Last week’s price action in the market averages is similar to that in mid-April, prior to a 9.8% surge in the S&P 500.
The stock-index futures trading before the open indicate a surge in prices at the open.
Last week’s abrupt sell off was triggered by comments by Fed chief Ben S. Bernanke that the Federal Reserve would “step down” its pace of asset purchases if the labor market improves.
That would eventually lead to higher interest rates.
This WILL happen, in fact interest rates will increase before the Fed takes action.
Traditionally, the market turns down when the Fed steps on the brakes, but interest rates are at historically low levels this time around and the economy and stock market speculation are NOT sizzling.
Expect a correction when the Fed officially steps down its purchase of assets, but not the end of the bull market.
Speculation is not rampant, and the individual investor is only now edging back into the market, conditions that accompany bull market tops..
My last post here before a week vacation urged readers to “Watch Rallies for signs of fatigue.” That applies to today’s rally, as well. It looks like a healthy one with the DJIA reaching 15,448 (S&P 500: 1,666).
Failure to hold most of its gain suggests the rebound from last week’s correction is suspect.
Investor’s first read – an edge before the open
DJIA: 15,303.10
S&P 500: 1,649.60
Nasdaq Comp.: 3,459.14
Russell 2000: 982.35
Tuesday, May 28, 2013 (9:02a.m.)
Apple (AAPL: $444.59)
Pre-market trading indicates AAPL has broken above resistance at $445 and is en route to challenge the May highs in the $465 area. Support is $445.
FACEBOOK (FB – $24.29)
FB broke support at $25 late last week and is at risk of dropping into the low 20s. Having broken support at $25, that level becomes resistance, in “technical” terms. The technical logic of that is breaking a key support level sends a bearish message to investors who were ready to but at that level, ergo they back off. It also upsets shareholders who may sell thinking the stock is going lower and may not rebound above $25for some time.
ECONOMY:
We have a full docket of economic reports this week. For access to information including charts and graphics go to www.mam.econoday.com .
There were 3,844 million jobs openings at the end of March, vs. 3,899 the month before, suggesting a continuing soft job market.
TUESDAY:
S&P Case Shiller Home Price Ix. (9:00)
Consumer Confidence (10:00)
Richmond Fed Mfg. Ix.(10:00)
Dallas Fed Mfg. Ix.(10:30)
WEDNESDAY:
ICSC Goldman Store Sales (7:45)
THURSDAY:
GDP (8:30)
Jobless Claims (8:30)
Corporate Profits (8:30)
Bloomberg Consumer Confidence (9:45)
Pending Home Sales Ix. (10:00)
FRIDAY:
Personal Income & Outlays (8:30)
Chicago PMI (8:30)
Consumer Sentiment (9:55)
RECENT POSTS:
May 7 DJIA 14,968 “Bull Run – Investor Panic in Offing ?
May 8 DJIA 15,056 “Dow 38,000 by 2025 ?
May 9 DJIA 15,105 “Correction Didn’t Happen When All Expected It – Now No One Expects
One !!!
May 10 DJIA 15,082 “Some Trader Selling Today”
May 13 DJIA 15,118 “Stocks Up – Bonds Heading Down”
May 14 DJIA 15,091 “Correction: Pro & Con – What to Look For”
May 15 DJIA 15,215 “Raise Some Cash – Politics to Get Uglier”
May 16 DJIA 15,275 “Again, Raise Some Cash”
May 17 DJIA 15,233 “Watch Rallies For Signs of Fatigue”
George Brooks
“Investor’s first read – an edge before the open”
[email protected]
……………………………………………..
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.
Read Next
