Thursday, September 11 , 2014 9:08 a.m. BEFORE the OPEN
Daily:Boiling down fundamental, technical, economic, monetary, fiscal, psychological, and seasonal data into a quick read.
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The Street just can’t accept the fact the Fed will raise interest rates from the historically low levels in effect for six years. It is going to happen, the question is: when? The Street’s current concern is that it may happen earlier than expected, possibly Q1 of 2015.
Interest rate concerns and the fact QE is scheduled to end in October are having an increasingly negative impact on the market.
Add Ukraine and ISIL and it is hard to paint a bullish picture for stock prices near-term.
The odds of one more spike up before a correction are becoming dimmer each day the S&P 500 fails to sustain a move above the 2,000 level.
The FOMC meets next week and that meeting will be followed by a press conference. In the meantime, expect volatility.
TODAY:
The Bulls need a big day or stocks are heading south. Tuesday’s market plunge did a lot of technical damage and yesterday’s bounce was not impressive.
Pre-market trading in the stock index futures indicates a drop at the open. If lower prices do not attract buyers today, the Bears win the tug of war that started August 26.
Resistance todayis DJIA: 17,116; S&P 500: 2,000; Nasdaq Comp: 4,597
Support todayis DJIA: 17,013; S&P 500: 1,988; Nasdaq Comp.:4,563
A break below these levels raises the potential for a drop to DJIA: 16,875; S&P 500: 1,971; Nasdaq Comp.: 4,513.
Investor’s first read– Daily edge before the open
DJIA: 17,068
S&P 500: 1,995
Nasdaq Comp.:4,586
Russell 2000: 1,164
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EUROPEAN CENTRAL BANK’S ECONOMIC STIMULUS
A surprise economic stimulus move by the European Central Bank (ECB) is driving the euro down sharply. The ECB cut its refinancing rate, reduced its deposit facility rate, lowered its lending facility, and initiated the purchase of euro-denominated covered bonds in an effort to jolt European economies out of lethargy. While the U.S. economy continues to inch forward, it could use help from abroad.
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INTERNATIONAL TENSIONS:
Ukraine/Russia – Quiet for now, but has the potential to get uglier.
ISIS/Iraq/Syria – A Euro/Mid-East coalition is forming to counter ISIL’s territory and influence quest.
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TECHNICAL ANALYSIS OF EACH OF THE 30 DOW INDUSTRIALS (9/5) At key junctures, I technically analyze each of the 30 Dow industrials, then using the Dow’s “divisor” convert these results back into the DJIA. I seek a near-term resistance level and a primary and secondary support level.
As of Aug 29, the near-term resistance level is 17,318; the primary support is 16,990 and secondary support is 16,912.
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INTEREST RATES:On numerous occasions, I have reminded readers that stock prices can rise along with interest rates, but to a point where higher rates draw money away from stocks to bonds and where higher rates adversely impact the economy. Realistically, that point must be a lot higher than the zero-based interest rates existing today. I conceded that the stock market would take a brief hit when a move to higher rates was perceived by the Street, but stabilize before moving higher.
A recent study by Andrew Garthwaite, chief equity strategist for Credit Suisse concludes just that. Since 1977, he found the S&P 500 peaked no earlier than four months prior to the Fed’s first rate increase, but gained as much as 4 percent in the six months after the first increase. He notes, that while rate rises have increased volatility in the stock market, they did not mark the end of the bull market.
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THIS WEEK’s ECONOMIC REPORTS:
Very light week for reports. For detailed analysis of both the U.S. and Foreign economies along with charts, go to www.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.”
TUESDAY:
NFIB Business Optimism Ix. (7:30): Index for August was up 0.4 points to 96.1
ICSC Goldman Chain Store Sales (7:45): Sept. 6 week sales up 0.7 pct. ; Year/year up 4.0pct.
JOLTS – Job Openings/Labor Turnover (10:00):There were 4,675 million job openings in July unchanged from June – the hires ratio was 3.5 pct./separations ratio 3.3 pct.
WEDNESDAY:
MBA Mortgage Purchase Apps (7:00): Purchase apps were down 3.0 pct and refi’s down 11.0 pct. in the 9/5 week
Wholesale Trade (10:00): July inventories were up 0.1 pct. but sales were up 0.7 pct – stock-to-sales are 1.16.
THURSDAY:
Jobless Claims (8:30): Up 11,000 to 312,000 in week ended 9/6.
FRIDAY:
Retail Sales (8:30):
Import/Export Prices (8:30):
Consumer Sentiment (9:55):
Business Inventories (10:00):
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RECENT POSTS:
Aug 26 DJIA 17,076 Bull/Bear Tug of War at S&P 2000 Level
Aug 27 DJIA 17,106 Market poised for Sharp Move
Aug 28 DJIA 17, 122 2,000 on S&P 500 – Floor or Ceiling ?
Aug 29 DJIA 17, 079 How Long Will Bulls Prop the Market ?
Sept. 2 DJIA 17,098 What are Odds of a Big Correction of 8% – 12% ?
Sept. 3 DJIA 17,067 Breakout and Run – Followed by a Crunch
Sept. 4 DJIA 17,078 Bulls “Must” Take Charge NOW
Sept. 5 DJIA 17,069 Market to Tip Its Hand Today
Sept. 8 DJIA 17,173 Bullish Storm Surge Imminent ?
Sept. 9 DJIA 17,111 Bulls to be Tested Today
Sept. 10 DJIA 17,013 Stock Market Back on the “Edge”
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.
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