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”
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.