In case you have heard the bears’ buzz about “insider sales” foretelling a market top, you should also know what newsletter publisher and money manager, InvesTech*, has to say about it. InvesTech has an incredible record for accurate calls in the market and for debunking market adages that simply are not true or are misleading. Its latest issue graphically illustrates the inconsistency of insider selling as a “sell” signal for the market as a whole.
However, InvesTech does go on to remind readers that 5% corrections have occurred every four to six months during this bull market with the last one occurring in November. Take note!
New highs and the absence of horrendous negative news are forcing investors to pull money out of safe havens and to invest in stocks. Profit takers end up with cash to invest, and the momentum continues. Stocks are more attractive to investors now than they were at lower prices. For one, the market has risen in defiance of adversity, for another, investors are fearful of missing the bull entirely.
That’s the kind of compulsion that drives stock prices to unrealistically high levels.
This bull has room to run, but not in a straight line. We will have a sharp correction. It may not come until May, it will come.
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 this week, it is expected the two chambers will reach an accord before March 27 !!!
Investor’s first read – an edge before the open
S&P 500: 1,556.22
Nasdaq Comp.: 3,252.87
Russell 2000: 942.51
Tuesday, March 12, 2013 (9.12 a.m.)
APPLE (AAPL: $437.87) There are buyers between $425 and $435, but there has been a steady seller here since mid-February, as well. Buyers did not have enough momentum in early trading to break AAPL up through $435 Friday, when sellers pounced on it and the rally faltered.
Yesterday was a different story. Sellers hit it early, but the buyers came in late in the day on some heavy volume. We have had a lot of false starts in recent months, but this action has a slight chance of being the beginning of the turn. The buying was apparently the result of expectations that AAPL will outline plans for the employment of its $137.1 billion in cash next month. We have heard that before. I am not overly enthused about big dividends. The shareholder gets a taxable cash dividend, but the price of the stock is automatically decreased by the same amount on the ex-dividend date when the amount of the dividend is transferred out of the company’s coffers to the shareholder. Support at $429 is a “must” hold.
I am not long or short AAPL.
FACEBOOK (FB – $28.14) FB needed aggressive buying to sustain a move across $28 and got it with a gain of $1.13 on above average volume last Thursday, but the buyer was gone Friday and light volume let the sellers back in charge as it easily broke down below support at $28.12. Yesterday, FB shot up across $28, but was hit by sellers. New resistance is $28.60. On a positive note, FB has traced out 5 straight higher daily lows bringing support up to $27.86.
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.
NFIB Small Business Optimism Ix. (7:30)
Treasury Budget (2:00)
Retail Sales (8:30)
Import/Export Prices (8:30)
Business Inventories (10:00)
Jobless Claims (8:30)
Producer Price Ix.(8:30)
Current Account (8:30)
Consumer Price Ix. (8:30)
Empire State Mfg. Svy.(8:30)
Industrial Production (9:15)
Consumer Sentiment (9:55)
RECENT POSTS: 2013
Feb 22 DJIA 13,890 “Today’s Rally Must Hold Its Gain”
Feb 25 DJIA 14,000 “No Room For a Rally Failure”
Feb26 DJIA 13, 784 “Another Rally Failure Likely”
Feb 27 DJIA 13,900 “March Buying Opportunity Shaping Up”
Feb28 DJIA 14,075 “Easy Does It !
Mar.1 DJIA 14,127 “Again – Buying Opportunity This Month”
Mar 5 DJIA 14,127 “Money Managers Scrambling For a Better Return”
Mar 6 DJIA 1 4,253 “Buyers Beginning to Panic”
Mar 7 DJIA 14,296 “Feeding Frenzy – Pressure Mounts to Buy”
Mar 8 DJIA 14,329 “Headlines of New Highs Lure More Buyers”
Mar11 DJIA 14,447 “Bulls: Room to Run, But Not in a Straight Line”
* If I were to be restricted to get one market letter, and one only, it would be InvesTech. Its indicators and interpretation thereof are damn near flawless. www.investech.com (406) 862-7777
“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.