Monday, July 30, 2014 9:04 a.m. BEFORE the OPEN
As I write, investment analysts are digesting Q2 earnings reports and preparing projections for earnings for coming quarters. With the exception of a stop-and-go housing industry, the economy is gaining traction, perhaps more than expected.
Currently, war in the Mid-east and Ukraine is not adversely impacting the stock market. It looks like it is all about money, money at the corporate bottom line, and we will shortly find out what the Street sees for this year and into next year.
TODAY:
Yesterday’s positive open failed to gain traction and the day ended with the major market averages giving back all that they gained throughout the day, a rally failure.
Pre-market trading today suggests a rebound. Again, like yesterday, this rebound will have to have legs, no room for another rally failure.
A failure would be bad news short-term, since both the Jobs report and GDP came in positive an hour before the open. Q2 GDP posted a 4.0% gain (vs. minus 2.1% Q1) and 218,000 private sector jobs were added in July with June revised up to 281,000.
A strong close paves the way for new highs, quite possibly a very strong up-leg.
Support todayis : DJIA: 16,884; S&P 500: 1,966; Nasdaq Comp.: 4,434.
Resistance todayis DJIA: 17,026; S&P 500: 1,983; 4,466.
Investor’s first read– Daily edge before the open
DJIA: 16,912
S&P 500: 1,696
Nasdaq Comp.:4,442
Russell 2000: 1,141
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):
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 ?
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.
