Friday, October 31, 2014 8:46 a.m. DAILY BEFORE the OPEN
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Daily:Boiling down fundamental, technical, economic,
monetary, fiscal, psychological, and seasonal data into a quick read.
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TODAY:
It’s done ! The Fed has ended QE bond purchases, confident the U.S. economy is gaining sustainable traction.
Hopefully, the Street will now abandon its silly mentality that bad is good. Addicted to QE, the Street has actually welcomed a soft economic reports in recent years, because they suggested the Fed was less likely to end bond purchases until the economy was expanding rapidly.
Immediately after the Fed’s decision Wednesday, investors were uncertain how the market would react the following day,but buying in pre-market trading indicated the reaction would be positive, and the market soared.
Nevertheless, while the DJIA was up 221 points, roughly two-thirds ( 141 points) of that rise was accounted for by Visa (V) which jumped 22 points on better than expected earnings. Visa is the DJIA’s highest priced stock, having ten times the impact on the average as Cisco (CSCO: $24.08)
The S&P 500 and Nasdaq Composite were up less percentagewise.
Even so, the scramble to buy will continue today with a powerful open.
However, the Major market averages are up sharply in just 12 trading days, so some short-term oriented investors are likely to lock-in profits. Since the October lows, the DJIA is up 8.2%, S&P 500: 9.8%, Nasdaq Comp. 8.4%, and Russell 2000: 11.1%.
New all-time highs are within reach today for all but the Russell 2000, which has to post a gain of 5% to get there.
The Street’s angst will now focus on the timing of an interest rate increase. While the economy should be able to accommodate slightly higher interest rates, just the suggestion of an increase sooner that mid2015 would rattle the Street’s sense of security.
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Investor’s first read– Daily edge before the open
DJIA: 17,195
S&P 500: 1,994
Nasdaq Comp.: 4,566
Russell 2000:1,155
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BEST SIX MONTHS for OWNING STOCKS (Nov. 1 to May 1)*
This six months period has consistently outperformed the six months between May 1 and November 1, though both have been interrupted by counter moves.
It is important to consider the possibility that the six month period starting Monday will be an exception. This would not only go counter to the Best Six Months pattern, it would contradict the market’s bullish record for rising in pre-presidential election years.
If the Washington scene has been ugly and dysfunctional over the last four years, it stands to get even more so regardless of who comes out ahead next Tuesday. Just keep an open mind. None of these seasonal tendencies is infallible. These seasonal patterns, and others are presented in great detail in the Stock Trader’s Almanac – “must” reading.
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TECHNICAL ANALYSIS EACH of 30 DOW INDUSTRIALS (10/30 close)
By technically analyzing each of the 30 Dow industrials then using the Dow “divisor” to convert the data back into the DJIA, I can get a better read on what is primary support and a secondary support.
As of the 10/8 close: Resistance 17,532; Primary Support: 17,052; and Secondary Support: 16,930.
NOTE: These calculations generally hold for longer periods of time, but need to be changed when the market is hit with excessive volatility.
The resistance and support levels listed daily may differ, since they are shorter term.
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THIS WEEK’s ECONOMIC REPORTS:
For detailed analysis of both the U.S. and Foreign economies along with charts, go towww.mam.econoday.com. Also included is an explanation of each indicator. If you want to know when the next Employment report or any other key report will be released that info is also there under “event release date.”
MONDAY:
PMI Services –flash (9:45): Oct. index was 57.3 down from 58.9 in Sept.
Pending Home Sales (10:00): Up 0.3 pct. in Sept. vs. down 1.0 pct. Aug.
Dallas Fed Mfg. Ix. (10:30): Index slipped to 10.5 in Oct. from 10.8 in Sept.
TUESDAY:
FOMC Meeting begins
ICSC Goldman Store Sales (7:45): Up 0.3 pct. in 10/24 week; Year/year +2.8 pct.
Durable Goods (8:30): Down 1.3 pct. in Sept. after drop of 18.2 pct. Aug. Ex-Trans +3.3 pct. vs. +8.7 pct. Aug.
S&P Case Shiller Home Price (9:00): Down 0.1 pct. Aug. vs increase of 0.1 pct. Jly.
Consumer Confidence (10:00): Index for Oct. is up to 94.5 from 89.0 in Sept.
Richmond Fed Mfg Ix. (10:00): Index for Oct. is 20 vs. 14 in Sept.
WEDNESDAY:
MBA Purchase Apps (7:45): Apps down 5.0 pct. ; Refi’s down 7.0 pct. in 10/24 week.
FOMC announcement (200): No press conference scheduled (yet)
THURSDAY:
GDP: Q3 (8:30): 3.5% after 4.6% (revised) in Q2
Jobless Claims (8:30): Up 3,000 to 287,000 in 10/24 week
FRIDAY:
Personal Income/Outlays (8:30):
Chicago PMI (9:45):
Consumer Sentiment (9:55):
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RECENT POSTS:
Oct. 16 DJIA 16,141 Rally Today Off Wednesday Lows Risky
Oct. 17 DJIA 16,117 What If the Fed Doesn’t Delay Taper ?
Oct. 20 DJIA 16,380 Critical Week for Bulls
Oct. 21 DJIA 16,399 Market Attacking Key Resistance
Oct. 22 DJIA 16,614 Just a Rally of End of the Correction ?
Oct. 23 DJIA 16,461 BIG Day for Economic Reports
Oct. 24 DJIA 16,677 DJIA – a Portfolio of Small Cap Stocks ?
Oct. 27 DJIA 16,805 Wednesday: Wall Street: Pass, or Fail
Oct. 28 DJIA 16,817 Bullard Bull !!
Oct. 29 DJIA 17,005 Fed Decision – Major Market Reaction ?
Oct. 30 DJIA 16,974 Interest Rate Angst Next
*Stock Trader’s Almanac
George Brooks
A Game-On Analysis, LL
“Investor’s first read – a daily edge before the open”
Investor’s first read, is a Game-On Analysis,LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is 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. References to specific securities should not be construed as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk.
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