The market will open higher today, the question is – Why ?
The U.S. response to Syria is uncertain, as is Fed taper, the direction of the economy here and abroad, and the divisiveness of another debt ceiling confrontation with the remote possibility of a government shutdown.
That leaves a “technical rally,” which is overdue coming off a double bottom and a market that has corrected 5.7% over the past month.
But, the kids are back to school now, and traders. money managers and brokers are back to work. In short, the investment year is beginning to kick in.
While the Best Six Months* for owning stocks doesn’t officially start until November 1, the markets tend to jump the gun, especially if preceded by a summer sell off.
At some point, the Street will accept an improving economy over its addiction to the security that continued taper offers it. That threshold has to be crossed, for another leg of this bull market to get underway. It can’t happen in a bad news is good news environment.
TODAY:
Strength at the open may simply be “technical,” except last Wednesday’s/ Thursday’s double bottom is much too narrow, so today’s strength is most likely traders front-running a favorable resolution to a number of pressing uncertainties.
A number of stocks are oversold and warrant the purchase of a partial position, so long as a cash reserve is maintained in the event the market will seek a comfort level at lower prices.
Support is DJIA 14,775 (S&P 500: 1,630)
Resistance starts at DJIA 14,946 (S&P 500:1,651)
Investor’s first read– an edge before the open
DJIA: 14,810
S&P 500: 1,632
Nasdaq Comp.: 3,589
Russell 2000: 1,010
Tuesday, Sept. 3, 2013 (9:12 a.m.)
TECHNICAL OBSERVATION – STOCKS:
The following are observations based solely on technical analysis and don’t give consideration to fundamentals or changes in brokerage ratings which can have an immediate impact on stocks, justified or not. The idea here is to give readers insight into the likely trends and turns in the stock’s price, short-and long-term.
I picked up on AAPL and FB last year when they were in a tailspin, and picked up on IBM, Pulte, First Solar, Target, and Hewlett-Packard recently for the same reason. These are not buy or sell recommendations, and are not stocks I have recommended.
NOTE: Expect support and resistance levels to change more frequently under adverse and uncertain conditions like those we are experiencing presently..
WARNING: This market is highly “news sensitive,” with everything at the present negative. Any break for the better in the mid-East, taper, or in the threat of a government shutdown in October will trigger a rally, especially in stocks below, since they have been hammered already.
Apple(AAPL: $487.21 )
Note: Bottom was targeted at $385 the turn around Apr. and Jun. 2013 (double bottom). This is a follow up.
Pattern: Positive, consolidating recent up move.
Resistance: $494
Support: $487 – 489 – AAPL still in consolidation and probing for a level that discounts new negatives in overall market. Icahn must like this.
Facebook (FB – $41.29 )
Note: Bottom was targeted below $18 for a turnaround Sept. 2012, this is a follow up.
Pattern: Positive –
Resistance: $41.58
Support: $41 Friday I said “Buyers at the open yesterday reinforces positive pattern, chances of a bump to $44.75 better than even.” It got buying at the open and a bump to $42.26, but gave it all back by the end of the day, which may have been due to being Friday before a 3-day weekend and with a possibility of a Syrian strike over the weekend. Key is open Tuesday.
IBM ($182.27 ) No change
Note: Started coverage Aug. 7, 2013 after big plunge in stock
Pattern: Negative
Resistance: $182.50
Support: Got down to my target on of $181. A turning pattern may be forming.. Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years. Unless the fundamentals are horrendous it is due for institutional buying, most likely in this area and possibly at or a smidge below $180.
Right now, there are sellers that must be taken out.
Each point up or down impacts the DJIA by about 13 points.
PulteGroup (PHM- $15.39 )
Note: Started coverage Aug. 12, 2013
Pattern: Neutral but weakening
Resistance: $15.75
Support: $14.60 (new) Got whipsawed on this one. Thursday’s strength was reversed abruptly as pattern weakened again due to industry uncertainty.
