Actionable insights straight to your inbox

Equities logo

Buying Opportunity Possible Early Monday

SUMMARY:    The Bulls have their work cut out for them. In addition to a purge of tech stocks, they must survive the Q1 earnings reports where the slightest disappointment can roil the


   The Bulls have their work cut out for them. In addition to a purge of tech stocks, they must survive the Q1 earnings reports where the slightest disappointment can roil the price of a stock, even if its future is bright.  Then there is Russia, which isn’t going to be content with controlling Crimea.

   Suddenly, the market needs to climb a “wall of worry” again and do so at higher levels of valuation.

   Even so, aside from Russia, the earnings reports will come and go, as will the trashing of tech stocks. 

   One hurdle this market cannot handle gracefully is a failure of the economy to rebound from its winter deep-freeze. Odds favor a rebound with an assist from a pick up in global economies, but an open mind at this point is needed for survival after a 177% five-year bull market surge in the S&P 500.


   I don’t think the bloodletting is over.  Perhaps at lower levels this Friday or early next Monday morning, IF the market gets whacked in the interim.

   Resistance is DJIA 16,289 (S&P 500: 1,851). Rallies between now and Next week will run into sellers, unless of course the market plunges sharply to the DJIA 15,985 (S&P 500: 1,818) area, then I can see a big bounce.

   The market needs to adjust for the UNCERTAINTY of earnings disappointments, a purge of tech stocks, and Russia’s next move.  That will either take time or lower prices.

   Nimble traders must be prepared to jump in, or place orders below the market in hopes of catching a brief plunge, something I refer to as a “wild bid.”

   Now is also a time to make a list of stocks a person wants to own, stocks they feel comfortable with, in the event they get a bargain price.

Investor’s first readDaily before the open

DJIA:  16,245                                                                           

S&P 500: 1,845

Nasdaq  Comp.:4,079

Russell 2000: 1,135

Tuesday, Apri1 8, 2014      9:16 a.m.


   Russia’s annexation of Crimea was only the first step in  President Putin’s power grab.Undoubtedly, he plans to stir additional unrest in sections of Ukraine where Russian speaking people are in great numbers.  A military response by Ukraine would give him reason to invade Ukraine to protect pro-Russians and that would  have an impact on global markets, which are vulnerable to begin with.

   One of the factors that turns a  normal market correction of 3% to 5% into a much bigger correction (5% to 12%) is new negatives that hit the market when it is about to rebound from the 5% correction. A sharp escalation in the  Russia/Ukraine situation could be one of those  factors.

 SELL in MAY, and Go Away ?

   You will soon read about that seasonal phenom. In the press and newsletters. Essentially, it is the backend of the “Best Six Months”* to own stocks (November 1 to May 1). Obviously, the message here is of the two six month periods, it is the worst for stocks. More in coming days.

   I don’t think it can be taken as a “given.” On far too many occasions over the last 26 years a May top was followed by a decline, but within months (well before Nov. 1) the market rallied sharply.  I see it more as a trading opportunity – i.e. “Sell in May,”  but be ready to buy back after a plunge.


     At key junctures, I technically analyze each of the 30 Dow  stocks seeking a reasonable near-term downside risk, a more severe risk and an upside potential for each, then use the Dow “divisor” to convert that data back into the DJIA.

    Currently, a reasonable risk based on present circumstances is DJIA 16,157, a more severe risk is 15,888 and the upside is 16,722.  The latter would have to come after the current slide has turned the corner.


The following stocks should find initial support below the following levels from which a technical rally should develop.   This is a technical opinion for today. I do not plan to follow up on a daily basis. I prefer late Friday and early Monday weakness  for emotional turns.  What can happen here is for a rally that is followed by another spike down on Friday, or in the first 20 minutes of trading Monday.

   These are growth stocks that got ahead of themselves, but really will keep growing making them attractive for long-term portfolios. This kind of shakeout should whet appetites of institutional investors who  recently felt comfortable buying at higher levels.

