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 read– an 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”
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.
