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Stock Market Needs a Catalyst

SUMMARY:       Yesterday’s economic reports were upbeat with nice gains posted in Durable Goods, PMI, Consumer Confidence, the State Street  Investor Confidence


      Yesterday’s economic reports were upbeat with nice gains posted in Durable Goods, PMI, Consumer Confidence, the State Street  Investor Confidence and Dallas Fed Manufacturing indexes.  Home prices continued to rise. The only  dud  was the Richmond  Fed Manufacturing Index.

      OK, not bad, but not the huge catalyst the market needs to explode. Even so, a firm rebound in the economy stands to prop stock prices until economies here and abroad gain more traction.

      The housing industry continues to be plagued by the difficulty of  home buyers and builders at all levels to obtain financing.

      Low interest rates have a downside. In addition to builders and business owners unable to get financing, persons living on fixed incomes are suffering from next to zero income from money market funds and CDs.


      While the stock market’s action over the last four days has been upbeat, it will need a catalyst if it is going to advance significantly from here.

      The economy can be that catalyst, but more recovery is needed than we have already seen.

      More of the same suggests a sideways trading channel until fall.

Supporttoday  is DJIA: 16,619; S&P 500:1,902;  Nasdaq Comp.:4,216

Resistancetoday is :DJIA: 16,712;   S&P 500: 1,916, Nasdaq Comp. : 4,246

Investor’s first readDaily edge before the open

DJIA:  16,675

S&P 500: 1,911

Nasdaq  Comp.:4,237

Russell 2000:    1,142

Wednesday,  May  28, 2014      8:55 a.m.


NOTE:  I continue  to run “Sell in May” and “Housing” for two reasons. One, this  unds andanalysis is relevant and I  add important content frequently. I get new readers, and I want them to have access to this insight.


Sell in May and Go Away ?? stock market has ranged sideways

   A popular jingle this time of the year for newsletters and journalistsMay has offered a number of timely exits, but I don’t buy the  “stay away” part, clearly not until November.

    Based on Friday’s market action, it looks like my contrariness is being rewarded.

   Essentially, it is the backend of the “Best Six Months”* to own stocks (November 1 to May 1). Obviously, the message here is of thConsumer Confidence, the State Street                                                e two six month periods,  May to November is the worst for stocks. 

   This is true, but as I have noted with the Best Six Months, a lot can happen in the interim.

   This bromide can’t be taken as a “given.” Of the 26 years I studied a “top” occurred in May on 10 occasions ranging from May 1 to May22.  Two occurred in June and two in July.  No meaningful top occurred in 12 of the years studied.

   On far too many occasions over the last 26 years a May top was followed by a decline, but within months (well before Nov. 1) the market rallied sharply.  I see it more as a trading opportunity – i.e. “Sell in May,”  but be ready to buy back after a plunge.  



     The economy needs a contribution from the housing sector if it is going to gain major traction coming out of the winter slump.

      April’s 1.3% jump in Existing Home Sales may suggest a recovery in housing is near. The jump comes going up against a weak March, but total housing inventory rose 16.8% to 2.29 million homes for sale.  Bank lending will remain a problem.

      Even so, housing stocks got a big boost Friday from the news and are beginning to show positive chart patterns. There was no follow-through Tuesday except for PHM. All others closed at their day’s low.


Beazer Homes(BZH)   $19.48

PulteCorp(PHM) :  $19.80

Toll Brothers (TOL):  $35.64

KB Homes(KBH): : $16.58

DR Horton(DHI) : $23.13



      This is a big week for economic news.  If it indicates the economy is charging out of its winter slump, money managers can expect to ramp up buying, assuming  the outlook for corporate earnings will improve. 

      For detailed analysis of both the U.S. and Foreign economies along with charts, go 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.”


Durable Goods (8:30): Increased 0.8 pct. in April vs. +3.6 pct (revised up from 2.6 pct. Projections were for drop of 0.8 pct.  Ex-transports gain was 0.1 pct.

FHFA House Price (9:00): A gain of 0.7 pct in Mar. vs. 0.6 pct. gain Feb.. Year/year for Mar. was +6.4 pct.

S&P Case Shiller  Home Prices (9:00): 20-city index more than projected at +1.2 pct. vs.0.8 pct.  Year/year was +12.4 pct.

NOTE: The major difference between FHFA and Case Shiller is  FHFA covers 13 more states and includes many more small towns as well as refi appraisals.

PMI Svcs flash (9:45): Jumped to 58.4 in May from 54.2 in Apr.

Consumer Confidence (10:00):Remained firm at 83.0 up from81.7 (revised)

Richmond Fed Mfg. Svy (10:00):  Flat in May at 7.

State Street Investors Confidence Ix.(10:00) Remains strong at 119.5  in May vs. 119.0 in Mar..

Dallas Fed Mfg. Svy(10:30): Increased  to 11.7 from 4.9


MBA Purchase Apps (7:00): Flat for the May 23 week, refi’s likewise

ICSC Goldman Store Sales(7:45): Down 1.2 pct. for the May 24 week (+2.1 pct. y/y)


GDP (8:30):

Jobless Claims (8:30):

Corporate Profits (8:30):

Pending Home Sales (10:00):


Personal Income (8:30):

Chicago PMI (9:45):

Consumer Sentiment (9:55):




May 13, DJIA  16,695  Bulls in Wings – Market Needs a Spark

May 14  DJIA  16, 715 What Could Spark a Surge or Plunge

May 15  DJIA  16,613  Market Needs Help from Economy, or…

May 16  DJIA  16,446  Bulls Blinked – But Don’t Get Too Bearish

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


**Stock Trader’s Almanac


A Game-On Analysis, , LLC publication

George  Brooks

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

[email protected]

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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