Thursday, March 29, 2012 9:11 a.m. ET
DJIA: 13,126.21 S&P 500: 1405.54
TODAY: While the DJIA and S&P 500 closed at my support levels yesterday, it briefly probed lower and I think those levels will be tested today and maybe exceeded by a little, before stabilizing before 11:30 and turning up. More specifically, that means a test by the DJIA of yesterday’s intraday low of 13,048 (S&P 500: 1397) with a further “fake out” slip to DJIA 13,048 (S&P 500: 1395).
Let’s put that another way. We had a minor but unexpected wave of profit-taking yesterday and we will have many more going forward. Odds favor the bulls will be buying on dips like this unless the market gets whacked by unexpectedly bad news and then they will step back and wait for lower prices.
Technically, the pattern is very positive and especially if you look at Nasdaq and the Russell, 2000, and SPDR S&P 500 ETF, which is useful in monitoring volume numbers that the major market averages don’t give.
Recently, I said I expected rising oil prices to top out as a negative with gas prices following on behind in time. The “ouch” level for gas prices was passed weeks ago, but the “I can’t stand it any more – I’m biking” level is now being estimated (by experts) at $5 a gal., not $4. Hmmm.
The final GDP number is in, Q4 grew at a 3% annual rate.
Jobless Claims for the week ending March 24 were down 5,000. With a revision to last week’s number, this can be sliced and diced a number of insignificant ways. The bottom line is unemployment claims are on the decline. The New York Fed estimates a 6% unemployment rate by mid-2013 taking into consideration a drop in claims but also an exit from the workforce. Doesn’t put meat on the table at some households today, but it is encouraging in the big picture.
Greece will probably have to restructure its debt again, Moritz Kraemer, head of sovereign ratings for S&P yesterday, though he declined to estimate when.
On the other hand, Italian Prime Minister, Mario Monti, said he believes the euro-area’s problems are almost over, that the European governments are preparing a one-year increase in the ceiling for recue aid to 940 billion euros to offset additional debt problems.
We haven’t heard much lately about Spain and Portugal. Since the euro-area sovereign debt crisis adversely impacted economic growth and world stock markets, we cannot ignore the likelihood these problems may return at some point. Just one of those balls “up in the air” that can come down at any time to hit stock prices. Hopefully, this time around, the Europeans are better prepared to counter it.
MONDAY: Pending Home Sales Index (10 a.m.) – a leading indicator to housing activity. Dipped 0.5% in February to 96.5 from 97.0 in January, but 9.2% ahead of a year ago. “An uneven but higher sales pattern”: Lawrence Yun, National Ass’n Realtors.
S&P Case Shiller Home price Index (9 a.m.) – tracks monthly changes in residential real estate in 20 metropolitan regions. January’s index fell 3.8% from January a year ago, in line with expectations and a slight improvement vs. the 4.1% decline in December (yr/yr).
Consumer Confidence ( 10 a.m.) –Based on consumer perceptions of business and employment conditions , as well as six months hence. The Conference Board’s index of Consumer Confidence dipped slightly in March to 70.2 from 71.6, higher gas prices were blamed. February’s index jumped 9.3 points to 70.8 well above the recession low of 25.3.
MBA Purchase Applications (7 a.m.) Applications for mortgages. It is a leading indicator for single family home sales and new home construction.
Durable Goods (8:30 a.m.) Durable Goods were ahead 2.2% in February vs. a decline of 3.6% in January. The gain fell short of the projected 3.0%. Ex-transportation February was up 1.6% vs. a decline of 3.0% in January.
GDP (8:30 a.m.) – Last estimate for Q4 was plus 3.0% and that is what the final number is – official today.
Jobless Claims (8:30) Dropped 5,000 for week ended March 24. With revisions to last week’s numbers, the four-week moving average is now 365,000,
Personal Income and Outlays (8:30 a.m.) Increased 0.3% in January after a 0.5% gain in December. Nice gain expected in February report.
Chicago PMI (9:45 a.m.) Purchase managers survey of regional business conditions. Rose 3.8 points (6%) to 64 in February. New orders index jumped 8.8% a good omen for this week’s report.
Consumer Sentiment (9:55 a.m.) a survey of 500 households regarding financial conditions and attitudes about the econo9my. Slipped 1.0% in a preliminary March survey.
*Stock Trader’s Almanac
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.