All Eyes on Fed at Jackson Hole Thursday

George Brooks |

MondayAugust  18 , 2014     11:45 a.m.  BEFORE the OPEN


    NEWS WHIPSAW:  Russia/Ukraine stands to hold center stage. Friday news about Ukraine’s destruction of Russian equipment that crossed the border is unconfirmed.  The Friday report  originated from Ukraine’s President Poroshenko’s office temporarily causing a drop in stock prices.

    Apparently that information was false and the market is off and running again. But Ukraine forces are regaining key cities from pro-Russian rebels in Eastern Ukraine, which may prompt a counter move by Russia resulting in bad news that turns the market down.

  This will be a big week for Fed watchers as the minutes of  the last July 29-30 FOMC meeting will be released at 2:00 p.m. Wednesday, but will  not be accompanied by a press conference. 

    Thursday through Saturday will feature the Kansas City Fed’s annual economic  policy symposium in Jackson Hole, Wyoming, where Who’s-who in U.S. and international economics will meet to address “Re-evaluating Labor Market Dynamics.”

    Fed chief Janet Yellen and ECB President Mario Draghi will highlight the list of speakers. Yellen will speak at 10:00 a.m. Friday in a speech titled, “Labor Markets.”

    Obviously, every word Yellen says will be parsed for a clue about the timing of a rise in the Fed’s benchmark interest rate.

    Economic data expected this week includes important housing  reports Monday, Tuesday and Friday (see below).


    The market is rebounding after taking a hit Friday when it was falsely reported that Ukraine forces destroyed Russian vehicles.  But, aggressive action by Russia may still trigger news that reverses the market back down if Russia reacts to Ukraine’s recent gains against the pro-Russian rebels in Eastern Ukraine, even though the two countries initiated peace talks over the weekend.

     The news whipsaw is really one of the worst phenom’s to cope with. No sooner than one decision is made than a news change puts an investor on the wrong side of the market.

    There is room to run on the upside near-term, assuming no new negatives. The economy needs a pick up in housing, so reports Monday, Tuesday and Friday will be watched closely.

     Unfortunately, the Street still gains comfort from the lack of great economic news since it increases the odds the Fed will raise rates later rather than sooner.   Geeeeeeezz !   Bad is good – Where these guys around in 2008 ?

     Support today is DJIA: 16,651; S&P 500: 1,953; Nasdaq Comp.: 4,459

     Resistance today is: DJIA: 16,753; S&P 500: 1,966; Nasdaq Comp.: 4,483

Investor’s first readDaily edge before the open

DJIA: 16,662

S&P 500: 1,955

Nasdaq  Comp.:4,464

Russell 2000:    1,141



    The DJIA has advanced 160% (the S&P 500: 194%) through August 14.

    But the base point for calculating that advance was March 2009 from DJIA 14,279 (S&P 500: 666) and came after an unprecedented bombardment of  unthinkable events, including failures and bailouts of  the Street’s most prestigious names: AIG, Lehman Bros., Merrill, Wachovia, Washington Mutual, F.Mae and F. Mac, etc. and a global scramble for survival. A total meltdown appeared imminent between September 2008 and March 2009, panicking investors and  crushing stock prices beyond reason.

    The final bear market plunge from DJIA 9,000 (S&P 500: 970)  to DJIA 6,440 (S&P 500: 666),  a drop of  28.4% and 31.3% respectively, was driven by pure hysteria.

    While I am stretching the rules of technical analysis a bit here, there is merit in the concept that  the final plunge was so emotionally charged, a more reasonable base for the bear market bottom would be DJIA 9,000 (S&P 500: 970) where the market began to fall apart in October 2008.

    Based on that assumption, the DJIA would have advanced 85% (S&P 500: 101%) through August 14, 2014, not 160% and 194% respectively. Put another way, that whole panic zone serves as the base for a bear market bottom, not the actual lows, owing to the extreme nature of events that produced the crunch.

    Conclusion: While not cheap, stocks are not as over priced as the doomsters think.



Depends on who you ask. A.Gary Shilling, publisher of  “INSIGHT” * challenged government press releases in an August 4, Special Report, “After the Government Report Releases.”

    Among the first to warn readers in advance of the Great Recession, Shilling  was quick to point out that the July 30, Q2 GDP report of an annualized gain of 4.0% was misleading with 1.66 percentage points attributed to a change in inventories, bringing the  growth number down to 2.3%, a rate he feels is not great enough to “spawn meaningful growth in wages and labor income.”  Excess inventories that are not worked off by sales  penalize future production.

    He attributes last week’s plunge in the stock market to the Street’s concern that the economy is not rebounding.

    If he is right, the question arises, Will the Fed have to revise its taper schedule ?

THE FED:                               

    We will hear more cautionary  comments from the Fed going forward in an attempt to ease an interest rate hike when its reality hits early next year. The Fed does not want speculative fever to run rampant prior to the rate increase.

     The Fed’s “easing in” policy is bad news for those who want the feeding frenzy to continue unabated, but good news for investors who opt for  a more stable market and an inevitable crunch instead of crash.

CURRENT: Aug. 15:

   St. Louis Fed President James Bullard warned the Street the rise in the Fed benchmark interest rate  may come earlier that generally expected, possible  by the end of Q1, that in terms of the Fed’s employment mandate, “We’re way ahead of where we expected to be.”





    At key junctures, I technically analyze each of the 30 Dow industrials seeking a reasonable near-term support and a more extreme support leyel, 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.

     After yesterday’s crunch, Iran my analysis based on the July 31 closeand concluded the near-term upside for the DJIA HAS DROPPED TO  16,765, a  reasonable downside from here is 16,391 and more extended downside risk to 16,264.

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



      Big week for reports on housing.  FOMC meets, no press conference planned.

      For detailed analysis of both the U.S. and Foreign economies along with charts, go to 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.”


Housing Market Ix. (10:00):


ICSC Goldman Store Sales (7:45):

Consumer Price Ix. (8:30):

Housing Starts (8:30):


MBA Mtge Purchase Apps/Refi’s (7:00)):

FOMC Minutes from July 29-30 FOMC meeting (2:00):

(No FOMC meeting scheduled for August)


Jobless Claims (8:30):

PMI Mfg Ix. Flash rpt (9:45):

Philly Fed Svy (10:00):

Existing Home Sales (10:00):

Leading Indicators (10:00):


No reports      



July 30   DJIA   16,912  Market on the Verge of Big Move ?

July 31   DJIA   16,880  Huge Test for Bulls

Aug.  1   DJIA  16,563  False Alarm, or ………

Aug.  4   DJIA   16,493  Trader’s Buy, but Risks are High.

Aug.  5   DJIA   16,569  Bulls “Must”  Step In Now, or…….

Aug.  6   DJIA   16,429  Is The Economy Really Rebounding ?

Aug.  7   DJIA   16,443  Rally to Give Investors a Good Read on Near-Term

Aug.  8   DJIA   16, 368 News Whipsaw = Increased Volatility

Aug. 11  DJIA   16, 553 Rebound to Good News – How Far ?

Aug. 12  DJIA   16,569  News Whipsaw – Watch Your Back !

Aug. 13  DJIA   16,560  Rally ?  Be Very Careful !

Aug. 14  DJIA   16,651  Better Off Now than in October 2007 ?


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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