The next 7 trading days should answer some questions. Congress returns today, President Obama addresses the Syria issue on TV tomorrow night after a Senate vote, and the FOMC announces a decision on the taper-now-or taper-later issue a week from Wednesday.
The DJIA and S&P 500 traced out an impressive enough base in late August/early September in the DJIA 14,760 (S&P 500: 1,627 area to support a further rally.
I am surprised the market hasn’t probed lower as a precaution to a worse-than-expected outcome in Syria, the Fed taper and more Washington gridlock.
The technical pattern is upbeat, but untested. A breakout-fake out here is a 40-60 possibility, which suggests investors should proceed with caution. I would feel better if the market was trading lower in face of universal concern.
I am not convinced the markets have discounted a new Fed chief in January and the implications of a final taper sometime next year. So far, it’s been all about the first taper.
Near-term resistance is DJIA: 14,983 (S&P 500: 1,663)
Near-term support is DJIA: 14,883 (S&P 500: 1,650)
Investor’s first read– an edge before the open
S&P 500: 1,655
Nasdaq Comp. 3,660
Russell 2000: 1,029
Monday, Sept. 9, 2013 (9:13)
The Fed hasn’t handled this taper thing well. Imagine the board of directors of a corporation deliberating over a decision that will affect its stock price and operations in a big way and the directors hitting the speech trail over and over again with opinions that vary, leading its shareholders and prospective investors to first conclude it would vote one way, then in a week or so conclude it will vote the other way.
How does one make a rational decision ? How much money is lost in the process ?
This is too much transparency.
The Fed has indicated it would accommodate the economy, tapering out of QE if the economy gains enough traction, holding fast if it doesn’t.
Small wonder the Street is confused and addicted to QE. The Street would be better off if the Fed officials didn’t comment beyond the accommodation statement.
Through its inconsistency it has caused interest rates to jump sharply, putting the homebuilding recovery at risk. While mortgage rates are not insufferably high, the jump following Fed chief Bernanke’s June 19 taper-by-fall and wrap up by mid-2014 jolted the markets. To make matters worse, a host of Fed officials followed his comments up with a denial that taper wasn’t the same as tightening, reversing a market that was dropping in search of a level that discounted taper consequences.
I am basically a Fed supporter, and think it did a good job when the world was in meltdown. The “taper isn’t tightening” message should have been started a year ago.
TECHNICAL OBSERVATION – STOCKS:
The following are observations based solely on technical analysis and don’t give consideration to fundamentals or changes in brokerage ratings which can have an immediate impact on stocks, justified or not. The idea here is to give readers insight into the likely trends and turns in the stock’s price, short-and long-term.
I picked up on AAPL and FB last year when they were in a tailspin, and picked up on IBM, Pulte, First Solar, Target, and Hewlett-Packard recently for the same reason. These are not buy or sell recommendations, and are not stocks I have recommended.
NOTE: Expect support and resistance levels to change more frequently under adverse and uncertain conditions like those we are experiencing presently..
WARNING: This market is highly “news sensitive,” with everything at the present negative. Any break for the better in the mid-East, taper, or in the threat of a government shutdown in October will trigger a rally, especially in stocks below, since they have been hammered already.
Resistance/support levelsare “tight” and more easily penetrated than if I gave readers “general” resi/spt levels.
Note: Bottom was targeted at $385 for the turn around Apr. and Jun. 2013 (double bottom). continue to follow
Resistance: breakout across $510 possible
Support: $496 - Buyers – above $490
Facebook (FB - $43.95)
Note: Bottom was targeted below $18 for a turnaround Sept. 2012. Continue to follow.
Pattern: Positive –
Recent strength attributed to Sun Trust Robinson Humphrey’s increase ib price target to #55 from $40.
IBM ($183.03) No change
Note: Started coverage Aug. 7, 2013 after big plunge in stock
Pattern: Negative, but improving.
Resistance: $183.50 - got hit yesterday by a seller at resistance $184.50 Still a seller there – buyer backed off – test of $181.50 - $182 likely.
