Investor’s first read - Brooksie’s edge before the open
Wednesday, August 8, 2012 9:18 a.m.
S&P 500: 1401.35
Nasdaq Comp.: 3015.86
Russell 2000: 801.34
TODAY: Expect a technical correction today with support starting at DJIA 13,050 (S&P 500: 1388). What’s important now is will buyers step in quickly as prices edge down?
A correction can actually take the DJIA down to 12,970 (S&P 500: 1380), just not today.
Stocks have been generally up over the last two weeks reflecting positive vibes from the Fed and abroad from European leaders who are verbally supporting the euro.
For this buoyancy to become a surge requires more volume. So far there is no rush to buy, as there would be if the BIG money saw a bright green light.
With July’s surprise payroll gain of 163,000, the U.S. has recouped four million of the 8.8 million jobs lost in the 2007 – 2009 Great Recession.
June job openings rose to the highest level in four years to 3.78 million suggesting hiring will increase in coming months, assuming job seekers are qualified. Obviously, there is an imbalance between the openings and qualified candidates.
Unfortunately, a lot of former jobs requiring minimal skills have been replaced by technological developments, like my example recently of the garbage truck here that formerly had a 3-man crew, now only has a driver. The truck picks up the bin, dumps it overhead into the truck then places it back on the curb.
Infrastructure rebuild would solve some of this unskilled labor problem, but states spent the little money allocated elsewhere.
Facebook($20.72) took a hit again yesterday after a brief rally in late trading. The stock has a lot of fans, but not among investors.
Yesterday’s plunge qualifies as the beginning off a test of last week’s $19.82 low. As such it is shaping up as a potential “double bottom” (tech term), but IMHO the bottoms are too close in time, ergo the risk of new lows. My worst case low for FB is $16.88, however that would have to occur on very heavy volume – 200 million – 260 million shares
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.
Consumer Credit (3:00p.m.):Rose sharply $17.1 bn in May with student loans a big contributor to to non-revolving loans.
Productivity and Costs (8:30a.m.): Business productivity declined 0.9% in Q1, revised upward from a gain of 0.5% vs. a gain of 1.2% in Q4, 2011.
Jobless Claims (8:30): Rose 8,000 claims in the July 28 to 365,000 bringing the 4-week average to 265,500.
U.S. International Trade Gap (8:30a.m.): Narrowed in May due to lower oil prices. The trade deficit narrowed to $48.7bn from $50.6bn in April.
Wholesale Inventories (10:00a.m.): Rose 0.3% in May bringing the inventory/sales ratio up a smidge to 1.18 from April’s 1.17.
Import/Export Prices (8:30a.m.): Import prices dropped sharply in June by 2.7% following a downwardly revised decline of 1.2% in May. Export prices declined 1.7% in the period.
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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