Thursday, June 12, 2014 RELEASED EARLY 8:16 a.m.
Yesterday I urged readers to “watch the trampoline effect for stocks,” adding if the market bounces like an old soft ball, expect more downside; if it bounces like a golf ball it’s bullish.
The bounce looked more like a softball. We may have a new negative to deal with – the violence in Iraq. Let’s call it an uncertainty for now, but corrections in the market need an excuse and that may be the reason for this one.
I can see downside pressure through Friday into early next week.
Odds are beginning to suggest a sideways trading range for several months, a good opportunity for traders to pick off targeted stocks that get over sold.
The bulls may just reverse this minor correction to the upside. They should show their hand shortly. If quick to jump in, another leg up is in the cards; it is hard to shut off the speculative fever once it is underway.
Support today is DJIA: 16,787; S&P 500: 1,936; Nasdaq Comp.: 4,307
Resistance today is DJIA: 16,858; S&P 500: 1,946; Nasdaq Comp.: 4,339
Breaking through that resistance, new resistance is DJIA: 16,913; S&P 500: 1,949; Nasdaq: 4,340.
Investor’s first read– Daily edge before the open
S&P 500: 1,943
Nasdaq Comp.: 4,331
Russell 2000: 1,166
The European Central Bank’s cut of its benchmark interest rate and announcement to employ additional measures to stimulate European economies stands to help the U.S. economy, as well. It did little to boost stock markets abroad which are trading at six-year highs, suggesting the move was already discounted. Even so, let’s consider it a positive.
TECHNICAL ANALYSIS of 30 DOW JONES INDUSTRIALS
At key junctures, I technically analyze each of the 30 Dow industrials seeking a reasonable near-term support and 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.
As of June 9, the support for this calculation is 16,801 and resistance is 17,176.
Note: My daily support/resistance levels are more short-term oriented.
THIS WEEK’s ECONOMIC REPORTS:
For detailed analysis of both the U.S. and Foreign economies along with charts, go to www.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.”
NFIB Small Bus. Optimism Ix. (7:30): May index up to 96.6 from 95.2
ICSC Goldman Store Sales (7:45) Sales down 2.8 pct. in June 7 week from a gain of 2.9 pct. the prior week. Year/year now +3.0 pct. vs +3.1 pct.
JOLTS (10:00) Job Openings/Labor Turnover improved beyond expectations with 4.455 million job openings at the end of April vs 4.166 million in March. The hires-to-separations ratio remained unchanged.
Wholesale Trade (10:00). While inventories rose 1.1pct., sales rose 1.3 pct, keeping the stock to sales ratio
MBA Purchase Apps (7:00) Mortgage apps surged 9.0 pct and refi’s 11.0 pct. in the June 7 week
Treasury Budget (2:00)
Jobless Claims (8:30)
Retail Sales (8:30)
Bus. Inventories (10:00)
June 2 DJIA 16,717 Decision Time for Stocks ?
June 3 DJIA 16,743 Economy “Must” Accelerate, or…
June 4 DJIA 16,722 Correction in Stocks Without Robust Economic Rebound
June 5 DJIA 16,737 Bulls Must Pick It Up, or Lose the Ball
June 6 DJIA 16,836 Easy Does It ! Dow 20,000, But Not in Straight Line
June 9 DJIA 16,924 Stock Market Breakout – Now What ?
June 10 DJIA 16,943 Greed/Fear Ratio, Not P/Es, Drive the Market
June 11 DJIA 16,945 Watch Trampoline Effect for Stocks
A Game-On Analysis, LLC publication
“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 investment advice or 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.