Suddenly – Concern for the Economy
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 read– a 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
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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