Phew, that was close. The question now is, how much of the “deal” has the market discounted ?
With ideological differences in Congress and the President so vast, I expected a decision on the debt ceiling and government shutdown to go beyond the October 17 deadline into the weekend, but without default. I expected a sell off on October 19 after the deadline was missed which I viewed as a big buying opportunity.
The Street saw it differently with a six-day 4.5% surge in the DJIA prior to an 11th hour “deal” on the debt limit/shutdown.
The downside of a short-term deal is the possibility this brinkmanship will raise its ugly head all over again. The upside it the fact public opinion polls indicate the public is fed up with governing by crisis.
This nonsense has had to adversely impact consumer and business confidence, and the stock market now needs to sift through the ashes for a reason to go higher without a correction/consolidation.
One doesn’t have to look far for examples of risk. Stocks of both IBM and EBAY were hammered after the Street was stunned by earnings reports released last night.
The DJIA will be negatively impacted today by a 14-point drop in IBM’s stock , which will lop off more than 80 points from the average.
Market needs to digest the impact of the debt ceiling/shutdown crisis and dig in its heels for ugly Q3 earnings reports.
Support is DJIA 15,245 (S&P 500: 1,709). Resistance: 15,465 (S&P 500: 1,730).
Investor’s first read– an edge before the open
S&P 500: 1,721
Nasdaq Comp.: 3,839
Russell 2000: 1,092
Thursday, Oct. 17, 2013 (9:16 a.m.)
STOCKS OF GENERAL INTEREST:
The following are based on technical analysis only and are not to be taken as buy or sell recommendations, but one of many factors that must be considered in the decision process. Comments do not take into consideration earnings reports or changes in institutional ratings, company guidance.
Apple (AAPL: $501.114) Positive.
Running into resistance at $502. Seller probably believed a big
“up” day was a good time to take something of the table. Given a stable market, AAPL can run to $509 - $510 near-term.. Support is $496 - $498.
Facebook (FB: $51.13) Positive
Rising out of consolidation phase. Mid 50s likely. Support $49,65.
IBM (IBM: $184.66) Note: traded below $173 in pre-market trading as a result of reporting disappointing earnings after the close yesterday. As a result, IBM is now technically negative. Obviously the report came as a surprise to the Street, the stock had risen five out of the last six days before the report. IBM is down from a March high of $215. While its technical pattern has abruptly turned negative, fundamentalists will be looking closely at a level that represents value.
Pulte Homes (PHM: $1602) Positive
PHM started to break out of its 19-day “down channel” yesterday on increased volume with a near-term possibility of $17 - $17.60. An attempt to sell off in late day trading was met with buying. There is a little resistance at $16.09. Support is $15.95.
First Solar (FSLR:$43.75) Positive
Nimble traders should love this stock. It swings widely within a trading day. One of those stocks a trader can stick in a “wild” bid followed by an order the same day a point or two higher. Stock must crack resistance at $45.80 to give it a shot at $48. Support is $44.75.
Target (TGT: $63.90) Neutral, but trying to turn the corner.
Retail in general is in question now and TGT is hearing footsteps. Has had buyers in recent days, but needs a push across $64 to improve the pattern.
Hewlett-Packard (HPQ: $23.28) Positive.
Broke out of a tight “pennant” formation with a shot at$25 - $26.
Support is $23.25
EBAY (EBAY: $53.97) Negative after disappointing earnings and guidance hammered the stock in after-market trading. It is trading at $50 in pre-market trading today and will have to probe for support in the high 40s. As with IBM, it is obvious, the Street was caught by surprise by the report.
Amazon (AMZN: $310.49) Positive
Support $309. Break above $311 raises chance of move to $316.
I do not own, nor am I short: AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
ECONOMIC REPORTS: No fewer than eight Federal Reserve officials speak this week during a light reporting week shaping up. Some reports will be delayed due to shutdown, though Federal Reserve based reports and private sector reports won’t. The economy is not currently center stage, though the deadlock in Washington will hurt the economy and confidence and business decisions going forward.
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com - www.mam.econoday.com
Fed’s Fisher speaks (7:45)
Housing Starts (8:30) PROJ>: 0.913 million unit rate vs. Aug. rate of 0.891 million
Jobless Claims (8:30)Distorted due to shutdown PROJ: 10/12: 330,000
Industrial Production (9:15) Delayed due to shutdown
Philly Fed Svy (10:00) PROJ.: 15.0 Oct. vs 22.3 Sept. vs. 9.3 Aug.
Fed’s Evans speaks (12:45 p.m.)
Fed’s George speaks (1:45 p.m.)
Leading Indicators (10:00)
Fed’s Evans speaks(2:00 p.m)
Fed’s Stein speaks (4:30 p.m.)
Sep 30 DJIA 15,258 “Makings of an October Buying Opportunity”
Oct 1 DJIA 15,129 “Now the Scary Part – the Debt Ceiling – Default ?”
Oct 2 DJIA 15,191 “Potential for a Deadline to be Breached”
Oct 3 DJIA 15,133 “Debt Deal to Miss Oct.17 Deadline – Settle Over the
Weekend – DJIA Bottoms Oct 18, 12,760 (intraday)”
Oct 4 DJIA 14,996 “Weekend Proposal on Shutdown – a Head Fake ?”
Oct 7 DJIA 14, 936 “DJIA 12,760 if Oct. 17 Deadline Missed”
Oct 8 DJIA 14,936 “Don’t Chase This Week’s Rally
Oct 9 DJIA 14,776 “Don’t Buy A Debt Ceiling Solution Rally”
Oct 10 DJIA 14,802 “A Very, Very Dangerous Rally”
Oct 11 DJIA 15,126 “News Whipsaw Can Roil Stock Prices in Coming Days”
Oct 14 DJIA 15,237 “Fear of Default Returns – Trader Alert”
Oct 15 DJIA 15,301 “What If We Default ? What If We Don’t ?
Oct 16 DJIA 15,168 “Market Saying “Deal” – A High Risk Bet ?”
“Investor’s first read – an edge before the open”
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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. Brooks may buy or sell stocks referred to herein.