Actionable insights straight to your inbox

Equities logo

Rally Now Would Be Risky

  Tuesday,  September  23 , 2014     9:13 a.m.  BEFORE the OPEN


TuesdaySeptember  23 , 2014     9:13 a.m.  BEFORE the OPEN


Daily:Boiling down fundamental, technical, economic,

monetary, fiscal, psychological, and seasonal data into a quick read.


   Alibaba (BABA: $89.89) closed down $4.00 yesterday, after hitting a post-IPO high of $99.70 Friday, suggesting it was overpriced, or maybe just that  the hot money planned an early exit, because it suspects all the hoopla accompanying it was a “signal” that  the Street  has become  indifferent to “risk.”

   With two exceptions (February and July/August), corrections have been followed by rebounds, conditioning the Street to expect that pattern to persist, so long as the Fed leads the Street to believe interest rates will rise later rather than sooner.

    This is the kind of environment that can catch investors off guard.

    Investors become conditioned to buy after a minor correction of 2% – 3% or so only to discover new negatives have surfaced drive stock prices lower, and the next thing you know the market is off 6%……8%…..12% !

    There is enough of a chance this will happen, to take precautions.

   Is this just another setback that will be followed by a rebound ?

   That question should be answered shortly.  Buyers have been quick to jump in on minor corrections in the past, if they fail to do so aggressively now, it would indicate a change in the market’s MO, and that would be a short-term , though potentially painful, negative.

   The S&P 500, Nasdaq Composite, and Russell 2000 took bigger hits yesterday than the DJIA.  My scan of the charts of each of the 30 Dow industrials turned up 22 negative patterns, 4 positive and 4 neutral. This scan is preliminary and will require more time to gain validity.  Even so, its preliminary serves as a caution sign.   

    A cash reserve is warranted any time several of a long list of warning signs appear. It defends against a loss and arms investors with buying power to take advantage of lower prices if a correction develops.


Expect a mixed-to-down open.  If trading is quiet during the first half hour, expect an attempt to rally.  Otherwise, expect the market to probe lower in search of buyers.

Resistance todayis DJIA 17, 238; S&P 500: 2,003; Nasdaq Comp.: 4,547.

Support today is DJIA 17,107; S&P 500: 1.987; Nasdaq Comp.: 4,503

Investor’sfirst readDaily edge before the open

DJIA: 17,172

S&P 500: 1,994              

Nasdaq  Comp.:4,527    

Russell 2000: 1,129



THE FED: No  more  Yellen press conferences until Dec. 17

The Street wanted clarification on the Fed’s interpretation of interest rates remaining low for a “considerable time,” a term used since last March. They got it Last Wednesday when Fed Chief Janet Yellen emphasized that rates are unlikely to rise quickly as the economy continues to improve, saying, “Even after employment and inflation are near mandate-consistent levels, economic conditions may for some time warrant keeping the target federal funds rate below levels the committee views as normal in the longer run.”

   The Fed projects a rise in the Federal Funds rate to 1.375 by the end of 2015




   Ukraine/Russia – quiet for now, but has the potential to get uglier.

   ISIS/Iraq/Syria – A Euro/Mid-East coalition is forming to counter ISIL’s territory and influence quest.

    This can get uglier than ugly where it is now. The possibility of a major war resulting must be considered.



    Big week for economic reports.   For detailed analysis of both the U.S. and Foreign economies along with charts, go 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.”


Existing Home Sales (10:00): Declined1.8 pct in Aug.  Year/year is down5.3 pct.


ICSC Goldman Store Sales: Up 0.1 pct. from prior week.  Year/year up 4.1 pct.

FHFA House Price Ix (9:00):

PMI Mfg. Ix. (9:45):

Richmond Fed Mfg. Ix. (10:00):

State Street Investor Confidence Ix (10:00):


MBA Mtge Purchase/Refi Ix.(7:00):

New Home Sales (10:00):



Durable Goods (8:30):

PMI Svcs flash Ix. (9:45):

Kansas City Fed Mfg Ix (11:00)


GDP (8:30):

Corporate Profits (8:30):

Consumer Sentiment (9:55):



Sept. 8    DJIA  17,173  Bullish Storm Surge Imminent ?

Sept. 9    DJIA  17,111  Bulls to be Tested Today

Sept. 10  DJIA  17,013  Stock Market Back on the “Edge”

Sept, 11  DJIA  17,068  Last Chance for Bulls to Avoid Crunch

Sept. 12  DJIA  17,049  The Fed, Elections, Geopolitics Stymie Bulls

Sept. 15  DJIA  16,987  A Brief Yellen Rally This Week ?

Sept. 16  DJIA  17,031  Street Keying on Yellen’s Wednesday Comments

Sept. 17  DJIA  17,131  Yellen Rally Risky – Raise Some Cash

Sept. 18  DJIA  17,156  Will BIG Money Sell Into Strength ?

Sept. 19  DJIA  17,265  Alibaba Frenzy – a Sell Signal ?

Sept. 22  DJIA  17,279  Another Test for the Bulls

*Stock Trader’s Almanac

A Game-On Analysis,  LLC publication

George  Brooks

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

[email protected]

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.
















Why distillate crack spreads will likely experience more volatility.