The Street has had to deal with a host of negatives over the last five years, many far more harrowing than the ones it wrestles with now.
Looking back, the market has done an admirable job of climbing a wall of worry.
The White House and Congress will once again lock horns in coming months with the prospect of a government shutdown hyped by the press.
There will always be a Syria “situation.”
Taper in September, or November, or later holds center stage, but the “core” issue is a change in Fed policy and what that means for interest rates and the stock market.
Taper will begin when the Fed feels comfortable with the stability and prospects for sustainable growth in the U.S. economy.
The first taper will most likely trigger a sharp but brief sell off, followed by a sharp rally.
How much of a rally depends on whether the Street can accept the trade off – a strengthening economy in exchange for less Fed hand-holding.
The market is telling us it doesn’t want to drop further, that based on what is known now, it has found its comfort level.
I see buyers nibbling away at stocks that have dropped sharply this summer, but I don’t see aggressive buying - yet.
Right now, it looks like the classic seasonal pattern shaping up, the market once again marching to the “Best time to own stocks”* (November 1 to May 1).
The Street may jump the gun on this, as it often does.
Investors MUST be prepared for that, and must know what they want to own.
The DJIA 14,760 – 14,800 area (S&P 500: 1,630 – 1,635) has shown to be a level that has attracted buyers in face of known negatives.
Support: DJIA: 14,858 (S&P 500:1,643)
Resistance: DJIA: 15,012 (S&P 500: 1,662)
Investor’s first read– an edge before the open
S&P 500: 1,655
Nasdaq Comp. 3,658
Russell 2000: 1,028
Friday, Sept. 6, 2013 (8:25 a.m.) EARLY RELEASE
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: $495.27 )
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: $497.80 – 500.00
Support: $489 - Has had buyer at the open last three days.. Could be Icahn
Facebook (FB - $42.66 )
Note: Bottom was targeted below $18 for a turnaround Sept. 2012, this is a follow up.
Pattern: Positive –
Consolidating. Break above $42.25 paved way for move to $44.60.
IBM ($184.15 ) No change
Note: Started coverage Aug. 7, 2013 after big plunge in stock
Pattern: Negative, but improving.
Resistance: $184.25 Still a seller there – patient but steady, so too is a buyer. If the latter gets aggressive $189 possible.
Support: Got down to my target on of $181, and has attracted a buyer. Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years.
Each point up or down impacts the DJIA by about 13 points.
PulteGroup (PHM- $15.25 ) At risk, needs buyer ASAP
Note: Started coverage Aug. 12, 2013
Pattern: Neutral but weakening
Support: $14.60 Needs big buyer to counter industry negatives that resurfaced with the jump in mortgage rates
First Solar (FSLR:$38.36 )
Note: Started coverage: Aug.: 22, 2013
Pattern: Negative , slight signs of improvement
Support: Yesterday morning, I said $36 must hold or a drop to $31 - $32 , but that there was some evidence of bargain hunting. Buyers struck in-size at the open and continued to buy throughout the day.
Target (TGT: 63.46)
Note: Started coverage Aug: 22, 2013:
Got a buyer early Tuesday. and early Wednesday and Thursday but lacked follow through, which itself is a recurring pattern. Odds favor another round of buying .
Hewlett-Packard (HPQ:22.12 )
Note: Started coverage Aug. 23, 2013
Pattern: Negative, probing for comfort level. Needs heavy volume buying that takes it across $22.75
HPQ looks like it can hold in this $22 - $23 area. Sharp drop from $26 created overhead supply (a lid) $19.85 is possible but only in a bad market.
eBay (eBay: $51.95 ) Yesterday’s action positive, though volume lacking
Note: Started coverage Aug. 28, 2013
Pattern: Neutral but improving Friday’s and Monday’s action did damage, bur Tuesday, Wednesday and Thursday buying at open a big help. Risk of mid-40s reduced.
Support: $ 51.30 Base-support 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: $ 294.10)
Note: Started coverage Aug. 28
Pattern: Bullish with second breakout yesterday raising odds of a move across $295 possible Volume trailing off suggests buyer doesn’t want to push price up too quickly.
Support: Support now $290
I do not own, nor am I short AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
Heavy schedule this week, also speeches by Federal Reserve officials. BIG employment reports Thursday and Friday.
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com - www.mam.econoday.com
ADP Employment rept (8:15) 178,000 Aug - private payrolls
Jobless Claims (8:30) down 9,000 to 323,000 for week ended 8?31
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) dropped 2.4 pct. -3.4 pct. July
ISM Non-Mfg. Ix. (10:00) Index Aug. 58.6 vs. 56.0 July; New orders index Aug. 60.5 vs. 57.7 July
Employment Situation (8:30) Proj.: Private payrolls Aug. 178,000 , unemployment 7.4 pct.
Fed’s Esther George speaks (1:30 pm) Proj.:
*Stock Traders Almanac- 2014 issue just coming off the printing press
“Investor’s first read – an edge before the open”
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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