Monday, October 13, 2014 9: 10 a.m. 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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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.
TODAY:
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.
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Investor’s first read– Daily edge before the open
DJIA: 16,544
S&P 500: 1,906
Nasdaq Comp.: 4,276
Russell 2000: 1,053
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TECHNICAL ANALYSIS EACH of 30 DOW INDUSTRIALS (10/10 close)
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.
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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:
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.”
TUESDAY:
NFIB Small Bus. Optimism (7:30):
ICSC Goldman Store Sales (7:45):
WEDNESDAY:
MBA Purchase Apps/ Refi’s (7:00)
PPI-FD (8:30);
Retail Sales (8:30):
Empire State Mfg. (8:30):
Business Inventories (10:00):
THURSDAY:
Jobless Claims (8:30):
Industrial Production (9:15):
Philadelphia Fed Svy(10:00):
Housing Mkt Ix. (10:00):
FRIDAY:
Housing Starts (8:30):
Consumer Sentiment (9:55):
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RECENT POSTS:
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.
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