Next week, December 18, the FOMC will announce its decision to taper or not.
To-date, the Street has run stocks up on news of a no taper, down on fears the Fed will begin to move out of QE.
Ironically, the market rallied in response to Friday’s surprisingly good jobs report, even though it increased justification for the Fed to begin taper.
Forecasts are mixed. Obviously, the Fed wouldn’t taper if it felt the economy was not gaining enough strength to continue its march forward with less QE.
But even if the Fed starts to withdraw, it can always re-start QE if the economy tanks.
All this taper talk for so many months could mute the impact of a decision once it comes. And, really, aside from the security “blankie” aspect, how much is QE helping now ?
Congress: U.S. negotiators Rep. Paul Ryan and Sen. Patty Murray are optimistic for a compromise by the Friday December 13 deadline to reduce the burden of the automatic $100 billion – $200 billion budget cuts in coming years. We’ll see. Agreement would be welcome in light of persistent gridlock in DC.
TODAY:
Both DJIA and S&P touched my target levels Friday. What’s important is, they held the gain.
I can see a rise at the open to DJIA 16,065 (S&P 500: 1,809), followed by a pullback to DJIA 15,927 (S&P 500: 1,796).
Basically, I see some give and take driven by improving economic numbers and the quandary over what the Fed will do next week.
Oh, we also have the December crosscurrents to muddle the picture.
NOT ROCKET SCIENCE !
This doesn’t have to be rocket science. Common sense and sensitivity to the emotions that are driving stock prices is key, because the level of the stock market, and stocks, is a matter of opinion. For proof, look at the varying levels and valuations the market and stocks reach over months, years. Confidence rules – too little, too much, a change for better or worse. Step back, ask, what drumbeat is the market marching to right now ? It would be nice to have a perfect formula for all the calls needed, but that would simply cause everyone to do the same thing at the same time, negating its value.
Investor’s first read– a daily edge before the open
DJIA: 16,020
S&P 500: 1,805
Nasdaq Comp.4,062
Russell 2000: 1,131
Monday, Dec. 9, 2013
NOTE: Anyone seriously interested in a very heavy, but very readable monthly analyses of the economy and financial markets should subscribe to A. Gary Shilling’s “INSIGHT.” This is super crunching, but a MUST read. No punches pulled, but not always the best bedtime read.
Most honest analyst in the investment business. Well, OK, that really isn’t a big compliment. Let’s say, just a refreshingly honest, straight shooter with an excellent staff. Web: agaryshilling.com. Ph: 973-467-0070.
TIMING – OPPORTUNITY STOCKS
The following are based on technical analysis only and are not to be taken as buy or sell recommendations, but as one of many factors that must be considered in the decision process. Comments do not take into consideration earnings reports, or changes in institutional ratings, company guidance. Technical analysis is based on one’s interpretation of the impact buying and selling have on the price of a stock and is therefore not an exact science. News and events can change an interpretation instantly.
Apple (AAPL: $560.02) Positive.
Thursday’s reversal and Friday’s drop look like a combination of selling into the news (China/iPhones) and selling into a strong market rally. It’s December/year-end inconsistency, so support can be $560 or $552. Looks like notch-down selling between $569 and $563. May need to probe for support now that the China news is out.
Facebook (FB:$47.94) Positive
What better day to lock in year-end profits than a slam-bang open in the market. FB got whacked at the open but stabilized at $47.70. Could get down to $47. Resistance is $48.40
IBM (IBM: $177.67) Neutral/Negative
IBM is still struggling with an irregular base. Overhead supply between $178 and $181 is very formidable. IBM trying to stabilize at $175. Failure indicates a test of $172.60. This is painful to watch.
Pulte Homes (PHM: $18.18) Positive
Little change from Friday’s post – While PHM got a big boost from Fed Vice-Chair Janet Yellen’s assurance the Fed will continue to accommodate the economic recovery and especially housing, the industry must now demonstrate it can gain traction. That may be in the works with the big jump in October’s New Home Sales. PHM should attract buyers in this area. if housing is a “go.” Friday’s jump was more of a sympathy move along with the surge in stock prices. A seller hit it at $18.47, but resistance now is $18.40.
