Day Trading Economic News Analysis: April 15, 2010
April Empire State Manufacturing Survey
In March the New York Fed reported that the Empire State Manufacturing Survey fell by 2 points to 22.86 from February's 24.91 however it is above the consensus of 22.0. New orders should see an increase in the April Empires State manufacturing index.
The manufacturing survey gives a detail look at New York's manufacturing sector, which is ahead of other surveys such as the Philadelphia Fed and ISM manufacturing index.
Jobless Claims
During the first week of April CareerBuilder.com provided a sense of optimism as the number of job listings increased. However last week the Labor Department showed negative signs in the labor market as jobless claims rose to 460k compared to 439k for the previous week. The increase may have been due to the Easter holiday as well as Cesar Chavez national holiday in California.
The 4 week moving average gives a better perspective than the weekly report. Previously the 4 week moving average rose 2,250 to 450,250 from the beginning of March.
March Industrial Production
Industrial production shows how much manufacturing, mining, electric and gas utilities are utilizing their resources, which accounts for 20% of GDP. It is an important tool for forecasting future GDP as well as measuring inflation by central banks.
Last month February Industrial Production increased 0.1% following 0.9% in January. December industrial production also jumped 0.7% concluding a three month moving average of 0.57%. The three month moving average gives a clearer picture of the trend. However the future seems to be mixed as other indexes showed that both February Philly Fed and the New York manufacturing indexes rose however the ISM manufacturing index fell back.
April Philadelphia Fed Survey
Based on last month's numbers April Philadelphia Fed Survey is expected to be higher. March Philly Fed reported an increase of 18.9 in manufacturing activity compared to February's 17.6. The Philly Fed is a good indicator for the industrial production index. Next month's industrial production should increase just as February Industrial Production increased to 0.1% following 0.9% in January. On Monday March 15th March Empire State Manufacturing Survey fell 22.86 from February's 24.91 however it is above the consensus of 22.0. These numbers are indicating that the manufacturing sector seems to be stabilizing as the economy is recovering.
Manufacturing is a major sector of the economy and gives insight into commodity prices. By understanding the type of investments the manufacturing sector is seeking, commodity prices will follow the direction as well as inflationary pressures.
If the manufacturing sector is seeking steel and other raw materials then the index will increase and so will the prices of these commodities as well as inflation.
Weekly Natural Gas Report
The Energy Information Administration reported last week the natural gas reported a rose to 31 billion cubic feet increasing from the previous 12 billion cubic feet for the March 26 week. Increasing inventories would most likely keep prices steady or lower because supply outweighs demand.
April Housing Market Index
March Housing Index decreased to 15 from February's 17 due to tighter credit, bad weather, and competition with other distressed properties. The housing index runs from 0 to 100 and shows the demand for new homes provided by the National Association of Home Builders.
Last month we mentioned housing sector stocks: Lowes and Home Depot. Both Lowes (LOW) and Home Deport (HD) were currently hitting their 52 week highs of 25.01 and 32.50, respectively. As of April 14, 2010 Lowes is currently trading at 26.59 (52 week high=26.63) and Home Depot is at 34.98 (52 week high=35.07). Homeowners are resuming fix-up and repairs of their current homes rather than purchasing or moving into new ones.
Tomorrow February Housing Starts will be announced in the morning providing data on new construction activity. The federal home buyer tax credit for first-time home buyers as well as repeat buyers ends on April 30, 2010. Qualified first-time home buyers receive a tax credit up to $8,000 while repeat buyers are eligible up to $6,500.
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We mentioned yesterday that there will be resistance around Tuesday's previous high of 1192. The S&P 500 only reached a high of 1190 before being consumed with the consumer credit report declining $11.5 billion in February. The S&P 500 settled at 1182 level after it fell to a low of 1177 breaking last Thursday's previous high of 1181.
On Friday Goldman Sachs was charged by the SEC with civil fraud regarding dealings of the subprime related products. Expect European and Asia markets to be lower on Monday after the aftermath of selling on the US exchanges. The S&P 500 fell to 1192 ending the day near last Wednesday's previous low.
The S&P started falling to a low of 1189 before ending the day up 1 to the 1197 level. On Monday the S&P 500 reached a new 52 week high of 1199 as the afternoon kicked off earnings season with the announcement of Alcoa. Alcoa ended up nearly flat on Tuesday's trading.
Today's primary pivot is 1173.34 so expect the market to go higher if it trades above between 1172 and 1174 levels and find support between 1167 and 1168.
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