The stock market rose briskly yesterday in response to reassuring Q2 GDP and Jobless Claims numbers, as well as the fact many stocks were short-term oversold. It was not a “Syria solution” rally that I warned not to chase.
That may yet come. I don’t like buying “gap” opens, too often the price paid is the high for the day, so beware Tuesday.
Tuesday begins the September countdown to the FOMC meeting ending on the 18th when Fed chief Bernanke holds his press conference and we all find out whether the fed will begin its taper and for how much for openers.
While the market may rally if taper is delayed, the rally is suspect, since taper uncertainty would continue and we still have the divisive debt limit debates to deal with.
I see the possibility of a great buying opportunity shaping up in October/November just in time for the beginning of the “Best Six Months” for owning stocks.*
If taper begins in September, the issue as a concern is not over. This is all about a change in Fed policy and what that means three to six months down the road.
CONCLUSION:
I have been looking for DJIA 14,250 (S&P: 500: 1,542) by October. That’s not far off. Along the way, DJIA 14,590 (S&P 500: 1,600) should provide some support. Yesterday’s rally was not impressive, though Nasdaq gave a better account of itself.
Look for selective buying today, but restraint since a Syria decision is possible.
St. Louis Fed’s James Bullard speaks at 9 o’clock this morning. His comments may impact stock prices, especially if he hints the Fed will delay taper.
Investor’s first read– an edge before the open
DJIA: 14,840
S&P 500: 1,638
Nasdaq Comp.:3,620
Russell 2000: 1,028
Friday, August 30, 2013 (8:55 a.m.)
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.
Apple(AAPL: $491.70)
Note: Bottom was targeted at $385 the turn around Apr. and Jun. 2013 (double bottom). This is a follow up.
Pattern: Positive, consolidating recent up move.
Resistance: $495
Support: $487 – 489 – AAPL still in consolidation and probing for a level that discounts new negatives in overall market. Icahn must like this. Can’t get in his head, but I’d guess he’ll nibble a shade below $490, which I am upgrading here.
Facebook (FB – $41.28 )
Note: Bottom was targeted below $18 for a turnaround Sept. 2012, this is a follow up.
Pattern: Positive –
Resistance: $41.67
Support: $41 Buyers at the open yesterday reinforces positive pattern, chances of a bump to $44.75 better than even.
IBM ($ 182.64) No change
Note: Started coverage Aug. 7, 2013 after big plunge in stock
Pattern: Negative
Resistance: $183.20
Support: Got down to my target on of $181. Got buyer at $181.50 early in the day and again at close at $182.50. A turning pattern may be forming.. Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years. Unless the fundamentals are horrendous it is due for institutional buying, most likely in this area and possibly at or a smidge below $180.
Right now, there are sellers that must be taken out.
Each point up or down impacts the DJIA by about 13 points.
PulteGroup (PHM- $15.86 )
Note: Started coverage Aug. 12, 2013
Pattern: Neutral
Resistance: $16.70
Support: $15.35 (new) Yesterday’s strength suggests a drop to $14 is less likely, however, the price of lumber is dropping – not a good sign and mortgage rates at two-year high. Looks like I was wrong about $14 by this weekend. Its strength defies the industry problems.
First Solar (FSLR:$37.52)
Note: Started coverage: Aug.: 22, 2013
Pattern: Negative, but improving thanks to buying yesterday.
Support: Got some buying at $36.85 yesterday. Trying to turn the corner. Needs big volume push across $37.80
Target (TGT:63.27)
Note: Started coverage Aug: 22, 2013:
Pattern: Negative
Resistance: $63.25
Support: $61.20
Stock needs big buyer or it is headed for $61 – $62. TGT’s drop from $73.50 is unnerving and may suggest the consumer is temporarily tapped out.
Hewlett-Packard (HPQ:22.52)
Note: Started coverage Aug. 23, 2013
Pattern: Negative, probing for comfort level
Resistance: $22.85.
HPQ looks like it can hold in this $22 – $23 area. $19.85 is possible in a bad market.
eBay (eBay:50.99) Yesterday’s action positive, though volume lacking
Note: Started coverage Aug. 28, 2013
Pattern: Neutral/bearish but improved based on yesterday’s action
Resistance: $53
Support: Rises to $50.55. Base support is in process of forming. Stock should get a buyer in here as it has on five occasions when it ranged between $50 and $58 this year. If that happens, the intensity of that rally must be studied. Failure to develop heavy volume suggests a break below $50 and drop into the mid-40s. If there are bulls out there, they should find this price attractive and make their move. If $50 isn’t attractive, the stock has a big problem.
Amazon.com (AMZN: 283.98)
Note: Started coverage Aug. 28
Pattern: Bullish, but correction must find support soon
Resistance: $287
Support: Support now $280. $268 – $272 is possible in a bad market.
I do not own, nor am I short AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
ECONOMIC REPORTS:
Heavy schedule this week, also speeches by Federal Reserve officials
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com
MONDAY:
Durable Goods (8:30) Down 7.8 pct vs. projection for a 4.0 pct decline, Ex transportation was a drop of 0.6 pct.
Dallas Fed Mfg (10:30) August index dropped to 7.3 from 11.4. New orders were 5.4 vs 10.8.
TUESDAY:
ICSC Goldman Store Sales (7:45) Index rose 0.2 pct for week ended 8/24
S&P Case-Shiller Home Prices (9:00) June +12.07 pct. y/y vs. +12.20 pct May
Consumer Confidence (10:00) August index better than expected at 81.5 vs. 81.0 July
Richmond Fed Mfg. Ix. (10:00) Up big in August with index plus 14 from a minus 14 July. New orders index plus 16 vs. minus 15
WEDNESDAY:
Pending Home Sales (10:00) July down 1.3 pct. vs. drop of 0.4 pct June
THURSDAY:
Q2 GDP (8:30) +2.5 pct. at annual rate. Comparisons affected by annual revision
Jobless Claims (8:30) down 6,000 to 331,000 for week ended 8/24 vs. 336,000 for prior week.
Corporate Profits (8:30) Q2 rose 3.9 pct q/q after a negative Q1
Bloomberg Consumer Comfort Ix. (9:45) No proj.
Fed’s Jeffrey Lacker speaks (2:00)
Fed Balance Sheet (4:30) Proj.:
Fed’s James Bullard speaks (7:45 p.m.
FRIDAY:
Personal Income/Outlays (8:30) Proj.: Jul. PI +0.2 pct., Expenditures +0.3 pct
Fed’s James Bullard speaks 9:00)
Chicago PMI (9:45) Proj.: Aug. index 53.0 vs. 52.3 Jul.
Consumer Sentiment (9:55) Proj.: Aug. index 80.0
RECENT POSTS: 2013
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?
· Stock Trader’s Almanac – New edition should be out now or shortly.
George Brooks
“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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