Fed Taper - A Buying Opportunity?

George Brooks |

Private payrollsincreased by 178,000 in August, in line with most projections but down from 198,000 in July.  It was not the kind of number that makes a September taper a slam-dunk, nor was it any assurance the Fed won’t act.

   Jobless Claims dropped 9,000 to 323,000 for the week ended 8/31, a plus for taper as  was the surge in August auto sales, and the fact all 12 of the Federal Reserve’s regional districts are growing, if only moderately.

   Tomorrow we get the Employment Situation and Unemployment  reports, which should ice the cake for a September taper, or no taper decision for the Fed. to be announced Wednesday September 18th.

   I really don’t see Syria as a big factor at this point, other than to contribute to a sudden increase in volatility as the markets are buffeted by the jolt from higher interest rates, the realization that Fed policy is changing (taper), threats of a government shutdown, the implementation of Obamacare, and the need to re-start significant  corporate earnings growth.

CONCLUSION:

   As noted yesterday, the swing factor for a continuation of this bull market hinges on the Street accepting good news as just that – good, and not a deterrent to buying, because it hastens the end of QE. 

   It’s time to graduate from reliance on the security of Fed accommodation.

   If  the Fed tapers and the economy doesn’t cave, subsequent tapers won’t be such a psychological obstacle. That may be what is needed for the Street to see good as good and return to the steady buying we saw earlier in the year.

   Investor’s first readan edge before the open

DJIA:  14,930

S&P 500: 1,653

Nasdaq  Comp. 3,649:

Russell 2000:  1,025

Thursday, Sept. 5,  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: $498.69 ) 

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: $4984

Support:  $493  -   Has had buyer at the open. Could be Icahn

Facebook (FB - $41.78 )

Note: Bottom was targeted below $18 for a turnaround Sept. 2012, this is a follow up.

Pattern: Positive –

Resistance: $42

Support: $41.60

Consolidating.  Break above $42.25 paves way for move to $44.60.

  IBM ($183.13 )  No change

Note: Started coverage  Aug. 7, 2013 after big plunge in stock

Pattern: Negative, but improving.

Resistance:  $184.20  Still a seller there – patient but steady                                      

Support:  Got down to my target on of $181, and has attracted a buyer.  Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years.

Each point up or down impacts the DJIA by about 13 points.

  PulteGroup (PHM- $15.32 )  At risk, needs buyer ASAP

Note: Started coverage Aug. 12, 2013

Pattern: Neutral but weakening

Resistance: $15.40

Support:  $14.60   Needs big buyer to counter industry negatives that resurfaced with the jump in mortgage rates

First Solar (FSLR:$36.47 )

Note: Started coverage: Aug.: 22, 2013

Pattern: Negative

Resistance: $36.90

Support: $36  must hold or a drop to #31 - $32 Some evidence of bargain hunting

Target (TGT: 63.55)

Note: Started coverage Aug: 22, 2013:

Pattern: Negative

Resistance: $63.75

Support: $63.25

Got a buyer Tuesday.  Trying to turn, but needs big buyer.

Hewlett-Packard (HPQ:22.27 )

Note: Started coverage Aug. 23, 2013

Pattern: Negative, probing for comfort level

Resistance: $22.50 

HPQ looks like it can hold in this $22 - $23 area. Sharp drop from $26 created overhead supply (a lid)  $19.85 is possible but only  in a bad market.

eBay (eBay: $51.45 )   Yesterday’s action positive, though volume lacking

Note: Started coverage Aug. 28, 2013

Pattern: Neutral/bearish Friday’s and Monday’s  action did damage, bur Tuesday  a big help.  Risk of mid-40s reduced.

Resistance: $52

Support:  $ 50.80,  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: $ 293.64  )

Note: Started coverage Aug. 28

Pattern:  Bullish with second  breakout yesterday raising odds of  a move across $295 possible

Resistance: $298

Support:  Support now $290 

 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. BIG employment reports Thursday and Friday.

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

TUESDAY:

PMI Mfg. Ix. (8:58)  Final Aug. 53.1 down from 53.9. New orders strong at 55.7 vs. 56.5

ISM mfg Ix. (10:00)  Aug 55.7 up from 55.4, New orders jumped to 63.2 from 58.3

Construction Spending (10:00) July up 0.6 pct.  better than projected 0.3 pct.

Motor Veh. Sales  Proj.:  Aug. 12.3 mil unit  rate

ICSC Goldman Store Sales (7:45)  Proj.:  none

Int’l Trade (8:30)   Proj.: minus 39.0 bil July vs.   $34.2 bil June

Fed’s John Williams speaks (12:30)  Proj.:

Fed’s Narayana Kocherlakota speaks (8:00 pm)

THURSDAY:

ADP Employment rept (8:15)  178,000 Aug  -  private payrolls

Jobless Claims (8:30)   Proj.:    330,000 week ended  8/31 vs. 331,000 prior week

Productivity and Costs (8:30)  Proj.:+1.8 pct productivity;  +0.7 pct.

Fed’s Kocherlakota speaks again (9:00 am )

Factory Orders (10:00)   Proj.:  -3.4 pct. July

ISM Non-Mfg. Ix. (10:00)   Proj.:  Ix. 55.0 Aug.

FRIDAY:

Employment Situation (8:30)  Proj.: Private payrolls Aug. 178,000  , unemployment 7.4 pct.

Fed’s Esther George speaks (1:30 pm)  Proj.:

RECENT POSTS:   2013

Aug 22  DJIA 14,897  “Street’s Angst Not About First Taper, but……”

Aug 23  DJIA 14,963  “Big Day: Rebound or Rally Failure ?”

Aug 26, DJIA  15,010  “Fed Policy Change – Big Impact on Stock Market ?”

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?

Aug 30  DJIA  14,840 “ Countdown Starts Tuesday – What to Expect”

Sep 3     DJIA  14,810   “Market Up Sharply – Someone Know Something ?”

Sep 4     DJIA  14,833  “What Must Happen for the Bull to Snort”

*changed from 1,542

  George  Brooks

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

sensiblesleuth@gmail.com

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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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Companies

Symbol Name Price Change % Volume
NVZMF Novozymes A/S 32.90 1.07 3.37 2,430

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