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Market to Tip Its Hand Today?

Friday,  September  5 , 2014     9:08 a.m.  BEFORE the OPEN

FridaySeptember  5 , 2014     9:08 a.m.  BEFORE the OPEN



   Many decision makers in the Street don’t want the market’s advance (S&P 500 up 5% since early August) to end.  They continue to buy.

   However, others look at an S&P 500 that  has risen 200% since March 2009 and are using the over-rated benchmark of 2,000 on the S&P 500 to feed stock out.

   Is 2,000 a floor, or a ceiling ?   I raised that question last week, and the market’s action has yet to tip its hand.

   It has been a slugfest with an edge first leaning toward the bullish camp only to reverse fields and trend toward the bearish camp.

   At this point, I don’t see an end to the Bull Market.  I see the risk of a moderate correction (3% – 5%) that could easily extend into a nasty crunch of 8% – 12%.

   There is still the possibility of one more sharp spike up, but that event lessens with rally failures like we had Wednesday and Thursday.

    A break above DJIA 17,162 and 2,012 on the S&P 500 would increase the odds of that spike.  Otherwise, look for a slide to DJIA 16,967, S&P 500: 1,985; Nasdaq Comp.: 4,532 today.

Investor’s first readDaily edge before the open

DJIA: 17,069

S&P 500: 1,997

Nasdaq  Comp.:  4,562

Russell 2000:  1,167



   I think the odds are getting greater every day.

   Why ? 

   A major correction isn’t factored into many of the Street’s scenarios.  After all the economy is gaining traction, and the Fed  isn’t expected to raise interest rates until mid-2015.

   Outlooks can change quickly, doubts and uncertainties can snowball. Careful !



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.


    While a major military undertaking by the U.S. in the Mid-East would have political consequences here, it does appear the stage is being set for a serious campaign to stop the Islamic State’s advances. A coalition is being formed and the news media is beginning to warn of a threat to our homeland if the Islamic State isn’t stopped !!!

    One issue not addressed yet is, how destabilizing is the Islamic State’s to Iran’s interests ?

    The unpopularity of an increased military operation  in the Mid-East and uncertainties of  how far it will extend is a negative that is not yet discounted in stock prices. 

    A 7-point plan to address the Ukraine/Russia conflict is expected to be presented Friday at a joint meeting of pro-Russia rebels and Ukrainian officials at Minsk, Belarus.

    Bottom line: tensions eased for now.



   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 17,312; the primary support is 16,973 and secondary support is 16,698.


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.



    Big week for reports, especially employment. For detailed analysis of both the U.S. and Foreign economies along with charts, go 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.”


PMI Mfg Ix. (9:45): Aug. index up to 57.9 from 55.8 in Jul.

ISM Mfg. Ix. (10:00):  Aug index up to 59 in Aug. from 57.1 in July; New orders 66.7 vs 63.4.

Construction Spend (10:00): Up 1.8 pct. in July decline of 0.9 pct. in June.


MBA Purchase Apps/Refi’s (7:00):Still  down 12.0 pct.week- down 0.2 pct. in Aug 29 week; Year/year

ICSC Goldman Store Sales (7:45): Unchanged in Aug. 30 week; Year/year + 4.8 pct.

Factory Orders (10:00): Boeing orders skewed July’s Factors Orders, triggering a 10.5 pct. rise; Ex-transport, orders dropped 0.8 pct..


Int’l Trade (8:30): July Trade deficit was $40.55 billion vs $40.8 billion June.

ADP Employment Rpt (8:15) 204,000 jobs were filled in Aug. vs, 218 in July.

Productivity/Costs (8:30): Q2 productivity grew at an annual rate of 2.3 pct. in Q2 after a drop of 4,5 pct. in Q1.

Jobless Claims (8:30): Dropped 4,000 to 302,000 in Aug. 30 week.

PMI Services Ix. (9:45): Was 59.5 in Aug. vs. 58.2 in July

ISM Non-Mfg. Ix. (10:00): Was 59.6 in Aug. vs. 58.7 in July


Employment Situation (8:30): 142,000 for Aug. vs. 213,000 in July and well below projections for 220,000.



Aug. 20  DJIA   16, 919 Is Market Now Vulnerable to Bad News ?

Aug. 21  DJIA   16,979  S&P 2000 to Trigger Selling

Aug  22  DJIA   17,039  Will Street Sell When S&P 500 Breaks 2,000 ?

Aug  25  DJIA   17,001  Stronger Economy – a Game Changer for Fed ?

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

A Game-On Analysis,  LLC publication

George  Brooks

“Investor’s first read – a daily edge before the open”

[email protected]

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.











The Fed model compares the return profile of stocks and US government bonds.