This market is tough to hold down for even a day or two. That’s bull market stuff. While many on the Street think a correction is justified, the bulls aren’t interested.
I agree, a 3% t0 5% correction is overdue, but the momentum is on the side of the bulls.
For one, new all-time highs in the DJIA, which is still used by the media as “the” benchmark for equities, is luring the public back into the market. For another, there is just a lot of institutional cash out there looking for a home in something that promises a return.
The crisis in Cyprus appears to be just another speed bump in Europe’s drawn out effort to solve its sovereign debt woes. Recession is a bigger problem in that it makes it more difficult for the troubled euro-area countries to grow-out of their fiscal dilemma.
The U.S. economy is the driver for the persistence of this bull market; any signs it is slowing will prompt a consolidation/correction.
TODAY: The market ran into a wall at my resistance levels yesterday (DJIA: 14,512, S&P 500: 1,557), Both will be tested again today.
For eight days in a row, both the DJIA and S&P 500 have closed well above their lows for the day, indicating the presence of buyers on dips.
A warning sign would be rally failures where the market loses most of a gain for the day. That would indicate sellers using strength to dump.
Minor support is DJIA 14,410 (S&P 500: 1,540). Breaking that, look for DJIA 14,290 (S&P 500: 1,532).
Investor’s first read – an edge before the open
S&P 500: 1,548.34
Nasdaq Comp.: 3,229.09
Russell 2000: 943.00
Wednesday, March 20, 2013 (9:14 a. m.)
Apple (AAPL: $454.27)
AAPL is still in a rebound mode with resistance unchanged from yesterday at $467 and support at $442.
At less than 10 times earnings, (a 33% discount from the S&P 500’ P/E), customer service second to none, and down 35% from its September $705 high, this industry leader clearly should be attracting more buying. I sense there is some serious money earmarked for AAPL, it is just waiting for a greener light on earnings growth going forward. Currently, the Street appears to expect a big increase in AAPL’s dividend, possibly by as much as 50%. While that would increase its interest as an investment to a wider range of investors, just be aware that dividends are taxed and the price of a stock is reduced by the amount of the quarterly dividend on the ex-dividend day. If the stock is rising at the time, it will go unnoticed, but this is not free money.
I am not long or short AAPL.
FACEBOOK (FB - $26.54) While Tuesday’s rebound from a four-day sell off was impressive, yesterday’s action was not. There is still enough selling to put a lid on FB a shade below $27 a share. A move above $27 would improve the patters, but it looks like resistance between there and $28.50 will require heavy volume to overcome. FB needs some good news, I am not long or short Facebook.
This will be a heavy 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.
FOMC meeting announcement (2:00)
Bernanke press conference (2:30)
Jobless claims (8:30)
FHFA House Price Ix. (9:00)
Existing Home Sales (10:00)
Philly Fed. Svy.(10:00)
Leading Indicators (10:00)
“Investor’s first read – an edge before the open”
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