Tuesday, March 13, 2012 9:02 a.m. ET
DJIA: 12,959.71 S&P 5400:371.09
Calm before the storm?
I have a feeling the market is on the verge of a sharp move.
Last week I thought it would be down 5%-7% over three weeks, a reasonable (but wrong) assumption since it had surged 19% since late November.
It only declined 2.7% and just for a day, then rebounded to recover its loss, but on light volume.
That suggests a lack of intense selling, though less than enthusiastic buying.
CONCLUSION: For once, I’d like to hack into some of the quants’ computers to get a feel for what they have been programmed to conclude. Are they getting a green light to charge in, now that Europe’s problems are lessened ? Do they foresee a peak in hysteria over the Iranian nuke issue, as well as a reversal in rising oil prices ? Is the U.S. economy gaining enough traction to offset a meaningful adverse impact from slowdowns in the European, Asian and South American economies ?
In recent posts, I have claimed that the big story of 2012 would be a huge exodus out of “safe” parking places for money (treasuries, money markets, CDs, etc.) into common stocks.
I expected that to happen sometime this year, but is that about to start now ?
The market has not tipped its hand – YET, but a pick up in volume on the upside would be the first sign, since volume has been so low.
I definitely would NOT want to buy long-term bonds or bond funds (or own them) when that shift happens.
U.S. Retail Sales were reported at 8:30 today showing a solid gain of 1.1% for February vs. an upwardly revised 0.6% gain for January. Gains were seen in 11 of 13 categories, with autos the strongest in four years. (How does the bailout look now ?)
ECONOMIC REPORTS: The stock market doesn’t always march to the drumbeat of the economy. This time around, the intensity of the economic recovery is critical to a further extension of the bull market that started three years ago. This recovery must continue to gain traction, even accelerate to offset the drag of a slowing international economy if the market is able to move higher.
- Retail Sales (8:30 a.m.) Retail sales advanced 0.4% in January after no gain in December as a result of a slowdown in auto sales.
- Business Inventories (10 a.m.) Rose 0.4% in Dec. below the 0.7% rise in sales pulling down the stock-to sales ratio to 1.26.
- FOMC Meeting (2:15) Rates expected to remain same
- MBA Purchase Applications (7 a.m.) Measures application for mortgages with lenders. Apps jumped 8.4% for the week ended Feb. 24.
- Import/Export Prices (8:30 a.m.) Imports rose 0.03 in Jan., The numbers were goosed by petroleum prices.
- Jobless Claims (8:30 a.m.) Rose for the Mar. 3 week but the overall point is the big trend is down.
- Producer Price Index (830 a.m.) Rebounded 0.1% in Jan. after a like amount decrease in Dec.
- Empire State Manufacturing Survey (8:30 a.m.) This regional survey of business rose sharply in February to 19.53 the best reading in 18 months.
- Philly Fed Survey (10 a.m.) Rose 2.9 points to 10.2 in Feb. reflecting good business activity in the Mid-Atlantic manufacturing area.
- Consumer Prices (8:30a.m.) Rose 0.2% following no change in the prior two months.
- Industrial Production (9:15 a.m.): Was unchanged in Jan. after a 1.0% increase in Dec.Monthly reports have varied. Capacity utilization has trended up six out of the last seven months.
- Consumer Sentiment (9:55 a.m.) has been on the rise since August. It will be interesting to see if rising gasoline prices can reverse sentiments.
Feb. 27 DJIA: 12,981 "Stock Prices: “May the Force Be With You”"
Feb. 28 DJIA: 13,005 "Big Test for Bulls Today"
Feb. 29 DJIA: 12,952 "Opportunities Exist Even in a Lethargic Market"
March 1 DJIA: 12,980 "Bull Market Intact – But Correction Likely in Coming Weeks"
March 2 DJIA: 12,977 "Selective Opportunities – Don’t Get Careless"
March 5 DJIA: 12,962 "Up or Down? Week’s Economic Reports Hold Key"
March 6 DJIA: 12,759 "Technical Correction Underway For Wall Street"
March 7 DJIA: 12,837 "Not Yet! Market Will Probe for a Comfort Level"
March 8 DJIA: 12,907 "Uneasy Market Anticipates Peaking Gas Prices"
March 9 DJIA: 12,922 "Easy Does It! Market is Selective Buying Only"
March 12 DJIA: 12,959 "Bulls Hanging Tough Against Correction"
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.