Wednesday, September 24 , 2014 9:13 a.m. 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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No one (including me) wants to see a sharp correction in the stock market.
But, “no- sweat” mentality has gripped investors, i.e., don’t sweat the Fed, the economy, the Russians, or ISIL – stocks will press higher.
While this three-day crunch from all-time highs smarts a bit, this is nothing compared to what can happen if the BIG money moves to the sidelines and lets every-day selling take prices lower, a selling that accelerates as investors realize buyers won’t step in to turn the market up.
The bull market that started in early March 2009 and persisted in spite of numerous formidable negatives here and abroad can go higher driven by increasing speculative excesses that draw less-savvy investors off the sidelines, but not without the risk of nasty corrections along the way.
BIG QUESTION:
Right now, the big question is, how much has a 197% rise in the S&P 500 discounted the rebound in the economy and the nation’s ability to cope with a host of challenges along the way ?
The plunge in stock prices following Friday’s new all-time highs did some serious technical damage. The market gave up too much ground to the spike up that preceded it. That should not happen so easily.
NO CATALYST:
If there was a major obstacle that had to be surmounted in order to trigger another surge in stock prices, I could see the potential for higher prices near-term. There doesn’t appear to be a catalyst at these levels, short of a technical rally that falls short of new highs.
COMFORT LEVEL:
The market needs to find a comfort level, and that stands to be lower, especially in light of the mounting uncertainty accompanying the bombing of Syria and the mid-term elections.
Odds favor lower prices. The market is trying to stabilize in pre-market trading. A rally here is risky.
Resistance today is DJIA 17, 103; S&P 500: 1,987; Nasdaq Comp.:4,517.
Support today is DJIA: 16,997; S&P 500: 1,978; Nasdaq Comp.: 4,501.
This is a dangerous market, but it has the potential to offer a major opportunity in coming weeks at lower prices.
Friday’s post was “Alibaba Frenzy – a Sell Signal ?” So far that is on target – too early to tell. That headline was more about frenzy than a dig at Alibaba as a company, time will tell. Trading should swing widely with a spike down below $83 possible.
Investor’s first read– Daily edge before the open
DJIA: 17,055
S&P 500: 1,982
Nasdaq Comp.:4,508
Russell 2000: 1,118
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THE FED: No more Yellen press conferences until Dec. 17
The Street wanted clarification on the Fed’s interpretation of interest rates remaining low for a “considerable time,” a term used since last March. They got it Last Wednesday when Fed Chief Janet Yellen emphasized that rates are unlikely to rise quickly as the economy continues to improve, saying, “Even after employment and inflation are near mandate-consistent levels, economic conditions may for some time warrant keeping the target federal funds rate below levels the committee views as normal in the longer run.”
DANGER: The Street continues to dwell in la-la land, welcoming economic reports that fall short of great, taking comfort in assurance by the Fed that low interest rates continue. Much of this bull market is built on that premise. Just a pick up beyond expectations in the economy would jolt the Street out of its comfort zone and trigger a drop in stock prices.
There is a trade off here. Either the Street gets a sluggish economy, but low interest rates, or a robust economy and higher rates.
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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 possibility of a major war resulting must be considered.
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THIS WEEK’s ECONOMIC REPORTS:
Big week for 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:
Existing Home Sales (10:00): Declined1.8 pct in Aug. Year/year is down5.3 pct.
TUESDAY:
ICSC Goldman Store Sales: Up 0.1 pct. from prior week. Year/year up 4.1 pct.
FHFA House Price Ix (9:00): July up 0.1 pct. vs. increase of 0.3 pct. June
PMI Mfg. Ix. (9:45): September“flash” 57.9 unchanged from final August
Richmond Fed Mfg. Ix. (10:00): September index 14 vs. 12 August
State Street Investor Confidence Ix (10:00):
WEDNESDAY:
MBA Mtge Purchase/Refi Ix.(7:00): Purchases down 0.3 pct. in Sept 19 week; Year/year down 16 pct. Refi’s down 7 pct.
New Home Sales (10:00): July at 412,000 at an annual rate below 430,000 proj.
THURSDAY:
JoblessClaims(8:30):
Durable Goods (8:30):
PMI Svcs flash Ix. (9:45):
Kansas City Fed Mfg Ix (11:00)
FRIDAY:
GDP (8:30):
Corporate Profits (8:30):
Consumer Sentiment (9:55):
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RECENT POSTS:
Sept. 8 DJIA 17,173 Bullish Storm Surge Imminent ?
Sept. 9 DJIA 17,111 Bulls to be Tested Today
Sept. 10 DJIA 17,013 Stock Market Back on the “Edge”
Sept, 11 DJIA 17,068 Last Chance for Bulls to Avoid Crunch
Sept. 12 DJIA 17,049 The Fed, Elections, Geopolitics Stymie Bulls
Sept. 15 DJIA 16,987 A Brief Yellen Rally This Week ?
Sept. 16 DJIA 17,031 Street Keying on Yellen’s Wednesday Comments
Sept. 17 DJIA 17,131 Yellen Rally Risky – Raise Some Cash
Sept. 18 DJIA 17,156 Will BIG Money Sell Into Strength ?
Sept. 19 DJIA 17,265 Alibaba Frenzy – a Sell Signal ?
Sept. 22 DJIA 17,279 Another Test for the Bulls
Sept. 23 DJIA 17,172 Rally Now Would Be Risky
*Stock Trader’s Almanac
A Game-On Analysis, LLC publication
George Brooks
“Investor’s first read – a daily edge before the open”
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.
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