Uneasy Market Anticipates Peaking Gas Prices

George Brooks  |

Investor's first read  - Brooksie's edge before the open

Thursday, March 8, 2012        9:02 a.m. ET

DJIA:  12,837.33     S&P 500:   1352.63

Yesterday’s market action was  in line with my expectations, the DJIA and S&P 500 ran into selling resistance at my targeted levels.

However, contrary to my expectations, it did not sell off at the close.

That means a firm open today.

Buying today’s open is risky, as I think we will be in a correction mode for a few weeks, either in a sideways-to-down consolidation or sell off.

Today’s strength  is fueled by good news out of Greece, the prospect of lower oil prices and  O.K. news on Jobless Claims and hopes for a good Employment Situation report at 8:30 Friday.

Buying in this market will require good timing and patience.

Yesterday I said there were five negatives overhanging the stock market at this time, three could vanish quickly (Greece’s bond swap concerns, rising gasoline prices, and Tensions about Iran’s nuke pursuit).  Two I said will take time (recession in foreign countries and its impact on the U.S.).

Worries about Greece are already off the table.

I think the rise in oil prices will peak soon. Bart Chilton, Chairman of the CFTC, was on CNBC  this morning and acknowledged there “IS” excess speculation in oil futures and that the CFTC has a measure to counter it.

Iran is off Page One for now.

That leaves recession or economic slowdown in Europe, Brazil, China and India as a concern and the impact on the U.S. economy.  These concerns are not capable of disappearing overnight and the market will need to find a level that discounts this uncertainty.

“What could change the picture ?”  I asked yesterday

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“Very strong U.S. economic numbers.”

CONCLUSION: This looks like a normal, healthy correction after a largely uncorrected sharp run up since late November.  Without a huge increase in  new hires in tomorrow’s Employment Situation report, I think the upside is limited for now, making new buying  risky for several weeks.  Patience.

ECONOMIC REPORTS:

MONDAY:

TUESDAY:

WEDNESDAY:

THURSDAY:

FRIDAY:

Recent Posts:

Feb. 21   DJIA: 12,965  "The Market’s Stall is Deceptive While Selected Issuers Could Hum"
Feb. 22   DJIA: 12,938  "Rotation of Strength: Continuing Opportunities as Market Averages Remain Sluggish"
Feb. 23   DJIA: 12,984  "Market Stall Masks Opportunities"
Feb. 24   DJIA: 12,982  "Speculators Hyping $4 Gasoline by Summer"
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"

George  Brooks

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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.

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