NOTE: I have added stocks to a new “technical analysis”alert list (See below)
Let’s get ready for a week of distraction, shopping, visits, driving, flying, parties, liquid lunches, festivities. BUT, if you think for a moment, those stocks you plan to buy sitting there at a juicy price waiting for you to buy, you are in for a rude surprise. Someone else is also going to jump in and run them up 3% -4% before you even notice.
I warned that December is a pain in the butt and this is just one example. STAY FOCUSED !
A lot happened last week, and this letter was one of the few to anticipate it with its headline…..”Taper Today=Sell Off Followed by a Rally.” The DJIA dropped 120 –points minutes after the FOMC announced it first taper out of QE, then rallied 500 points in three days.**
This bull market has climbed a horrendous, back-tilted wall of worry, and just maybe the bulls are now able to peek over the top at what lies ahead.
Clearly our own economy is stable, and even gaining traction. But what about Europe, China, Japan, the BRICS ? What if all of the above begin gaining traction?
The Street has FINALLY graduated to “good is good,” from “good is bad, because it may hasten a Fed taper.”it
I see another spike taking the DJIA across 16,400 (S&P 500) 1,844. The profit-taking is mostly over, and now begins th scramble to load of what is seen as 2014’s winners. The buyers cannot load up without tipping their hand, so charts will help target where the money is flowing.
Janet Yellen’s Senate confirmation vote as Chair of the Federal Reserve has been delayed in face of Republican opposition until January 6. This may be just another chess play or the beginning of a new problem.
Now that the first taper has been announced, . the Fed is expected to wrap up QE in measured steps at a $10 billion clip over the next seven sessions, but would alter its withdrawal if the economy falters.
While taper is a change in Fed policy away from stimulation, the Fed insists it is not tightening, since it plans to hold interest rates down throughout 2014.
Investor’s first read– a daily edge before the open
S&P 500: 1,818
Russell 2000: 1,146
Monday, Dec. 23, 2013
AN WARENESS OF THE POTENTIAL FOR A Q1 CORRECTION.
Best Six Months to own stocks:
Over the years the Stock Trader’s Almanac* has expounded on its significant finding that the stock market performs better between November 1 and May 1 than between May 1 and November 1.
The Almanac’s “Best Six” goes back to 1950. The six months is a snapshot between November and May. Many major market advances often start before November, but the point made here is the period between fall and May is where the action is.
Is this going to be another “BEST six months to own stocks ?
The six months between November 1 and May 1, have consistently outperformed the six months between May 1 and November 1.*
With a 5.7% rise in the DJIA since October 31, the Street is now wondering if the market is off to yet another “Best Six Months.” Out of the last 25 years, Nov.1 to May 1, have produced 19 up-years, 3 flats and 3 downers. The best years averaged gains of 11.8% with the best up 25.6% (1998 – 1999).
THE DANGER: over the last 25 years, there have been 14 corrections ranging between 6% and 16% during this November1 to May1 period. Seven of those started in January, two in December and four in February.
TIMING – OPPORTUNITY STOCKS New addition planned: alert to stocks with emerging technical patterns with potential. In a prolonged downturn, I would alert readers to stocks with vulnerable patterns. All on the drawing board.
The following are based on technical analysis only and are not to be taken as buy or sell recommendations, but as one of many factors that must be considered in the decision process. Comments do not take into consideration earnings reports, or changes in institutional ratings, company guidance. Technical analysis is based on one’s interpretation of the impact buying and selling have on the price of a stock and is therefore not an exact science. News and events can change an interpretation instantly.
Apple (AAPL: $549.02) Positive. (ALERT)
Thank you China ! And yes, institutions have been licking their chops as AAPL drifted lower, until Wednesday when a savvy buyer gobbled up all the shares for sale and closed the stock at its high, a classic one-day reversal. Friday it signaled expectations for better things to come and indeed they did today with pre-market trading uo $18 on news it can sell its iPhone through China Mobile.
Some resistance at $550, probably year-end profit-takers.
Facebook (FB:$55.12) Positive
May have run into some profit-taking Thursday and Friday, nevertheless it was able to close near its high for the day on both days. Support $54.60.
IBM (IBM: $180.02) Positive
Hit a wall Friday. Its double bottom at $172 - $173 is pretty well set but a test is likely with support now $177.80.
Pulte Homes (PHM: $18.62) Positive
The housing industry must now demonstrate it can gain traction.
PHM may be locked in a sideways trading range between $17.80 and $19.80 until housing attracts serious buyers. Friday was upbeat but needs a follow through.
