Last Thursday Amazon (AMZN) released a favorable earnings report, but it was an upgrade by Raymond James’ Aaron Kessler to Strong Buy from Market Perform with a price target of $446 produced a 21-point gap at the open.
That’s bull market stuff.
That suggests speculative fever is festering. Appetites are whetted. Institutions are beginning to panic about missing opportunities, paying up aggressively just to be on board.
Prior to the beginning of this bull market I wrote that a bull will be signaled when the “fear of owning stocks changes to the fear of NOT owning stocks.”
We passed that stage years ago. What we may be seeing is an escalation of that fear – the fear of missing the BIG moves small company stocks can produce, but at a greater risk, but which investors tend to ignore until it is too late.
Small company stocks post bigger gains early in a bull market primarily because they are coming off severely depressed levels, it is the big-caps and mid-caps that get the biggest play. At some point, the focus rolls over to the small- and micro-caps, eventually ending is a wild speculative blow out.
We may be on the threshold of a big run in the latter two groups.
With the shutdown/default risk behind us and Fed taper postponed, the final hurdle is the economic recovery. We will get a peek at its progress this week, but may need a few more weeks’ data to confirm due the impact of Washington’s folly earlier this month.
If speculative fever is festering, this could get wild, but not without risk.
Investor’s first read– an edge before the open
DJIA: 15,570
S&P 500:1,759
Nasdaq Comp.3,943:
Russell 2000: 1,118
Monday, Oct. 28, 2013 (8:56 a.m.)
STOCKS OF GENERAL INTEREST: I am considering the elimination of this section and offering it in a separate publication on a subscription basis.
I would be able to cover more companies, and would not be constrained by a pre-market deadline. Comments welcome: [email protected]. Include opinion about how you think I could even improve commentary bearing in mind these are NOT buy/sell comments.
The following are based on technical analysis only and are not to be taken as buy or sell recommendations, but as 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. Technical analysis is based on one’s interpretation of the impact buying and selling have on the price of a stock and is therefore not an exact science. News and events can change an interpretation instantly.
Apple ($AAPL: $525.96) Positive.
Big jump last week was in anticipation of AAPL’s intro of its newest iPad and tablet iPad Air. Friday was a day of rest. Support is $520 – $522. AAPL has a shot at $538 – $544, but must now get past resistance at $528 – $529. Support is $524. Earnings come after the close today.
Facebook ($FB: $51.95) Positive
Last week was a consolidation week which may reflect nervousness about earnings due Oct. 30. However, this may just be a correction to its 8-day surge in early Oct.. While there has been some buying in the low 50s, FB is under some pressure and can get down to $48 – $49. Stock had a one-day reversal Friday and needs the same on the upside this week.
IBM ($IBM: $176.85) Negative but probing for support.
A spike of buying on Friday was reversed by selling late in the day until a buyer in-size stepped in. Support is $176. Resistance in $178.
Pulte Homes ($PHM: $18.04) Positive
Investors got the earnings report they were looking for last week pushing PHM across $18.Support is now $17.75 – $$17.80.
First Solar ($FSLR:$52.80) Positive
Got stopped in its tracks Friday at $54,70 but should find buyers between $50.25 and $51.30.
Target (TGT: $64.07) Neutral – borderline negative.
Buying late Friday penetrated a downtrend line, improving TGT’s ugly chart pattern. Still .needs the kind of big buyer above $63 like it got six eight days ago.
Hewlett-Packard (HPQ: $24) Positive.
Friday’s chart improved slightly thanks to some buying that came in late in the day. Can hit $26 near-term if its earnings report Oct. 26 is well received. Support is $23.90.
EBAY (EBAY: $51.63) Neutral and turning ugly.
EBAY needed a big-volume move above $52.70 to reverse damage done by management’s comments about the company’s near-term prospects last week. The day started out with a surge, but it met serious selling taking the stock down shortly after the open.
I think there is a credibility problem here as a result of management’s comments about the Holiday season. It would be a good idea if management clarifies its position if it wants to head off more selling. Support at $50.65.
Amazon (AMZN: $363.39) Positive
AMZN pleased the Street last week with its Q3 earnings report, but it was Raymond James’ Aaron Kessler’s raising of its rating to Strong Buy from Market Perform with a price target of $446 that blew it out. Thursday’s market action suggested a strong move up, but not a “gap” of 22-points at the open. This is the kind of stuff that whets appetites. !!
I do not own, nor am I short: AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
ECONOMIC REPORTS:
Heavy slate of reports this week, however accuracy is
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com
MONDAY:
Industrial Production (9:15) Proj.: Sept. +0.4 pct.
Pending Home Sales(10:00) Proj.:Sept. zero pct.
Dallas Fed. Mfg. Ix.(10:30 Proj.:Oct. Ix at 9.0 vs.12.8 Sept.
TUESDAY:
FOMC Meeting begins
ICSC Goldman Store Sales (7:45) No proj.
Producer Price Ix.: Proj.:Sept. +0.2 pct
Retail Sales (8:30) Proj.: Sept.: zero pct.
S&P Case-Shiller Home Price Ix. (9:00) Proj.: 20 cty HPI +0.7
Business Inventories (10:00) Proj.: Aug.: +0.3 pct.
Consumer Confidence(10:00) Proj.:Oct. ix. 75 vs 79.7 Sept.
State Street Investor Confidence Ix.(10:00) Proj.:
WEDNESDAY:
ADP Employment Rpt(8:15) Proj.: Oct.: 138,000
Consumer Price Ix.(8:30) Proj.:Sept.: +0.2 pct.
FOMC Meeting announcement (2:00) No Bernanke press conf. planned
THURSDAY:
Jobless Claims (8:30) Proj.:for 10/26: 335,000
Chicago PMI (9:45) Proj.:Oct.: ix.: 55.0 vs 55.7 Aug.
FRIDAY:
Motor Vehicles Sales Proj.:Oct.domestic:11.9 mill-unit rate (total: 15.4 mil.-units)
Fed’s Bullard speaks(8:00)
PMI Mfg Ix.(8:58) Proj.: No data available
ISM Mfg. Ix.(10:00) Proj.:Oct.: ix.: 55.0 vs. 56.2
Fed’s Kocherlakota speaks(11:15)
RECENT POSTS – 2013
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 ?”
Oct 17 DJIA 15,373 “How Much of the “Deal” has the Market Discounted” ?
Oct 18 DJIA 15,371 “No More Wall of Worry for Bull Market to Climb ?”
Oct 21 DJIA 15,399 “Analysis Projects High-Low Range for DJIA”
Oct 22 DJIA 15,392 “Is the Stock Market Vulnerable ?”
Oct 23 DJIA 15,467 “Q3 Earnings – Only Worry In Town ?”
Oct 24 DJIA 15,413 “No Fed Taper in Sight ? Don’t Bet on It.”
Oct 25 DJIA 15,509 “Best Six Months for Owning Stocks”
George Brooks
“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.
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