Suddenly - Concern for the Economy

George Brooks |

Yesterday’s pullback hit my DJIA support (15,925) on the nose, but stopped short of my S&P 500 target (1,812).  These levels were based on technical analysis, hitting them suggests the market was marching to technical (supply/demand) pressures, not outside factors like Emerging Market turmoil and the next Fed taper.

   Looks like the goal posts will have to be moved back for today’s support levels, as the stock-index futures indicate a drop in early trading in face of a rise in Jobless Claims, a 0.4% drop in January Retail Sales and expectations for  uninspiring reports on Industrial Production and Consumer Sentiment tomorrow (see below).

   Nine days ago investors regretted not locking in gains after a 29% rise in the S&P 500 in 2013. Worse yet, they agonized over whether they should be selling after a 326-point plunge in the DJIA on Monday, February 3.

   After a sharp rally, investors agonized yesterday over whether to BUY.

   This is a classic  human nature reaction, the kind that  complicates the decision process.  If you bought in-size yesterday, you may wish you waited  until today to agonize all over again.  

   Yesterday, I suggested, “The risks of going “all-in” or “all-out” at any one point in time are high. Risk can be reduced by being selective and taking only a “partial” position, rather than a full one. This enables one to participate in an advance, but be less vulnerable in the event of a decline.  What’s more, it tempers the urge to “do something” because the market is rising.”

   Today’s support is DJIA: 15,795 (S&P 500:1,801 ).

 Investor’s first reada daily edge before the open

DJIA: 15,963

S&P 500:  1,819

Nasdaq  Comp.: 4,201

Russell 2000: 1,132

Thursday, February 13, 2014, 2014   9:12 a.m. 

FED CHIEF YELLEN TESTIFIES  - again !

   Fed Chief Janet Yellen testified before the U.S. House Financial Services Committee on Tuesday and will testify again today before the Senate Banking Committee Thursday at 10:00 a.m..

NOTE:  There will be no FOMC meeting this month.  The next meeting will be March 18 – 19 and it will be accompanied by a summary of economic projections and be followed by a press conference.

 

  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 still down  but half as much at a minus 1.6%.  However since January 31, its up 2.1%.  Conclusion: As a barometer, it still suggests a  challenging year for both bulls and bears.

DEBT CEILING DEBATE

   The U.S. House extended the debt ceiling until March 15, 2015.  This has been a contentious, white knuckle issue in the past, no more.

……………………………………………………………………….

THE ECONOMY:

The economic calendar  is lighter this week,  but Fed chief Janet Yellen, testified before the U.S. House Financial Services Committee Tuesday and will do so again Thursday (10:00 a.m.) before the Senate Banking Committee (see below). 

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: No major reports

TUESDAY:

NFIB Small Business Optimism Ix (7:30)  Jan. index was up slightly to 94.1 from 93.9 in Dec.

ICSC Goldman Store Sales (7;45) Impacted by weather w/w for Feb. 9 was off  0.3 pct vs, plus 0.3 pct. Jan.  y/y is plus 2.3 pct.

 Release of Fed’s semi-annual monetary policy (8:30)

Fed’s Plosser speaks (9:00)

JOLTS –Job Openings Labor Turnover (10:00) Hire rate Dec. was 3.2 pct. Separation rate 3.2 pct.

Fed Chief Yellen Testifies U.S. House Financial Services Committee (10:00)

Wholesale Trade (10:00)Dec. inventories increased 0.3% offset by 0.5% increase in wholesale sales

Fed’s Lacker speaks (8:00 p.m.

Fed’s Fisher speaks (8:10)

WEDNESDAY:

MBA Purchase Apps (8:00 ) Down 2 pct  for Feb. 7 week

THURSDAY:

Jobless Claims (8:30):  Rose 8,000 to 339,000

Retail Sales (8:30) Declined 0.4 pct. Jan. vs. revised 0.1 pct. drop Dec.

Fed Chief Yellen testifies before Senate Banking Committee (10:00)

Business Inventories (10:00)

FRIDAY:

Import/Export Prices 8:30)

Industrial Production (9:15)

Consumer Sentiment (9:55)

2014

Jan 28   DJIA  15,837  A Very, Very Key Juncture in the Market

Jan 29   DJIA  15,928  Mini-Bear ?

Jan 30   DJIA  15,738  Risky Rallies

Jan 31   DJIA  15,848  2014 – An Ominous Start – How Far Down ?

Feb 3    DJIA  15,698  January Warning for the Market

Feb 4    DJIA 15, 372  A Rally !  How Far ?

Feb 5    DJIA  15,445  Slower Economy to Delay Further Fed Taper ?

Feb 6    DJIA  15,440 Will BIG Money Step In or Step Aside ?

Feb 7    DJIA  15,628  Easy Does It – Rally Failure Possible

Feb 10  DJIA  15,794  Critical Week for Bulls

Feb 11  DJIA  15, 801 Market Crossroads – Up ? or Down ?

Feb 12  DJIA  15,994  Bulls in Charge, but……….

  George  Brooks

 

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

*Stock Trader’s Almanac

sensiblesleuth@gmail.com

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. Brooks may buy or sell stocks referred to herein.

 

 

 

 

 

 

 

 

 

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