Market Wants to Run

George Brooks |

SUMMARY:

   So far this week, the reports on the economy are not  reflecting a spring recovery, but the Street is betting (cautiously) that one will come. (see below)

   Part of the market’s strength this week can be attributed to Fed chief Janet Yellen’s assurance that its interest rate policy will  remain low for some time after  its taper is completed. At some point, the Street will have to accept higher interest rates. That will become a reality when the Fed gives it serious consideration or if the economy begins to sizzle with help from abroad.

   While it is unlikely Russia will invade Ukraine or any other border states with high concentration of Russian speaking citizens, the UNCERTAINTY  will persist. This will be one of those “will they, or won’t they” deals that will have a varying impact on the market, a news whipsaw of sorts.

   TODAY:

  Minor support is DJIA 16,500 (S&P 500: 1,881). Breaking that finds support at DJIA 16,426 (S&P 500: 1,874).

   The charts of the major market indexes look positive, the S&P hitting new highs, the DJIA close, however Nasdaq and Russell 2000 lag.

    We can get a better read on the bulls strength from an attempt to decline.  Failure to gain momentum would be a big positive.

   I still see an April surge, though the market’s strength in the last three days came sooner than I expected. I was looking for some downside in April to set up a surge.

Investor’s first reada daily edge before the open

DJIA:  16,532

S&P 500: 1,885

Nasdaq  Comp.:4,268

Russell 2000: 1,188

Wednesday,  Apri1 2, 2014,    9:16 a.m.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

ANOTHER 6% + CORRECTION BEFORE MAY  - UNLIKELY

   One of the Stock Trader’s Almanac’s great discoveries is the fact the stock market’s performance during thesix months between November 1 and May1 is far superior to the six months between May 1 and November 1.* The Almanac  refers to it as the “Best Six Months.”

   Over of the last 25 years, the “Best Six Months” has produced 19 up-years, 3 flats and 3 downers. The best years averaged gains of 11.8% with the best year up 25.6% (1998 – 1999).

   Over the last 25 years,  there have been14 corrections ranging between 6% and 16%, but more than one correction of this size during the Best Six Months was rare.

   In 2002 there was a 6.2% correction in January and a 6.5% correction in March/April.  In 2003, there was a 7.0% correction in Nov. 2002/December 2002 and  a 12.9% correction in January/March of 2003.

   So far, the DJIA is ahead  6.0% since October 31, 2013 even with a 7% correction in the interim.  Another correction exceeding  6% is of course possible, but unlikely.

EUROPEAN ECONOMIES:

   Manufacturing output , new orders and exports are  up for the eighth consecutive month, suggesting its recovery is real, though not yet robust. Our economy has

scratched and clawed its way out of  a horrendous recession without help from Europe.  Obviously, a recovery there stands to  accelerate the pace of  our recovery here.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

    TECHNICAL ANALYSIS EACH OF 30 DOW STOCKS:

   At key junctures, I technically analyze each of the 30 Dow Jones industrials for a reasonable near-term  downside and a more extreme downside, as well as a near-term upside potential. I note the price for each, add them up and divide by the DJIA divisor (0.1557159) and arrive what the DJIA would be if each of the 30 stocks hit my targets.

   As of  Thursday’s close I concluded a reasonable near-term downside  for the DJIA was 15,900, a more severe near-term  downside would be 15,625. The near-term upside would be 16,511.  That’s all assuming the overall news environment doesn’t change.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

HOUSING STOCKS – Watch housing stocks for a clue to the direction of the economy.

    As spring approaches, the Street will be dissecting every morsel of  economic data in search of how much of the recent slowdown in the economy is attributable to severe weather.

   A logical place to snoop is the housing industry and stocks since they should firm up before the industry stats confirm a rebound

 PARTIAL LIST: 

Beazer Homes(BZH)  Friday: $20.08

PulteCorp(PHM) Friday: $19.19

Toll Brothers (TOL) Friday: $35.90

KB Homes(KBH) Friday: $16.99

DR Horton(DHI) Friday $21.65

CONCLUSION:

   Not only can sudden strength in these stocks signal an economic improvement, they can offer an opportunity, and should be tracked closely. If a green light is, imminent, the BIG money will be buying ahead of the news.  

