Again - Bulls Challenged

George Brooks |

ThursdayJune  26, 2014      9:16 a.m.  BEFORE the OPEN

    We had a spike in the market, a one-day correction in the  market, and the Street  is now digesting a flow of mostly positive economic news.

    A downwardly revised 2.9% plunge in Q1’s estimated GDP jolted the Street. In addition to the impact on spending by a severe winter, the economy’s growth rate was restricted by weak demand for computers, electronic products, machinery and appliances, as well as sharply reduced defense spending.

    The economy is now rebounding, and its intensity will have a major impact on whether the stock market can move significantly higher, hold its own here, or decline.

TODAY:   

    So far, the flow of economic data is positive enough to encourage selective buying, though the drop in stock prices that started Tuesday can be renewed today or tomorrow, if yesterday’s bounce fails to follow through.

    The Bulls must step in aggressively if this market is able to recoup what it lost Tuesday near-term.

    Support today is DJIA: 16,821; S&P 500: 1,953; Nasdaq Comp.:4,364

    Resistance today is DJIA: 16,896; S&P 500: 1,963; Nasdaq Comp.: 4,392

     NOTE: The DJIA found support at  16,811, the “reasonable” support level arrived at in my June 20 technical analysis of the DJIA (see below). Breaking that the next support level based on that analysis would be 16,718.

  Investor’s first readDaily edge before the open

DJIA:  16,867                                   

S&P 500: 1,959

Nasdaq  Comp.:4,379

Russell 2000:   1,182

   

EUROPE:

    The European Central Bank’s cut of its benchmark interest rate and announcement to employ additional measures to stimulate European economies  stands to help the U.S. economy, as well.  It did little to boost stock markets abroad which are trading at six-year highs, suggesting the move was already discounted. Even so, let’s consider it a  positive.

 

TECHNICAL ANALYSIS of 30 DOW JONES INDUSTRIALS

(UPDATED ANALYSIS:  June 20)

    At key junctures, I technically analyze each of the 30 Dow industrials seeking a reasonable near-term support and a more extreme support level, as well as a short-term resistance level. By technically studying the balances of buying and selling in each stock, then converting that data back to the DJIA using the “divisor” (0.1557159) I can get a better reading on the average itself.  The DJIA is a price-weighted average and subject to distortion by higher priced issues.

    As of the close June 20, the near-term upside for the DJIA is 17,117.  Reasonable support is 16,811, more extreme support is 16,718

    Note: My daily support/resistance  levels are more short-term oriented.

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THIS WEEK’s ECONOMIC REPORTS:

    Look for a very heavy schedule of releases on the economy this week, especially Monday and Tuesday for the housing industry.

      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.”

MONDAY:

Chicago Fed Nat’l Activity Ix.(8:30): May up to 0.20 from Apr. minus 0.32

PMI Mfg Flash Ix. (9:45): Markit flash index  for June  up to 57.5 from 56.4 (final May). New orders 61.7 vs. 58.8

Existing Home Sales (10:00): Up 4.9 pct. May vs. gain of 1.5 pct. Apr./ Yea/year minus 5.0 pct vs. minus 6.8 pct.

TUESDAY:

ICSC GoldmanStore Sales (7:45): Up 2.0 pct. in 6/21 week vs +0.4 pct. week ago. Year/year now +4.1 pct.  vs +3.1 a year ago

FHFA HousePrice Ix. (9:00): Unchanged in April after a 0.7 pct. gain in Mar..

S&P Case Shiller HPI (9:00)): Up 0.2 pct. Apr. vs. gain of 1.2 pct. Mar..

New Home Sales (10:00): Surged 18.6 pct. in May  to an annual rate of 504 million units

Consumer Confidence (10:00): June index rose to 85.2 from 82.2 in May (revised).

Richmond Fed Mfg.(10:00): May index dropped to 3 from 7, but new orders up to 4 from 3.

WEDNESDAY:

MBA Purchase Apps (7:00): Both apps and refi’s slipped 1.0 pct in the June 20 week following sharp drops the week before.

Durable Goods Orders (8:30): Down 1.0 pct. in May vs. +0.4 pct. in Apr./ Ex-transport  may was +0.6 pct. vs. -0.8 pct..

GDP (8:30): Final read for Q1 was down 2.9 pct. vs. the prior prelim est. of down 1.0 pct.

Corporate Profits (8:30): Q1  were $1.907 trillion vs. $1.905 trillion in Q4 or +0.5% (ann. Rate) vs. a 7.9% gain (ann. Rate) Q4.  Year/year were up 6.8% vs. 6.0% in prior quarter.

PMI Services Flash (9:45): Markit’s flash Index is up 2.8 points to 61.2 from May’s flash reading and up 3.1 points from May’s final reading.  The “flash” reading is Based on 85% of the standard monthly reading and is released about a week before the final reading FYI ! These are post-winter bounce back  are strong readings, though

THURSDAY:

Jobless Claims (8:30):Down 2,000 to 312,000 for 6/18 week.

Personal Income/Outlays (8:30): Personal Income up 0.4 pct./ Personal Expenditures up 0.2 pct.

Kansas City Fed. Mfg. Ix.(11:00):

FRIDAY:

Consumer Sentiment (9:55):

 

 

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RECENT POSTS:

June 12  DJIA   16,843  Sideways, 3-Month Trading Range Beginning ?

June 13  DJIA   16,734 Iraq Crisis to Create Buying Opportunity

June 16  DJIA   16,775 Uncertainty – A Menace to Stock Prices Near-Term

June 17  DJIA   16,781 Decision Day for Stock Prices – Near-Term

June 18  DJIA   16,808 Market Awaits a Fed QE Exit Strategy

June 19  DJIA   16,906 Wall Street Needs a Dose of Reality 

June 20  DJIA   16,921 Spike Up Likely, No Room for Rally Failure

June 23  DJIA   16,947 Spike, Correction – Opportunity

June 24  DJIA   16,937 Market to React to Week’s Economic Reports

June 25  DJIA   16,818 Major Challenge for Bulls

A Game-On Analysis,  LLC publication

George  Brooks

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

Brooks007read@aol.com

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 investment advice or 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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