Investor’s first read - Brooksie’s edge before the open
Wednesday, August 29, 2012 9:15 a.m.
S&P 500: 1409.30
Nasdaq Comp.: 3077.14
Russell 2000: 814.28
With the Republican Convention underway and the Democrat Convention in the wings, political swordsmanship will accelerate – “on Guard !”
We will be reminded how close to an abyss our nation is, how more attractive one party’s program is compared with the other’s.
As if we don’t need more uncertainty.
But that is what we are dealing with, so expect a lot of head-fakes as the market bobs and weaves in search for a comfort level.
On average, Presidential Election years have posted gains of 6.1% over the last 60 years. Over the last 20 years, the market declined sharply in the final four months when the White House incumbent was defeated (2000 and 2008).
Excellent coverage of election years vs. the stock market can be found in the Stock Trader’s Almanac and the August issue of InvesTech Research.
CONCLUSION: Big Ben delivers his annual speech at the Fed’s symposium Friday at Jackson Hole, Wyoming, but I suspect we will have to read between the lines if we are looking for confirmation about the Fed’s next move to pump air into our economy.
That will come September 12-13 when the FOMC meets.
TODAY: Yesterday the DJIA and S&P 500 rebounded from slightly above my support levels of DJIA 13,040 (S&P 500: 1402) but are encountering resistance starting at DJIA 13,150 (S&P 500: 1413). These levels must be penetrated to enable a meaningful move up. Yesterday’s support levels stand, however another test will likely fail leading to a drop to DJIA 12,945 (S&P 500: 1365).
No change from yesterday – a BIG buyer needed – NOW, or FB will plunge again to new lows. Last week was the week I said FB would hit its low, with a target of $16.88. While it posted an all-time low of $18.75, the stock is now locked in an unimpressive basing pattern.
I don’t own, nor have I ever owned FB. Generally, I don’t recommend or comment on individual stocks. I started covering FB technically after its IPO because I felt at $34 it was very vulnerable in face of all the misunderstanding and hype. At some point, I will drop coverage. I would like to see readers through the full cycle, from the $34 where I picked it up as “going lower” down to a bottom.
ECONOMIC REPORTS: Big week.
Dallas Fed Mfg Survey (10:30): Declined to 6.4 in August from 12.0 in July, reflecting softer growth. New orders eased to 0.3 from 1.4.
S&PCase Shiller Home Price Ix (9:00): The 20-city home price index gained 0.5% in May following a 0.7% gain in April and 0.8% gain in March.
Consumer Confidence Index(10:00): Declined to 60.6 in August from 65.4 in July.
Richmond Fed Mfg Ix (10:00): Improved to minus 9 in August from minus 17 in July.
GDP (8:30): In its second revision, Q2 grew at a 1.7% annual rate from Q1’s 2.0%. The 1st revision was a growth rate of 1.5%.
Pending Home Sales (10:00): Fell 1.4% in June after a 5.4% gain in May.
Jobless Claims (8:30): Were up 4,000 to 372,000. The 4-week average is up slightly to 368,000 but still 8,000 below the mid-July level.
Personal Income Outlays (8:30):
Kansas City Fed Mfg Ix (11:00): Rose to plus 5 in July from plus 3 in June. New orders rose to a minus 4 from a minus 7.
Chicago PMI(9:45):Up 0.8 to 53.7 in July. New Orders rose 1.0 points to 52.9.
Consumer Sentiment (9:55): Gained in mid-August to 87.6 from July’s 82.7
Factory Orders (10:00): Declined 0.5% in June, including a 2.9% drop in Petroleum and coal.
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.
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