Investor’s first read – Brooksie’s edge before the open
Wednesday, April 18, 2012 9:08 a.m. ET
S&P 500: 1,390.78
Nasdaq Comp.: 3,042.82
Russell 2000: 810.63
With concerns about the economy and Spain temporarily in the background, yesterday’s post noted, “We have a shot at DJIA 13,095 (S&P 5001394) this week.” I went on to add that there is no room for rally failures.
We got to and a bit beyond that level in just one day, so where to from here?
The DJIA has recouped two-thirds of its early April, 626-point slide. That should call for a pause, even a pullback to absorb trader’s profit-taking and selling by investors who were spooked by the 5-day tumble.
The S&P 500 has only recouped one-half of its early April loss, but along with the Nasdaq Composite, it is presently distorted by big moves in Apple (AAPL) and Google (GOOG), which are not listed in the 30 DJIA.
It was delightful to have the European “thing” in the background, not having to fear getting clotheslined before the market opens by news that a euro-area nation was on the brink of meltdown.
Realistically, that risk will be with us for months or a year, or two. While European leaders are better prepared to deal with Spain’s crisis now, the process will breed angst and uncertainty.
There are no major economic reports due for release today, but tomorrow looms big with Jobless Claims, Existing Home Sales, the Philly Fed (regional business) Survey, and Leading Indicators on the docket.
TODAY: Expect a mixed open with a drift down to DJIA 13,007 (S&P500:1378)by late morning, followed by a rally to about DJIA 13,085 (S&P 500: 1387). The S&P could be distorted by Apple and Google’s action.
With concern for health the U.S. economic expansion mounting after a disappointing April 6 Employment Situation report, the Street will be looking for reassurance that the economy is still improving. This week will shed light on that.
Retail Sales (8:30) rose 0.8% in March three times the economist’s 0.3% estimate following a strong 1.0% in February after a gain of 0.6% in January. Eleven of 13 categories posted increases.
Empire State Manufacturing Survey (8:30) The pace of growth in the New York area’s manufacturing slowed in April to 6.6 from 20.2, following a 5- month, 19,4 point run since November.
Business Inventories (10a.m.) Rose 0.7% in January, inventory-to-sales ratio remained at 1.27.
Housing Market Index (10a.m.) A survey by the NAHB which rates the economy and housing market conditions, including current home sales, new home sales, projected sales and traffic of prospective buyers.
:30) Rose a strong 1.1% in February after a gain of 0.6% in January
Empire State Manufacturing Survey (8:30) Strength in inventories bumped the index ahead 3.5% in March.
Business Inventories (10a.m.) Rose 0.6% in February following an increase of 0.8% in January, inventory-to-sales ratio remained at 1.27.
Housing Market Index (10a.m.) A survey by the NAHB which rates the economy and housing market conditions, including current home sales, new home sales, projected sales and traffic of prospective buyers. April’s Housing Market Index dropped to 25 from 28 in March. A Bloomberg survey for the index of 48 economists ranged between 27 and 30.
Housing Starts (8:30) Dropped 1.1% in February after a 3.7% gain in January. Permits rose 5.1% after a 1.6% gain in January.
Industrial Production (9:15) Was flat in February due to a drop in mining. Manufacturing rose 0.3% after a jump of 1,1% in January.
Jobless Claims (8:30) Rose 13,000 in the April 7 week to 380,000 Four-week moving average was up 4,250 to 368,5000.
Existing Home Sales (10 a.m.) Slipped 0.9% in February to a 4.59 million rate.
Philly Fed Survey (10a.m.) measures general business conditions in the Philadelphia region. The index jumped sharply in March to 12.5 from 10.2.
Leading Indicators (10a.m.) Surged 0.7% in February with the help of improving jobless claims. Also contributing were the interest rate spread (Fed Fds/10 yr treasury rate), stock prices and building permits.
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.