Thursday, August 7, 2014 9:13 a.m. BEFORE the OPEN
Bulls held the line yesterday as stocks stabilized. We are looking at a probing process where stock prices are seeking a level that discounts known uncertainties and negatives.
The Bulls would like to take advantage of lower prices, but are wary of getting blindsided by new negatives.
I can see volatility extending into September/October.
While the major market averages failed to penetrate yesterday’s resistance levels (DJIA: 16,912, S&P 500: 1,903, Nasdaq Comp.: 4,314), expect another try today.
Odds favor a couple good days.
A rally failure here would raise the risk of another leg down.
Resistance today is: DJIA: 16,506; S&P 500: 1,930; Nasdaq Comp.: 4,386.
Support today is : DJIA: 16,420; S&P 500: 1,917; Nasdaq Comp.: 4,346.
Failure to hold that level would lead to a test of the DJIA 16,370 level; S&P 500: 1911; Nasdaq Comp.: 4,325.
Investor’s first read– Daily edge before the open
S&P 500: 1,920
Russell 2000: 1,125
IS THE ECONOMIC RECOVERY FAILING TO GAIN TRACTION ?
Depends on who you ask. A.Gary Shilling, publisher of “INSIGHT” * challenged government press releases in an August 4, Special Report, “After the Government Report Releases.”
Among the first to warn readers in advance of the Great Recession, Shilling was quick to point out that the July 30, Q2 GDP report of an annualized gain of 4.0% was misleading with 1.66 percentage points attributed to a change in inventories, bringing the growth number down to 2.3%, a rate he feels is not great enough to “spawn meaningful growth in wages and labor income.” Excess inventories that are not worked off by sales penalize future production.
He attributes last week’s plunge in the stock market to the Street’s concern that the economy is not rebounding.
If he is right, the question arises, Will the Fed have to revise its taper schedule ?
We will hear more cautionary comments from the Fed going forward in an attempt to ease an interest rate hike when its reality hits early next year. The Fed does not want speculative fever to run rampant prior to the rate increase.
The Fed’s “easing in” policy is bad news for those who want the feeding frenzy to continue unabated, but good news for investors who opt for a more stable market and an inevitable crunch instead of crash.
Along the same lines, Dallas Fed President, Richard W. Fisher recently indicated the economy was getting significantly closer to “liftoff,” suggesting to me and obviously others, that interest rates may rise sooner than expected. Based on various projections that could be Q1 or early Q1.
TECHNICAL ANALYSIS of 30 DOW JONES INDUSTRIALS
(UPDATED ANALYSIS: AUGUST 5
At key junctures, I technically analyze each of the 30 Dow industrials seeking a reasonable near-term support and a more extreme support leyel, as well as a short-term resistance level. By technically studying the balances of buying and selling in each stock, then converting that data back to the DJIA using the “divisor” (0.1557159) I can get a better reading on the average itself. The DJIA is a price-weighted average and subject to distortion by higher priced issues.
After yesterday’s crunch, Iran my analysis based on the July 31 closeand concluded the near-term upside for the DJIA HAS DROPPED TO 16,765, a reasonable downside from here is 16,206 and more extended downside risk to 15,884.
Note: My daily support/resistance levels are more short-term oriented
THIS WEEK’s ECONOMIC REPORTS:
The economic report schedule is heavy this week with a good balance between housing, service, production and employment
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.”
Gallup U.S. Consumer spending Measure (8:30): July daily spending was $94 vs. $91 in June.
ICSC Goldman Store Sales (7:45): Same store sales were up 0.2 pct. in the June in Aug 2 week vs the prior week. Year/year is at a +4.5 pct. rate.
PMI Services. Ix. (9:45): Index was 60.8 in July vs. 61.0 in June
Factory Orders (10:00): June surged 1.1 pct. after a 0.6 pct. drop in May (rev.)
ISM Non- Mfg Ix. (10:00): July 58.7 vs June 56.0; New orders were 64.9 vs. 61.2 in June.
Global Composite PMI (11:00): July was 55.5 vs. June’s 55.4
MBA Purchase App (7:00): Dropped 1.0 pct. in Aug 1 week, Refis up 4.0 pct.
Int’l Trade (8:30): International trade deficit narrowed in June to $41.5 billion from $44.7 billion in May
Jobless Claims (8:30): Claims dropped 14,000 in the Aug. 2 week to 284,000, lowest since 2006.
Consumer Credit (3:00):
Wholesale Trade (10:00):
July 22 DJIA 17,051 Significance of Yellen’s Warning
July 23 DJIA 17,086 Feeding Frenzy in Low-Priced Stocks Imminent ?
July 24 DJIA 17, 113 Taper’s End Fully Discounted – 2015 Interest Rates Not
July 25 DJIA 17,083 Is Market Action Setting Stage for a Leg Up ?
July 28 DJIA 17,960 Big Week – Economic Reports/Q2 Earnings
July 29 DJIA 16,982 Quite Before the Storm ?
July 30 DJIA 16,912 Market on the Verge of Big Move ?
July 31 DJIA 16,880 Huge Test for Bulls
Aug. 1 DJIA 16,563 False Alarm, or ………
Aug. 4 DJIA 16,493 Trader’s Buy, but Risks are High.
Aug. 5 DJIA 16,569 Bulls “Must” Step In Now, or…….
Aug. 6 DJIA 16,429 Is The Economy Really Rebounding ?
A Game-On Analysis, LLC publication
“Investor’s first read – a daily edge before the open”
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