There are always several balls up in the air in this business, any one of which can come down to change the outlook.
Just when it seemed safe to dig in the cleats and swing for the fences as the U.S. economy emerged from the winter freeze, a serious crisis rises out of the Mid-East as a civil war intensifies in Iraq threatening oil production and distribution.
Once again, the United States is looked to for a solution for religious differences that have existed for countless years and will exist for the same going forward.
At best, this is a growing uncertainty and stands to be somewhat of a drag on the stock market.
The biggie will be the Federal Reserve’s exit strategy from QE. The is no shortage of speculation among economists and Street pundits as to what that will be.
Some expect interest rates to rise sooner than expected. The doomsters see what they have always seen – an econ/stock market disaster worse than the “big one.”
The FOMC meets today and tomorrow. Fed chief Janet Yellen has a press conference at 2:30 tomorrow where she is expected to announce a new set of quarterly forecasts for employment, economic growth, and inflation.
I have always believed a cash reserve is smart. Cash IS an investment even if it doesn’t earn squat in a money market fund. It is a cushion against an unexpected, news triggered drop in the stock market; and it arms an investor with the capability to jump on a new opportunity of take advantage of a drop in the market.
This looks like decision day for stock prices, near-term. The bulls stubbornly held their ground yesterday, the bears were mostly a no-show.
If anything puts this market down near-term, it will be “uncertainty” about the Mid-East and Fed policy. The economy is stable, probably gaining traction, especially if economies abroad begin to heat up.
Near-term, the market can go either way with an ever so slight edge given to the bulls who may use early weakness to BUY.
DJIA 16,819; S&P 500: 1,942; Nasdaq Comp.: 4,329
Breaking that on the upside takes the DJIA to 16,857; S&P 500: 1,946; Nasdaq Comp.:4,338
DJIA: 16,741; S&P 500: 1,933; Nasdaq Comp.: 4,307
A break below DJIA 16,720; S&P 500: 1,930; Nasdaq Comp. 4,296 raises the odds of another leg down.
Investor’s first read– Daily edge before the open
S&P 500: 1,957
Nasdaq Comp.: 4,321
Russell 2000: 1,166
Tuesday, June 17, 2014 9:18 a.m. Before the open
Quadruple Witching Friday looms this week when stock index futures, stock index options, stock options and single stock options expire on the same day. Stock options expire on 3rd Friday each month. All four expire on the 3rd Friday in March, June, September and December.
This even used to have a big short-term impact of stocks, not so much anymore. Even so, “heads up !”
The European Central Bank’s cut of its benchmark interest rate and announcement to employ additional measures to stimulate European economies stands to help the U.S. economy, as well. It did little to boost stock markets abroad which are trading at six-year highs, suggesting the move was already discounted. Even so, let’s consider it a positive.
TECHNICAL ANALYSIS of 30 DOW JONES INDUSTRIALS
At key junctures, I technically analyze each of the 30 Dow industrials seeking a reasonable near-term support and a more extreme support level, as well as a short-term resistance level. By technically studying the balances of buying and selling in each stock, then converting that data back to the DJIA using the “divisor” (0.1557159) I can get a better reading on the average itself. The DJIA is a price-weighted average and subject to distortion by higher priced issues.
As of June 12, the reasonable support for the DJIA is 16,573, the more extreme support level is 16,443 and the short-term resistance is 16,896.
Note: My daily support/resistance levels are more short-term oriented.
THIS WEEK’s ECONOMIC REPORTS:
Look for a heavier schedule of releases on the economy this week, including a press conference by Fed chief Janet Yellen at 2:30 following the release of the minutes from the FOMC meeting Wednesday.
For detailed analysis of both the U.S. and Foreign economies along with charts, go to www.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.”
Empire State Mfg Ix. (8:30): Hit a 4-yr. high at 19.28 May vs 19.01 in Apr. New orders also hit a 4-yr. hi at 18.36
Industrial Prod. (9:15): May up 0.6 pct. after a drop of 0.3 pct. (revised) in Apr. Capacity utilization is 79.1 vs. 78.6
Housing Mt Ix. (10:00): Index jumped to 49 from 45 in May which is promising, though “traffic” remains in a slump at 36.
FOMC meeting begins
ICSC-Goldman Store Sales (7:45): Sales up 0.4 pct. for the 6/14 week. Year/year is +3.1 pct. vs. +3.0 pct.
Consumer Price Ix. (8:30): Up 0.4 pct. May vs. +0.3 pct. Apr. X-food/energy up 0.3 pct. May vs. +0.2 pct. Apr..
Housing Starts (8:30): Down 6.5 pct. May after gain of 12.7 pct. Apr.
MBA Purchase Apps (&:00):
FOMC meeting announcement(2:00)
Fed. press conference – Yellen (2:30):
Quadruple Witching Friday
Jobless Claims (8:30):Philly Fed Svy (10:00):
Leading Indicators (10:00):
June 2 DJIA 16,717 Decision Time for Stocks ?
June 3 DJIA 16,743 Economy “Must” Accelerate, or…
June 4 DJIA 16,722 Correction in Stocks Without Robust Economic Rebound
June 5 DJIA 16,737 Bulls Must Pick It Up, or Lose the Ball
June 6 DJIA 16,836 Easy Does It ! Dow 20,000, But Not in Straight Line
June 9 DJIA 16,924 Stock Market Breakout – Now What ?
June 10 DJIA 16,943 Greed/Fear Ratio, Not P/Es, Drive the Market
June 11 DJIA 16,945 Watch Trampoline Effect for Stocks
June 12 DJIA 16,843 Sideways, 3-Month Trading Range Beginning ?
June 13 DJIA 16,734 Iraq Crisis to Create Buying Opportunity
June 16 DJIA 16,775 Uncertainty – A Menace t Stock Prices Near-Term
A Game-On Analysis, LLC publication
“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 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.