Up or Down? Week’s Economic Reports Hold Key
Investor’s first read Brooksie’s edge before the open
Monday, March 5, 2012 9: 15 a.m. ET
DJIA: 12,977.57 S&P 500: 1369.63
The big reason our stock market has been strong over the last 5 months even in face of serious concerns abroad is the fact our economic expansion has been gaining strength.
That must continue !
This week will bring us key economic reports addressing manufacturing, non-manufacturing, retail sales, and employment data (see below).
The broad-based S&P 500 is up 19% since November 25, the end of the last meaningful correction of 10%.
Technically, we are due for a breather, something on the order of 5%-7% without “news” to trigger it. Bulls would counter, saying February’s market action was mostly sideways, an orderly consolidation that could provide a base for higher prices over the next two months.
Higher or lower at this juncture is pretty much dependent on the flow of economic reports
Stronger economic numbers than expected – we’re headed north.
Any weakness in the economic numbers, and we are headed south and it will be more like 10% – 12% than 5% – 7%..
I don’t usually dwell on the economy, however, the market has come a long way in anticipation of a sustained recovery, and there is no room for disappointment.
This is not to reduce the importance of my contention that institutions have a huge amount of money to invest, that there is nowhere else to invest it, and with the risk of a meltdown in Europe, money will now come out of “safe” investments and go into stocks, which are historically cheap.
Essentially, I am alerting you to the risk of a shakeout, one which could impact your portfolio, but one that would enable you to pick up stocks at attractive prices.
TODAY: Failure to cross DJIA 12,995 (S&P 500: 1377) calls for a test of minor support at DJIA: 12930 (S&P 500: 1367). Breaking that, look for DJIA: 12,885 (S&P 500: 1357.
ECONOMIC REPORTS:
MONDAY:
- Factory Orders (10 a.m.) – Thanks to strong Durable Goods’ orders December was up a solid 1.1% after a big 2.2% jump in Nov..
- ISM Non-Manufacturing Index (10 a.m.) – January was strong, as was December. A very comprehensive index.
TUESDAY:
- ISC Goldman Store Sales (7:45 a.m.)Covers major retail chains, but limited to 10% of total retail sales.
WEDNESDAY:
- MBA Purchase Allowances (7 a.m.)Measures purchase applications at mortgage lenders. Provides gauge of housing demand – a key to giving current economic recovery a boost.
- ADP Employment Report (8:15 a.m.):This will be scrutinized carefully for a clue to what Friday’s Employment Situation report produces. Very Important.
- Productivity and Costs ( 8:30 a.m.) Hours worked generally increases before new hires
- EIA Petroleum Status Report (10:30 a.m.):Weekly report of inventories here and abroad, with some bearing on prices for petroleum prices.
- Consumer Credit (3 p.m.)Rose $19.3 billion in December following November’s $20.4 billion gain. Both months saw sizable gains in credit card usage.
THURSDAY:
- Jobless Claims (8:30 a.m.)Was down 2,000 for the week ended Feb, 25, Four-week moving average is now 354,000
FRIDAY:
- Employment Situation (8:30) Was up a solid 243,000 in January, 203,000 in December and 157,000 in November. The unemployment rate dropped tro 8.3% from 8.5%. Average workweek was steady at 34.5 hours.
- International Trade (8:30 a.m.)The trade gap worsened in December as imports jumped. The nonpetroleum goods deficit increased to $36.5 billion from $34.1 billion, while petroleum products slipped to $26.9 billion from $27.6 billion.
- Wholesale Trade (10 a.m)Measures the dollar value of sales made and inventories held by merchant wholesalers. It rose 1.0% in December. The stock-to-sales ratio is considered “very lean and efficient.”
Recent Posts:
Feb. 6 DJIA: 12,845 “Follow the Money as It Exits Safe Havens“
Feb. 7 DJIA: 12,878 “Market Held Up By Sneaky Buying“
Feb. 8 DJIA: 12,883 “Is It Safe For Bulls to Come Out and Play?“
Feb. 9 DJIA: 12,890 “BIG Money Buying the Future“
Feb. 10 DJIA: 12,801 “Can a Greek Deal Be Accomplished Over the Weekend?“
Feb. 13 DJIA: 12,874 “Easy Does It! Some Selling Into Good News Expected“
Feb. 14 DJIA: 12,878 “Investors Should Expect “Market Churn”“
Feb. 15 DJIA: 12,780 “Market Churn to Include Brief Correction“
Feb. 16 DJIA: 12,904 “Another Snag in Greek Bailout + Long Weekend = Extended Correction“
Feb. 17 DJIA: 12,949 “Investors Establish Bullish Turf“
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“
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“
George Brooks
*Bloomberg.Com
**National Journal
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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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