The market’s rally yesterday was unimpressive, most likely sparked by FRB’s Fisher and Kocherlakota’s comments that the Fed will continue an accommodative policy. That’s nothing new from what Chair Bernanke last week in his press conference.
However, this is a news whipsaw market, which is characterized by sharp moves both ways. Just as it appears the market is sure to rise, it reverses quickly on news and plunges. And when there is absolutely no doubt it is headed south, it reverses (on news) and rebounds.
The trigger in this case is interest rates, which are responding to speculation of when and how rapidly the Fed will wind down QE.
News headlines today featured, “Treasuries Advance, Snap Longest Run of Losses Since March 2012.”
Stock-index futures traded higher before the open in response, extending yesterday’s technical bounce.
The Street can only blame itself for getting clothes-lined by Bernanke’s comments about “tapering” out of QE.
It became addicted to breast feeding by the Fed and actually started to believe it and the economy couldn’t survive without it.
It rooted for “bad” news over good news (the goal of QE) because it hoped the Fed would extend QE indefinitely.
That is pretty stupid, but is what it is. If that’s how the Street thinks, we must deal with it.
The truth will out in time, and I believe the bull market will resume.
I think uncertainties will plague the market for a number of months, and lower prices are likely.
That could set up an outstanding buying opportunity. While the Street may not be getting it right, I think the BIG money will. That means, it may jump the gun, buying as others are selling.
While resistance starts at DJIA 14,845 (S&P 500: 1,597), I can see a further push to DJIA 14,946 (S&P 500: 1,609).
A drop below DJIA 14,695 (S&P 500: 1,579) would be cause for concern.
Investor’s first read – an edge before the open
S&P 500: 1,588.07
Russell 2000: 961.26
Wednesday, June 26, 2013 (8:06 a.m.)
Apple (AAPL: $402.63)
AAPL has attracted some buyers, but not enough to reverse its negative pattern. Without a big buyer, odds favor a test of April’s $385 lows
AAPL’s stock is begging for big news. Granted, it’s a reasonable value here if there is something to look forward to. If the “wait” is too long, there will be more selling as investors eye better prospects that by way of this market decline are popping up.
.At 10 times earnings and yielding 2.94%, AAPL is a value, but management has not yet produced news that would prompt institutions to buy in-size. The Street is becoming impatient. Nevertheless, long-term buyers can be expected to use this slippage to buy.
FACEBOOK (FB – $24.25)
Overhead supply is formidable at $24.45, which it tested yesterday before backing off. Someone has been buying the stock as it traces out a base pattern with support around $24.10 and rsistance $24.40.
Big week shaping up for economic reports. The Street is now faced with a choice – Is it hoping for disappointing reports and an increase in the likelihood that the Fed won’t back away from Q.E. soon ? Or will it hope for upbeat reports, a sign that Q.E. has been helping. It can’t have it both ways – Q.E. and a sharply improving economy. For access to information including charts and graphics go to www.mam.econoday.com . Great site !
ICSC-Goldman Store Sales (7:45) No proj.
Durable Goods Orders (8:30 Proj: +3.3% for May 13, ex-transport: minus 0.1%
FHFA House Price Ix.(9:00) Proj: +1.2% for Apr. 13
S&P Case-Shiller Home Price Ix. (9:00) Proj: +1.5% m/m
New Home Sales (10:00)Proj: annual rate of 460,000 units
Consumer Confidence (10:00) Proj: 75.0 for June 13
Richmond Fed. Mfg Ix. (10:00) Proj: 2 vs. a minus 2 in May
GDP – Q1 (8:30) Proj for third time to be +2.4%
Jobless Claims (8:30) Proj: 345,000 for June 22 vs 354,000 for June 15 week.
Personal Income/Outlays (8:30) Proj: +0.2% for May 13
Bloomberg Consumer Comfort Ix. 9:45)
Pending Home Sales(10:00) Proj: Proj: +1.0% for May 13
Kansas City Fed Mfg Ix. 11:00) Proj: 4.0
Chicago PMI (9:45) Proj: 55.0
Consumer Sentiment (9:45) Proj: 83.0
Quadruple Witching Friday when contracts for stock-index futures, stock-index options, stock options, and single stock futures expire.
“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.