Money Managers Scrambling For a Better Return

George Brooks |

The U.S. House plans a vote Thursday that would enable the U.S. government finance its operations through the September 30 fiscal year and avoid a government shutdown on March 27 when current funding expires, the next looming hurdle facing the market.
Uncertainties that would have tanked stock prices a year ago, are having little effect on the market now. Either the Street is confident Washington’s heavies will work things out with minimal damage, or it believes the U.S. economy’s growth will accelerate enough to offset an adverse impact from sequestration crippling the economy.
There have been buyers on dips, as evidenced in four out of the last five days of trading when stocks advanced. In fact, it rose on the day sequestration kicked in. Advancing issues trounced declining issues in each of the last five days.
Investor’s first read – an edge before the open
DJIA: 14,127.82
S&P 500: 1,525.20
Nasdaq Comp.: 3,182.03
Russell 2000: 916.68
Tuesday, March 5, 2013 (9.15a.m.)
APPLE (AAPL: $420.05) It’s just very unfortunate Apple’s CEO Tim Cook couldn’t convince shareholders at Apple’s Annual Meeting last week that the company’s stock was worth more than $435 a share. That was the key support level that AAPL had to hold to prevent a potential assault on the $400 level. Its tumble Friday and Monday did a lot of technical damage. Talk of an iWatch to compensate for slowing growth from areas like iPhones and iPods may help the stock find a comfort level sooner rather than later, as would clarification of the company’s plans for use of its $137 billion in cash. Obviously, the company needs good news shortly. Without it, the risk is for a drop below $400. While the stock is likely to go lower, the stock in down 40% from its September high, and I think very close to the low it is going to post. It can slip momentarily below $400 in a rush to sell, then turn on a dime and rebound. Watch this one very, very carefully. Shorts can’t be looking for much more downside and institutions cannot watch this carnage much longer before stepping in. If by chance it slips below $400, I don’t se it there long. That would have to happen in face of a lot of unjustified despair. It would look like it is going much lower, investors would be thinking buying would be sheer insanity !! It would be the “I can’t stand it anymore” point where long-time holders would just want out. That’s the kind of hopelessness that produces an outstanding opportunity. Will it happen ? In a more negative environment – yes. But, there is so much money looking for an industry leader that is down, a company with great products and a lot of cash, I kind of doubt it. Look at it this way. There are a lot of institutions looking at AAPL. They have not broken ranks yet in a big way to buy. Suddenly one or two does. What do the others do ? Down 40% in six months ???? Really ?
I do not own, nor am I short Apple’s stock.
FACEBOOK (FB - $27.72) FB’s technical picture changed last Thursday and Friday when heavy volume turned its stock up from $26,34 and moved it up across $28. Monday was a consolidation day with trading between $27,44 and $28.06. Its technical pattern is now neutral, improved from negative. Odds favor an attack on the $29 level where resistance is formidable. Support is $27.
I don’t own, nor have I ever owned FB. Generally, I don’t recommend or comment on individual stocks. I started covering FB technically after its IPO because on May 21. I felt at $34 it was very vulnerable in face of all the misunderstanding and hype. I warned of a drop to $24-26, which it did shortly thereafter. Following a rally back into the 30s, FB dropped into the low 20s where on August 2, I forecast a low of $16.88. On September 4, it hit $17.55, its low since its IPO at $38. I’ll continue technical coverage for a while to accommodate readers.
As for Apple, well it is a big-name stock that got shellacked in a short period of time, I wanted to help target a bottom as with FB. Comments are based on technical analysis only.
ECONOMY:
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.
TUESDAY:
ISM Non-Mfg. Ix.(10:00)
WEDNESDAY:
ADP Employment Rept. 8:15)
Factory Orders (10:00)
Beige Book (2:00)
THURSDAY:
International Trade (8:30)
Jobless Claims (8:30)
Productivity and Costs (8:30)
FRIDAY:
Employment Situation (8:30)
Wholesale Trade (10:00)
George Brooks
“Investor’s first read – an edge before the open”
sensiblesleuth@gmail.com

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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.

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Companies

Symbol Name Price Change % Volume
POW.PR.B:CA Power Corporation of Canada 5.35% Non-Cumulative F 24.45 -0.10 -0.41 927

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