Again ! Raise some cash for a better opportunity in October/November.
While the Street views a decision not to begin tapering out of QE this month as a positive, the market had risen more than 5% in nine days ahead of the news, so the “taper rally” I referred to as providing a selling opportunity was blunted.
We could get some delayed reaction buying in here, which would present an opportunity to lighten up on stocks that have had a good run and free up buying power for new leaders as we edge into the “Best time for owning stocks,”* (November 1 to May 1).
Over the next four-to-six weeks the market will have to cope with the debt ceiling debate, Obamacare defunding and the possibility of a government shutdown (unlikely).
On top of that, we get Q3 corporate earnings.
Presently, this spells uncertainty and after a sharp run up in stock prices – risk, at least in certain stocks.
CONCLUSION:
The stock charts and charts of the market averages look good, but over-extended , suggesting the need for a correction sideways, or down. The turn would come out of a sharp spike upward, or a “stall” with the market bumping its head at a resistance level most likely around DJIA 15,780 (S$P 500: 1,741).
Investor’s first read– an edge before the open
DJIA: 15,636
S&P 500: 1,722
Nasdaq Comp. 3,789
Russell 2000: 1,075
Friday, Sept. 20, 2013 (9:16 a.m.)
TECHNICAL OBSERVATION – STOCKS:
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.
NOTE: Expect support and resistance levels to change more frequently under adverse and uncertain conditions like those we are experiencing presently..
WARNING: This market is highly “news sensitive,” with everything at the present negative. Any break for the better in the mid-East, taper, or in the threat of a government shutdown in October will trigger a rally, especially in stocks below, since they have been hammered already.
Resistance/support levelsare “tight” and more easily penetrated than if I gave readers “general” resi/spt levels.
Apple(AAPL: $472.30 )
Note: Bottom was targeted at $385 for the turn around Apr. and Jun. 2013 (double bottom). I continue to follow
Pattern: Now neutral down from bearish.
Resistance: $475
Support: Rises to $466
The Motley Fool investment letter attributes AAPL’s problem to : “Since their introduction, both the iPhone and iPad have been the best products at the best price points….In the last year, the market has shifted. Now Apple’s products appear to be overpriced compared to their rivals and they aren’t necessarily better.” Clearly a case where management has decided to play “prevent defense,” ie. try not to lose a dominant position. You have to play the game that got you there !
Facebook (FB – $45.98)
Note: Bottom was targeted below $18 for a turnaround Sept. 2012. Continue to follow.
Pattern: Positive –
Resistance: $49.90
Support: $44.50
Recent strength attributed to Sun Trust Robinson Humphrey’s increase in price target to $55 from $40. Is now correcting big $26 to $45.62 move that started in July.
IBM ($193.39 )
Note: Started coverage Aug. 7, 2013 after big plunge in stock
Pattern: Positive up from neutral, but improved
Resistance: $194.65 The $194 – $196 area should be tough to penetrate
Support: $192.35 Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years.
PulteGroup (PHM- $17.62 )
Note: Started coverage Aug. 12, 2013
Pattern: Positive but Taper decision could move it sharply one way or another
Resistance: $18.00
Support: $17.30
Big beneficiary of the Fed
First Solar (FSLR: $39.83 )
Note: Started coverage: Aug.: 22, 2013
Pattern: Neutral – basing – improved yesterday but so did others.
Resistance: $40.40
Support: $39.55
Target (TGT: $65.39)
Note: Started coverage Aug: 22, 2013:
Pattern: Needs to stabilize after yesterday’s return to its base from resistance level.
