Easy Does It! Market Nervous, Needs Breather

George Brooks |

Yesterday’s post was an alert to the possibility the Fed may begin to taper out of QE by year-end.  I based that on the possibility the economy is stronger than reports currently reveal, having been held back by the uncertainties associated with the debacle in Washington in October.

   Then too, I think it is well worth considering the question, would Fed chief Bernanke want to turn over the reins to Vice Chair, Janet Yellen before taper is initiated, or let the decision up to the FOMC under her  authority ? 

   The consensus is he will NOT push for taper before she takes over. Assuming her confirmation isn’t obstructed, her first meeting will be in March, though she would normally be scheduled to take over February 1.

  Worth noting. The U.S. government is funded until January 15, 2014, and the debt ceiling deadline is set at February 7.  Hmmmm.

   Personally, I think hard evidence of the first taper will hammer the market briefly, but it will recover quickly, for the obvious reason – the Fed won’t taper until it feels the economy can grow without the Fed’s help. Aside from the psychological factor, I am not convinced the stimulus is doing much, but I’ll let that up to people smarter than I to conclude.

TODAY:    

    If you were watching the market yesterday after the release of the FOMC minutes, you saw stock prices plunge as if they hit an air pocket.  That is evidence of how sensitive the market is to taper, as well as how much this market could use a consolidation to digest  15 days of unrelenting gains. 

   What’s my point ? 

   Don’t get too comfywith the consensus taper won’t start until March !

   Watch your back !

   More downside is in store if  any attempt to rally lacks zip, or if a rally gives back all that it gained in the day (rally failure).     

   Resistance at DJIA 15,618 (S&P 500: 1,766) must be penetrated to reverse yesterday’s slippage.

   Support is DJIA 15,535 (S&P 500: 1,754)

NOTE:Wouldn’t life be a lot easier without corporate guidance, quarterly earnings reports, and broker ratings ?

   Investors, institutions and managements could focus on the big picture without this quarter to quarter stuff.

Investor’s first readan edge before the open

DJIA: 15,618

S&P 500: 1,763

Nasdaq  Comp.3,930

Russell 2000:  1,105

Thursday, Oct. 31, 2013     (9:15 a.m.)

   STOCKS OF GENERAL INTEREST: I am considering the elimination of this section and offering it in a separate publication on a subscription basis.

I would be able to cover more companies, and would not be constrained by a pre-market deadline. Comments welcome: sensiblesleuth@gmail.com. Include opinion about how you think I could even improve commentary bearing in mind these are NOT buy/sell comments.

   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. 

Apple (AAPL: $524.89) Positive.

AAPL’sQ3 earnings report released after the close Monday was disappointing. Gross margins were less than projected, but quarter earnings, though down 8.6% vs.  a year-ago beat analysts’ projections, as did expectations for the  holiday season. Tuesday,  AAPL soared to $539 in early trading, but attracted serious selling throughout the day, closing down $13.20 for the day on heavy volume, but only after hitting a low of $514.54.Wednesday, AAPL rallied sharply again  at the open then traded sideways until the close.  It currently is a consolidation phase between $516 and $532.

Facebook (FB: $49.01) Positive

While there had been some buying in the low 50s, it was important the $50 level held up  to head off a further decline, possibly to $48 - $49 where it is now. Resistance is $49.85. There is some support at $48.. Breaking that the next level is $46.

IBM (IBM: $180.15)  Negative, and it only has to work on its base a bit longer to turn positive.

IBM is in the process of developing a turning pattern which will ensure investors further downside is limited. It has run into resistance at$182 and is now probing the downside for a support level where it should see buying above $178.

Pulte Homes (PHM: $18.00)  Positive

Investors got  the earnings report they  were looking for last week  pushing PHM across $18.Any chance PHM could move higher yesterday was dashed by  the mid-afternoon plunge in the market, but was able to stabilize. Support is now $17.90, resistance is $18.10 - $18.18.

 First Solar (FSLR:$51.40)  Positive

Got stopped in its tracks last Friday at $54.70 but as expected, found some buyers at $50. While it could test $50 again. The stock has a healthy short position, so buying can be expected on dips. Earnings due 10/31. Has an outside shot at $58, if earnings chase shorts.

Target (TGT: $65.71) Now positive but with a limited short-term upside.

 Yesterday’s surge is just what TGT needed to round out a base formation and set the stage for a recovery. Support is now 65.25. Stock can get to $67 - $68.

