Investor’s first read – Brooksie’s edge before the open
Wednesday, April 25, 2012 9:10 a.m. ET
DJIA: 13,001.56
S&P 500: 1371.97
Nasdaq Comp.: 2961.60
Russell 2000: 798.05
The stock market will open higher today, but much the jump in the S&P 500 and Nasdaq will be attributable to a huge jump in the price of Apple’s (AAPL) stock.
March Durable Goods Orders came in at a minus 4.1% vs. a gain of 1.6% in February. While this number needs deeper analysis, it is not good news in light of the fact economists expected March orders to be up.
Nevertheless, the disappointment in Durables isn’t likely to prompt any change in stance by the Fed. The Street will be listening carefully to what Fed Chair Bernanke has to say at his 2:15 press conference today for any clues about policy changes.
So far, Q1 corporate earnings are looking good. With 145 S&P 500 companies reporting, 82% have beat estimates with earnings rising an average of 12%. While this says earnings gains are solid, it also says analysts have most likely low-balled estimates (again).
CONCLUSION:
The market is in limbo right now, trying to find a level that gives proper weight to looming negatives and uncertainties (slowing U.S. economy, Spain’s debt woes) and positives (corporate earnings). It’s a sifting process for which we do not yet have an answer.
The “technical” picture of the market is neutral at best. A bearish topping pattern is forming, which will take a break above DJIA 13,250 (S&P 500: 1410) to totally. eliminate.
I don’t think this is the time to take big chances unless one is a nimble trader, capable of reversing positions quickly to avoid a nasty loss.
I am a believer in using adversity to pick up attractively priced stocks, I just don’t see an ugly enough picture yet.
ECONOMIC REPORTS
Again, the flow of economic reports will be important this week because the Street is concerned that the economy is slowing.
TUESDAY
Case Shiller Home Price Ix (9:00) – a 20-city house price index indicated prices dropped at a slower rate in February, suggesting the market was stabilizing. Home prices declined 3.5% vs. a year ago.
New Home Sales (10 a.m.) At an annual rate of 328,000, March sales of new homes exceeded projections but declined 7.1% from a February’s upward revision of 353,000. A Bloomberg survey of 78 economists forecast an annual rate of 319,000.
Consumer Confidence (10 a.m.) – was unchanged in April
following a drop to 70.2 in March from 71.6 in February.
FHFA House Price Ix (10 a.m.) – unchanged in January after a 0.1% increase in December.
WEDNESDAY
Durable Goods (8:30) – February orders rebounded 2.4% after a 3.5% decline in January and 3.3% increase in December.
FOMC Meeting Announcement (12:30) – is expected to leave policy rates unchanged, but the Street will be focused on comments by Fed officials after the meeting for any clues about a change in policy going forward.
THURSDAY
Jobless Claims (8:30) – declined 2,000 to 386,000 in the April 14 week, after a sharp jump of 26,000 (revised up by 8,000) the prior week. The four-week average is now 374,750.
Pending Home Sales (10 a.m.) – dropped 0.5% in February after a 2.0% rise in January.
FRIDAY
GDP (8:30) – Q4’s GDP’s last estimate was a plus 3%. Q3 was 1.8%.
Employment Cost Ix (8:30) – a measure of the total employee compensation costs, including wages, salaries and benefits. It rose 0.4% in Q4 vs, a rise of 0.3% in Q3.
Consumer Sentiment (9:55) – The index slid to 75.7 in mid-April from 76.2 in March
George Brooks
*Stock Trader’s Almanac. You should not be without this statistical gem and reservoir of investing savvy. Got my first issue in 1968 and every one since.
……………………………………………………………………………………
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.
Read Next
