Veterans Day:Take a moment to appreciate the sacrifice U.S. military veterans and their families make and have had to make in the past; those who survived and those who didn’t.
Reports of greater-than-expected Q3 GDP growth of 2.8% last week triggered a sharp plunge in stock prices for fear strength in the economy would give the Fed a reason to taper out of QE early.
But reports that the GDP was distorted by inventory build and components that had to be estimated since data was delayed by the government shutdown prompted a rebound in stock prices. .
The rebound held even though Friday’s Employment Situation report sported a much greater increase in new hires than projected – a gain of 204,000 vs. the 120,000 forecast.
Suddenly, the Street doesn’t know whether it believes bad is good or good is bad, a tradeoff between continued taper and a flat economy or less taper and a booming economy.
What is troubling is the fact the benchmark 10-year yield jumped sharply Friday. If it stays there, it could indicate the Fed will taper earlier than March which most economists expect, perhaps December or January.
If you are looking for an answer at the open, you will have to wait. The Street doesn’t seem to know which way to go.
TODAY:
Looks like we are back in a news whipsaw with the Street marching to a pair of drummers – the Fed and the economy.
Toss in early profit-taking and portfolio window dressing by institutions and you get increased volatility.
Resistance is DJIA: 15,865 (S&P 500: 1,778)
Support is DJIA: 15,705 (S&P 500: 1,764)
Investor’s first read– a daily edge before the open
DJIA: 15,761
S&P 500: 1,770
Nasdaq Comp.3,919
Russell 2000: 1,099
Monday, Nov. 11, 2013 (9:01 a.m.)
NOTE: I see too many news items presented in “video” rather than print. I don’t have time or patience to watch a video played at someone else’s pace. I prefer to speed-read print and if I want it for reference, make a copy. Anyone who has laboriously transcribed verbal can sympathize. What are they thinking ? Or aren’t they ?
TECH WATCH: Changes: Adding Nike (NKE), Polaris Industries (PII) and Pandora (P) and dropping Target (TGT) and eBay (EBAY).
I am considering the elimination of the Tech Watch section and offering it in a separate publication on a subscription basis.
I would be able to cover more companies, and would not be constrained by a pre-market deadline. Comments welcome: [email protected]. Include opinion about how you think I could even improve commentary bearing in mind these are NOT buy/sell comments.
The following are based on technical analysis only and are not to be taken as buy or sell recommendations, but as one of many factors that must be considered in the decision process. Comments do not take into consideration earnings reports, or changes in institutional ratings, company guidance. Technical analysis is based on one’s interpretation of the impact buying and selling have on the price of a stock and is therefore not an exact science. News and events can change an interpretation instantly.
Apple (AAPL: $520.56) Positive.
Remains in consolidation, but rebounded from Thursday’s setback. Support is $518.Some selling at $521. Once past that, AAPL can rise to $526.
Facebook (FB: $47.53) Positive
Market rebound helped prevent further downside for FB. Could slip lower, $45.70 is a key support. Resistance to upside is $50 and $52.
IBM (IBM: $) Negative, but has the potential now to turn positive.
Resistance now $180.60. Support $179. This is a turning pattern that needs time..
Pulte Homes (PHM: $16.85) Positive
Support at $17.60 failed to hold when interest rates rose Friday and taper talk picked up again. Whole housing group took a hit. Support is now $16.20, resistance $17.95.
First Solar (FSLR:$60.50) Positive
Blowout earnings last week prompted buying and panicky short covering. Support is now $60. Rise above $61 needed to move stock to $63 – $65.
Nike (NKE:$77.12) Positive
Rebounded from targeted support at $75.60 and closed at resistance targeted at $77. May need to trade sideways for several days before moving higher. Posted a neat two-day reversal. Support now $76.70.
Hewlett-Packard (HPQ: $25.94) Positive.
Recent strength due to its $3.5 billion U.S. Navy order. Rebounded steadily from Thursday’s setback and can now attack resistance at $26.25. Support is $25.75.
Polaris Inds. (PII:127.13) Positive
Stabilized Thursday after high-volume spike down. Rebound was disappointing. PII needs a big buyer to get it back on track after Thursday’s crunch. Support $126.55. Resistance is now $130.
Amazon (AMZN: $350.31) Positive
Raymond James’ Aaron Kessler raised his rating to Strong Buy from Market found support at $342 with nice rebound following. Needs to push across Resistance at $351.
Pandora Media (P:$26.74) Positive.
Opinions on P vary, but seem in line with investors’ long or short position. This one can move sharply either way. Earnings due Nov. 21 after the close. A dangerous stock to be on the wrong side of. Thursday’s drop did not change its positive status. Resistance at $26.85 needs to be broken to give P a shot at higher prices.
THE ECONOMY:
While the economic reports released this week are few in number, they are significant. Though the accuracy of these reports may still be suspect due to the shutdown, the Street will be watching for clues about the economy’s strength, since it will influence the timing of Fed taper. With renewed concern about an early Fed taper, Fed. Chief Bernanke’s speech Wednesday, 7:00p.m. will be parsed for clues. For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com
MONDAY:
Veteran’s Day: Market open, banks closed
NFIB Small Business Optimism Ix. (7:30): Proj.: Index 93.3 Oct vs. 93.9 Sept.
TUESDAY:
Fed’s Fisher speaks (3:00a.m.) ?
Fed’s Narayana speaks 1:00p.m.
Fed’s Lockhart speaks (1:50a.m.)
WEDNESDAY:
Fed. chiefBernanke speaks (7:00p.m.)
THURSDAY:
Jobless Claims (8:30) Proj. 330,000 for week ended 11/9
Productivity/Costs (8:30) Proj.: Q3 +2.3pct.
Fed’s Plosser speaks(9:a.m.)
FRIDAY:
Empire State Mfg. Svy (8:30) Proj.: Index Nov. 5.5 vs. 1.52 Oct.
Import/Export Prices(8:30) Proj. Oct. -0.5 pct.
Industrial Production (9:15) Proj. Oct. +0.1pct. vs. +0.6 Sept.
Wholesale Trade (10:00) Proj. Sept. +0.4pct.
RECENT POSTS – 2013
Oct 25 DJIA 15,509 “Best Six Months for Owning Stocks”
Oct 28 DJIA 15,570 “Do I Detect Speculative “Fever “ ? If So, What Can
Happen”
Oct 29 DJIA 15,568 “ When Will the Small Investor Plunge ?”
Oct 30 DJIA 15,680 “Don’t Rule Out Fed Taper by Year-End”
Oct 31 DJIA 15,618 “Easy Does It ! Market Nervous, Needs Breather”
Nov 1 DJIA 15,545 “Rally Failure, Correction to Continue ?
Nov 4 DJIA 15,615 “Room to Run – Just Ditch the Blinders”
Nov 5 DJIA 15,639 “Market Crossroads – Which Way ?
Nov 6 DJIA 15,618 “Bulls Hold the Edge, But What About Interest Rates ?
Nov 7 DJIA 15,747 “Early Profit Taking or Warning of a Correction ?”
Nov 8 DJIA 15,593 “Time for the Street to Get Off the Fed Teat”
George Brooks
“Investor’s first read – an edge before the open”
*STOCK TRADERS ALMANAC: The new annual Stock Trader’s Almanac is off the press. This is a “must,” always has been, if you are a serious investor, or intend to be a serious investor. Visit stocktradersalmanac.com for details
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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.
