern, following a sharp but brief plunge in prices in early April.
Support is DJIA 12,945 (S&P 500:1,375).
Jobless Claims for the week ending April 14 declined slightly by 2,000 to 386,000, not a game changer, but a bit disappointing as reflected in pre-open trading in the stock-index futures which dropped after the report.
Three reports are scheduled for 10 o’clock. A Bloomberg survey of economists concludes Existing Home Sales rose 0.07% in March to an annual rate of 4.62 million.
I have nothing in advance for the Philly Fed (regional business) Survey or Leading Indicators.
Yesterday, IBM’s 7.32 points following disappointing earnings report alone cost the DJIA about 55 points. Earlier this week, wide fluctuations in Apple (AAPL) and Google (GOOG) impacted the S&P 500 and Nasdaq Comp. in both directions. Both sport huge market caps that give them clout in these averages which are weighted by “market values.”
Next week marks the last week of the “Best Six Months” period to own stocks.*
There is a distinct tendency for the stock market to begin rising in and around the beginning of November and peaking in and around May 1. The surge started ahead of schedule last year (Oct.) and in 2010 (Aug.).
Worth noting, the market topped out on May 2 last year prior to a five-month, 20% plunge as Europe’s sovereign debt woes increased and Congress threatened to enable a default on certain U.S. obligations. This year stands to feature more angst out of Europe and heightened political hostility.
With concern for health the U.S. economic expansion mounting after a disappointing April 6 Employment Situation report, the Street will be looking for reassurance that the economy is still improving. This week will shed light on that.
Retail Sales (8:30) rose 0.8% in March three times the economist’s 0.3% estimate following a strong 1.0% in February after a gain of 0.6% in January. Eleven of 13 categories posted increases.
Empire State Manufacturing Survey (8:30) The pace of growth in the New York area’s manufacturing slowed in April to 6.6 from 20.2, following a 5- month, 19,4 point run since November.
Business Inventories (10a.m.) Rose 0.7% in January, inventory-to-sales ratio remained at 1.27.
Housing Market Index (10a.m.) A survey by the NAHB which rates the economy and housing market conditions, including current home sales, new home sales, projected sales and traffic of prospective buyers.
:30) Rose a strong 1.1% in February after a gain of 0.6% in January
Empire State Manufacturing Survey (8:30) Strength in inventories bumped the index ahead 3.5% in March.
Business Inventories (10a.m.) Rose 0.6% in February following an increase of 0.8% in January, inventory-to-sales ratio remained at 1.27.
Housing Market Index (10a.m.) A survey by the NAHB which rates the economy and housing market conditions, including current home sales, new home sales, projected sales and traffic of prospective buyers. April’s Housing Market Index dropped to 25 from 28 in March. A Bloomberg survey for the index of 48 economists ranged between 27 and 30.
Housing Starts (8:30) Dropped 1.1% in February after a 3.7% gain in January. Permits rose 5.1% after a 1.6% gain in January.
Industrial Production (9:15) Was flat in February due to a drop in mining. Manufacturing rose 0.3% after a jump of 1,1% in January.
Jobless Claims (8:30) Rose 13,000 in the April 7 week to 380,000 Four-week moving average was up 4,250 to 368,5000.
Existing Home Sales (10 a.m.) Slipped 0.9% in February to a 4.59 million rate.
Philly Fed Survey (10a.m.) measures general business conditions in the Philadelphia region. The index jumped sharply in March to 12.5 from 10.2.
Leading Indicators (10a.m.) Surged 0.7% in February with the help of improving jobless claims. Also contributing were the interest rate spread (Fed Fds/10 yr treasury rate), stock prices and building permits.
*Stock Trader’s Almanac. You should not be without this statistical gem and reservoir of investing savvy. Got my first issue in 1968 and every one since.
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.