Apple (AAPL:$523.47 )  Below $513

Alexion Pharm (ALXN:$145.66 )  Below $137

Applied Mat’ls (AMAT:$20.13)  Below $19.60

Athena Health (ATHN: $143.69) Below $141

DISH Network (DISH: $59.51) $56

Express  Scripts (ESRX: $72.71) Below $70.60

Google (GOOG:$538.15 ) Below $506

IDEXX Labs (IDXX: $120.02: Below $115

Intuitive Surgical (ISRG: $487.03) Below $484

ISIS Pharm (ISIS:37.54

Micron Tech (MU:$21.71 )   Below $20.60

Netflix (NFLX:$338.00) Below $317

Qualcom (QCOM:$78.08 ) Below $76

Tesla (TSLA:$207.52 )   Below $182

Western Digital (WDC:$89.60 ) Below $87

Xilinx (XLNX: $52.93) Below $50.60

Yahoo (YHOO:$33.07 ) Below $29



   One of the Stock Trader’s Almanac’s great discoveries is the fact the stock market’s performance during thesix months between November 1 and May1 is far superior to the six months between May 1 and November 1.* The Almanac  refers to it as the “Best Six Months.”

   Over of the last 25 years, the “Best Six Months” has produced 19 up-years, 3 flats and 3 downers. The best years averaged gains of 11.8% with the best year up 25.6% (1998 – 1999).

   Over the last 25 years,  there have been14 corrections ranging between 6% and 16%, but more than one correction of this size during the Best Six Months was rare.

   In 2002 there was a 6.2% correction in January and a 6.5% correction in March/April.  In 2003, there was a 7.0% correction in Nov. 2002/December 2002 and  a 12.9% correction in January/March of 2003.

   So far, the DJIA is ahead  6.0% since October 31, 2013 even with a 7% correction in the interim.  Another correction exceeding  6% is of course possible, but unlikely.


   Manufacturing output , new orders and exports are  up for the eighth consecutive month, suggesting its recovery is real, though not yet robust. Our economy has

scratched and clawed its way out of  a horrendous recession without help from Europe.  Obviously, a recovery there stands to  accelerate the pace of  our recovery here.



HOUSING STOCKS – A spring rebound in the economy can hardly occur without a renewal of interest in housing stocks.  While this group had a brief run last week,  Friday’s sell off stopped it in its tracks. Looks like we must get deeper into April  for enough confirmation  of a spring rebound from the severe winter weather  to get a read on how much of an improvement we can expect.


Beazer Homes(BZH)  Friday: $19.96

PulteCorp(PHM) Friday: $19.03

Toll Brothers (TOL) Friday: $36.00

KB Homes(KBH) Friday: $16.81

DR Horton(DHI) Friday $21.77


   All five housing stocks listed above spiked in early trading Friday, in sympathy with the major market averages. 

   I don’t see a robust rebound yet, it is now a “wait and see” situation as the Street tries to get a handle on a potential spring rebound.

   Yesterday was a bad day for  these housing stocks as it was across the board for many others, so the weakness cannot  yet be taken as a bad omen for the group or the economy in general – not yet.



The economic calendar this  week is light with the highlight being the FOMC report.

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.”


Consumer Credit (3:00):


NFIB Small Business Ix.(7:30):

ICSC Goldman Store Sales(7:45):

JOLTS-Job Openings Labor Turnover(10:00):


MBA Purchase Apps (7:00):

Wholesale Trade (10:00):

FOMC Minutes (2:00 p.m.):


Jobless Claims (8:30):

Import/Export Prices (8:30)


PPI-FD – inflation report (8:30)

Consumer Sentiment(9:55):



Mar 19 DJIA 16,338  A Spring Break for the Economy ?

Mar 20 DJIA 16,222  Fed Reality – Market Up, or Down ?

Mar.21 DJIA 16,331  Yellen, Putin, Economic Freeze, Quadruple Witching Friday

Mar 24 DJIA 16,302  BIG Test for the Market Today

Mar 25 DJIA 16,276  Bull Top Unlikely – Why

Mar 26 DJIA  16,367 Bulls Must Beat Key Resistance Level

Mar 27 DJIA  16,268 Rally Failures = Lower Prices – Opportunity ! 

Mar 28 DJIA  16,264  April/May Surprise Surge ?

Mar 31 DJIA  16,323  CONFIDENCE Calls the Shot – April Opportunity ?

Apr 1   DJIA   16, 457 Rounding Top or Base for Big Upmove ?

Apr 2   DJIA   16,532  Market Wants to Run

Apr 3   DJIA   16,573  What the Market Really Needs Now is……

Apr 4   DJIA   16,572   New Highs Need to Hold Today

Apr 7   DJIA   16,412  Sell Off to Create Trader’s Buy

*Stock Trader’s Almanac

A Game-On Analysis, LLC publication

George  Brooks

“Investor’s first read – an edge before the open”

[email protected]

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 investment advice or 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. Brooks may buy or sell stocks referred to herein.


















A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance.