Stock Market Breakout - Now What?

George Brooks |

SUMMARY:

By now we should have a good read on the spring rebound in the economy. It’s    impressive, but not robust.

    Prior to last week’s surge, I felt the market had discounted a good (not great) spring rebound, with the S&P 500 rising 12.2% from February’s low.

    We have gotten the spring rebound I was expecting, the question now is has the market over-discounted it ?

    The temptation now is to go all-in, and that emotion is usually wrong, Selectivity is a better strategy along with some cash reserve to take advantage of the next correction.

    Speculative appetites have been whetted, so we need to let the market tell us if  last week’s breakout has legs.

Supporttoday id DJIA: 16,878; S&P 500: 1,944; Nasdaq Comp.: 4,306

Resistancetoday is DJIA: 17,015; S&P 500: 1,959; Nasdaq 4,341

Investor’s first readDaily edge before the open

DJIA:  16,924

S&P 500:  1,949

Nasdaq  Comp.: 4,321

Russell 2000:    1,165

Monday,  June  9, 2014      9:15 a.m.

 

NOTE:    

      Two new monthly economic reports reflecting international activity appeared on my economic calendar this week (see below). The Global Composite PMI covers global manufacturing and services for countries, including  U.S., Japan, Germany, France, China and UK (85% global GDP)  and the Global Services PMI report covering the international service sector(80% global GDP).

.      The Global PMI index rose in May to 54.3 from 52.8 in April; the Global Services index for May rose to 54.6 from 52.7 in April, both reflecting economic expansion here and abroad. Results are reported and included in my economic calendar each, my source is econoday.com.  (site is well worth visiting).

 

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HOUSING:

      I began to track these housing stocks, hoping to gain some insight into the strength of the economic recovery emerging from  a severe winter.

      My reasoning was that a robust economic recovery cannot develop without a contribution from the housing sector.

      The sector is stable with spikes up, but sellers are quick to enter to turn them down.

          Inventories continue to drop along with  falling mortgage rates,  a combo that forces home prices upward, which should prompt a stampede to buy before available attractive homes are picked up.  The problem , banks are not anxious to lend at such low rates and many buyers simply can’t qualify for mortgages.

      Friday, all but BZH rebounded from consolidations on increased volume. This could be significant for a group that few think can gain traction. The stability in this group suggests  a lot of negatives have been discounted in  the stock’s prices. But, another spike upward suggests the Street still gives housing a chance of participating, possibly driving economic growth.

     

    PARTIAL LIST :

Beazer Homes(BZH)   $19.14

PulteCorp(PHM) :  $20.13

Toll Brothers (TOL):  $36.88

KB Homes(KBH): : $17.01

DR Horton(DHI) : $24.42

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THIS WEEK’s ECONOMIC REPORTS:

      For detailed analysis of both the U.S. and Foreign economies along with charts, go towww.mam.econoday.com. Also included is an explanation of each indicator. If you want to know when the next Employment report or any other key report will be released that info is also there under “event release date.”

TUESDAY:

NFIB Small Bus.Optimism Ix.(7:30)

ICSC Goldman Store Sales (7:45)

JOLTS (10:00)

WEDNESDAY:

MBA Purchase Apps (7:00)

Treasury Budget (2:00)

THURSDAY:

Jobless Claims (8:30)

Retail Sales (8:30)

Bus. Inventories (10:00)

FRIDAY:

 

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RECENT POSTS:

May 19  DJIA   16,491  Stock Market Getting Ready for a Move ?

May 20  DJIA   16,511  Bull Still Alive

May 21  DJIA   16,374  Market Needs Help from Fed and Economy

May 22  DJIA   16,533 Again – Stock Market Set for a Big Move

May 27  DJIA   16,606 Market to Key on Week’s Economic Reports

May 28  DJIA   16,675 Stock Market Needs  a Catalyst

May 29  DJIA   16,663 European Monetary Ease June 5 – a Catalyst ?

May 30  DJIA   16,698 A “Teaser” Market Capable of Big Moves Either Way

June 2    DJIA   16,717 Decision Time for Stocks ?

June 3    DJIA   16,743 Economy “Must” Accelerate,  or…

June 4    DJIA   16,722 Correction in Stocks Without Robust Economic Rebound

June 5    DJIA   16,737 Bulls Must Pick It Up, or Lose the Ball

June 6    DJIA   16,836 Easy Does It ! Dow 20,000, But Not in Straight Line

 

*Bloomberg

**Stock Trader’s Almanac

 

A Game-On Analysis,  LLC publication

George  Brooks

“Investor’s first read – a daily edge before the open”

Brooks007read@aol.com

Investor’s first read, is a Game-On Analysis,LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  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. References to specific securities should not be construed as particularized investment advice or as recommendations that you or any investors purchase or sell these securities on their own account. 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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