Based on trading yesterday and pre-market trading today, it does not look like the Street will get much insight from the release of the FOMC minutes at 2 o’clock this afternoon.
There is increasing speculation that the Fed won’t decide to taper at its FOMC meeting September 17/18, as previously expected by two-thirds of economists polled by Bloomberg.
It is possible, crunching of the FOMC minutes today will shed light on this, that the sentiments expressed in the minutes of the Committee will indicate a difference of opinion that is unlikely to change before the September meeting.
WHAT NOW ?
To-date, the market has moved up when assured taper is not imminent and down when it is, a delay in a decision would extend uncertainty and that is not good.
Extended uncertainty would trigger selling and especially if interest rates do not drop in the interim.
If the Street celebrates a “no-go” decision on taper in September (28 days from now) by rising, it would set up an uglier fall once the decision was made.
As expected. While DJIA closed down fractionally yesterday, the S&P, Nasdaq Comp. and Russell 2000 rose, the latter quite nicely.
The 10-year Note dropped yesterday, after a sharp rise over the preceding five days, that were taper-related.
Resistance: The market must break up through resistance at 15,075 (S&P 500: 1,657) to have a chance for a meaningful recovery. While it may rally on a delay by the Fed to taper in September, I would expect that rally to give way to a further decline.
Investor’s first read– an edge before the open
S&P 500: 1,652.35
Nasdaq Comp.: 3,626.59
Russell 2000: 1,028.57
Wednesday, August 21, 2013 (9:15 a.m.)
TECHNICAL OBSERVATION – STOCKS:
The following are observations based solely on technical analysis and don’t give consideration to fundamentals or changes in brokerage ratings which can have an immediate impact on stocks, justified or not. The idea here is to give readers insight into the likely trends and turns in the stock’s price, short-and long-term.
I picked up on AAPL and FB last year when they were in a tailspin, and picked up on IBM recently for the same reason, and am including Pulte, since it has been in a pronounced slide. These are not to be construed as buy or sell recommendations, and are not stocks I have recommended.
I will most likely focus on quality stocks that have had a decline and seek to assist readers in targeting points where the stock will find temporary support levels and hopefully the final support level from which the stock can find a turning point.
Again, these are purely technical assessments without consideration for fundamentals.
Pattern: Positive, consolidation possible
Support is $500.80
Facebook (FB – $37.81)
Resistance: $38.50 Positive late day buyers raise chances of a breakout above $38.50 en route to $40. Needs help from overall market
Support rises to $38.28
Resistance: ran into a seller at targeted resistance$185.45
Support: $183.80, but still see $181. Breaking that look for $174
Buying at Monday’s close could stabilize IBM for a while, though overall market weakness is a drag.
Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years. Unless the fundamentals are horrendous it is due for institutional buying, most likely in this area and possibly at or a smidge below $180.
Right now, there are sellers that must be taken out.
Each point up or down impacts the DJIA by about 13 points.
PulteGroup (PHM- $15.65)
Pattern: Positive, but test of lows needs to develop in coming weeks to cement upturn.
First Solar (FSLR:$37.09)
Pattern: Negative, but can press up near $40 if resistance at $38.65 can be penetrated. Big gap down between $46 and $42 will be hard to work through without unexpected news.
Support: $37, but untested. Break below this level counts to low 30s.
I do not own, nor am I short AAPL, FB, IBM, PHM, or FSLR
Thursday reports dominate the week.
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com.
Existing Home Sales(10:00) Proj.: 5.15 million rate July vs. 5.08 million June
FOMC minutes made public 2:00 p.m.
Jobless Claims (8:30) Proj.: 329,000 for week ended 8.17, up 9,000 from a week ago.
PMI Mfg Ix. (8:58) Proj.: Index for August of 53.5 vs. 53.7 mid-month.
FHFA House Price Ix. (9:00) Proj.: +0.6 pct June vs. +0.7 pct May
Bloomberg Consumer Comfort Ix. (9:45)
Leading Indicators (10:00) Proj.: +0.5 pct. June vs. +0.2 pct May.
Kansas City Fed Mfg. Ix. (11:00) Proj.: Index rise to +5 in August vs. index of 6 in May
Federal Reserve’s Richard Fisher speaks (2:00)
New Home Sales (10:00) Proj.: 487,000 unit rate in July vs. 497,000 rate in June
RECENT POSTS: 2013
Aug 5 DJIA 15,658 “August/September Correction Looms”
Aug 6 DJIA 15612 “Market Doesn’t Need Reason to Correct”
Aug 7 DJIA 15,518 “Uncertainties to Plague Market Until September”
Aug 8 DJIA 15,470 “DJIA 14,250 by Early October, or Worse
Aug 9 DJIA 15,498 “Has a Correction Already Started ?”
Aug 12 DJIA 15,425 “Taper, A Withdrawal Process From Addiction”
Aug 13 DJIA 15,419 “Homebuilders Ready for a Bounce ?”
Aug 14 DJIA 15,451 “Hindenburg Omen – Worth the Worry ?”
Aug 15 DJIA 15,337 “October Buying Opportunity at Much Lower Levels”
Aug 16 DJIA 15,112 “Fed Pressed for Clarification – Rallies Suspect”
Aug 19 DJIA 15,081 “Will Fed Intervene to Stop the Carnage ?”
Aug 20 DJIA 15,010 “Rally Ahead of Wednesday’s FOMC Minutes”
“Investor’s first read – an edge before the open”
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.