TODAY:
While the Street was relieved outright war didn’t result from Russia’s move into Crimea, there is more to life on Wall Street than in this corner of the world.
The Street is reaching out to riskier stocks, a normal progression as the bull market shifts into a higher gear. The smaller company Russell 2000 posted a 2.75% gain yesterday, compared with a gain of DJIA (1.41%), S&P 500(1.53%, Nasdaq (1.75%). That’s impressive the first day out of a crisis.
The other rumbling abroad may be that of European economies. Just maybe, they are gaining traction, emerging from a cesspool of fiscal, monetary and economic problems.
Don’t rule out new unsettling news out of Ukraine. Undoubtedly, it would prompt a brief plunge in U.S. stocks, but a sustained drop is unlikely. Look for a break in winter weather this month to trigger a consumer surge in buying and a spring surge in stock prices.
The BIG money won’t wait for the winter ice to thaw. If it sees a little daylight it will pounce.
Minor support is DJIA 16,360 (S&P 500: 1,870). If broken, look for support at DJIA: 16,304 (S&P 500: 1,862). This assuming no new news !
CONCLUSION:
While the Russian/Ukraine crisis had a momentary impact on stock prices, it appears there was underlying strength that wasn’t going to be deterred for long anyway. The Nasdaq Composite and Russell 2000 closed Monday close to their highs for the day and that was prior to comments by Russia’s president Vladimir Putin that a military invasion was not planned unless absolutely necessary.
While the Russian/Ukraine situation may re-ignite, it will have to get pretty ugly to cause a big correction in stock prices. Appetites for stocks have been whetted and re-whetted over and over, and that’s going to be hard to shut off with momentum building.
RUSSIA’s DILEMMA
It’s likely Mr. Putin heard footsteps bigger than his own when he made his move on Ukraine’s Crimea. His move triggered a flight of capital, a huge drop in Russian stocks, bumped interest rates up, drove the ruble to new lows, rattled global confidence and trust, and may jeopardize international lending to Russian entities.
Investor’s first read– a daily edge before the open
DJIA: 16,395
S&P 500: 1,873
Nasdaq Comp.: 4,351
Russell 2000: 1,208
Wednesday, March 5, 2014, 2014 9:13 a.m.
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A BEST SIX MONTHS to own stocks – No more corrections ???
Over the years, the Stock Trader’s Almanac* has expounded on its significant finding that the stock market performs better between November 1 and May 1 than between May 1 and November 1.
The Almanac’s “Best Six” goes back to 1950.. The six months is a snapshot between November and May. Many major market advances often start before November, but the point made here is the period between fall and May is where the action is.
The six months between November 1 and May 1, have consistently outperformed the six months between May 1 and November 1
Is this going to be another “BEST six months to own stocks ? . So far, the DJIA is ahead 5.4% since October 31, 2013 even with a 7% correction in the interim.
Over of the last 25 years, Nov.1 to May 1, have produced 19 up-years, 3 flats and 3 downers. The “Best Six” years averaged gains of 11.8% with the best year up 25.6% (1998 – 1999).
Over the last 25 years, there have been 14 corrections ranging between 6% and 16% during this November1 to May1 period.
We have had one correction so far since October 31, another correction is possible, but unlikely.
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JANUARY BAROMETER
As January goes, so goes the stock market for the year, according to the January Barometer (JB).* The 3.6% drop in the S&P 500 in January suggests a very challenging year for investors and clearly not as rewarding as 2013 when the S&P 500 rose 29% after a 5.8% rise in the preceding January.
The JB boasts an 89% accuracy rate over the years with most of its misses explained by unpredictable events, such as war and extreme bull/bear turning points.
The rationale for the JB having predictable value is that a new year is accompanied by year-end and new year portfolio adjustments and decisions based on projections for the year ahead. It is also a time when institutions receive a lot of new money that must be put to work.
So far in 2014, the S&P 500 is unchanged. However, since January 31, its up 4.0%. Conclusion: As a barometer, it still suggests a challenging year for both bulls and bears.
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THE ECONOMY:
The economic calendar is loaded this week with both economic and housing 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.”
MONDAY:Motor Vehicle Sales: Jan. sales were at a 15.2 mil. ann. Rate vs. 15.4 mil in Dec..
Personal Income/Outlays (8:30): Personal Income rose 0.3 pct. in Jan. vs no change Dec. Spending increased 0.4 pct. vs a 0.1 pct increase in Dec..
PMI Mfg. Ix,(8:30): Feb. jumped to 57.1 from 53.7 in Jan..
ISM Mfg.Ix.(10:00):Feb index rose 1.9 points to 53.2 from 51.3 Jan..
Construction Spending (10:00): Jan. up 0.1 pct. vs gain of 1.5 pct. Dec.
TUESDAY:
ICSC Goldman Store Sales (7:45): Up 0.3 pct. for Mar. 1 week. Year over year up 1.5 pct.
WEDNESDAY:
MBA Purchase Apps (7:00): Surged 9.0 pct. for the Feb. 28 week vs. a drop of 4 pct the prior week.
ADP Employment Report (8:15):
PMI Services Ix.(8:58): 139,000 new jobs were created in February.
ISM Non-Mfg, Ix.(10:00):
THURSDAY:
Jobless Claims (8:30):
Productivity/Costs (8:30):
Bloomberg Consumer Comfort Ix. (9:45):
Factory Orders (10:00)
FRIDAY:
Employment Situation (8:30):
International Trade (8:30):
Consumer Credit (3:00p.m.):
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RECENT POSTS:
2014
Feb 20 DJIA 16,040 Winter Slump – Spring Rebound ?
Feb 21 DJIA 16,133 Housing Hanging Tough – a Harbinger ?
Feb 24 DJIA 16,103 Bull Market – the Pressure to Act
Feb 25 DJIA 16,207 Rally Failure – or Start of Another Up Leg ?
Feb 26 DJIA 16,179 Monday’s Market Action – a Signal ?
Feb 27 DJIA 16,198 Market Setting Stage for an Early Spring Rally
Feb 28 DJIA 16,272 March Setting Stage for Spring Rally.
Mar 3 DJIA 16,321 Russian Bear Providing American Bull an Opportunity
Mar 4 DJIA 16,168 Crisis Almost Over – Easy Does it on Opening Prices
George Brooks
“Investor’s first read – an edge before the open”
*Stock Trader’s Almanac
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. 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. Brooks may buy or sell stocks referred to herein.
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