The Syria “solution” goosed the market again yesterday, but there is a possibility the market’s recent strength is taper-related.
Both the DJIA and S&P 500 have recouped two-thirds of their August losses of 5.7% and 4.8% respectively. That can’t all be the Syria “solution,” which will have its share of setbacks in coming weeks.
Either the Fed will not start to taper out of QE next week, or it will be a token taper of $5 billion, or so.
The iShares US Home Construction ETF (ITB) is up sharply over the last four days, even in face of higher mortgage rates.
Ten-year treasuries have perked up (yield down), another hint the Fed may not initiate taper next week.
CHANGE IN DOW JONES INDUSTRIAL AVERAGE:
Three components of the Dow Jones Industrial Average (DJIA) will change next week in a move designed to give a better balance to the impact each will have on the changes in the average.
The DJIA is a price-based average as compared with the S&P 500, which is market value based (shares x price). Higher priced stocks have a greater impact on changes in the DJIA vs. lower priced stocks. A one percent change in IBM ($186.60) has nearly 13 times the impact on the DJIA as a one percent change in Bank of America (BAC: $14.61).
New additions include Goldman Sachs (GS: $165.14), Visa (V: $184.59) and Nike (NKE: $66.82). Removed are: Bank of America (BAC: $14.61), Hewlett-Packard: HPQ: $22.27) and Alcoa (AA: $8.05).
The DJIA is calculated by adding up the prices of its 30 components then dividing the sum by its “divisor.”
Investor’s first read– an edge before the open
DJIA: 15,326
S&P 500: 1,689
Nasdaq Comp. 3,725;
Russell 2000: 1,055
Thursday, Sept. 12, 2013 (8:20) EARLY RELEASE TODAY
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.
Resistance/support levelsare “tight” and more easily penetrated than if I gave readers “general” resi/spt levels.
Apple(AAPL: $467.71)
Note: Bottom was targeted at $385 for the turn around Apr. and Jun. 2013 (double bottom). continue to follow
Pattern: Positive
Resistance: $484 (sharp rebound possible)
Support: $465 – $459.85
AAPL taking hit in face of concerns that its just released low-priced IPhone is too high-priced to compete. That’s just one opinion, many followed Apple’s release, some highly critical, others not so. I didn’t see this coming, nor should I, if research departments tracking fundamentals in-depth didn’t. Usually the stock’s behavior signals trouble in advance, which suggests yesterday’s sell off may have been overdone, especially with Carl Icahn licking his chops at an opportunity to pick up shares at a discount.
Facebook (FB – $45.04)
Note: Bottom was targeted below $18 for a turnaround Sept. 2012. Continue to follow.
Pattern: Positive –
Resistance: $46.60
Support: $44.50
Recent strength attributed to Sun Trust Robinson Humphrey’s increase in price target to $55 from $40. Due for a rest, but buyers almost panicking
IBM ($190.70)
Note: Started coverage Aug. 7, 2013 after big plunge in stock
Pattern:
Resistance: $193.60
Support: $188.70 Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years.
PulteGroup (PHM- $16.59 )
Note: Started coverage Aug. 12, 2013
Pattern: Now positive with big move yesterday
Resistance: $16.50
Support: $16.10 Got the big buyer it needed Monday to counter industry negatives that resurfaced with the jump in mortgage rates.
First Solar (FSLR:$39.60)
Note: Started coverage: Aug.: 22, 2013
Pattern:Turned positive yesterday, may struggle to pass $42
Resistance: $39.95
Support: $39.30 May need consolidation here – resistance above $40
Target (TGT: 64.99)
Note: Started coverage Aug: 22, 2013:
Pattern: Positive with yesterday’s breakout from its base
Resistance: $65.60
Support: $64.60
Hewlett-Packard (HPQ:22.27)
Note: Started coverage Aug. 23, 2013
Pattern: Negative, but tracing out a nice base above $22
Resistance: $22.40 – steady seller
Support: $22.20
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: $54.28)
Note: Started coverage Aug. 28, 2013
Pattern: Turned positive yesterday, up from neutral
Resistance: $54.50
Support: $ 53.80
Amazon.com (AMZN: $299.64)
Note: Started coverage Aug. 28
Pattern: Bullish
Resistance: $305
Support: Support now $298
I do not own, nor am I short AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
ECONOMIC REPORTS:
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com
THURSDAY:
Jobless Claims (8:30) Proj.: for 9/7/13 330,000 vs. 323,000 prior week.
Import/Export Prices (8:30) Proj.: Aug. +0.5 pct.
FRIDAY:
Producer Price Ix. (8:30) Proj.: Aug. +0.2 pct. ; Ex. food/energy: +0.1 pct.
Retail Sales (8:30) Proj.: Aug. +0.5 pct. ; Excl. motor veh. +0.3 pct.
Consumer Sentiment (9:55) Proj.: Aug Ix. 82.0 vs. mid-month 82.1
Business Inventories (10:00) Proj.: July +0.3 pct.
RECENT POSTS: 2013
Sep 4 DJIA 14,833 “What Must Happen for the Bull to Snort”
Sep 5 DJIA 14,930 “ September Taper – Buying Opportunity ?
Sep 6 DJIA 14,937 “Market Wants to Run – Are You Ready ?”
Sep 9 DJIA 14,,932 “Breakout or Fakeout ? Syria/Fed Taper”
Sep 10 DJIA 15,063 “Easy Does It !
Sep 11, DJIA 15,191 Taper Center Stage – What to Expect”
George Brooks
“Investor’s first read – an edge before the open”
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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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