It looks like institutions are accelerating their buying of targeted stocks for 2014 and beyond. I am positive but continue my warning of a Q1 correction (see below “The Danger.”
Yesterday I projected a spike up to DJIA (16,400 (S&P 500:1,844) I still see that before Friday, trading stops at 1 p.m. today. Just because you are caught up in the holiday cheer and pressures, don’t take your eye off tye stocks you want to own.
Janet Yellen’s Senate confirmation vote as Chair of the Federal Reserve has been delayed in face of Republican opposition untilJanuary 6. This may be just another chess play or the beginning of a new problem.
Now that the first taper has been announced, . the Fed is expected to wrap up QE in measured steps at a $10 billion clip over the next seven sessions, but would alter its withdrawal if the economy falters.
While taper is a change in Fed policy away from stimulation, the Fed insists it is not tightening, since it plans to hold interest rates down throughout 2014.
I AM GOING TO REPEAT THE FOLLOWING TO MAINTAIN AWARENESS OF THE POTENTIAL FOR A Q1 CORRECTION.
Best Six Months to own stocks:
Over the years the Stock Trader’s Almanac* has expounded on its significant finding that the stock market performs better between November 1 and May 1 than between May 1 and November 1.
The Almanac’s “Best Six” goes back to 1950. The six months is a snapshot between November and May. Many major market advances often start before November, but the point made here is the period between fall and May is where the action is.
Is this going to be another “BEST six months to own stocks ?
The six months between November 1 and May 1, have consistently outperformed the six months between May 1 and November 1.*
With a 5.7% rise in the DJIA since October 31, the Street is now wondering if the market is off to yet another “Best Six Months.” Out of the last 25 years, Nov.1 to May 1, have produced 19 up-years, 3 flats and 3 downers. The best years averaged gains of 11.8% with the best up 25.6% (1998 – 1999).
THE DANGER: over the last 25 years, there have been 14 corrections ranging between 6% and 16% during this November1 toMay1 period. Seven of those started in January, two in December and four in February.
TIMING – OPPORTUNITY STOCKS New addition planned: alert to stocks with emerging technical patterns with potential. In a prolonged downturn, I would alert readers to stocks with vulnerable patterns. All on the drawing board.
The following are based on technical analysis only and are not to be taken as buy or sell recommendations, but as one of many factors that must be considered in the decision process. Comments do not take into consideration earnings reports, or changes in institutional ratings, company guidance. Technical analysis is based on one’s interpretation of the impact buying and selling have on the price of a stock and is therefore not an exact science. News and events can change an interpretation instantly.
NOTE: I have added stocks to a new “TECHNICAL ANALYSIS ALERT LIST” (See below)
Investor’s first read – a daily edge before the open
S&P 500: 1,827
Russell 2000: 1,157
Tuesday, Dec. 24, 2013 8:45 Market closes 1p.m. , closed Dec. 25.
Apple (AAPL: $570.09) Positive. (ALERT)
Thank you China ! And yes, institutions have been licking their chops as AAPL drifted lower, until Wednesday when a savvy buyer gobbled up all the shares for sale and closed the stock at its high, a classic one-day reversal. Friday it signaled expectations for better things to come and indeed they did today with pre-market trading up $18 on news it can sell its iPhone through China Mobile. Of course a $21 gain yesterday indicates institutions are reeeeeaching for all they can get $600 ?
Support is $566.
Facebook (FB:57.77) Positive
Whiile it was hit by sellers Thursday and Friday, it closed on those days at the high for the day – a good sign as I have noted. Yesterday’s breakout must have ruined the holidays for the FB doomsters. Support is $57, break above $58.32 paves way for low 60s.
IBM (IBM: $182.23) Positive
Its double bottom at $172 – $173 and we will have to consider its “test of that bottom to be Friday’s rally failure. Volume was loe yesterday so its $2.21 move is a little suspect. Even so, sellers must have been on holiday, as well. Resistance is $184 – $186. Support rises to $179.40.
Pulte Homes (PHM: $19.71) Positive
The housing industry must now demonstrate it can gain traction.
A 6% rise in PHM’s stock yesterday suggests, housing may be looking at a good, as long as interest rates do not rise much further. Support is now $19.10. Stock has had a pattern of rises followed by a consolidation and pull back.
First Solar (FSLR:$55.76) Neutral turning positive
Stock needs a credible institutional research report to assure investors FSLR’s fundamentals are not following China’s track. Spikes of buying volume continue to suggest FSLR may be attracting buyers. Friday’s action disappointing and Monday’s, as well, however the 3-month price chart and 10-day chart tell a different story. The former reflects a one-day reversal, but the latter shows a buying spike followed by a pullback. It’s been a while since FSLR has racked up big one-day gains. If it gets a green light from the Street on fundamentals, it has a shot at $60.Support is $55.50
Nike (NKE:$77.11) Positive
Still doing battle with year-end sellers. Needs a hi-volume push across $78.50 to improve pattern.Thursday’s pullback after Wednesday’s surge was normal. But Q2 earnings triggered selling. Q2 earnings only one cent above Street estimates. We now know the reason for its drop 8 days ago. Obviously someone knew something.