First Solar (FSLR:$58.01) Positive
Looks like year-end profit-taking with sellers using Wednesday’s strength to sell, but selling increased Friday in spite of a surge in the market. I would expect short covering under those conditions. Drop may have been related to plunge in photovoltaic producer, ReneSola (SOL) which got hammered when it reported greater than expected Q3 losses. Resistance drops to $59. Support uncertain – $54.60.
Nike (NKE:$79.86) “the inchworm” Positive
No change:Some profit-taking showed up in recent days, but stock edged up Friday and should be able to work its way up into the low $80s. Support is $79. Crossing $79.25 improves its pattern and sets the stage for higher prices.
Hewlett-Packard (HPQ: $27.25) Positive.
Jumped along with the market Friday, but slipped back . Volume spike at the close may stabilize HPQ at $27.60. Resistance starts $27.9.
Polaris Inds. (PII:135.98) Positive
Performed as expected, hiting new 52-week high Friday. Support is $135.90. Needs good buyer there or slip to $135.30 possible.
Amazon (AMZN: $384.) Positive
Needs a move across $390 to renew uptrend. Support $386.
Pandora Media (P:28.52) Positive.
Sellers used Thursday’s rally to sell and sold into the surge in the stock market Friday. Support is $28.50. Resistance is $30 remain the same. Definitely not a stock for light sleepers. Has its lovers and haters.
THE ECONOMY:
A much lighter week this week. The Street will parse words from Fred speakers Monday (see below)
For detailed analysis of both the U.S. and Foreign economies along with charts, go towww.mam.econoday.com. Also included is an explanation of each indicator. If you want to know when the next Employment report or any other key report will be released that info is also there under “event release date.”
MONDAY:
Fed’s Lacker speaks (12:30 p.m.)
Fed’s Bullard speaks (12:50 p.m.)
Fed’s Fisher speaks (2:15 & 6:30 p.m.)
TUESDAY:
NFIB Business Optimism Ix. (7:30)
JOLTS (10:00) – Job Offers & Labor Turnover : Openings forecast for Oct. 13, 3.905 million vs. 3.913 million Sept.
Wholesale Trade (10:00) Oct. +0.4 pct.
WEDNESDAY:
Treasury Budget (2:00 p.m.)November -$155 billion
THURSDAY:
Jobless Claims (8:30) November 325,000 week end 12/7
Retail Sales (8:30) November +0.6 pct., excl auto: +0.3 pct.
Import/Export Prices (8:30) Nov. -0.8 pct import price, -.03 pct. export prices.
Business Inventories (10:00) Oct. =0.3 pct
FRIDAY:
Producer Price Index (8:30) Nov. -0.1 pct.
RECENT POSTS – 2013
Nov 12 DJIA 15,783 “Get Ready for Year-End Cross Currents”
Nov 13 DJIA 15,750 “Money Manager Dilemma – Your Problem, as Well
Nov 14 DJIA 15,821 “Feeding Frenzy in 2014’s Winners ? Big Day for “TECH
WATCH” Stocks”
Nov 15 DJIA 15,876 “Yellen – No Taper – Surprise January Correction ?
Nov 18 DJIA 15,961 “Green Light to Load Up on Stocks ?
Hospital
Nov 25 DJIA 16,064 Fetch the Blinders – Here come the forecasts
Nov 26 DJIA 16,072 Time to Shop for New Winners and Old Winners Getting
Whacked by Profit-Taking”
Nov 27 DJIA16,072 “December Head-Fakes Galore – Raises Risks”
Nov 29 DJIA 16,097 “Stock Market Bubbles Don’t Pop to a Full House”
Dec 2 DJIA 16.086 “Serious Stuff Coming This Week and Next”
Dec 3 DJIA 16,008 “Hunting Season – Be Armed and Ready”
Dec 4 DJIA 15,914 “Holidays, Or Not, DO NOT Take Your Eye Off This Market”
Dec 5 DJIA 15,889 “December’s Two Dilemmas – Watch Your Back”
George Brooks
“Investor’s first read – an edge before the open”
*STOCK TRADERS ALMANAC: The new annual Stock Trader’s Almanac is off the press. This is a “must,” always has been, if you are a serious investor, or intend to be a serious investor. Visit stocktradersalmanac.com for details
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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 risk. Brooks may buy or sell stocks referred to herein.