Resistance: $66.60 Good chance of a spike across $66
Support: $65 Nice base forming
Hewlett-Packard (HPQ: $21.31)
Note: Started coverage Aug. 23, 2013
Pattern: Negative –
Resistance: $22.30
Support: $20.60
Sharp drop from $26 created overhead supply (a lid) $19.85 is possible after being dropped from DJIA thus triggering selling from funds indexed to the DJIA.
eBay (eBay: $54.45 )
Note: Started coverage Aug. 28, 2013
Pattern: Positive – on a roll
Resistance: $56 – $57
Support: $ 53.80
Amazon.com (AMZN: $312.06)
Note: Started coverage Aug. 28
Pattern: Bullish , but correcting September up move.
Resistance: $314
Support: Support now $308
I do not own, nor am I short AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
ECONOMIC REPORTS: BIG, BIG Week for reports.
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com
MONDAY:
Empire State Mfg. Ix. (8:30) Sept. Index 6.3 down 2.4 pts
Industrial Production (9:15) +0. pct Aug vs. flat July. Manufacturing up 0.7 pct. vs. drop of 0.4 pct July.
TUESDAY:
FOMC Meeting begins
ICSC-Goldman Store Sales (7:45) Down 1.6 pct. for week ended 9/14
Consumer Price Ix.(8:30) Sept. +0.1 pct. vs. gain of 0.2 pct July
Housing Market Ix.(10:00) Sept. unchanged at 59
WEDNESDAY:
Housing Starts (8:30) August was up 0.9 pct. to 891,000 vs. 0.883 million
units July Permits 0.918 mil. units Aug. down 3.8 pct.
mil. units July
FOMC Meeting Announcement and Forecasts (2:00 pm)
Bernanke press conference (2:30)
THURSDAY:
Jobless Claims (8:30) Rose 15,000 week ended Sept. 14, but distorted by incomplete reports from California and Navada,
Current Account Deficit (8:30) PROJ: Q2 minus $96.7 billion vs, $106 billion
In Q1
Bloomberg Consumer Comfort Ix.(9:45) PROJ: none
Existing Home Sales(10:00) Rose 1.7 pct. in August, plus 13.2 pct. vs year ago.
Philadelphia Fed Svy Ix. (10:00) Index jumped to 22.3 in September vs. 9.3 August.
Leading Indicators (10:00) PROJ: Rose 0.7 pct. in August vs. 0.5 pct July
Fed’s Pianalto speaks (11:30)
FRIDAY:
QUADRUPLE WITCHING FRIDAY !
Fed’s George speaks (12:30)
Fed’s Tarullo speaks (12:40)
Fed’d Bullard speaks (12:55)
Fed’s Kochelakota speaks (1:45)
RECENT POSTS: 2013
Sep 4 DJIA 14,833 “What Must Happen for the Bull to Snort”
Sep 5 DJIA 14,930 “ September Taper – Buying Opportunity ?
Sep 6 DJIA 14,937 “Market Wants to Run – Are You Ready ?”
Sep 9 DJIA 14,,932 “Breakout or Fakeout ? Syria/Fed Taper”
Sep 10 DJIA 15,063 “Easy Does It !
Sep 11, DJIA 15,191 “Taper Center Stage – What to Expect”
Sep 12 DJIA 15,326 “Fed to Delay Taper Next Week ?
Sep 13 DJIA 15, 300 “What’s in Line Next Week – Fed Taper, Larry Summers”
Sep 16 DJIA 15,376 “No Taper ! No Summers ! Selling Opportunity ?
Sep 17 DJIA 15,494 “No Taper= Rally Followed By a Sell off ?
Sep 18 DJIA 15, 529 “Sell the Taper Rally ?”
Sep 19 DJIA 15,676 “Raise Cash for Better Opportunities”
Note: The DJIA may be impacted more with the replacement of Bank of America (BAC), Hewlett Packard (HPQ), and Alcoa by Goldman-Sachs (GS), Visa (V), and Nike (NKE). While the change isn’t effective until the morning of trading Sept. 23, the trading by index funds associated with these changes may distort the averages.
*Stock Trader’s Almanac – 2014 issue just off the press.
George Brooks
“Investor’s first read – an edge before the open”
……………………………………………..
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.
