Market Needs Help From Economy or…….
Generally, the market leads the economy, charging up ahead of good economic numbers, down in advance of bad ones.
This is one of those cases where the Street just can’t get a read, ergo no big decision to buy or sell.
That stands to change abruptly. Nasdaq is still on the ropes, improved from last week’s miserable behavior, but still vulnerable.
Three things can happen. A surge – a plunge or a sideways trading range. The latter seems most likely.
This is not a time to be leveraged one way or another. Cash is an investment and investors should have a healthy reserve, since the market is hovering at all-time highs.
If the Street decides to buy in-size, there will be plenty of opportunities and time to get on board.
If it bails, the damage can be significant.
Sounds like I am hedging! No, I simply do not have a strong feeling at this time. That can change abruptly too.
Last Friday, I called attention to a prospective “Head & Shoulders” top formation but warned readers to be careful, that it could abort to the upside.
I also noted the same pattern did not exist in the DJIA, SP 500, and Russell 2000.
A move above 4,250 would pretty much eliminate the likelihood of a H&S top from following through on the downside, which could carry it to 3,550, however the Nasdaq would have to drop below 4,010 to put the H&S back in play.
Support today is: DJIA: 16,557; S&P 500: 1,883; Nasdaq Comp.: 4,084
Resistance today is: DJIA: 16,656; S&P 500: 1,893; Nasdaq 4,118
Investor’s first read– Daily edge before the open
DJIA: 16,613
S&P 500: 1,888
Nasdaq Comp.: 4,100
Russell 2000: 1,103
Thursday, May 15, 2014 9:18 a.m.
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Sell in May and Go Away ??
A popular jingle this time of the year for newsletters and journalists.
May has offered a number of timely exits, but I don’t buy the “stay away” part, clearly not until November.
Essentially, it is the backend of the “Best Six Months”* to own stocks (November 1 to May 1). Obviously, the message here is of the two six month periods, May to November is the worst for stocks.
This is true, but as I have noted with the Best Six Months, a lot can happen in the interim.
This bromide can’t be taken as a “given.” Of the 26 years I studied a “top” occurred in May on 10 occasions ranging from May 1 to May22. Two occurred in June and two in July. No meaningful top occurred in 12 of the years studied.
On far too many occasions over the last 26 years a May top was followed by a decline, but within months (well before Nov. 1) the market rallied sharply. I see it more as a trading opportunity – i.e. “Sell in May,” but be ready to buy back after a plunge.
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HOUSING:
We cannot have a robust economic recovery from the severe winter months without a rebound in housing. Such a rebound would likely be preceded by an up-move in housing industry stocks.
Trading in the following stocks has been generally upbeat in recent days, though there is still a seller out there to put a lid on attempts to run. The selling yesterday was a bit more intense.
PARTIAL LIST :
All five got hit by some selling yesterday,
Beazer Homes (BZH) Monday $19.34
PulteCorp ($PHM) Monday $18.72
Toll Brothers (TOL) Monday $34.35
KB Homes (KBH) Monday: $16.2715.85
DR Horton (DHI) Monday: $22.g
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THIS WEEK’S ECONOMIC REPORTS:
For detailed analysis of both the U.S. and Foreign economies along with charts, go to www.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.”
TUESDAY:
NFIB Small Business Optimism (7:30): Surged 1.8 points to 95.2, highest since 2007.
ICSC Goldman Chain Store Sales (7:45): Mixed for May 10 week at minus 0.1
pct., but y/y up 3.9 pct.
Retail Sales (8:30): Rose only 0.1 pct. In April following March’s 1.5 pct. surge
Import/Export Prices (8:30): dopped 1.0 pct. Vs. increase in Mar. prices dropped
0.4 pct. In Apr. to reverse 0.4 pct. Gain in Mar. Export prices dropped
1.0 pct. Vs. increase of 1.0 pct. Mar.
Business Inventories (10:00): Rose0.4 pct. In Mar. vs. a 1.0 pct rise in sales.
Inventory/sales ratio is 1.30.
WEDNESDAY:
MBA Purchase Apps (7:00): Up 1.0 pct. In May 9 week after rise of 9.0 pct. The prior week. Refi’s rose 7.0 pct. Vs a rise of 2.0 pct the prior week.
PPI FD (8:30): Apr. up 0.5 pct. vs. rise of 0.6 pct. in Mar.
THURSDAY:
CPI (8:30): Up 0.3 pct, Apr. vs. +0.2 pct. Mar. ex-Food engy +0.2 pct. Apr unchg
Jobless Claims (8:30): Down 24,000 to 297,000 May 10 week
Empire State Mfg. Ix. (8:30): Index 1.29 Apr. vs. 5.61 Mar and 4.45 Feb
Industrial Production (9:15):
Philly Fed. Svy (9:55):
Housing Market Ix. (10:00):
FRIDAY:
Housing Starts (8:30):
Consumer Sentiment (9:35)
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RECENT POSTS:
Apr 30, DJIA 16,535 Sell in May and Go Away ??
May 1 DJIA 16,580 Money Manager Dilemma – Plunge Now
May 2 DJIA 16,558 Big Move in the Offing ?
May 5 DJIA 16,512 Bear Calling Bulls Out
May 6 DJIA 16,530 Wild Ride to Continue
May 7 DJIA 16,401 Tech Headed For Slaughterhouse – Huge Selling Climax
Buy Looms
May 8 DJIA 16,518 Major, Major Bull/Bear Crossroads
May 9 DJIA 16,550 Head & Shoulders Top Nasdaq ?? Careful !
May 12 DJIA 16,583 Market Really Wants to Run, but…..
May 13, DJIA 16,695 Bulls in Wings – Market Needs a Spark
May 14 DJIA 16, 715 What Could Spark a Surge or Plunge
*Stock Trader’s Almanac
A Game-On Analysis, LLC publication
George Brooks
“Investor’s first read – a daily edge before the open”
Investor’s first read, is a Game-On Analysis,LLC publication for which George Brooks is sole owner, manager, and writer. Neither Game-On Analysis, LLC, nor George Brooks is 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. References to specific securities should not be construed as particularized investment advice or as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk.
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