NOTE: Changes to :Tech Watch” – Nike, Polaris, Pandora in, Target, eBay out
I am looking over my shoulder for the unexpected, something that can trigger a sharp correction. Don’t let that alarm you. In this casino environment, I frequently look for trouble when it looks like stocks seem to have nowhere else to go but up.
Fortunately, we have had three corrections since May though the net result has been a higher market.
Currently, I see January as a possibility for a nasty correction, but from higher levels.
This is a monster bull, one that has thumbed its nose at one unthinkable adversity after another, and at some point in the future it will pack it in with a spectacular speculative frenzy prior to a Grizzly size bear.
In the interim, expect 3% -5% corrections and one or two 8% -11% pullbacks. The latter can dole out enough pain to force investors to bail, just before a rebound.
Yesterday was a ho-hummer with an ever so slight positive bias. Bulls want to see an attempt to sell off lose momentum, bears are hoping for a rally failure.
Right now, the most readable market action would be the rally failure, since the market has posted an uninterrupted surge since early October.
A move up that holds beyond DJIA 15,675 (S&P 500: 1,772) would be positive raising the odds of new all-time highs. A sustained drop below DJIA: 15,580 (S&P 500: 1,760) would be a warning of more downside.
Investor’s first read– a daily edge before the open
S&P 500: 1,767
Nasdaq Comp. 3,936
Russell 2000: 1,108
Tuesday, Nov. 5, 2013 (9:01 a.m.)
TECH WATCH: Changes: Adding Nike (NKE), Polaris Industries (PII) and Pandora (P) and dropping Target (TGT) and eBay (EBAY).
I am considering the elimination of the Tech Watch section and offering it in a separate publication on a subscription basis.
I would be able to cover more companies, and would not be constrained by a pre-market deadline. Comments welcome: email@example.com. Include opinion about how you think I could even improve commentary bearing in mind these are NOT buy/sell comments.
The following are based on technical analysis only and are not to be taken as buy or sell recommendations, but as one of many factors that must be considered in the decision process. Comments do not take into consideration earnings reports, or changes in institutional ratings, company guidance. Technical analysis is based on one’s interpretation of the impact buying and selling have on the price of a stock and is therefore not an exact science. News and events can change an interpretation instantly.
Apple (AAPL: $526.75) Positive.
No change. Remains in consolidation. Must break up through $528 to give it a shot at $540 and above. Friday, I said odds favored a slip to $514 - $518 first. It did that, hitting $515.84 before rebounding to $520. This is what a consolidation looks like – a lot of volatility reflecting profit taking and new investors who see the dips that selling produces as an opportunity to move in. I can see a slip to $510 - $512 in a soft market, but odds do not favor that, without an ugly surprise.
Facebook (FB: $49.75) Positive
Hit both resistance ($52) and support (49) levels Friday, closing at the latter and continuing down Monday. FB could drop quickly to $46.80 where it should find some buying.
IBM (IBM: $180.27) Negative, and it only has to work on its base a bit longer to turn positive.
No change:IBM is in the process of developing a turning pattern which will ensure investors further downside is limited. It has run into resistance at $182 and is now probing the downside for a support level where it should see buying above $178.
Pulte Homes (PHM: $17.83) Positive
Investors got the earnings report they were looking for last week, pushing PHM across $18. Since then, it has been digesting that gain. Trying to hold above $17.60 Any further weakness should attract a buyer.
First Solar (FSLR:$61.83) Positive
Blowout earnings last week prompted buying and panicky short covering taking FSLR above my target level. Stock can go higher. Support rises to $60.20.
Target (TGT: $64.62) Now positive but with a limited short-term upside.
This is the last day for my coverage of TGT. Stock could edge a bit higher but there is formidable resistance between $67 and $68.
Nike (NKE:$76.37) Positive
Has had a nice run from the $63 level with consolidations along the way, the most recent being a 10-day sideways range between $75 and $76. It is volatile intraday. Support is $75.70, resistance $76.70. A good market should enable NKE to move across $80 near-term..
Hewlett-Packard (HPQ: $25.77) Positive.
No change: Hit $26 with room to spare in response to news of a $3.5 billion U.S. Navy order. Support is $25.55.
