Bullard Bull!

George Brooks |

 

Tuesday, October  28, 2014     9:03 a.m.  DAILY BEFORE the OPEN

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Daily:Boiling down fundamental, technical, economic,

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

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    With the market reeling from a harrowing five-day plunge, I alerted readers before the open on October 16, “Don’t be surprised if the Fed steps in to announce an extension of bond purchases.”

     The same morning, St. Louis Fed President, James Bullard, said in an interview that it would be a “logical policy response” for the Fed to delay the end of quantitative easing.

    The market soared.

    Bullard spared a lot of investors a bit more pain, though the flow of reasonably good Q3 earnings in the interim may have turned the market without Bullard.

    The market’s positive reaction indicates the Street is still addicted to QE, which suggests it prefers bad news to good news, the latter encouraging the Fed to exit its low interest rate policy sooner rather than later.

    That has to change.  Bad is bad.  Where were these guys when bad was crushing stocks in 2008 ?

TODAY:

The market will open higher today. The U.S. economy doesn’t justify a delay in QE. While economies abroad (especially Germany) are struggling, it is likely the Fed will announce the end of bond purchases Wednesday.

    Why then is the market up ?

    Hopefully, because the Street is prepared to see good for what it  is  - “good” and accept slightly higher interest rates  in 2015.

    In a real world, interest rates will have to rise if the economy is going to gain more and more traction.  To a point, stocks can rise along with interest rates until they adversely impact the economy and attractiveness of fixed income over stocks.

TOMORROW:

   The market’s reaction to the Fed’s decision regarding bond purchases will tell us a lot about the Street’s readiness to accept the end of this phase of QE.  

   The Street’s screwy mindset must change for this bull market to continue, otherwise a major bear market looms when reality hits.

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Investor’s first readDaily edge before the open

DJIA: 16,817

S&P 500:  1,961                               

Nasdaq  Comp.: 4,485

Russell 2000:1.117

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FOMC MEETING Oct. 28 – 29:  WILL FED EXTEND BOND PURCHASES ??

    Last  week , James Bullard, a non-voting Fed official, stepped in suggesting bond purchases could be extended which is huge, but only if it does so. When ?  There is  no press conference scheduled after its FOMC meeting next week, Oct. 28. * If they schedule one, odds strongly favor a special announcement indicating if it plans to extend bond purchases, which would be a tipoff. If the Fed is going to do this it will have to this month or in December, since there is no meeting scheduled for November.

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BULL MARKET RETRACEMENT:

    A One-third retracement of the five and a half year bull market would take the DJIA down  to 13,714 (S&P 500: 1,568) and it can get there in face of the right negatives. A one-third retracement of any major move is not out of the question., just not the norm.

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TECHNICAL ANALYSIS EACH of 30 DOW INDUSTRIALS   (10/24 close)

By technically analyzing each of the 30 Dow industrials then using the Dow “divisor” to convert the data back into the DJIA, I can get a better read on what is primary support and a secondary support.

  As of the 10/8 close:  Resistance 17,298; Primary Support: 16,645; and Secondary Support: 16,542.

   NOTE: These calculations generally hold for longer periods of time, but need to be changed when the market is hit with excessive volatility.

   The resistance and support levels listed daily may differ, since they are shorter term.

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INTERNATIONAL TENSIONS:

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

   ISIS/Iraq/Syria – A Euro/Mid-East coalition has formed to counter ISIL. A full-blown bombing mission has been undertaken, which stands to be ongoing. Psychologically, that stands to play well in America, which has been warned of future terrorist activity.  The good possibility of a major war resulting must be considered.

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THIS WEEK’s ECONOMIC REPORTS:

     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:

PMI Services –flash (9:45): Oct. index was 57.3 down from 58.9 in Sept.

Pending Home Sales (10:00): Up 0.3 pct. in Sept. vs. down 1.0 pct. Aug.

Dallas Fed Mfg. Ix. (10:30): Index slipped to 10.5 in Oct. from 10.8 in Sept.

TUESDAY:

FOMC Meeting begins

ICSC Goldman Store Sales (7:45):

Durable Goods (8:30):

S&P Case Shiller Home Price (9:00):

Consumer Confidence (10:00):

Richmond Fed Mfg Ix. (10:00):

WEDNESDAY:

FOMC announcement (200): No press conference scheduled (yet)

THURSDAY:

GDP: Q2c – Final revision(8:30):

Jobless Claims (8:30):

FRIDAY:

Personal Income/Outlays (8:30):

Chicago PMI (9:45):

Consumer Sentiment (9:55):

 

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RECENT POSTS:

Oct. 16   DJIA  16,141  Rally Today Off Wednesday Lows Risky

Oct. 17   DJIA  16,117  What If the Fed Doesn’t Delay Taper ?

Oct. 20   DJIA  16,380   Critical Week for Bulls

Oct. 21   DJIA  16,399   Market Attacking Key Resistance

Oct. 22   DJIA   16,614  Just a Rally of End of the  Correction ?

Oct. 23   DJIA   16,461  BIG Day for Economic Reports

Oct. 24   DJIA   16,677  DJIA – a Portfolio of Small Cap Stocks ?

Oct. 27   DJIA   16,805  Wednesday:  Wall Street: Pass, or Fail ?

 

George  Brooks

A Game-On Analysis,  LL

“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 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 equities.com. 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: http://www.equities.com/disclaimer

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