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Raise Cash for October Opportunity

By  +Follow September 20, 2013 6:18AM
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Again !  Raise some cash for a better opportunity in October/November.

   While the Street views a decision not to begin tapering out of QE this month as a positive, the market had risen more than 5% in nine days ahead of the news, so the “taper rally” I referred to as providing a selling opportunity was blunted.

   We could get  some delayed reaction buying  in here, which would present an opportunity to lighten up on stocks that have had a good run and free up buying power for new leaders as we edge into the “Best time for owning stocks,”* (November 1 to May 1).

   Over the next four-to-six weeks the market will have to cope with the debt ceiling debate, Obamacare defunding and the possibility of a government shutdown (unlikely).

On top of that, we get Q3 corporate earnings.

   Presently, this spells uncertainty and after a sharp run up in stock prices – risk, at least in certain stocks.

CONCLUSION:

   The stock charts and charts of the market averages look good, but over-extended , suggesting  the need for a correction sideways, or down. The turn would come out of a sharp spike upward, or a “stall” with the market bumping its head at a resistance level most likely around DJIA 15,780 (S$P 500: 1,741).

   Investor’s first readan edge before the open

DJIA:  15,636

S&P 500:  1,722

Nasdaq  Comp. 3,789

Russell 2000:  1,075

Friday, Sept. 20, 2013     (9:16 a.m.)

   TECHNICAL OBSERVATION – STOCKS:

The following are observations based solely on technical analysis and don’t give consideration to fundamentals or changes in brokerage ratings which can  have an immediate impact on stocks, justified or not.  The idea here is to give readers insight into the likely trends and turns in the stock’s price, short-and long-term.

   I picked up on AAPL and FB last year when they were in a tailspin, and  picked up on IBM, Pulte, First Solar, Target, and Hewlett-Packard recently for the same reason. These are not  buy or sell recommendations, and are not stocks I have recommended.

NOTE: Expect  support and resistance levels to change more frequently under adverse  and uncertain conditions  like those we are experiencing presently..

   WARNING: This market  is highly “news sensitive,” with everything at the present negative. Any break for the better in the mid-East, taper, or in the threat of a government shutdown in October will trigger a rally, especially in stocks below, since they have been hammered already.

Resistance/support levelsare “tight” and more easily penetrated than if I gave readers  “general” resi/spt levels.

  Apple(AAPL: $472.30 ) 

Note: Bottom was targeted at $385 for the turn around  Apr. and Jun. 2013 (double bottom). I continue to follow

Pattern: Now neutral  down from bearish.

Resistance:  $475

Support:  Rises to $466

The Motley Fool investment letter  attributes AAPL’s problem to : “Since their introduction, both the iPhone and iPad have been the best products at the best price points….In the last year, the market has shifted.  Now Apple’s products appear to be overpriced compared to their rivals and they aren’t necessarily better.” Clearly a case where management has decided to play “prevent defense,” ie. try not to lose a dominant position. You have to play the game that got you there !

Facebook (FB - $45.98)

Note: Bottom was targeted below $18 for a turnaround Sept. 2012.  Continue to follow.

Pattern: Positive –

Resistance: $49.90

Support: $44.50

Recent strength attributed to Sun Trust Robinson Humphrey’s increase in price target to $55 from $40. Is now correcting big $26 to $45.62 move that started in July.

  IBM ($193.39 ) 

Note: Started coverage  Aug. 7, 2013 after big plunge in stock

Pattern: Positive up from neutral, but improved

Resistance:  $194.65        The $194 - $196 area should be tough to penetrate                    

Support:  $192.35  Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years.

  PulteGroup (PHM- $17.62 ) 

Note: Started coverage Aug. 12, 2013

Pattern: Positive but Taper decision could move it sharply one way or another

Resistance: $18.00

Support:  $17.30

Big beneficiary of the Fed

First Solar (FSLR: $39.83 )

Note: Started coverage: Aug.: 22, 2013

Pattern: Neutral – basing – improved yesterday but so did others.

Resistance: $40.40

Support: $39.55

Target (TGT: $65.39) 

Note: Started coverage Aug: 22, 2013:

Pattern:  Needs to stabilize after yesterday’s return to its base from resistance level.

