Alibaba Frenzy - a Sell Signal?

George Brooks |

FridaySeptember  19, 2014     8:40 a.m.  BEFORE the OPEN


Daily:Boiling down fundamental, technical, economic,

monetary, fiscal, psychological, and seasonal data into a quick read.


   No, I do not see a Bull Market top, just an increasing risk of a sharp , perhaps severe, correction.

   The feeding frenzy accompanying today’s record  IPO of Chinese online retailer Alibaba (BABA) suggests a growing disregard for the potential for a correction.  Obviously, this disconnect is traceable to the fact the stock market has not had a correction greater than 10% in three years – corrections have been followed  quickly by recoveries.

    I have no doubt, BABA will rise well beyond its IPO price of $68, as it draws buyers in who couldn’t get in on the IPO.  It’s IPO market cap will be $170 billion. That compares with the present market cap of Amazon (AMZN) of $150 billion even though the latter’s sales are close to 9 times greater.

    The U.S. economy is chugging along, the Street is not worried about interest rates now that Fed Chief Yellen has indicated a rise in its benchmark rate is not imminent.  The Street is confident corporate earnings will  continue to grow. War in the Mid-East is nothing new and the only game in town is common stocks.

   In time, the frenzy over BABA will be exceeded by investors’ frenzy for issues far more speculative as the Bull Market hits its full stride, but for now BABA looks like a sign of too much greed and too little respect for reality.


   I have expected a spike in stock prices for weeks, however until liftoff four days ago its chances seemed slim.

  The Alibaba splash today can mark an excess typical of a market that needs a correction.   It looks like the last thing the Street expects is a major correction, and that concerns me.

   Good time to raise some cash to protect assets and provide a reserve to take advantage of lower prices in the event of a correction.


  This is  Quadruple Witching Friday when Index futures, index options, stock options and stock futures expire on the same day.  Quad-witch occurs on the third Friday in March, June, September and December and can be disruptive to trading.

Investor’sfirst readDaily edge before the open

DJIA: 17,265

S&P 500: 2,011

Nasdaq  Comp.: 4,593   

Russell 2000: 1,159


THE FED: No  more  Yellen press conferences until Dec. 17

The Street wanted clarification on the Fed’s interpretation of interest rates remaining low for a “considerable time,” a term used since last March. They got it yesterday when Fed Chief Janet Yellen emphasized that rates are unlikely to rise quickly as the economy continues to improve, saying, “Even after employment and inflation are near mandate-consistent levels, economic conditions may for some time warrant keeping the target federal funds rate below levels the committee views as normal in the longer run.”

   The Fed projects a rise in the Federal Funds rate to 1.375 by the end of 2015




   Ukraine/Russia – quiet for now, but has the potential to get uglier.

   ISIS/Iraq/Syria – A Euro/Mid-East coalition is forming to counter ISIL’s territory and influence quest.

    This can get uglier than ugly where it is now. The possibility of a major war resulting must be considered.



    The center of focus this week will be the FOMC meeting and Fed Chief Janet Yellen’s news conference at 2:30 p.m. Wednesday.  For detailed analysis of both the U.S. and Foreign economies along with charts, go 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.”


Empire State Mfg. Svy (8:30): September index up to 27.14 from 14.69 in August.  New orders 16.86 up from 14.40

Industrial Production (9:15): August was down 0.1 pct. after a gain in July of 0.4 pct..


FOMC meeting begins

ICSC Goldman Store Sales (7:45): Dropped 2.6 pct in the Sept. 13 week over the prior week.  Year/year is +3.0 pct..

PPI-FD (8:30): Unchanged in July.  Ex food/energy was up 0.1 pct.  vs. increase of  0.2 pct. June.


MBA Purchase Mtge Purchase Apps: (7:00): Purchase apps rose 5.0 pct. in Sept. 12 week vs. drop of 3.0 pct. in the prior week. Refi’s rose 11.0 pct. after a drop of 11.0 pct. the prior week.

Consumer Price Ix.(8:30): Unchanged in August vs. a rise of 0.1 pct. in July

Housing Market Ix.(10:00): Sept. Index up to 59 from 55 in Aug..

FOMC announcement (2:00):

Fed press conference – Yellen (2:30):


Jobless Claims (8:30): Down 36,000 to 280,000 in the Sept. 13 week

Housing Starts (8:30): Down 14.4 pct. in Aug; Starts down 5.6 pct..

Philly Fed Svy (10:00)  Aug.  Index 22.5 vs 28.0 for July


Leading Indicators (10:00):

Quadruple Witching Friday



Sept.  2   DJIA  17,098  What are Odds of a Big Correction of 8% - 12% ?

Sept.  3   DJIA  17,067  Breakout and Run – Followed by a Crunch

Sept. 4    DJIA  17,078  Bulls “Must” Take Charge NOW

Sept. 5    DJIA  17,069  Market to Tip Its Hand Today

Sept. 8    DJIA  17,173  Bullish Storm Surge Imminent ?

Sept. 9    DJIA  17,111  Bulls to be Tested Today

Sept. 10  DJIA  17,013  Stock Market Back on the “Edge”

Sept, 11  DJIA  17,068  Last Chance for Bulls to Avoid Crunch

Sept. 12  DJIA  17,049  The Fed, Elections, Geopolitics Stymie Bulls

Sept. 15  DJIA  16,987  A Brief Yellen Rally This Week ?

Sept. 16  DJIA  17,031  Street Keying on Yellen’s Wednesday Comments

Sept. 17  DJIA  17,131  Yellen Rally Risky – Raise Some Cash

Sept. 18  DJIA  17,156  Will BIG Money Sell Into Strength ?

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 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:


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