 Hewlett-Packard (HPQ: $24.20)  Positive.  Can get to $26 if it can cross resistance at  $24.50. Support is $24.10. Yesterday’s activity while not dynamic, suggested it may be ready for a move higher.

EBAY (EBAY: $52.75) Neutral  but struggling

No change from yesterday. With support now at 52.55, EBAY must break $54 to turn positive and even then I am uneasy about the stock.

Amazon (AMZN: $361.08) Positive

No change except last line. AMZN pleased the Street last week with its Q3 earnings report, but it was Raymond James’ Aaron Kessler’s  raising of its rating to Strong Buy from Market Perform with a price target of $446 that blew it out. Currently, a break above $365 gives  it a shot at $370 - $378.

I do not own, nor am I short: AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.

ECONOMIC REPORTS

  Heavy slate of reports this week, however accuracy is suspect due to the shutdown.

   For a detailed account of past and current economic reports, including charts go to: mam.econoday.com - www.mam.econoday.com

MONDAY:

Industrial Production (9:15)  Sept. +0.6 pct. vs forecast +0.4 pct.

Pending Home Sales(10:00) Sept. down 5.6%, lowest in nine months.

Dallas Fed. Mfg. Ix.(10:30) Oct. index  -3.6 down from 12.8.

TUESDAY:

FOMC Meeting began

ICSC Goldman Store Sales (7:45) Down 0.4 pct. for week ended 10/21

Producer Price Ix.: Sept. down 0.1 pct. / core was up 0.1 pct.

Retail Sales (8:30) Proj.: Sept.: Sept was – 0.1 pct. vs. +0.2 pct Aug.

S&P Case-Shiller Home Price Ix. (9:00)  20 cty HPI +0.9 pct Aug./ +12.8 pct. y/y

Business Inventories (10:00) Proj.: Aug.: +0.3 pct.

Consumer Confidence(10:00) Oct. index dropped to 71.2 from 80.2

State Street Investor Confidence Ix.(10:00) Oct. index dropped to 95.7 from 101.3 in Sept. as result of shutdown/default risk.

WEDNESDAY:

ADP Employment Rpt(8:15) Oct.: 130,000 vs. revisd 145,000 Sept.

Consumer Price Ix.(8:30).:Sept.: +0.2 pct. vs. +0.1pct. Aug.  Year/year  +1.2 pct.

FOMC Meeting announcement (2:00) No Bernanke press conf. planned

THURSDAY:

Jobless Claims (8:30) :For 10/26: 339,000

Chicago PMI (9:45) Proj.:Oct.: ix.: 55.0 vs 55.7 Aug.

FRIDAY:

Motor Vehicles Sales Proj.:Oct.domestic:11.9 mill-unit rate (total: 15.4 mil.-units)

Fed’s Bullard speaks(8:00)

PMI Mfg Ix.(8:58) Proj.: No data available

ISM Mfg. Ix.(10:00) Proj.:Oct.: ix.: 55.0 vs. 56.2

Fed’s Kocherlakota speaks(11:15)

RECENT POSTS - 2013

Oct 15 DJIA   15,301   “What If We Default ?  What If We Don’t ?

Oct 16 DJIA   15,168   “Market Saying “Deal” – A High Risk Bet ?”

Oct 17 DJIA   15,373   “How Much of the “Deal” has the Market Discounted” ?

Oct 18 DJIA   15,371   “No More Wall of Worry for  Bull Market to Climb ?”

Oct 21 DJIA   15,399   “Analysis Projects High-Low Range for DJIA”

Oct 22 DJIA   15,392   “Is the Stock Market Vulnerable ?”

Oct 23 DJIA   15,467   “Q3 Earnings – Only Worry In Town ?”

Oct 24 DJIA   15,413   “No Fed Taper in Sight ?  Don’t Bet on It.”

Oct 25 DJIA   15,509   “Best Six Months for Owning Stocks”

Oct 28 DJIA   15,570   “Do I Detect Speculative “Fever “ ? If So, What Can  

                                       Happen”

Oct 29 DJIA   15,568  “ When Will the Small Investor Plunge ?”

Oct 30 DJIA   15,680  “Don’t Rule Out Fed Taper by Year-End”

 

  George  Brooks

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

sensiblesleuth@gmail.com

*NOTE:  STOCK TRADERS ALMANAC: The new annual Stock Trader’s Almanac  is off the press.  This is a “must,” always has been, if you are a serious  investor, or intend to be a serious investor. Visit stocktradersalmanac.com for details

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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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