Hewlett-Packard (HPQ:$28.05) Positive.
Another rally/tight consolidation indicating it wants to move across $30Still digesting its surge 17 days ago. May need more rest time between $26 – $28 before moving to a new 52-week high ($28.70). Support $27.30.
Polaris Inds. (PII:143.21) Positive
Higher. Support $142
Amazon (AMZN: $402.92) Positive
Two powerful rallies in two days. suggest higher prices. Suport is $402.
Pandora Media (P:$29.58) Positive.
Took a brief rest Friday after a sharp move up Thursday, then renewed upside yesterday. Support $29.10 resistance $31.
NEW ! NEW ! NEW ! – Technical analysis ALERT list
The following is a “Technical” alert list, stocks that have indicated an improved technical pattern. I will not follow up in detail like the stocks above. These are not buys or sells, but simply alerts that their technical pattern is improving. Normal intraday fluctuations can offer a lower price than that listed here.
Warning: An improving technical pattern can be reversed instantly by negative commentary from the Street, broker downgrades, etc. These are “snapshots” at a given time. Good timing can target pinpoint lower prices in some cases. Most stocks are technically attractive because they sketched out a positive upbeat pattern. Some will be because they are showing signs of rebounding from a depressed condition. If after additional due diligence you decide to buy any of these stocks, always protect yourself with a stop cell in line with your tolerance for risk
Align Technologies (ALGN:58.04 ) Listed here (12/23) at $57.03
Gentex (GNTX: $32.95) Listed here (12/23) at $32.64
Netease (NTES: $75.52) Listed here (12/23) at $74.51
Spirit Airlines (SAVE: $46.14) Listed here (12/23) at $46.06)
Valeant Pharm (VRX: $112.62) Listed here (12/23) at $112
Dycom (DY:27.34 ) Listed here (12/23)12/23) at $28.05
Cognex (CGNX: $37.32) Listed here (12/23) at $36.09)
Salex Pharm. (SLXP: $89.13) Listed here (12/23) at $87.61
Natus Medical (BABY:$22.80 ) Listed here (12/24) at $22.80
Sierra Wireless (SWIR:$22.33) Listed (12/24) at $22.33
NOTE: I AM NEITHER LONG OR SHORT ANY OF THE ABOVE STOCKS
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.”
Personal Income/Spending (8:30)Nov. Personal Income was +0.5 pct, but still considered “soft.”
PCE Prices (8:30)
Michigan Consumer Sentiment (9:55) Dec. index up sharply from Nov. 75.1
TUESDAY: Market closes 1 p.m.
Durable Goods (8:30)
FHFA Housing Prices (9:00)
New Home Sales (10:00)
Jobless Claims (8:30)
RECENT POSTS – 2013
Dec 5 DJIA 15,889 “December’s Two Dilemmas – Watch Your Back”
Dec 6 DJIA 15,821 “No Fed Taper=December Rally – Correction Q1 ?
Dec 9 DJIA 16,020 “Investor Angst Intensifies”
Dec 10 DJIA 16,025 “ Two Big Dates Loom – What to Watch”
Dec 11 DJIA 15,973 “Year End Rally ?
Dec 12 DJIA 15,843 “Trading Opportunities Imminent – First a BUY – Then a SELL”
Dec 13 DJIA15,739 “Best Six Months Ahead ? Not Without an Ugly Correction in the Interim”
Dec 16 DJIA January 30 Taper ? If So, Fed Needs to Schedule a Press Conference – a Tip off”
Dec 17 DJIA 15,755 Fed to Taper January 30 ? It Should, Here’s Why
Dec 19 DJIA 15,875 Taper Today=Sell Off Followed by a rally – No Taper=Rally Followed by a sell off”
Dec 23, DJIA 16,221 New Feature : “Technical “Alert” List.”
*Stock Trader’s Almanac; Get it ! This is the most comprehensive compendium of investing savvy between two covers I have ever encountered in my 47 years of writing about the market. Got my first in 1968. There you have it ! I’m an old duff, but I have programmed my computer (brain) with smarts gained from writing about the market in an unbelievably challenging stretch of market activity. I endorse the Almanac – It’s loaded with references, stats, valuable studies, and insight.
“Investor’s first read – an edge before the open”
** Disgusting ! I am taking bows for a great call, one that was entirely contrary to existing expectations. Out of character for me, BUT I must do it. For one it’s the truth, for another, I need to promote myself in order to gain more readers.
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.