Support: Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years.
PulteGroup (PHM- $15.47 )
Note: Started coverage Aug. 12, 2013
Pattern: Neutral again after ugly trend
Support: $15.25 Needs big buyer to counter industry negatives that resurfaced with the jump in mortgage rates
First Solar (FSLR:$37.45 )
Note: Started coverage: Aug.: 22, 2013
Pattern: Negative , slight signs of improvement
Thursday morning, I said $36 must hold or a drop to $31 - $32 , but that there was some evidence of bargain hunting. Buyers struck in-size at the open and continued to buy throughout the day. Friday was a different story as FSLR got whacked by a seller.
Target (TGT: 63.29)
Note: Started coverage Aug: 22, 2013:
Had a buyer every day last week, but seller showed up Friday. Is there a message here about consumer spend ?
Note: Started coverage Aug. 23, 2013
Pattern: Negative, but tracing out a nice base above $22
HPQ looks like it can hold in this $22 - $23 area. Sharp drop from $26 created overhead supply (a lid) $19.85 is possible but only in a bad market.
eBay (eBay: $52.83) Yesterday’s action positive
Note: Started coverage Aug. 28, 2013
Pattern: Neutral but improving
Support: $ 52.00 May be tiring after sharp 4-day rally from a $50 area. $53 - $54 look tough without big news.
Amazon.com (AMZN: $ 295.86)
Note: Started coverage Aug. 28
Support: Support now $294
I do not own, nor am I short AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com - www.mam.econoday.com
Fed’s John Williams speaks (11:00)
Consumer Credit (3:00 p.m.) Proj.: $12.3 bil.
NFIB Small Bus. Optimism Ix.(7:30) Proj.: Ix Aug. 95.0 vs. July 94.1
JOLTS (10:00) Jobs Opening Labor Turnover Svy. Proj.: July 9.9275 mil. vs. 3.936 mil June
Wholesale Trade (10:00) Proj.: July +0.3 pct vs. June drop of 0.2 pct.
Jobless Claims (8:30) Proj.: for 9/7/13 330,000 vs. 323,000 prior week.
Import/Export Prices (8:30) Proj.: Aug. +0.5 pct.
Producer Price Ix. (8:30) Proj.: Aug. +0.2 pct. ; Ex. food/energy: +0.1 pct.
Retail Sales (8:30) Proj.: Aug. +0.5 pct. ; Excl. motor veh. +0.3 pct.
Consumer Sentiment (9:55) Proj.: Aug Ix. 82.0 vs. mid-month 82.1
Business Inventories (10:00) Proj.: July +0.3 pct.
RECENT POSTS: 2013
Aug 22 DJIA 14,897 “Street’s Angst Not About First Taper, but……”
Aug 23 DJIA 14,963 “Big Day: Rebound or Rally Failure ?”
Aug 26, DJIA 15,010 “Fed Policy Change – Big Impact on Stock Market ?”
Aug 27 DJIA 14,946 “No Quick Solution for Market’s Negatives – DJIA 14,250 ?
Aug 28 DJIA 14,776 “What Now for AAPL, FB, AMZN, FB, IBM, HPQ, etc. ?”
Aug 29 DJIA 14,824 “Don’t Buy the Syria Solution Rally?
Aug 30 DJIA 14,840 “ Countdown Starts Tuesday – What to Expect”
Sep 3 DJIA 14,810 “Market Up Sharply – Someone Know Something ?”
Sep 4 DJIA 14,833 “What Must Happen for the Bull to Snort”
Sep 5 DJIA 14,930 “ September Taper – Buying Opportunity ?
Sep 6 DJIA 14,937 “Market Wants to Run – Are You Ready ?”
*Stock Traders Almanac- 2014 issue just coming off the printing press
“Investor’s first read – an edge before the open”
The writer of Investor’s first read, George Brooks, is not 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. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk. Brooks may buy or sell stocks referred to herein.
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