Investor’s first read – Brooksie’s edge before the open
Monday, July 3, 2012 9:09 a.m. ET
DJIA: 12,871.39
S&P 500: 1365.51
Nasdaq Comp.: 2951.23
Russell 2000: 807.84
TODAY: Minor support is DJIA 12690 (S&P 500:1342). There is a good chance of a spike across 13,050 (S&P 500: 1384).
Institutions will be buying stocks in the early days of Q3. Buying may be more intense since the decisions made at the European Summit last week were made on the last trading day of Q2. I assume many money managers were surprised at the progress made last week and will now be buying stocks that were on a “wait” list before this week’s breakthrough.
Europe, didn’t solve their sovereign debt problems at last week’s summit meeting, there is much to be done, and new obstacles to overcome.
What’s important is, the euro-area countries, including Germany, “agreed” to solve them and save the euro.
That is what was missing, that’s what the Street, businesses and consumers wanted to hear.
Odds favor a bump in the consumer/business confidence numbers going forward, which stands to translate into better spending and production numbers.
This is another big week for economic reports. While Construction Spending increased yesterday, the ISM Manufacturing Survey of 300 firms covering employment, production, new orders, supplier deliveries, and inventories plunged sharply.
Factory Orders will be released at 10 o’clock today, the ADP Employment (8:15 a.m.) and Jobless Claims (8:30a.m.) on Thursday and the Employment Situation Report at 8:30 Friday.
These reports currently reflect a growing uneasiness for the economies here and abroad.
CONCLUSION: The stock market is now seeking a level that takes into consideration progress make at last week’s European summit.
The threat of a euro-meltdown was reduced by decisions made last week at the summit, which was the greatest uncertainty facing investors and businesses.
That should limit the magnitude of a loss from current levels, even allow for some upside action, since businesses put key decisions on hold until the fate of the euro was decided.
I don’t see better numbers coming in for several months. During that time political campaigning will get uglier, there will be second thoughts about the euro, and the fiscal cliff will get bigger headlines.
At some point, the BIG money will be able to see beyond these oppressive uncertainties and negatives and begin buying in-size. Most likely that will be at a time most investors want little to do with the stock market.
Facebook (FB): FB desperately needs a friend in high analytic places or it will slide down below 30.
ECONOMIC REPORTS:
MONDAY:
Markit PMI Manufacturing Index (9:00)
ISM Manufacturing (10:00) – – The Index slipped to 53.5 in May from 54.8 in April, however New Orders were up 1.9 points to 60.1.
Construction Spending (10:00) – Gained 0.3% in April following a revised gain of 0.3% in March.
TUESDAY:
Factory Orders (10:00) – April orders dropped 0.6% after March’s Revised drop of 2.1%.
WEDNESDAY: Holiday
THURSDAY:
ADP Employment Report – Private payroll employment gained 133,000 in May.
Jobless Claims – Claims dropped 6,000 for the June 23d week to 386,000 bringing the 4-week average to 386,750.
ISM Non-Manufacturing Index – Rose to 53.7 in May from 53.5 in April, however, New Orders rose 2 points to 55.5
FRIDAY:
Employment Situation – Rose a disappointing 69,000 in May after a rise of 77,000 in April.
George Brooks
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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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