Resistance: $66.60      Good chance of a spike across $66             

Support: $65  Nice base forming

Hewlett-Packard (HPQ: $21.31)

Note: Started coverage Aug. 23, 2013

Pattern: Negative  -

Resistance: $22.30

Support: $20.60

 Sharp drop from $26 created overhead supply (a lid)  $19.85 is possible  after being dropped from DJIA thus triggering selling from funds indexed to the DJIA.

eBay (eBay: $54.45 )  

Note: Started coverage Aug. 28, 2013

Pattern: Positive – on a roll

Resistance: $56 - $57

Support:  $ 53.80

Amazon.com  (AMZN: $312.06)

Note: Started coverage Aug. 28

Pattern:  Bullish , but correcting September up move.

Resistance: $314

Support:  Support now $308

 I do not own, nor am I short  AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.

ECONOMIC REPORTS:  BIG, BIG Week for reports.

   For a detailed account of past and current economic reports, including charts go to: mam.econoday.com - www.mam.econoday.com

MONDAY:

Empire State Mfg. Ix. (8:30)  Sept. Index  6.3 down 2.4 pts

Industrial Production (9:15)   +0. pct Aug vs. flat July. Manufacturing up 0.7 pct. vs. drop of 0.4 pct July.

TUESDAY:

FOMC Meeting begins 

ICSC-Goldman Store Sales (7:45)  Down 1.6 pct. for week ended 9/14

Consumer Price Ix.(8:30)    Sept. +0.1 pct. vs. gain of 0.2 pct July

Housing Market Ix.(10:00)   Sept. unchanged at 59

WEDNESDAY:

Housing Starts (8:30)    August was up 0.9 pct. to 891,000 vs. 0.883 million

   units  July  Permits 0.918  mil. units Aug. down 3.8 pct.

mil. units July

FOMC Meeting Announcement and Forecasts (2:00 pm)

Bernanke press conference (2:30)

THURSDAY:

Jobless Claims (8:30)   Rose 15,000 week ended Sept. 14, but distorted by incomplete reports from California and Navada,

Current Account Deficit (8:30)   PROJ:   Q2  minus $96.7 billion  vs, $106 billion

   In Q1

Bloomberg Consumer Comfort Ix.(9:45)  PROJ: none

Existing Home Sales(10:00) Rose 1.7 pct. in August, plus 13.2 pct. vs year ago.

Philadelphia Fed Svy Ix. (10:00) Index jumped  to 22.3 in September vs. 9.3 August.

Leading Indicators (10:00)   PROJ:  Rose 0.7 pct. in August vs. 0.5 pct July

Fed’s Pianalto speaks (11:30) 

FRIDAY:

QUADRUPLE WITCHING FRIDAY !

Fed’s George speaks (12:30)

Fed’s Tarullo speaks (12:40)

Fed’d Bullard speaks (12:55)

Fed’s Kochelakota speaks (1:45)

 

RECENT POSTS:   2013

Sep 4     DJIA  14,833  “What Must Happen for the Bull to Snort”

Sep 5     DJIA  14,930  “ September Taper – Buying Opportunity ?

Sep 6     DJIA  14,937  “Market Wants to Run – Are You Ready ?”

Sep 9     DJIA  14,,932 “Breakout or Fakeout ?  Syria/Fed Taper”

Sep 10   DJIA  15,063  “Easy Does It !

Sep 11,  DJIA  15,191   “Taper Center Stage – What to Expect”

Sep 12  DJIA   15,326   “Fed to Delay Taper Next Week ?

 

Sep 13   DJIA  15, 300  “What’s in Line Next Week – Fed Taper,  Larry Summers”

Sep 16  DJIA   15,376  “No Taper ! No Summers ! Selling Opportunity ?

Sep 17  DJIA   15,494  “No Taper= Rally Followed By a Sell off ?

Sep 18  DJIA   15, 529  “Sell the Taper Rally ?”

Sep 19  DJIA   15,676   “Raise Cash for Better Opportunities”

Note: The DJIA may be impacted more with the replacement of Bank of America (BAC), Hewlett Packard (HPQ), and Alcoa by Goldman-Sachs (GS), Visa (V), and Nike (NKE).  While the change isn’t effective until the morning of trading Sept. 23, the trading by index funds  associated with these changes may distort the averages.

*Stock Trader’s Almanac – 2014 issue just off the press.

  George  Brooks

“Investor’s first read – an edge before the open”

This email address is being protected from spambots. You need JavaScript enabled to view it.

……………………………………………..

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.

 

 

 

 

 

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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By  +Follow September 20, 2013 6:18AM
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