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No Quick to Market’s Negatives – DJIA: 14,250?

As the fall approaches, we have a nasty combination of uncertainties shaping up – Syria,  Fed taper, debt ceiling brinkmanship, and speed bumps in our economic recovery.   Any one,

As the fall approaches, we have a nasty combination of uncertainties shaping up – Syria,  Fed taper, debt ceiling brinkmanship, and speed bumps in our economic recovery.

  Any one, or more of those negatives could hammer stock prices between now and late October, JUST IN TIME FOR THE BEGINNING OF THE “BEST SIX MONTHS FOR OWNING STOCKS”*

   Get ready now, be sure you have a cash reserve to take advantage of lower prices. 

   Crises  produce opportunities, but they can be hard to exploit.

For one,  confusion reigns at extreme bottoms when so many stocks are down making  choices difficult.  Hesitation to act can cause  an investor to miss the lowest prices.  Then too, conditions are so dire at these junctures, investors are simply too paralyzed to act.

   It helps to screen the stocks you are sure you want to buy well in advance, then  start taking a position piece by piece.  Taking a partial position eases the decision process and reduces risk.

   All this assumes there will be a buying opportunity in the fall, most likely October or November. Odds of it happening are strong enough to give this serious consideration.

   Even without the Syrian crisis, the market was struggling yesterday. Durable Goods for July dropped more than expected and the economy in Texas is flat per the Dallas Fed Manufacturing report released yesterday.

   I am disturbed by the slump in retail stocks (see Target below).  This could be  a blip where the consumer needs a breather, but it could raise the odds the Fed won’t taper in September.

  A delay in taper would  trigger a brief but sharp rally, followed by a decline as the Street  begins to worry more about the economy than about its Fed-security blanket.

 TODAY:  Big drop at the open with DJIA off some 186 points before 10 o’clock. To the 14,760 area (S&P 500: 1,633).

   The uncertainties  troubling the Street are not the kind that can be eliminated near-term, so there is little to temper the decline in stock prices.

   I still feel DJIA 14,250 (S&P 500:1,542) is likely by late October. The DJIA has declined almost twice as much as the S&P from  its Aug. 2 high, which accounts for the difference in my projection of their decline from here.

Investor’s first readan edge before the open

DJIA:  14,946.41

S&P 500: 1,656.78

Nasdaq  Comp.: 3,657.57

Russell 2000:  1,038.47

Tuesday, August 27, 2013     (9:10 a.m.)


The following are observations based solely on technical analysis and don’t give consideration to fundamentals or changes in brokerage ratings which can  have an immediate impact on stocks, justified or not.  The idea here is to give readers insight into the likely trends and turns in the stock’s price, short-and long-term.

   I picked up on AAPL and FB last year when they were in a tailspin, and  picked up on IBM, Pulte, First Solar, Target, and Hewlett-Packard recently for the same reason. These are not  buy or sell recommendations, and are not stocks I have recommended.

I will primarily focus on quality stocks that have had a decline and seek to assist readers in targeting points where the stock will find temporary support levels and hopefully the final support level from which the stock can turn around.

   But I will also track stocks in an uptrend

   Again, these are purely technical assessments without consideration for fundamentals.

  Apple(AAPL: $502.97  ) 

Note: Targeted the Turn around  Apr. and Jun. 2013 (double bottom). This is follow up.

Pattern: Positive, consolidating recent up move.

Resistance: $509

Support is $500. Rally fail yesterday after nice run to $510 confirms AAPL in consolidation, brief slip to $490 possible, even $486 – normal give and take after big move.

  Facebook (FB – $ 41.34)

Note: Targeted the  turnaround Sept. 2012, this is  the follow up.

Pattern: Positive – Broke out of consolidation on increased volume  Friday and followed through with another pop yesterday

Resistance:   new tutf – $43.50 – $46

Support:  Breakout raises support to $41.25

  IBM ($ 184.74 )  No change from Friday

Note: Started coverage  Aug. 7, 2013 after big plunge in stock

Pattern: Negative

Resistance:  $185.75

Support:  $184.25 won’t hold – look for break below $180, but  after attempt to hold at $180.75.    Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years.  Unless the fundamentals are horrendous  it is due for institutional buying, most likely in this area and possibly at or a smidge below $180.

Right now, there are sellers that must be taken out.