First Solar (FSLR:$55.87) Neutral turning positive
Stock needs a credible institutional research report to assure investors FSLR’s fundamentals are not following China’s track. Spikes of buying volume suggests FSLR may be attracting buyers. Friday’s action disappointing. Could just be year-end stuff. Still doubters, not willing to take a chance on buying or holding. Some support a shade below $55.
Nike (NKE:$77.34) Positive
Thursday’s pullback after Wednesday’s surge was normal. But Q2 earnings triggered selling. Q2 earnings only one cent above Street estimates. We now know the reason for its drop 8 days ago. Obviously someone knew something.
Hewlett-Packard (HPQ:$27.79) Positive.
Still digesting its surge 17 days ago. May need more rest time between $26 - $28 before moving to a new 52-week high ($28.70). Support $27.30.
Polaris Inds. (PII:141.57) Positive
A brief consolidation Thursday, gave way to Friday breakout to new 52-week high on very heavy volume. Support $140.80.
Amazon (AMZN: $402.20) Positive
Broke out to new 52-week high Friday. Support is now $400.90
Pandora Media (P:$28.00) Positive.
Took a brief rest Friday after a sharp move up Thursday. Support $27.70, resistance $29.
NEW ! NEW ! NEW ! - Technical analysis ALERT list
The following is a “Technical” alert list, stocks that have indicated an improved technical pattern. I will not follow up in detail like the stocks above. These are not buys or sells, but simply alerts that their technical pattern is improving. Normal intraday fluctuations can offer a lower price than that listed here.
Warning: An improving technical pattern can be reversed instantly by negative commentary from the Street, broker downgrades, etc. These are “snapshots at a given time. Good timing can target pinpoint lower prices in some cases. Most stocks are technically attractive because they sketched out a positive upbeat pattern. Some will be because they are showing sign of rebounding from a depressed condition.
Align Technologies (ALGN: 57.03) Listed here at $57.03
Gentex (GNTX: $32.64) Listed here at $32.64
Netease (NTES: $74.51) Listed here at $74.51
Spirit Airlines (SAVE: $46.06) Listed here at $46.06)
Valeant Pharm (VRX: $112)Listed here at $112
Dycom (DY: 28.05) Listed here at $28.05
Cognex (CGNX: $36.09)Listed here at $36.09)
Salex Pharm. (SLXP: $87.61) Listed here at $87.61
NOTE: I AM NEITHER LONG OR SHORT ANY OF THE ABOVE STOCKS
For detailed analysis of both the U.S. and Foreign economies along with charts, go towww.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.”
Personal Income/Spending (8:30)
PCE Prices (8:30)
Michigan Consumer Sentiment (9:55)
TUESDAY: Market closes 1 p.m.
Durable Goods (8:30)
FHFA Housing Prices (9:00)
New Home Sales (10:00)
Jobless Claims (8:30)
RECENT POSTS - 2013
Dec 5 DJIA 15,889 “December’s Two Dilemmas – Watch Your Back”
Dec 6 DJIA 15,821 “No Fed Taper=December Rally – Correction Q1 ?
Dec 9 DJIA 16,020 “Investor Angst Intensifies”
Dec 10 DJIA 16,025 “ Two Big Dates Loom – What to Watch”
Dec 11 DJIA 15,973 “Year End Rally ?
Dec 12 DJIA 15,843 “Trading Opportunities Imminent – First a BUY – Then a
Dec 13 DJIA15,739 “Best Six Months Ahead ? Not Without an Ugly Correction in
Dec 16 DJIA January 30 Taper ? If So, Fed Needs to Schedule a Press
Conference – a Tip off”
Dec 17 DJIA 15,755 Fed to Taper January 30 ? It Should, Here’s Why
Dec 19 DJIA 15,875 Taper Today=Sell Off Followed by a rally – No Taper=Rally
Followed by a Sell Off
*Stock Trader’s Almanac;Get it ! This is the most comprehensive compendium of investing savvy between two covers I have ever encountered in my 47 years of writing about the market. Got my first in 1968. There you have it ! I’m an old duff, but I have programmed my computer (brain) with smarts gained from writing about the market in an unbelievably challenging stretch of market activity. I endorse the Almanac – It’s loaded with references, stats, valuable studies, and insight.
“Investor’s first read – an edge before the open”
** Disgusting ! I am taking bows for a great call, one that was entirely contrary to existing expectations. Out of character for me, BUT I must do it. For one it’s the truth, for another, I need to promote myself in order to gain more readers.
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.
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