If we weren’t in a news sensitive, whipsaw market, the light would be bright green for buying. The Nasdaq and Russell 2000 are hot, suggesting investors are opting for a shot at a greater return with disregard for heightened risk.
This market can turn down in a heartbeat – one misstatement by a Fed official, or blown earnings report would do it. That possibility has tormented prospective buyers over the last four days as stocks jumped sharply.
Still fresh in their minds are the 4.1%, eight-day plunge in early June and the 5.1%, four-day plunge less than two weeks ago.
The stock and bond markets responded negatively following Fed chair Ben S. Bernanke’s June 19 vague comments about beginning to taper out of QE by year-end and withdrawing totally by mid-2014, assuming our economy is gaining adequate traction by then.
The reaction caught the Fed by surprise and it immediately dispatched a half dozen FRB presidents to stabilize bond and stock markets and the spike in long-term interest rates.
The Street needs know more about the Fed’s exit from QE, otherwise uncertainty takes charge and unjustified worries surface.
Stock and bond markets may need to find comfort levels, but that beats the scenario we witnessed in June.
Trickle down doesn’t cut it, especially with the market at all-time highs.
Pre-market futures suggest a “wait-and-see” sentiment as the Street looks ahead to Bernanke’s 4:10 speech this afternoon.
If the Street doesn’t like what he has to say, the DJIA will drop to 15,110 (S&P 500: 1,630) Thursday. If the Street likes his message, we can expect a broad advance with increased speculation in secondary stocks.
A ho-hummer gets us more saw-toothed market action at the mercy of Q2 earnings reports.
The Street NEEDS TO GET BEYOND THIS TAPER STUFF and a good, no-holds-barred outline would be a great start.
Investor’s first read – an edge before the open
S&P 500: 1,642.32
Nasdaq Comp.: 3,504.26
Russell 2000: 1,018.01
Wednesday, July10, 2013 (9:06 a.m.)
Apple (AAPL: $422.35)
We got the confirmation of support at $411, which AAPL touched briefly at the open then took off digging deeply into resistance between $418 – $422.
Technically, yesterday’s action was encouraging for a stock that has been lacking just that.
Odds favor AAPL has seen its lows for 2013, but it has had 5 false moves since its September 2012 high of $705. Minor support is now $412. Resistance starts at $432.
I really think management should be out there selling an image of an innovator, industry leader and great servicer of customers, and screw the analysts and their quarterly projections and waffling over market share and competition. What this company brings to the table is worth 12 times earnings, just because it is Apple. It sells at less than 10 x earnings, yields 2.9% and has a ton of cash. What will this company look like 3 years from now ?
FACEBOOK (FB – $25.48)
It took heavy volume, but FB punched through resistance at $25, which should become support. Resistance is now $26.75. The pattern here has been for sharp moves to be quickly followed by a 3-4 day correction. If that happens again, a brief drop to $24.70 is possible. This pattern is upbeat though a bit tentative.
I DO NOT OWN, NOR HAVE I EVER OWNED APPLE OR FB.
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 QE soon ? Or will it hope for upbeat reports, a sign that QE has been helping. It can’t have it both ways – For access to information including charts and graphics go to www.mam.econoday.com .
NFIB Small Business Optimism Report (7:30)Proj.: 94.7 (range: 93.5 – 95.5)
Job Openings and Labor Turnover -JOLTS (10:00) Proj for May 13: 3.8 mil
******FOMC Minutes (2:00)
******Bernanke speaks (4:10) !!!!!!!!
Jobless Claims (8:30) Proj. for July 6: 337,000 vs. 343,000 prior week.
Import/Export Prices (8:30) Proj.: +0.1%
Producer Prices (8:30) Proj. for June 13: + 0.5%
Consumer Sentiment (9:55) Proj.: July 13 84.1 vs. 84.5
“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.