EBAY (EBAY: $51.37) Neutral but struggling
This is the last day of coverage for eBay.
Continues to look weak with significant overhead supply, starting now at $53. Worth noting, EBAY has rebounded sharply from the $49 - $50 area four times in a year and may do so again. Needs a big buyer to head off a drop the mid-40s.
Polaris Inds. (PII: 131.09) Positive
PII rose $2.09 yesterday to challenge resistance at $133-$134. Pre-market trading indicates it will open on the downside, suggesting it needs bigger volume to break out.
Amazon (AMZN: $358.74) Positive
No change:In an upbeat market, AMZN could move across $375. Raymond James’ Aaron Kessler’s raised his rating to Strong Buy from Market Perform with a price target of $446. Looks ready for a move to $364 - $366.
Pandora Media (P:$25.67) Positive.
Pandora has ranged between 23 and $28 since mid-September as it digests its move up from $18. It appears to have found support in the $25.30 - $25.75 area. In a good market, increased upside volume can take it beyond $28 into the low-30s. This is a highly news sensitive stock and it can go up or down sharply without advance notice. There has been some heavy trading in recent days, which could reflect a buyer sopping up some big pieces for sale. Stock needs a move above $26 to tip the scales in favor of the bulls. Break below $25 raises risk of drop to $23.
While the economic reports released this week are few in number, they are significant. Though the accuracy of these reports may still be suspect due to the shutdown, the Street will be watching for clues about the economy’s strength, since it will influence the timing of Fed taper.. Bernanke speaks at 3:30p.m. Friday.
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com - www.mam.econoday.com
Factory Orders (10:00) Rose1.7 pct in Sept. vs. declines of 0.1 pct Aug, 2.8 pct July
Fed’s Powell speaks (11:40)
Fed’s Rosengran speaks (4:00 p.m.)
ISM Non-Mfg.Ix. (10:00) PROJ.: Oct. index Sept. 54.5
Fed’s Lacker speaks (12:30 p.m.)
Fed’s Williams speaks (5:10p.m.)
Leading Indicators (10:00) PROJ.: Sept. +0.7pct.
Fed’s Pianalto speaks (1:0 p.m.)
Jobless Claims (8:30) PROJ.: For week 11/2 335,000
GDP (8:30) PROJ.: 3rd estimate Q3 +2,0 pct. annual rate
Fed’s Stein speaks (9:10)
Employment Situation (8:30) PROJ.: October 120,000, Private payrolls: 128,000. Unemployment rate 7.3 pct.
Personal Income/Outlays (9:55)PROJ.: Sept: +0.3 pct.
Consumer Sentiment (9:55)PROJ.: Nov. index: 75.0 vs. 73.2 Oct.
Fed’s Lockhart speaks (12:00p.m.)
Fed Chief Bernanke speaks (3:30p.m.)
RECENT POSTS - 2013
Oct 15 DJIA 15,301 “What If We Default ? What If We Don’t ?
Oct 16 DJIA 15,168 “Market Saying “Deal” – A High Risk Bet ?”
Oct 17 DJIA 15,373 “How Much of the “Deal” has the Market Discounted” ?
Oct 18 DJIA 15,371 “No More Wall of Worry for Bull Market to Climb ?”
Oct 21 DJIA 15,399 “Analysis Projects High-Low Range for DJIA”
Oct 22 DJIA 15,392 “Is the Stock Market Vulnerable ?”
Oct 23 DJIA 15,467 “Q3 Earnings – Only Worry In Town ?”
Oct 24 DJIA 15,413 “No Fed Taper in Sight ? Don’t Bet on It.”
Oct 25 DJIA 15,509 “Best Six Months for Owning Stocks”
Oct 28 DJIA 15,570 “Do I Detect Speculative “Fever “ ? If So, What Can
Oct 29 DJIA 15,568 “ When Will the Small Investor Plunge ?”
Oct 30 DJIA 15,680 “Don’t Rule Out Fed Taper by Year-End”
Oct 31 DJIA 15,618 “Easy Does It ! Market Nervous, Needs Breather”
Nov 1 DJIA 15,545 “Rally Failure, Correction to Continue ?
“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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