A Dangerous Rally - DJIA 16,000 this Week?

George Brooks |

stock market today, DJIA today, S&P 500 today, nasdaq todayMonday, October  13, 2014 9: 10 a.m.  BEFORE the OPEN


Daily: Boiling down fundamental, technical, economic, monetary, fiscal, psychological, and seasonal data into a quick read.


   One of the negatives accompanying this market decline has been characterized by a stop and go churning that stands to create overhead supply that impedes recovery.

    The plunges in August, April, and January were sharp and short-lived and the recovery rapid. The market has attempted to rebound three to four times in the last 13 days only to encounter enough selling to turn it back down. Some of that turndown is a result of buyers suddenly opting for the sidelines.

      The market’s plunge last Thursday and Friday after a sharp Fed-induced rally Wednesday did a lot of technical damage.

    This is a very dangerous market, one which cannot afford to take any new negatives. The August lows have been taken out by the S&P 500 and Nasdaq Comp., so the market will need to probe further for support with DJIA 16,000 (S&P 500: 1,831) not out of the question., especially if the economic skid in Europe worsens.

    Expect stabilizing comments by Fed officials along the way.

    Q3  earnings will dominate news in coming weeks. Disappointments will take their usual toll. More importantly though, will be projections for future earnings especially for S&P 500 companies where close to 46% of revenues are derived from international sales. Weak demand abroad and a strong U.S. dollar  are forcing the Street’s analysts to revise projections downward.


    Again, October is roiling the stock market. But October’s crunch has provided attractive buying opportunities in the past and may again this year.

     Look for forays into the market like the one that will occur at the open today.

Just keep in mind this market is attempting to adjust to undercurrents that could be game changers, at least short-term.

    The Street is nervous about  the impact of the Fed’s ending of bond purchases, but it has had a snit fit about that for months. It’s corporate earnings IMHO that are waking  it up at 4 a.m., and combined with fairly high price/earnings ratios, that could trigger an ugly plunge, and all that can happen in a week or two.

    There are a lot of good reasons to buy U.S, stocks, but there are times the market isn’t listening, or at least until prices get really irresistible. If any month can produce that kind of opportunity, October can.


Investor’s first readDaily edge before the open

DJIA: 16,544

S&P 500:  1,906                               

Nasdaq  Comp.: 4,276

Russell 2000: 1,053



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 16,851; Primary Support: 16,430; and Secondary Support: 16,112.

   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.



   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.



    A heavy week for reports on the economy. For detailed analysis of both the U.S. and Foreign economies along with charts, go to www.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.”



NFIB Small Bus. Optimism (7:30):

ICSC Goldman Store Sales (7:45):


MBA Purchase Apps/ Refi’s (7:00)

PPI-FD (8:30);

Retail Sales (8:30):

Empire State Mfg. (8:30):

Business Inventories (10:00):


Jobless Claims (8:30):

Industrial Production (9:15):

Philadelphia Fed Svy(10:00):

Housing Mkt Ix. (10:00):


Housing Starts (8:30):

Consumer Sentiment (9:55):



Sept, 24  DJIA  17,055  Critical Crossroads for Money Managers

Sept. 25  DJIA  17,210  Back to Tug of War  - Bulls vs. Bears

Sept  26  DJIA  16,945  Moment of Truth for Market’s Direction

Sept. 29  DJIA  17,113  Huge Test for Bulls Today

Sept. 30  DJIA  17,071  Big Move in Market for Winner of Tug of War

Oct.  1    DJIA  17,042  October – Risk or Opportunity ?

Oct.  2    DJIA  16,804  October Opportunity But Angst in Interim

Oct.  3    DJIA  16,801  Rally Today Must Hold

Oct.  6    DJIA  17,009  Best Six Months for Owning Stocks Looms

Oct.  7    DJIA  16,991  Volatility: Q3 earnings, ISIS, the Fed, Elections

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?

*Stock Trader’s Almanac

A Game-On Analysis,  LLC publication

George  Brooks

“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.

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. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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