No More Wall of Worry for Bull Market to Climb?

George Brooks |

With the angst of default, growing pain of the shutdown, and Fed taper off the table, is there anything left of  the wall of worry for the bull market to climb ?

   Don’t get too comfy.  Bear markets, mini-bears, often develop out of nowhere when least expected, because the investing environment appears to be problem-free when money is so easy to make, the less one knows the easier it is to make it. When the public feels it is safe to get into the market, even borrowing to do so.

   We aren’t there yet.

   That’s a stage of this grand bull market we haven’t seen yet, but in time probably will.

   The market dropped sharply to my support level yesterday (DJIA: 15,245, S&P 500: 1,709), but rebounded sharply to close near my resistance levels (DJIA: 15,465, S&P 500: 1730). Both were set with room to spare, yet both were hit, suggesting volatility favoring the bulls.

    While the market advanced ahead of Congress’ decision to raise the debt ceiling and end the shutdown, more buying is justified now that the two are done deals.

    The market is not without risk, as evidenced  by the 11-point hit IBM took yesterday after reporting disappointing earnings Wednesday  evening.

    Selectivity is advised, and be damn careful of the earnings reports this time around, and revised earnings and guidance going forward.

    Support today looks like DJIA: 15,285 (S&P 500: 1,724)

    Resistance is DJIA: 15,495 (S&P 500: 1,740).

Investor’s first readan edge before the open

DJIA: 15,371

S&P 500:    1,733

Nasdaq  Comp.:  3,863

Russell 2000:  1,102

Friday, Oct. 18, 2013     (9:16 a.m.)

  

 STOCKS OF GENERAL INTEREST:

   The following are based on technical analysis only and  are not to be taken as buy or sell recommendations, but 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.

Apple (AAPL: $504.50) Positive.

Worked through $502 resistance. Given a stable market, AAPL can run to $509 - $510 near-term..  Support  rises to $501.60

Facebook (FB: $52.21) Positive

No change here. Rising out of consolidation phase. Mid 50s likely.  Support rises to $51.65

IBM (IBM: $174.83)  Got crushed by earnings report.  IBM now negative Obviously the report came as a surprise to the Street, the stock had risen  five out of the last six days before the report. IBM is down from a March high of $215.   Yesterday’s “flush” should have cleared the air. Support is $174, resistance $176.65.  While its technical pattern has abruptly turned negative, fundamentalists will be looking closely at a level that represents value.

Pulte Homes (PHM: $16.66)  Positive

Yesterday’s  break out of its 19-day “down channel”  on increased volume has near-term  potential for $17 - $17.60.  Support is $16.25.

First Solar (FSLR:$45.97)  Positive

Nimble traders should love this stock. It swings widely within  a trading day. One of those stocks a trader can stick in a “wild” bid followed by an order the same day a point or two higher. Stock has a shot at $48. Support is $45.65.

Target (TGT: $64.86) Now positive

Broke out from a sloppy turning pattern with potential  for $67.

Hewlett-Packard (HPQ: $23.38)  Positive

Broke out of a tight  “pennant” formation  Wednesday, with nice follow through yesterday, though I would have liked to see heavier volume. Has the potential for a move to $25 - $26.

Support is $23.25

EBAY (EBAY: $51.38) Negative after  disappointing earnings and guidance hammered the stock yesterday. Needs time to consolidate. Yesterday’s early “flush” should have cleared the air.  Resistance is now $51.60. This is the fifth time down from the $56 - $57 area this year, each of the preceding four times it rebounded sharply.As with IBM, it is obvious, the Street was caught by surprise by the report.

Amazon (AMZN: $310.77) Positive

Locked in a tight five-day consolidation between $305 and $310. Break above $310 counts to $316 - $319.

 

I do not own, nor am I short: AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.

 

ECONOMIC REPORTS:  No fewer than eight Federal Reserve officials speak this week during a  light reporting week shaping up. Some reports will be delayed due to shutdown, though Federal Reserve based reports and private sector reports won’t. The economy is not currently center stage, though the deadlock in Washington will hurt the economy and confidence and business decisions going forward.

   For a detailed account of past and current economic reports, including charts go to: mam.econoday.com - www.mam.econoday.com

WEDNESDAY:

THURSDAY:

Fed’s Fisher speaks (7:45)

Housing Starts (8:30) Aug. +0.9 pct. vs a 5.7 pct gain July (revised down)

Jobless Claims (8:30)Distorted due to shutdown 

Industrial Production (9:15)  Delayed due to shutdown

Philly Fed Svy (10:00)  19.8 Oct.   vs  22.3 Sept. .

Fed’s Evans speaks (12:45 p.m.)

Fed’s George speaks (1:45 p.m.)

FRIDAY:

Leading Indicators (10:00)

Fed’s Evans speaks(2:00 p.m)

Fed’s Stein speaks (4:30 p.m.)

 

Sep 30  DJIA   15,258  “Makings of an October Buying Opportunity”

Oct  1   DJIA   15,129  “Now the Scary Part – the Debt Ceiling – Default ?”

Oct  2   DJIA   15,191  “Potential for a Deadline to  be Breached”

Oct  3   DJIA  15,133   “Debt Deal to Miss Oct.17 Deadline – Settle Over the

                                      Weekend – DJIA  Bottoms Oct 18,  12,760 (intraday)”

Oct 4   DJIA   14,996   “Weekend Proposal on Shutdown – a Head Fake ?”

Oct 7   DJIA   14, 936  “DJIA 12,760  if Oct. 17 Deadline Missed”

Oct 8   DJIA   14,936   “Don’t Chase This Week’s Rally

Oct 9   DJIA   14,776   “Don’t Buy A Debt Ceiling Solution Rally”

Oct 10 DJIA   14,802  “A Very, Very Dangerous Rally”

Oct 11 DJIA   15,126  “News Whipsaw Can Roil Stock Prices in Coming Days”

Oct 14 DJIA   15,237  “Fear of Default Returns – Trader Alert”

Oct 15 DJIA   15,301  “What If We Default ?  What If We Don’t ?

Oct 16 DJIA   15,168  “Market Saying “Deal” – A High Risk Bet ?”

Oct 17 DJIA   15,373   “How Much of the “Deal” has the Market Discounted” ?

  George  Brooks

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

sensiblesleuth@gmail.com

NOTE:  STOCK TRADERS ALMANAC: The new annual Stock Trader’s Almanac  is off the press.  This is a “must,” always has been, if you are a serious  investor, or intend to be a serious investor. Visit stocktradersalmanac.com for details

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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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