Friday, October 24, 2014 9:03 a.m. DAILY BEFORE the OPEN
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Daily:Boiling down fundamental, technical, economic,
monetary, fiscal, psychological, and seasonal data into a quick read.
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It clearly acts like it with sharp moves either way in big cap stocks, mostly in reaction to Q3 earnings reports.
It all started with Fed’s James Bullard’s hint that the Fed could extend bond purchases beyond this month’s deadline.
The timing of Bullard’s comment in the morning, Thursday, Oct. 16, was perfect, the market and oil prices were in a tailspin. Addicted to a comfort level provided by Fed bond purchases, the Street responded as expected – it raced to buy.
The big question now is, What will the Street do if the Fed completes taper next Wednesday ?
Such an important decision would have to be accompanied by a press conference, but none is scheduled to-date. If one is announced, the Street will know what is coming.
If this rally is more a response to Q3 earnings than Bullard’s comment, it is sustainable.
I just technically analyzed 30 Dow stocks and 34 leading Nasdaq stocks, and see “panic,” as buyers (long and shorts) scramble to buy – at the market !
A certain urgency to buy is evident as if the Street fears missing its last chance to buy.
Technically, Netflix (NFLX: $383) looks like it’s going to $406, Tesla (TSLA: $235) to $252, Google (GOOG: $544) to $560, and Facebook (FB: $80) to $86 – immediately !
Maybe they will, but I am not buying. At extremes, investors surrender to the market’s direction (up or down), feeling, “I can’t stand it anymore,” and recklessly buy or sell.
With the market surging, it looks like the Street is frantically chasing stocks – not a sound tactic.
TODAY:
Four of the 30 Dow industrials accounted for 112 of the 216 points gained by the DJIA yesterday (CAT, V, GS, MMM).
I am hoping the reason for the market’s strength is earnings-based and not a hope the Fed will announce it is extending bond purchases next Wednesday. If the latter is the driver of stock prices, and the Fed doesn’t extend bond purchases, stocks will take a hit.
The major market averages have recouped about two-thirds of the loss their nasty September/October loss (S&P 500: – 9.9%, the DJIA and Nasdaq: -8.6%), which is about the level where they encounter some resistance.
Look for a mixed open
Minor support today is DJIA: 16,598; S&P 500: 1,941: Nasdaq Comp.:4,427.
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Investor’s first read– Daily edge before the open
DJIA: 16,677
S&P 500: 1,950
Nasdaq Comp.: 4,452
Russell 2000: 1,116
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FOMC MEETING Oct. 28 – 29: WILL FED EXTEND BOND PURCHASES ??
Last week , James Bullard, a non-voting Fed official, stepped in suggesting bond purchases could be extended which is huge, but only if it does so. When ? There is no press conference scheduled after its FOMC meeting next week, Oct. 28. * If they schedule one, odds strongly favor a special announcement indicating if it plans to extend bond purchases, which would be a tipoff. If the Fed is going to do this it will have to this month or in December, since there is no meeting scheduled for November.
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BULL MARKET RETRACEMENT:
A One-third retracement of the five and a half year bull market would take the DJIA down to 13,714 (S&P 500: 1,568) and it can get there in face of the right negatives. A one-third retracement of any major move is not out of the question., just not the norm.
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TECHNICAL ANALYSIS EACH of 30 DOW INDUSTRIALS (10/23close)
By technically analyzing each of the 30 Dow industrials then using the Dow “divisor” to convert the data back into the DJIA, I can get a better read on what is primary support and a secondary support.
As of the 10/8 close: Resistance 16,954; Primary Support: 16,490; and Secondary Support: 16,954.
NOTE: These calculations generally hold for longer periods of time, but need to be changed when the market is hit with excessive volatility.
The resistance and support levels listed daily may differ, since they are shorter term.
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INTERNATIONAL TENSIONS:
Ukraine/Russia – quiet for now, but has the potential to get uglier.
ISIS/Iraq/Syria – A Euro/Mid-East coalition has formed to counter ISIL. A full-blown bombing mission has been undertaken, which stands to be ongoing. Psychologically, that stands to play well in America, which has been warned of future terrorist activity. The good possibility of a major war resulting must be considered.
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THIS WEEK’s ECONOMIC REPORTS:
For detailed analysis of both the U.S. and Foreign economies along with charts, go towww.mam.econoday.com. Also included is an explanation of each indicator. If you want to know when the next Employment report or any other key report will be released that info is also there under “event release date.”
TUESDAY:
ICSC Goldman Store Sales (7:45): Down 0.3 pct. in 10.18 week; Year/year is +2.1 pct.
Existing Home Sales (10:00): Up 2.4 pct. to an annual rate of 517 million units; Year/year is down 1.7 pct.
WEDNESDAY:
MBA Purchase Apps/Refis (7:00) Apps up 11.6 pct. vs gain of 5.6 pct week ago
Consumer Price Ix (8:30):Up 0.1 pct; Ex food/energy up 0.1 pct.
THURSDAY:
Jobless Claims: 8:30): Up 17,000 to 283,000 in 10/17 week
Chicago Fed Nat’l Activity Ix (8:30): Sept. index up to plus 0.47 from minus 0.25 in Aug.
FHFA House Prices (9:00): Up 0.5 pct. in Aug. from 0.2 pct. in July. Year/year is 4.8 pct.
PMI Mfg Ix. (9:45): Index down to 56.2 in Oct. from 57.5 in Sept.
Leading Economic Inds. (10:00): Up 0.8 pct in Sept vs unchanged in Aug.
Kansas City Fed Mfg Ix. (11:00): Oct. index slipped to 4 from 6 in Sept.
FRIDAY:
New Home Sales (10:00):
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RECENT POSTS:
Oct. 8 DJIA 16,719 Extreme Volatility = Risk, but Opportunity
Oct. 9 DJIA 16,994 Bad News is Good News ? Pure Insanity !
Oct. 10 DJIA 16,544 Last Man Standing – Bear – or Bull ?
Oct. 13 DJIA 16,544 A Dangerous Rally – Dow 16,000 this Week ?
Oct. 14 DJIA 16,321 Technical Bounce – Easy Does It !
Oct. 15 DJIA 16,315 Risk: DJIA 14,666 (-1,655 pts.) by Oct 31
Oct. 16 DJIA 16,141 Rally Today Off Wednesday Lows Risky
Oct. 17 DJIA 16,117 What If the Fed Doesn’t Delay Taper ?
Oct. 20 DJIA 16,380 Critical Week for Bulls
Oct. 21 DJIA 16,399 Market Attacking Key Resistance
Oct. 22 DJIA 16,614 Just a Rally of End of the Correction ?
Oct. 23 DJIA 16,461 BIG Day for Economic Reports
*Note: Correction: There “is” an FOMC meeting next week Oct. 28-29, there just isn’t a press conference “scheduled” to accompany it (yet).
** Stock Trader’s Almanac
George Brooks
A Game-On Analysis, LL
“Investor’s first read – a daily edge before the open”
Investor’s first read, is a Game-On Analysis,LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is 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. References to specific securities should not be construed as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. 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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