How Quickly Will Bulls Pounce on Lower Prices?

George Brooks |

The S&P 500 never had a chance of posting an all-time bull market high Friday and with the stock-index futures signaling a sharp drop at the open today, it won’t hit the high today either.
Europe’s woes are back in the headlines, this time triggered by an unprecedented levy by Cyprus on bank deposits in an effort to raise 5.8 billion euros ($7.6 billion) demanded by euro-area finance ministers.
It’s both the precedent and danger that what is happening in Cyprus will cause the same kind of run on banks in other countries that it has caused in Cyprus.
Already the incident has caused borrowing costs in Italy a Spain to rise. The issue has yet to go before Cyprus’ parliament.
I find it difficult to believe the euro-area ministers cannot tip toe through this minefield, having successfully coped with greater crises in recent years.
TODAY:
This is a real test of the bulls’ resolve. Individual and institutional investors have been hoping for a pullback in prices to buy, let’s see what they do with this one.
The DJIA will try to hold a little above 14,400 (S&P 500: 1,554).. Breaking that, the next support would be DJIA 14,290 (S&P 500: 1,537).
Investor’s first read – an edge before the open
DJIA: 14,514.11
S&P 500: 1,560.70
Nasdaq Comp.: 3,249.02
Russell 2000: 952.48
Monday, March 18, 2013 (9:19 a. m.)
Apple (AAPL: $432.50)
Last Thursday, AAPL got a boost when BTIG research upgraded it to a buy from neutral, noting there are new products yet to be released and the expectation that the company will return to earnings growth in 2014. Friday’s high volume 11-point surge improved its “technical” pattern dramatically. The key now is, will other institutions rush in off the sidelines fearful its price will run away from them ?
At less than 10 times earnings, customer service second to none, and down 37% from its September $705 high, this industry leader clearly should be attracting more buying. I sense there is some serious money earmarked for AAPL, it is just waiting for a greener light on earnings growth going forward. It shouldn’t take much to trigger a stampede.
I am not long or short AAPL.
FACEBOOK (FB - $26.64) FB has closed near its daily low six days in a row. Friday was the fourth day in a row its daily high was lower than the preceding daily high. This clearly indicates a persistent seller. Odds are it will slip to $25.60 with an attempt to rally at $26.30. This kind of selling will take a big buyer to reverse at this level. Otherwise it will have to find a comfort level closer to $24.25. I am not long or short Facebook.
ECONOMY:
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.
MONDAY
Housing Market Ix.(10:00)
TUESDAY
FOMC meeting begins
Housing Starts (8:30)
WEDNESDAY
FOMC meeting announcement (2:00)
Bernanke press conference (2:30)
THURSDAY
Jobless claims (8:30)
FHFA House Price Ix. (9:00)
Existing Home Sales (10:00)
Philly Fed. Svy.(10:00)
Leading Indicators (10:00)
George Brooks
“Investor’s first read – an edge before the open”
sensiblesleuth@gmail.com

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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 ri

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