Thursday, October 16, 2014 8:59 a.m. 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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I still see DJIA 14,666 and S&P 1,686 by October 31.At the rate it is plunging those levels could be hit Friday or Monday.
But………
Fear of deflation is mounting so rapidly, panic is setting in fueled by confusion, as well as the Ebola scare.
Do not be surprised if the Fed steps in to announce an extension of bond purchases, citing economic woes abroad as a reason.
That would reverse the market’s tailspin, triggering a sharp rally fraught with risk for investors paying up for stocks that have already exploded.
Odds are that rally would fail, and the market would renew its downtrend until a comfort level is reached that discounts negatives, including disappointing future earnings.
ISIS and Russia are currently non-events, probably because both are getting hammered by plunging oil prices (contrived ?).
“Deflation” will share headlines along with Ebola in coming weeks. The Street has jousted with inflation for decades, but little is known of deflation.
What turns a 12% -15% correction into a bear market – down 20%-40% ?
New negatives that hit the market when it hits its correction turning point.
There are a lot of candidates for that. It could be any of the above.
We could get a selling climax Friday or first 15 minutes of trading Monday, if panic sets in. Whether that would be a longer term investing opportunity or short-term trading opportunity is unknown today.
However, be on the alert for statements by the Fed about extending bond purchases. That would trigger a sharp rally, if only temporarily.
TODAY:
The market will test yesterday’s lows (DJIA 15,855, S&P 500:1,820, Nasdaq Comp. 4,116. If successful, the market will rebound today and in early trading Tomorrow with resistance starting at DJIA 16,295, S&P 500: 1,880, Nasdaq Comp.: 4,255.
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Investor’s first read– Daily edge before the open
DJIA: 16,141
S&P 500: 1,862
Nasdaq Comp.: 4,218
Russell 2000: 1.072
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BULL MARKET RETRACEMENT:
A One-third retracement of the five and a half year bull market would take the DJIA down to 13,714 (S&P 500: 1,568) and it can get there in face of the right negatives. A one-third retracement of any major move is not out of the question., just not the norm.
Good Q3 earnings and projections for Q4 and 2015 could prevent the plunge I see shaping up. Certain comments by Fed officials about interest rates staying low into late 2015 could delay a crunch, but only temporarily.
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TECHNICAL ANALYSIS EACH of 30 DOW INDUSTRIALS (10/15 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 16,325; Primary Support: 15,722; and Secondary Support: 16,157.
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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INTERNATIONAL TENSIONS:
Ukraine/Russia – quiet for now, but has the potential to get uglier.
ISIS/Iraq/Syria – A Euro/Mid-East coalition has formed to counter ISIL. A full-blown bombing mission has been undertaken, which stands to be ongoing. Psychologically, that stands to play well in America, which has been warned of future terrorist activity. The good possibility of a major war resulting must be considered.
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THIS WEEK’s ECONOMIC REPORTS:
A heavy week for reports on the economy. 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.”
TUESDAY:
NFIB Small Bus. Optimism (7:30): Sept. index was 95.3 vs. 96.1 in Aug.
ICSC Goldman Store Sales (7:45): Down 0.7 pct. in Oct. 11 week : Year/year+3.8 pct.
WEDNESDAY:
MBA Purchase Apps/ Refi’s (7:00) Purchases down 1.0 pct. ; Year/year minus 4.4 pct. Refis up 11 pct Oct 10 week.
PPI-FD (8:30): Up 0.1 pct Sept. vs. unchanged Aug.
Retail Sales (8:30): Down 0.3 pct.. Sept vs. gain of 0.6 pct. Aug.
Empire State Mfg. (8:30): Down 6.17 points Sept. from 5-yr high 27.54
THURSDAY:
Jobless Claims (8:30): Down 23,000 to 264,000 in Oct. 11 week, lowest since year 2000.
Industrial Production (9:15):
Philadelphia Fed Svy(10:00):
Housing Mkt Ix. (10:00):
FRIDAY:
Housing Starts (8:30):
Consumer Sentiment (9:55):
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RECENT POSTS:
Sept. 30 DJIA 17,071 Big Move in Market for Winner of Tug of War
Oct. 1 DJIA 17,042 October – Risk or Opportunity ?
Oct. 2 DJIA 16,804 October Opportunity But Angst in Interim
Oct. 3 DJIA 16,801 Rally Today Must Hold
Oct. 6 DJIA 17,009 Best Six Months for Owning Stocks Looms
Oct. 7 DJIA 16,991 Volatility: Q3 earnings, ISIS, the Fed, Elections
Oct. 8 DJIA 16,719 Extreme Volatility = Risk, but Opportunity
Oct. 9 DJIA 16,994 Bad News is Good News ? Pure Insanity !
Oct. 10 DJIA 16,544 Last Man Standing – Bear – or Bull ?
Oct. 13 DJIA 16,544 A Dangerous Rally – Dow 16,000 this Week ?
Oct. 14 DJIA 16,321 Technical Bounce – Easy Does It !
Oct. 15 DJIA 16,315 Risk: DJIA 14,666 (-1,655 pts.) by Oct 31
*Stock Trader’s Almanac
A Game-On Analysis, LLC publication
George Brooks
“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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