First Solar (FSLR:$36.72 )
Note: Started coverage: Aug.: 22, 2013
Pattern: Negative, but improving thanks to buying yesterday (wrong !) Sellers showed to send stock back to support $36.50. Needs big sustained buying to head off drop tp $31 – $32.
Target (TGT:63.31 )
Note: Started coverage Aug: 22, 2013:
Pattern: Negative
Resistance: $63.25
Support: $63
Stock needs big buyer or it is headed for $61 – $62. TGT’s drop from $73.50 is unnerving and may suggest the consumer is temporarily tapped out.
Hewlett-Packard (HPQ:22.34 )
Note: Started coverage Aug. 23, 2013
Pattern: Negative, probing for comfort level
Resistance: $22.36.
HPQ looks like it can hold in this $22 – $23 area. $19.85 is possible in a bad market.
eBay (eBay: $49.99 ) Yesterday’s action positive, though volume lacking
Note: Started coverage Aug. 28, 2013
Pattern: Neutral/bearish Friday’s action did damage
Resistance: $51.20
Support: $ 49.65, but stock is at risk here. Base support is in process of forming. Stock should get a buyer in here as it has on five occasions when it ranged between $50 and $58 this year. If that happens, the intensity of that rally must be studied. Failure to develop heavy volume suggests a break below $50 and drop into the mid-40s. If there are bulls out there, they should find this price attractive and make their move. If $50 isn’t attractive, the stock has a big problem.
Amazon.com (AMZN: $280.98 )
Note: Started coverage Aug. 28
Pattern: Bullish, but correction must find support soon
Resistance: $284
Support: Support now $280. $268 – $272 is possible in a bad market.
I do not own, nor am I short AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
ECONOMIC REPORTS:
Heavy schedule this week, also speeches by Federal Reserve officials
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com
TUESDAY:
PMI Mfg. Ix. (8:58) Proj.: Ix.: 53.9 Aug unchg
ISM mfg Ix. (10:00) Proj.: Ix. 53.8 Aug. vs
Construction Spending (10:00) Proj.:+0.3 pct. July vs. -0.6 pct June
Motor Veh. Sales Proj.: Aug. 12.3 mil unit rate
ICSC Goldman Store Sales (7:45) Proj.: none
Int’l Trade (8:30) Proj.: minus 39.0 bil July vs. $34.2 bil June
Fed’s John Williams speaks (12:30) Proj.:
Fed’s Narayana Kocherlakota speaks (8:00 pm)
THURSDAY:
ADP Employment rept (8:15) Proj.:177,000 Aug for private payrolls
Jobless Claims (8:30) Proj.: 330,000 week ended 8/31 vs. 331,000 prior week
Productivity and Costs (8:30) Proj.:+1.8 pct productivity; +0.7 pct.
Fed’s Kocherlakota speaks again (9:00 am )
Factory Orders (10:00) Proj.: -3.4 pct. July
ISM Non-Mfg. Ix. (10:00) Proj.: Ix. 55.0 Aug.
FRIDAY:
Employment Situation (8:30) Proj.: Private payrolls Aug. 178,000 , unemployment 7.4 pct.
Fed’s Esther George speaks (1:30 pm) Proj.:
RECENT POSTS: 2013
Aug 22 DJIA 14,897 “Street’s Angst Not About First Taper, but……”
Aug 23 DJIA 14,963 “Big Day: Rebound or Rally Failure ?”
Aug 26, DJIA 15,010 “Fed Policy Change – Big Impact on Stock Market ?”
Aug 27 DJIA 14,946 “No Quick Solution for Market’s Negatives – DJIA 14,250 ?
Aug 28 DJIA 14,776 “What Now for AAPL, FB, AMZN, FB, IBM, HPQ, etc. ?”
Aug 29 DJIA 14,824 “Don’t Buy the Syria Solution Rally?
Aug 30 DJIA 14,840 “ Countdown Starts Tuesday – What to Expect”
*Stock Trader’s Almanac – New edition should be out now or shortly.
George Brooks
“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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