Near-Term Tipping Point for Stock Prices

George Brooks |

FridayJune 27, 2014 9:16 a.m. BEFORE the OPEN

    Two days in a row, the major market averages have closed at the highs for the day, defying nervous sellers an upper hand.

    The bulls have held their ground, but will have their work cut out for them to drive stock prices significantly higher at this time.

    Aside from an ugly Q1 GDP report Wednesday, the economic numbers came in reasonably impressive this week (see below). While St. Louis Fed’s James Bullard warned that interest rates may rise as early as Q1 of 2015, he also projected a 3% growth rate for the GDP for the remainder of 2014, essentially dismissing any dire message sent by the Q1 report.

    As a result, the Street is reluctant to buy or sell aggressively. It’s as if it would like to sit back and pick off selected issues of opportunity and not have to reach to buy them. Then too, it is not pressured to sell UNLESS OTHER INSTITUTIONS BEGIN SELLING.

TODAY:

    This is a standoff between buyers and sellers. As I see it, odds favor a trading range not yet defined, but one that can be exploited by timers for quick trades, as well as longer term investors seeking to accumulate positions on pullbacks.

    There is enough bearish sentiment around to strike some optimism for the upside or at least temper any downside momentum.

    Short interest in the ETF, Industrial Select Sector SPDR Fund (XLI) has approached a level last seen in 2012 (+64% year-to-date) according to a Bloomberg survey.

    Minor support today DJIA: 16,769; S&P 500: 1,948; Nasdaq Comp.: 4,358

    Minor resistance today DJIA: 16,880;  S&P 500: 1,960; Nasdaq Comp.: 4,386

    Breaking those resistance levels, resistance rises to DJIA: 16,918; S&P 500:1,963; Nasdaq Comp.: 4,394.

Investor’s first readDaily edge before the open

DJIA:  16,846                                   

S&P 500: 1,957

Nasdaq  Comp.:4,379

Russell 2000:   1,180

 >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>       

    Occasionally, I am asked why I do not refer to a lot of technical indicators. Well, I do monitor ones that have proven to be reliable.

    In fact, I have written about most of these indicators long before they were well followed. A lot are redundant, a lot are BS, an attempt to quantify what is rarely quantifiable at key junctures.

    What I want to accomplish here is to boil that data down into a quick read prior to the open. 

    Much of all this is common sense applied to years in the trenches in good and bad markets. A lot is simply judgment.

    Buying low and selling high is complicated by human emotions – fear to step in at bargain prices when nobody else is willing to buy and to sell when everyone else is buying and making easy money.

         

EUROPE:

    The European Central Bank’s cut of its benchmark interest rate and announcement to employ additional measures to stimulate European economies  stands to help the U.S. economy, as well. It did little to boost stock markets abroad which are trading at six-year highs, suggesting the move was already discounted. Even so, let’s consider it a  positive.

 

TECHNICAL ANALYSIS of 30 DOW JONES INDUSTRIALS

(UPDATED ANALYSIS:  June 20)

    At key junctures, I technically analyze each of the 30 Dow industrials seeking a reasonable near-term support and a more extreme support level, 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.

    As of the close June 20, the near-term upside for the DJIA is 17,117.  Reasonable support is 16,811, more extreme support is 16,718

    Note: My daily support/resistance levels are more short-term oriented.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

THIS WEEK’s ECONOMIC REPORTS:

    Look for a very heavy schedule of releases on the economy this week, especially Monday and Tuesday for the housing industry.

      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:

Chicago Fed Nat’l Activity Ix.(8:30): May up to 0.20 from Apr. minus 0.32

PMI Mfg Flash Ix. (9:45): Markit flash index  for June  up to 57.5 from 56.4 (final May). New orders 61.7 vs. 58.8

Existing Home Sales (10:00): Up 4.9 pct. May vs. gain of 1.5 pct. Apr./ Yea/year minus 5.0 pct vs. minus 6.8 pct.

TUESDAY:

ICSC GoldmanStore Sales (7:45): Up 2.0 pct. in 6/21 week vs +0.4 pct. week ago. Year/year now +4.1 pct.  vs +3.1 a year ago

FHFA HousePrice Ix. (9:00): Unchanged in April after a 0.7 pct. gain in Mar..

S&P Case Shiller HPI (9:00)): Up 0.2 pct. Apr. vs. gain of 1.2 pct. Mar..

New Home Sales (10:00): Surged 18.6 pct. in May  to an annual rate of 504 million units

Consumer Confidence (10:00): June index rose to 85.2 from 82.2 in May (revised).

Richmond Fed Mfg.(10:00): May index dropped to 3 from 7, but new orders up to 4 from 3.

WEDNESDAY:

MBA Purchase Apps (7:00): Both apps and refi’s slipped 1.0 pct in the June 20 week following sharp drops the week before.

Durable Goods Orders (8:30): Down 1.0 pct. in May vs. +0.4 pct. in Apr./ Ex-transport  may was +0.6 pct. vs. -0.8 pct..

GDP (8:30): Final read for Q1 was down 2.9 pct. vs. the prior prelim est. of down 1.0 pct.

Corporate Profits (8:30): Q1  were $1.907 trillion vs. $1.905 trillion in Q4 or +0.5% (ann. Rate) vs. a 7.9% gain (ann. Rate) Q4.  Year/year were up 6.8% vs. 6.0% in prior quarter.

PMI Services Flash (9:45): Markit’s flash Index is up 2.8 points to 61.2 from May’s flash reading and up 3.1 points from May’s final reading.  The “flash” reading is Based on 85% of the standard monthly reading and is released about a week before the final reading FYI ! These are post-winter bounce back  are strong readings, though

THURSDAY:

Jobless Claims (8:30):Down 2,000 to 312,000 for 6/18 week.

Personal Income/Outlays (8:30): Personal Income up 0.4 pct./ Personal Expenditures up 0.2 pct.

Kansas City Fed. Mfg. Ix.(11:00): June index was 6, down from 10 in May and 7 in Apr..

FRIDAY:

Consumer Sentiment (9:55):

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

RECENT POSTS:

June 12  DJIA   16,843  Sideways, 3-Month Trading Range Beginning ?

June 13  DJIA   16,734 Iraq Crisis to Create Buying Opportunity

June 16  DJIA   16,775 Uncertainty – A Menace to Stock Prices Near-Term

June 17  DJIA   16,781 Decision Day for Stock Prices – Near-Term

June 18  DJIA   16,808 Market Awaits a Fed QE Exit Strategy

June 19  DJIA   16,906 Wall Street Needs a Dose of Reality 

June 20  DJIA   16,921 Spike Up Likely, No Room for Rally Failure

June 23  DJIA   16,947 Spike, Correction – Opportunity

June 24  DJIA   16,937 Market to React to Week’s Economic Reports

June 25  DJIA   16,818 Major Challenge for Bulls

June 26  DJIA   16,867 Again – Bulls Challenged

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 investment advice or 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

Companies

Symbol Name Price Change % Volume
CPBP Capac Bancorp Inc (Mi) n/a n/a n/a 0

Comments

Emerging Growth

Nano One Materials Corp.

Nano One Materials Corp is a technology company. The Company manufactures storage materials for lithium ion batteries.

Private Markets

Cloudera

Cloudera offers enterprises a new data platform built on the Apache Hadoop open-source software package. Hadoop is a data-management platform that can consolidate data in a single repository for comprehensive…

Cross Campus

With over 500 members and operating 80,000 square feet by summer 2016, Cross Campus is one of the country’s top ten shared, collaborative office or "coworking" operators in the US.…