   Very impressive bump up yesterday, most likely in reaction to Fed chief Yellen’s comments about keeping interest rates down, as well  investors seeking a neglected industry group.  Add to that some short covering, and you have the ingredients for a nice rebound. All five except DHI rose on good volume.

   All five have posted nice 4-day moves up.

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

THIS WEEK’s ECONOMIC REPORTS:

The economic calendar this  features important employment, manufacturing, service industry reports, however these reports may still be adversely impacted by severe weather conditions.

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:

Chicago PMI (9:45): Index dropped in Mar. to 55.9 from 59.8 in Feb..

Dallas Fed Mfg. Svy.(10:30) Rose sharply in Mar.  to 17.1 from 10.8 in Feb.

TUESDAY:

Motor Veh. Sales: Feb.’s month/month now at an annual rate of 15.3 million light motor vehicles vs. 15.2 in Jan.

ICSC Goldman Store Sales (7:45): Same store sales  for Mar. 29  week up 3.6 pct. in spite of winter weather. Year/year distorted by late Easter.

PMI Mfg. Ix. (9:45): Final Mar. index was 55.5 unchanged from mid-month and down slightly from Feb.’s 57.5.

ISM Mfg. Ix. (10:00): Mar. index was 53.7 vs. 53.2 in Feb..

Construction Spend (10:00): Feb. rose 0.1 pct. after a drop of 0.2 pct in Jan..

Global Mfg. PMI (11:00): Index slipped to 52.4 in Mar. from 53.2 in Feb..

WEDNESDAY:

MBA Purchase Apps (7:00): Rose 1.0 pct. in the Mar. 28 week; Refi’s dropped 3.0 pct.

ADP Employment Report (8:15): New hires in March hit 191,000 slightly below estimates vs. 178 (revised) in Feb.

Factory Orders (10:00):

THURSDAY:

Int’l Trade (8:30):

Jobless Claims (8:30):

PMI Services Ix. (9:45):

ISM Non-Mfg. Ix. (10:00):

FRIDAY:

Employment Situation (8:30):

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

RECENT POSTS:

Mar 7   DJIA 16,421  Pivotal Day in the Market

Mar 10 DJIA 16,452  Important Test for the Bulls Today

Mar 11 DJIA 16,418 Gold Due For a Play ?

Mar 12 DJIA 16,351  Crimea – How Big A Negative for Stocks ?

Mar 13 DJIA 16,340  Correction to Set Up An Opportunity

Mar 14 DJIA 16,108  Selling Climax Next Week ?

Mar 17 DJIA  16,065 Rally Failure Risk, But Trader’s Buy Looms

Mar 18 DJIA 16,247  Market Vigil – Economy and Russian Nationalism

Mar 19 DJIA 16,338  A Spring Break for the Economy ?

Mar 20 DJIA 16,222  Fed Reality – Market Up, or Down ?

Mar.21 DJIA 16,331  Yellen, Putin, Economic Freeze, Quadruple Witching Friday

Mar 24 DJIA 16,302  BIG Test for the Market Today

Mar 25 DJIA 16,276  Bull Top Unlikely - Why

Mar 26 DJIA  16,367 Bulls Must Beat Key Resistance Level

Mar 27 DJIA  16,268 Rally Failures = Lower Prices – Opportunity ! 

Mar 28 DJIA  16,264  April/May Surprise Surge ?

Mar 31 DJIA  16,323  CONFIDENCE Calls the Shot – April Opportunity ?

Apr 1   DJIA   16, 457 Rounding Top or Base for Big Upmove ?

A Game-On Analysis, LLC publication

George  Brooks, Sole Member,Manager

“Investor’s first read – an edge before the open”

Brooks007read@aol.com

The writer of  Investor’s first read, is  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. Brooks may buy or sell stocks referred to herein.

 

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
CRQDF Credito Real SA De CV 1.87 0.00 0.00 0

Comments

Emerging Growth

PixarBio Corp

PixarBio Corp is a specialty pharmaceutical/biotechnology company focused on pre-clinical and commercial development of novel neurological drug delivery systems for post-operative pain.

Private Markets

XY Find It

Founded by serial entrepreneur Arie Trouw, XY Findables follows a single guiding principle: customers should never lose anything important again. With over 50,000 users around the world, more than 100,000…

Dropbox, Inc.

Dropbox is a service that allows their users to bring all photos, docs, and videos anywhere, and share them easily. Any file saved to Dropbox will automatically save to all…