The minutes of the FOMC’s latest meeting will be released tomorrow at 2:00 p.m..
The Street will crunch every word in search for a clue about Fed taper decisions expected at its September 17/18 meeting with a Bernanke press conference around 2:30 the 18th.
The 20-year bond is overdue for a modest technical rally, on the heels of its three month decline. Since May 1, the iShares 20-year treasury bond ETF (TLT) has plunged 17.5%, which in terms of loss of investment value wipes out some 7 years of income.
The dozens of stock charts I have screened are as ugly as those I would expect to see in the latter stages of a bear market when all hope seems to be lost.
Well, all hope IS NOT LOST. This is a correction in a bull market that has the potential for getting a lot uglier if the Fed’s taper efforts trigger ( or are perceived to have the potential to trigger) a further surge in interest rates and panic on the Street. Possible, but unlikely.
As the Street ponders the possibilities of Fed taper, the market will probe for a comfort level.
Discomfort or uncertainty spells lower prices.
Confidence that the Fed can pull taper off without seriously disrupting the financial markets would lead to another leg up in this bull market most likely starting this fall.
We are in a “narrow” news sensitive market. Unlike the ones that bedeviled us over the years with negatives knifing us from all directions, this one is focused on commentary out of the Federal Reserve regarding taper.
One well-placed Fed spokesperson can run the market up or down, making a decision to be “all-in” or “all-out” of the market, risky.
Odds slightly favor a rally in the stock market today, even the bond market which is overdue for a bounce.
Whether a rally today and Wednesday has a chance to hold would depend on how the Street interprets the minutes released from the FOMC tomorrow at 2:00.
Without new insight, the market will resume its decline into September.
If the Street likes what it reads, expect stability and a saw-toothed market action into mid-September.
Resistance DJIA: 15,095 (S&P 500: 1,659)
Support: DJIA: 14,920 (S&P 500: 1,635)
Investor’s first read– an edge before the open
S&P 500: 1,646.86
Russell 2000: 1,013.25
Tuesday, August 20, 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 $503
Facebook (FB – $37.81)
Pattern: Positive, Buyers still there. Big rise raises chances of correction
Resistance: $38.30 which can be topped with heavy buying.
Support is $37.50
Support: $181. Breaking that look for $174
Buying at yesterday’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.
Each point up or down impacts the DJIA by about 13 points.
PulteGroup (PHM- $15.65)
Buying at the close when PHM hit support at $15.65 suggests interest has picked up.
Homebuilding group is recovering in face of mortgage rate jitters.
I do not own, nor am I short AAPL, FB, IBM, or PHM
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.
MONDAY: No major reports
Chicago Fed National Activity Rpt. (8:30) No projection available
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 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 ?”
“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.