Thursday, June 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.
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 read– Daily edge before the open
S&P 500: 1,959
Russell 2000: 1,182
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.
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.”
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.
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.
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
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):
Consumer Sentiment (9:55):
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
“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 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.