The DJIA is locked in a tight trading range with no indication which way it will move. The broader based S&P 500 and Nasdaq Composite are a little more upbeat, but the Russell 2000 is leading the charge, having closed at its high for the day for 5 straight days.
This is classic bull market stuff. With most of the major negatives behind, investors feel safe in buying stocks that have the greatest upside potential, and these tend to be small company stocks.
Odds favor, small-cap stocks and micro-cap stocks will have a huge run before this bull market sunsets.
At some point most global economies will emerge from their respective recessions and speculative will mount.
We are not there yet, but the divergence between the larger caps and smaller caps suggest it will happen.
The edge goes to the bulls. Clearly the prospect for the sequester’s automatic spending cuts kicking in on March 1, is a negative, but the Street either concludes its impact is already priced into the market, or that Congress and the White House will minimize the pain with a delay or compromise. With Sequester only 13 days away and Congress on break until February 25, time is too short for action to avert it, unless there is an unwritten agreement out there to rush it through before March 1.
Support is DJIA 13,935 (S&P 500: 1,516) Resistance is DJIA: 14,014 (S&P 500: 1,525)
Investor’s first read – an edge before the open
Nasdaq Comp.: 3,198.65
Russell 2000: 923.26
Friday, February 15, 2013 (9:09a.m.)
APPLE (AAPL: $466.59)
TODAY: An attempt to rebound from $463 Wednesday lacked enough buyers to reverse AAPL’s recent slide. Volume was light yesterday suggesting neither buyers nor sellers were in a hurry to act. We have had three days in a row where AAPL closed well off its high for the day. Ordinarily that would be a warning sign. Fortunately, APPL is pretty much sold out. A drop from here would occur if the buyers walk away. Minor support is $462, a more significant support is $457. Resistance is $471.Pre-market trading suggests that will be challenged today.
Support lies in the $457 - $461 area.
I do not own, nor am I short Apple’s stock.
FACEBOOK (FB - $28.50)
Buyers showed up Wednesday at $27.31 to reverse a 12-day, 17% slide. Yesterday, I said it it can move across $28.50 in coming days. It did that yesterday, though volume was unimpressive. Today, I see it stopping a smidge short of $29. What we are seeing here is buying support a little above $27, but it will need some sizable volume to get across $29.
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.
This will be another light 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.
Empire State Mfg. Svy (8:30)
Industrial Production (9:15)
Consumer Sentiment (9:55)
“Investor’s first read – an edge before the open”
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