Actionable insights straight to your inbox

Equities logo

Speculative Fever Mounting – Careful

Wednesday, July 2, 2014 9:10 a.m. BEFORE the OPEN     The Street is impressed with the flow of reports on the economy as evidenced by the run yesterday to within

WednesdayJuly 2, 2014 9:10 a.m. BEFORE the OPEN

    The Street is impressed with the flow of reports on the economy as evidenced by the run yesterday to within $1.30 of the DJIA 17,000.

    Yesterday’s buying can also be attributed to institutions investing for Q3. Selling when the DJIA neared 17,000 can be blamed to some degree on institutional computers programmed to sell into levels that will prompt the kind of frenzied buying that facilitates selling large blocks of stocks without impacting the price.


    This bull market is up 196% since the bear market bottom in early March 2009.  That should be enough to suck all doubters in off the sidelines.  For one, they are finally becoming  convinced this market is headed further north. For another, they can’t stand not to be in on it.

    They will be buyers on dips, which is one of the contributors to the fact corrections have been mild in recent months.

    At some point in here, the BIG money will not only feed stock out at peaks, it won’t be buying on pullbacks. Without that support, a small correction becomes a much bigger correction.  How big depends on what new news hits the market when it is trying to rebound.



    I am still bullish, but  the Street is becoming a little too indifferent to risk. The ADP payroll count for June came in at 281,000 today, another indication the economy is rebounding smartly from the impact of  severe winter weather.

    We have yet to see reckless, untethered speculation, but we will.  The less one  knows, the more they will be able to make – to a point when the executioner lowers the boom.

     In the interim, there will be a correction of 4% to 6%, probably before fall. Odds favor it will start after the DJIA punches through 17,000 up to 17,110 or so.

Support today is DJIA: 16,918; S&P 500:1,968; Nasdaq Comp.: 4,437

Resistance today is DJIA: 16,981; S&P 500: 1,976; Nasdaq Comp.: 4,469

Investor’s first read – Daily edge before the open

DJIA:  16,956

S&P 500: 1,973

Nasdaq  Comp.:4,458 

Russell 2000:   1,205




    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.

     Yesterday’s breakout prompted me to run the analysis again.  While my near-term upside remains the same at 17,109, the reasonable near-term downside jumps to 16,875 as of the close July 1. I did not calculate an extreme downside this time.

            Note: My daily support/resistance  levels are more short-term oriented.



    Expect a full slate of reports in this shortened July 4 week with the key Employment Situation report coming  at8:30 Thursday, preceded by the ADP Employment report as usual on Wednesday.

      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.”


Chicago PMI (9:45): Declined to 62.6 in June  from 65.5 in May

Pending Home Sales (10:00): Up 6.1 pct. in June from  a gain of 0.4 pct. in May.

Dallas Fed Mfg.(10:30): Business Activity  index was 11.4 in June vs. 8.0 in May; the Production index was 15.5 in June vs 11.6.


Motor Vehicle Sales:  Light motor vehicles sales were up 4.6 pct. to an annual rate of 16.8 million vehicle.

ICSC Goldman Store Sales (7:45):  Chain store sales for the Jun 28 week were up 1.0 pct. vs. up 0.8 pct .

PMI Mfg Ix.(9:45):  Index hit 57.3 in June up from 56.4 in May.

ISM Mfg. Ix.(10:00):  At 55.3 in June vs. 55.4 in May, but New Orders jumped to 58.9 from 56.9.

Construction Spend.(10:00):Up 0.1 pct. in May vs. 0.8 pct. in Apr., revised  up from 0.2 pct.

Global Mfg. PMI (10:00): Rose in June to 52.7 from 52.1 in May.


MBA Purchase Apps.(7:00Apps down 1.0 pct. refi’s up 1.0 pct. for week Jun 27

ADP Employment (8:15): June payrolls up 281,000 vs up 179,000 (revised)

Gallup US Job Creation Ix. (8:30Index unchanged for June at 27.

Factory Orders (10:00):


Employment Situation (8:20):

International Trade (8:30):

Jobless Claims (9:30):

PMI Services Ix. (9:45):

ISM Non- Mfg. Ix. (10:00):



June 12  DJIA   16,843  Sideways, 3-Month Trading Range Beginning ?

June 13  DJIA   16,734 Iraq Crisis to Create Buying Opportunity

June 16  DJIA   16,775 Uncertainty – A Menace to Stock Prices Near-Term

June 17  DJIA   16,781 Decision Day for Stock Prices – Near-Term

June 18  DJIA   16,808 Market Awaits a Fed QE Exit Strategy

June 19  DJIA   16,906 Wall Street Needs a Dose of Reality 

June 20  DJIA   16,921 Spike Up Likely, No Room for Rally Failure

June 23  DJIA   16,947 Spike, Correction – Opportunity

June 24  DJIA   16,937 Market to React to Week’s Economic Reports

June 25  DJIA   16,818 Major Challenge for Bulls

June 26  DJIA   16,867 Again – Bulls Challenged

June 27  DJIA 16,846   Near-Term Tipping Point for Stock Prices

June 30  DJIA 16,851  Stock Fever Festering

July  1    DJIA 16,826 Week’s Economic Reports – Dow 17,000 ?

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 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.

A weekly five-point roundup of critical events in fintech, the future of finance and the next wave of banking industry transformation.