Each point up or down impacts the DJIA by about 13 points.

  PulteGroup (PHM- $ 16.15)

Note: Started coverage Aug. 12, 2013

Pattern: Positive, but needs test of  recent low ($14.23)  needs to develop in coming weeks to cement  upturn. The Street is on edge about how much the rise in mortgage rates will impact the homebuilding and housing industry. Common sense say it will have a temporary impact, but rates are still low, house prices rising and inventories down. If people want to buy a house, they had better not tarry long.

Resistance: $16.38 Looks like a seller there

Support: $15.80

First Solar (FSLR:$38.78 )

Note: Started coverage: Aug.: 22

Pattern: Negative, ran into sellers at $40, again at $39.  Big gap between $46 and $42 will be hard to work through.  Yesterday’s action hurt  chances for near-term rally.


Support: Rises to $38.40.  Stock has had some nice buying in last three days. Odds favor a sideways basing action between $37 and $40 with some support at $38.

Target (TGT:64.13 )   A warning economy is slowing ?

Note: Started coverage Aug: 22:

Pattern: Negative

Resistance: $64.35

Support: $64.12.   Has had a number of spikes in volume in three days indicating institutions are dumping but suggesting SOMEONE is buying.   Market  action last 3 days was ugly ! Stock needs big buyer or it is headed for $61 – $62.

Hewlett-Packard (HPQ: 22.27)

Note: Started coverage Aug. 23

Pattern: Negative, probing for comfort level

Resistance: $22.50. 

Support: $22.45 but untested. Penetration raise chances of $19.85. Yesterday’s rally failure raises odds of a downside breakout.

 I do not own, nor am I short  AAPL, FB, IBM, PHM, FSLR ,TGT, or HPQ


Heavy schedule this week, also speeches by Federal Reserve  officials


   For a detailed account of past and current economic reports, including charts go to: –


Durable Goods (8:30)  Down 7.8 pct vs. projection for a 4.0 pct decline, Ex transportation was a drop of 0.6 pct.

Dallas Fed Mfg (10:30)   August index dropped to 7.3 from 11.4.  New orders were 5.4 vs 10.8.


ICSC Goldman Store Sales (7:45) Proj.:  none

S&P Case-Shiller Home Prices (9:00) Proj.:  June +1.0 pct m/m,    +12.2 pct. y/y

Consumer Confidence (10:00) Proj.: Proj.:  Aug. index 78.0

Richmond Fed Mfg. Ix. (10:00) Proj.:  Aug. index  improved to zero vs, Jul. minus 11


Pending Home Sales (10:00) Proj.:   Jul. -1.0 pct.


Q2 GDP (8:30) Proj.:  +2.2 pct. at annual rate. Comparisons affected by annual revision

Jobless Claims (8:30) Proj.:  330,000 for week ended 8/24 vs. 336,000 for prior week.

Corporate Profits (8:30)   No proj.

Bloomberg Consumer Comfort Ix. (9:45)  No proj.

Fed’s Jeffrey Lacker speaks (2:00)

Fed Balance Sheet (4:30) Proj.:

Fed’s James Bullard speaks (7:45 p.m.


Personal Income/Outlays (8:30) Proj.:  Jul. PI +0.2 pct., Expenditures +0.3 pct

Fed’s James Bullard speaks 9:00) 

Chicago PMI (9:45) Proj.:  Aug. index 53.0  vs. 52.3 Jul.

Consumer Sentiment (9:55) Proj.:  Aug. index   80.0


Aug 15 DJIA 15,337   “October Buying Opportunity at Much Lower Levels”

Aug 16  DJIA 15,112  “Fed Pressed for Clarification – Rallies Suspect”

Aug 19  DJIA 15,081  “Will Fed Intervene to Stop the Carnage ?”

Aug 20  DJIA 15,010  “Rally Ahead of Wednesday’s FOMC Minutes”

Aug 21  DJIA 15,002  “No September Taper = Bad For Stock Market”

Aug 22  DJIA 14,897  “Street’s Angst Not About First Taper, but……”

Aug 23  DJIA 14,963  “Big Day: Rebound or Rally Failure ?”

Aug 26, DJIA  15,010  “Fed Policy Change – Big Impact on Stock Market ?”

*Stock Trader’s Almanac – New edition due shortly

  George  Brooks

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

[email protected]


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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