Q3 Earnings - Only Worry in Town?

George Brooks |

   Investors are understandably relieved that the government shutdown and is over and debt ceiling has been  raised, averting a default on certain U.S. obligations. 

   But it looks like the celebration is over and shorter term investors are locking in profits. Most likely, these are the same prescient investors who bought in advance of the news.   

   Fed taper ?  - hmmm.  Yeah, I remember that.  Wasn’t that the crisis before the shutdown/default scare ?

   Taper will return and all the investors who are loading up on long bonds now had better have an exit strategy when taper stirs the pot again.  The 20-year  Treasury ETF (TLT) has a way to go before returning to the neckline of a massive head & shoulders top, and that will be a time to move closer to the exit before it gets too crowded.

   While a threat of a shutdown and default will return, the likelihood of a repeat performance  is highly unlikely – the BIG money will not stand for this kind of nonsense.

   So, we are now left out in the cold with nothing to worry about except Q3 earnings (ugh).  Expectations are for an increase of 3.8%. I wouldn’t be surprised to see a lower number. 

   With all the speed bumps and  headwinds this economy had encountered, beating year-ago numbers by an impressive amount becomes a real challenge. As a economic recovery stretches out.

   The Street isn’t looking for much this quarter, but the real swing factor is what about Q4 and Q1, 2014 ?

TODAY:

   A 6.8% move in the S&P 500  in just 10 days with the big news already out  cannot be sustained without a consolidation or correction, and it appears that is in the cards now.  The Street is without mercy if a company disappoints.

   Near-term support is DJIA  15,290 (S&P 500: 1,734).  Resistance is DJIA 15,485 (S&P 500: 1,757).

Investor’s first readan edge before the open

DJIA: 15,467

S&P 500: 1,754

Nasdaq  Comp.:3,929

Russell 2000:  1,115

Wednesday, Oct. 23, 2013     (8:56 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: $519.86) Positive.

Big jump Monday was in anticipation of AAPL’s  intro of its newest iPad and tablet iPad Air. AAPL must break through resistance at $522 before attacking resistance between $526 and $528. It could sneak down to $514 first.  Earnings and all the whoopla that goes with it come on Oct 28.  Has a shot at $538 - $544 if market sizzles.

Facebook (FB: $52.67) Positive

Took a day off Monday and then gave ground Tuesday.  Acts nervous about earnings due Oct. 30, however this may just be a correction to its 8-day surge. Support is $52.30.

IBM (IBM: $174.97)  Negative but probing for support.

Got some buying yesterday, but needs a stronger commitment to turn the corner. A break below $172 raises chances of a drop below $170.  I may replace IBM, unless it looks like it will drop into the 160s, in which case I will try to pick a bottom.

Pulte Homes (PHM: $16.53)  Positive

Had a nice move up at the open yesterday but hit a wall at $16.90. But it had some big volume at the close. It’s possible there was a block for sale and someone picked it up. Resistance is now $16.65, support $16.45. I don’t want to see a break below that.  Earnings come on Oct. 24. 

First Solar (FSLR:$54.50)  Positive

Monday’s surge was triggered by a JP Morgan recommendation, and possibly by panicky short covering. Stock can hit May high of $59, and could go higher if shorts are squeezed to the “ouch” point.  Support is $51.90. Should be buyers if it drops to $50.65 - $52. FSLR has had a big run since its Sept. low of $35.59, and I may replace it with another stock.

Target (TGT: $65.12) a weak positive but improving.

No change here. Broke out from a sloppy turning pattern with potential  for $67, but will encounter selling along the way.  Support is $64.50

Hewlett-Packard (HPQ: $24.05)  Positive

Broke out of a tight  “pennant” formation last  Wednesday, with nice follow through Thursday and Friday. Monday was a day of rest, but it ripped on Tuesday closing at $24.05 after reaching $24.39.  Can hit $26 near-term if earnings report Oct. 26 cooperates..  Support is $23.80

EBAY (EBAY: $51.83) Neutral

Still licking its wounds from last Thursday’s earnings report. There is confusion here, small thanks to management’s poor handling of guidance.  Needs big-volume move  above $52.70 to reverse damage done by the report. Support at $51.50 must hold. This was the fifth time down from the $56 - $57 area this year, each of the preceding four times it rebounded sharply.

Amazon (AMZN: $332.54) Positive

Blew out of a tight consolidation pattern  Friday, and took a breather Monday with another surge yesterday.. Support is $327. Has a shot at crossing $340 near-term. Earnings after close today must cooperate.                                 

 

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

 

ECONOMIC REPORTS

 

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

TUESDAY:

Employment Situation (8:30)  Sept. added 148,000 jobs, 128,000 was private sector.

Richmond Fed Mfg. Ix.(10:00) Sept.index dropped to zero from 14 in Aug.

WEDNESDAY:

Import/Export Prices (8:30) PROJ.: Import +0.2 pct,  Export-0.1 pct.

FHFA House Prices (9:00) PROJ.: July y/y +8.8 pct.

THURSDAY:

Jobless Claims (8:30) PROJ.: For 10/19 335,000

PMI Mfg. Ix.(8:58)PROJ.: Oct. index was 52.7

JOLTS(10:00) PROJ.: Job Openings Labor Turnover Aug. 3.725 mil vs 3.689 July

New Home Sales(10:00) PROJ.:  Sept. 420,000-unit annual rate

Kansas City Fed. Mfg. Ix.(11:00) PROJ.”\: Delayed

FRIDAY:

Durable Goods (8:30) PROJ.: Sept.:+2.5 pct, ex-trans. +0.5 pct

Consumer Sentiment (9:55) Oct. Index 74.8 vs. 75.2 mid-month Oct.

RECENT POSTS - 2013

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” ?

Oct 18 DJIA  15,371  “No More Wall of Worry for  Bull Market to Climb ?”

Oct 21 DJIA  15,399   “ Analysis Projects High-Low Range for DJIA”

Oct 22 DJIA 15,392    “Is the Stock Market Vulnerable ?”

  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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Symbol Name Price Change % Volume
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