BEST SIX MONTHS AHEAD ?
November 1 kicks off the “Best Six Months for Owning Stocks,”* (Nov. 1 to May 1). This pattern, discovered and fully documented by the Stock Trader’s Almanac, illustrates how consistently this six month period has outperformed the May 1 to November 1 period.
However, this year will be a special challenge, since the S&P 500 is up 24% from Nov 1, 2012. In the interim between May 1 and today, the S&P is up 10%. Since May, there were three corrections, a May – June 7.5% correction and two 4.8% corrections in September and October. Since October 4, the S&P 500 is ahead 6.7%.
The “bad-is-good” folks got a jolt yesterday at 9:45 a.m. when the Chicago Purchasing Managers Index (PMI) for October came in at 65.9, up sharply from 55.7.
Who wants good news when it ensures the Fed won’t taper anytime soon ?
Two days ago, I warned readers not to get too comfy with the Street’s forecast of a March taper. The FOMC did not have reliable economic data for its meeting this week, due to distortions caused by the government shutdown and near default.
But when it gets a better handle on the underlying strength of the economic recovery, it may decide it is safe to start tapering out of QE, a bit at a time, starting December or January.
The Street is having difficulty cutting the cord. It would opt for a so-so economic recovery over a strong one, because it feels more secure with the Fed pumping money into the system.
TECHNICAL ANALYSIS of EACH of the 30 DOW INDUSTRIALS
On October 20, I did a technical analysis of each of the 30 Dow industrials seeking three results. One, was a reasonable intermediate-term high, the other two were a reasonable support level and a level that reflects the risk of a nasty correction. I totaled the numbers for each column and divided by the Dow industrials “divisor” to get a projected level for the three. Conclusion: By this calculation, the intermediate-term potential for the DJIA was 15,843 with support at 15,200, and support for a nasty correction at 14,631. The DJIA got within 122 points of my projected intermediate-term high of 5,843 on Wednesday before the market turned down.
TODAY: The DJIA will encounter r4esistance at 15,608 (S&P 500: 1,768).
Support is DJIA 15,485 (S&P 500: 1,752).
Investor’s first read– an edge before the open
S&P 500: 1,756
Russell 2000: 1,100
Friday, Nov. 1, 2013 (9:15 a.m.)
STOCKS OF GENERAL INTEREST: I am considering the elimination of this section and offering it in a separate publication on a subscription basis.
I would be able to cover more companies, and would not be constrained by a pre-market deadline. Comments welcome: [email protected]. Include opinion about how you think I could even improve commentary bearing in mind these are NOT buy/sell comments.
The following are based on technical analysis only and are not to be taken as buy or sell recommendations, but as 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. Technical analysis is based on one’s interpretation of the impact buying and selling have on the price of a stock and is therefore not an exact science. News and events can change an interpretation instantly.
Apple (AAPL: $522.70) Positive.
Remains in consolidation. Must break up through $528 to give it a shot at $540 and above. Odds favor a slip to $514 – $518 first..
Facebook (FB: $50.20) Positive
Whoa ! That was a monster of a reversal after an early sell off. Resistance is now $52 and support is $49.15. It will have its work cut out for it to chew through resistance between $52 and $54, but someone likes it !
IBM (IBM: $179.21) Negative, and it only has to work on its base a bit longer to turn positive.
No change: IBM is in the process of developing a turning pattern which will ensure investors further downside is limited. It has run into resistance at$182 and is now probing the downside for a support level where it should see buying above $178.
Pulte Homes (PHM: $17.65) Positive
Investors got the earnings report they were looking for last week pushing PHM across $18.Any chance PHM could move higher was dashed Wednesday by the mid-afternoon plunge in the market. Today: Support changes to $16.95 Support is now $17.90, resistance to $17.76.
First Solar (FSLR:$50.30) Positive
Got stopped in its tracks last Friday at $54.70 but as expected, found some buyers at $50. Earnings were reported last night and were a blowout. As noted yesterday, stock has a shot at $58 near-term.
Target (TGT: $64.79) Now positive but with a limited short-term upside.
Yesterday’s drop didn’t damage TGT’s basing formation, but does indicate this stock still has sellers. Overall market weakness didn’t help. Should find some buying a smidge under $64.40. Some resistance at $64.95.
Hewlett-Packard (HPQ: $24.37) Positive. Still can get to $26, but needs a one-day reversal ASAP or a slip to Support $24.10, then some basing to support a rebound.. Market decline didn’t help.
EBAY (EBAY: $52.71) Neutral but struggling
Support now at 52.30, EBAY must break $53.50 to turn positive and even then I am uneasy about the stock.
Amazon (AMZN: $364.03) Positive
In an upbeat market, AMZN could move across $375. Raymond James’ Aaron Kessler’s raised his rating to Strong Buy from Market Perform with a price target of $446.
I do not own, nor am I short: AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
Heavy slate of reports this week, however accuracy is suspect due to the shutdown.
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com
Industrial Production (9:15) Sept. +0.6 pct. vs forecast +0.4 pct.
Pending Home Sales(10:00) Sept. down 5.6%, lowest in nine months.
Dallas Fed. Mfg. Ix.(10:30) Oct. index -3.6 down from 12.8.
FOMC Meeting began
ICSC Goldman Store Sales (7:45) Down 0.4 pct. for week ended 10/21
Producer Price Ix.: Sept. down 0.1 pct. / core was up 0.1 pct.
Retail Sales (8:30) Proj.: Sept.: Sept was – 0.1 pct. vs. +0.2 pct Aug.
S&P Case-Shiller Home Price Ix. (9:00) 20 cty HPI +0.9 pct Aug./ +12.8 pct. y/y
Business Inventories (10:00) Proj.: Aug.: +0.3 pct.
Consumer Confidence(10:00) Oct. index dropped to 71.2 from 80.2
State Street Investor Confidence Ix.(10:00) Oct. index dropped to 95.7 from 101.3 in Sept. as result of shutdown/default risk.
ADP Employment Rpt(8:15) Oct.: 130,000 vs. revisd 145,000 Sept.
Consumer Price Ix.(8:30).:Sept.: +0.2 pct. vs. +0.1pct. Aug. Year/year +1.2 pct.
FOMC Meeting announcement (2:00) No Bernanke press conf. planned
Jobless Claims (8:30) :For 10/26: 339,000
Chicago PMI (9:45) Oct. surged to 65.7 from 55.7 Sept.
Motor Vehicles Sales Proj.:Oct.domestic:11.9 mill-unit rate (total: 15.4 mil.-units)
Fed’s Bullard speaks(8:00)
PMI Mfg Ix.(8:58) Proj.: No data available
ISM Mfg. Ix.(10:00) Proj.:Oct.: ix.: 55.0 vs. 56.2
Fed’s Kocherlakota speaks(11:15)
RECENT POSTS – 2013
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” ?
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 ?”
Oct 23 DJIA 15,467 “Q3 Earnings – Only Worry In Town ?”
Oct 24 DJIA 15,413 “No Fed Taper in Sight ? Don’t Bet on It.”
Oct 25 DJIA 15,509 “Best Six Months for Owning Stocks”
Oct 28 DJIA 15,570 “Do I Detect Speculative “Fever “ ? If So, What Can
Oct 29 DJIA 15,568 “ When Will the Small Investor Plunge ?”
Oct 30 DJIA 15,680 “Don’t Rule Out Fed Taper by Year-End”
Oct 31 DJIA 15,618 “Easy Does It ! Market Nervous, Needs Breather”
“Investor’s first read – an edge before the open”
*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
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.