Moment of Truth for Market's Direction

George Brooks |

FridaySeptember  26 , 2014     9:13 a.m.  BEFORE the OPEN

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Daily: Boiling down fundamental, technical, economic,

monetary, fiscal, psychological, and seasonal data into a quick read.

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   Last Thursday’s post queried whether the BIG Money would sell into the strength generated by Fed Chief Janet Yellen’s interest rate comments.  From all appearances it sold last week and early this week.

   Wednesday’s 154-point surge in the DJIA  looked like just another “buy on dip” by institutions, like  so many in the past.

   But something happened overnight. Bids simply disappeared at the open yesterday, then selling took over.  Something spooked investors, and I don’t think it has anything to do with known negatives.

   Is it a fear that we are going to war, a more intense war than Iraq and one where America is more at risk than ever before ?

   Worry that the U.S. economy will gain enough traction to force the Fed to raise interest rates sooner rather than later ?

   An exit in anticipation of disappointing corporate earnings going forward ?

   Concern that in spite of some good news, an ugly correction (8% - 12%), worse yet, a bear market looms.

 TODAY:

   We have been here before, a sharp decline that looks like it can go much further, only to reverse abruptly to the upside as institutions jump in to pick up stocks at lower prices.

    We saw this knee-jerk reaction  Wednesday, and may see a technical rally in early trading today. Nike’s earnings surprise after the close yesterday will add 46 points to the DJIA at the open today (!!).

    However, a  rally today is high risk, fit for sound sleepers who sit close to the exit ready to bail if they don’t like what they see.

    Resistance today is DJIA: 17,014; S&P 500: 1,973; 4,486

See below: Technical Analysis of Each of 30 Dow industrials.

Investor’s first readDaily edge before the open

DJIA: 16,945

S&P 500: 1,965                                

Nasdaq  Comp.:4,466    

Russell 2000: 1,110

     

 

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TECHNICAL ANALYSIS EACH of 30 DOW INDUSTRIALS   (9/25 close)

By technically analyzing each of the 30 Dow industrials then using the Dow “divisor” to convert the data back into the DJIA, I can get a better read on what is happening internally.  I seek three results – a near-term resistance level, and  a primary support and a secondary support.

   As of the 9/25 close:  Resistance 17,141; Primary Support: 16,746; and Secondary Support: 16,454.

   The resistance and support levels listed daily may differ, since they are shorter term.

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INTERNATIONAL TENSIONS:

   Ukraine/Russia – quiet for now, but has the potential to get uglier.

   ISIS/Iraq/Syria – A Euro/Mid-East coalition has formed to counter ISIL. A full-blown bombing mission has been undertaken, which stands to be ongoing. Psychologically, that stands to play well in America, which has been warned of future terrorist activity.  The possibility of a major war resulting must be considered.

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THIS WEEK’s ECONOMIC REPORTS:

    Big week for economic reports.   For detailed analysis of both the U.S. and Foreign economies along with charts, go to www.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:

Existing Home Sales (10:00): Declined1.8 pct in Aug.  Year/year is down5.3 pct.

TUESDAY:

ICSC Goldman Store Sales: Up 0.1 pct. from prior week.  Year/year up 4.1 pct.

FHFA House Price Ix (9:00): July up 0.1 pct. vs. increase of 0.3 pct. June

PMI Mfg. Ix. (9:45): September“flash” 57.9 unchanged from final August

Richmond Fed Mfg. Ix. (10:00):   September index 14 vs. 12 August

State Street Investor Confidence Ix (10:00):

WEDNESDAY:

MBA Mtge Purchase/Refi Ix.(7:00): Purchases down 0.3 pct. in Sept 19 week; Year/year down 16 pct.  Refi’s down 7 pct.

New Home Sales (10:00): Aug sales surged 18.0% to a 504,000 annual rate. Data reported yesterday was for July.

THURSDAY:

JoblessClaims(8:30): Rose 12,000 to 293,000 in Sept. 20 week

Durable Goods (8:30): Down 18.2pct. in Aug.; Ex-Trans+0.7pct.

PMI Svcs flash Ix. (9:45): Sept. “flash” index 58.5 vs Aug 59.5

Kansas City Fed Mfg Ix (11:00): Sept. index 6 vs, Aug. index 3

FRIDAY:

GDP (8:30): Q2 revised estimate  +4.6%

Corporate Profits (8:30):

Consumer Sentiment (9:55):

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RECENT POSTS:

Sept. 8    DJIA  17,173  Bullish Storm Surge Imminent ?

Sept. 9    DJIA  17,111  Bulls to be Tested Today

Sept. 10  DJIA  17,013  Stock Market Back on the “Edge”

Sept, 11  DJIA  17,068  Last Chance for Bulls to Avoid Crunch

Sept. 12  DJIA  17,049  The Fed, Elections, Geopolitics Stymie Bulls

Sept. 15  DJIA  16,987  A Brief Yellen Rally This Week ?

Sept. 16  DJIA  17,031  Street Keying on Yellen’s Wednesday Comments

Sept. 17  DJIA  17,131  Yellen Rally Risky – Raise Some Cash

Sept. 18  DJIA  17,156  Will BIG Money Sell Into Strength ?

Sept. 19  DJIA  17,265  Alibaba Frenzy – a Sell Signal ?

Sept. 22  DJIA  17,279  Another Test for the Bulls

Sept. 23  DJIA  17,172  Rally Now Would Be Risky

Sept, 24  DJIA  17,055  Critical Crossroads for Money Managers

Sept. 25  DJIA  17,210  Back to Tug of War  - Bulls vs. Bears

*Stock Trader’s Almanac

A Game-On Analysis,  LLC publication

George  Brooks

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

Brooks007read@aol.com

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.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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