Friday, June 13, 2014 9:07 a.m. Before the open
The new negative for investors, is an old one returned – Iraq. It’s a civil war between shiites and Sunnis, which everyone with an ounce of common sense should have known would raise its ugly head – the question – When ?
How will it impact the price of oil, just as Americans ramp up their long range driving in the summer months ?
We’ve been here before and the market was able to weather the storm, the difference this time is the major market averages are at higher levels and thus more vulnerable.
The challenge to stability and control of Iraq will require a response from the United States, as have so many hotspots in the Mid-East in recent years.
At best, we are looking at uncertainty, and that strongly suggests a sideways trading range for several months with some more downside risk than what we have seen so far, but with some juicy trading opportunities.
The key to market stability and upside potential continues to be the economy here and abroad.
Odds favor a spike down to DJIA: 16,656; S&P 500: 1,921; Nasdaq Comp: 4,277 by 11:00, a rally to DJIA: 16,705; S&P 500: 1,927; Nasdaq Comp.: 4,290, then a close for a loss for the day as we head into the weekend.
Always be aware that a reasonable correction can become an ugly one if new negatives hit the market as the correction has run its course and on the verge of a rebound. Obviously, that kind of negative is not foreseeable, if it were it would be factored into stock prices ahead of that juncture.
Investor’s first read– Daily edge before the open
S&P 500: 1,930
Nasdaq Comp.: 4,297
Russell 2000: 1,159
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:
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.”
NFIB Small Bus. Optimism Ix. (7:30): May index up to 96.6 from 95.2
ICSC Goldman Store Sales (7:45) Sales down 2.8 pct. in June 7 week from a gain of 2.9 pct. the prior week. Year/year now +3.0 pct. vs +3.1 pct.
JOLTS (10:00) Job Openings/Labor Turnover improved beyond expectations with 4.455 million job openings at the end of April vs 4.166 million in March. The hires-to-separations ratio remained unchanged.
Wholesale Trade (10:00). While inventories rose 1.1pct., sales rose 1.3 pct, keeping the stock to sales ratio
MBA Purchase Apps (7:00) Mortgage apps surged 9.0 pct and refi’s 11.0 pct. in the June 7 week
Treasury Budget (2:00)
Jobless Claims (8:30) Up 4,000 to 317,000 in the June 7 week
Retail Sales (8:30) Up 0.3 pct. in May vs. increase of 0.5 pct. (revised up from an increase of 0.1 pct.)
Bus. Inventories (10:00) Inventories rose 0.6 pct. , sales up 0.7 pct – inventory sales ratio unchanged at 1.29.
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
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.