Thursday, July 31, 2014 9:04 a.m. BEFORE the OPEN
TODAY:
The S&P 500 is now up 195% since this bull market began on March 6, 2009. While it still has room to run, the current bull ranks #2 going back 44 years when institutions first started to have heavy impact. The 1990 – 1998 bull market is #1, having advanced 301%* over a 93 month span.
This bull market has further to go, BUT a sharp correction of 5%+ lurks out there, I think sometime before the end of October.
Monday’s rebound following a selloff Friday offered the bulls a chance to grind out another rebound after a brief correction – it didn’t happen. Rally failures followed Tuesday and Wednesday.
There are sellers across the board in pre-market trading setting the stage for another tumble.
The markets are unexpectedly rattled here. The Street has ignored the news front, and the economic numbers have been good. Q2 earnings are OK, so this must be technical.
The question here short-term is, has the balance between buyers and sellers shifted? It has favored the bulls for months as evidenced by a step-up trading pattern where minor corrections were followed by rebounds to new highs.
It is up to the bulls now to use this correction as a chance to step in once again.
Support today is DJIA: 16,746; S&P 500: 1,948; Nasdaq Comp.: 4,390.
No question, the nature of trading has undergone a change in just three days.
Investor’s first read– Daily edge before the open
DJIA: 16,880
S&P 500: 1,970
Nasdaq Comp.:4,462
Russell 2000: 1,146
THE FED:
We will hear more cautionary comments from the Fed going forward in an attempt to ease an interest rate hike when its reality hits early next year. The Fed does not want speculative fever to run rampant prior to the rate increase.
The Fed’s “easing in” policy is bad news for those who want the feeding frenzy to continue unabated, but good news for investors who opt for a more stable market and an inevitable crunch instead of crash.
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TECHNICAL ANALYSIS of 30 DOW JONES INDUSTRIALS
(UPDATED ANALYSIS: July 21)
At key junctures, I technically analyze each of the 30 Dow industrials seeking a reasonable near-term support and a more extreme support leyel, 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.
I ran my analysis after the July 21 close and concluded the near-term upside for the DJIA is 17,333 a reasonable downside is 16,932 and more extended downside risk to 16,865. We hit 16,877 Monday. A follow through to yesterday’s rally failure puts that number in jeopardy.
Note: My daily support/resistance levels are more short-term oriented.
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THIS WEEK’s ECONOMIC REPORTS:
The economic report schedule is heavy this week with a good balance between housing, service, production and employment
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:
PMI Services (flash) 9:45): July the winter low in Feb.flash reading at 61.2 well above 50’s break even and 7.9 points above
Pending Home Sales (10:00): Index was 102.7 in June vs103.8 in May
Dallas Fed Mfg (10:30): Index is 12.7 in July vs. 11.4 in Jun..
TUESDAY:
FOMC Meeting begins
ICSC Goldman Store Sales (7:45): Up 0.2 pct. in July 26 week from a drop of 0.4 pct. the prior week . Year/year is +4.6 pct.
S&P Case Shiller Home Prices (9:00): Slipped in May to a minus 0.3 pct. rate vs. +0..2 pct. in Apr..m Year/year is +9.3 pct. vs. +10.8 pct. Apr.
Consumer Confidence (10:00): Rose to 90.9 from85.2
State Street Investor Confidence (10:00): Slipped to 114.7 in July from 119.5 in June.m
WEDNESDAY:
MBA Purchase Apps/Refi’s (7:00): Flat ! Down 2.2 pct., Refi’s down 4.0 pct. Year/year Apps down 12.0 pct.
ADP Employment (8:15): 218,000 Private Sector Jobs were added in July, June was revised upward to 281,000. Jobs added were across the entire spectrum of industries and pay scale.
GDP 8:30): Q2 growth was 4.0 pct. vs a minus 2.1 pct. – a surprise
FOMC Minutes – no press conference
THURSDAY:
Jobless Claims (8:30): Rose 23,000 to 302,000 for July 26 week.
Chicago PMI (9:45):
FRIDAY:
Employment Situation (8:30):
Personal Income (8:30):
PMI Mfg. Ix. (9:45)
Consumer Sentiment (9:55):
ISM Mgd Ix. (10:00)
Construction Spend (10:00)
Global Mfg PMI (10:00)
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RECENT POSTS:
July 22 DJIA 17,051 Significance of Yellen’s Warning
July 23 DJIA 17,086 Feeding Frenzy in Low-Priced Stocks Imminent ?
July 24 DJIA 17, 113 Taper’s End Fully Discounted – 2015 Interest Rates Not
July 25 DJIA 17,083 Is Market Action Setting Stage for a Leg Up ?
July 28 DJIA 17,960 Big Week – Economic Reports/Q2 Earnings
July 29 DJIA 16,982 Quite Before the Storm ?
July 30 DJIA 16,912 Market on the Verge of Big Move ?
*I use intraday prices
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.
