Spike Up Likely - No Room for Rally Failure

George Brooks |

FridayJune  20, 2014      9:12 a.m.  Before the open

    The stock market is holding up well in face of a host of bad news abroad (Iraq, Syria, Libya, Ukraine) and a gnawing angst about the Fed’s interest rate policy in spite of its efforts to assure the Street rates will remain low for a considerable time.

    The stock-index futures are moderately positive in pre-market trading, so Quadruple Witching Friday (see below) is unlikely to have an impact. It is Friday, so traders may wrap up a good week with some profit taking.

     The near-term direction of stock prices will be dictated by “technical” factors, a balance or imbalance of buyers and sellers.

     Last week, I said odds favor the beginning of a sideways trading range for several months. I may be wrong on that, we may have another spike before that happens.

     Either way, it looks like a stock picker’s market for the nimble trader and astute “timer” who is accumulating stocks for the longer term but carefully picking a price level to buy, i.e. buying on dips.

     TODAY:

Resistance today is DJIA: 16,976; S&P 500: 1,966; Nasdaq Comp.:4,374

Support today is DJIA: 16,918; S&P 500: 1,958; Nasdaq Comp.: 4,351

Breaking that the next support is DJIA 16,866; S&P 500: 1,953; Nasdaq Comp.: 4,341.  

Investor’s first readDaily edge before the open

DJIA:  16,921                                   

S&P 500:  1,959

Nasdaq  Comp.: 4,359

Russell 2000:    1,184

Quadruple Witching Friday looms this week when stock index futures, stock index options, stock options and single stock options expire on the same day. Stock options expire on 3rd Friday each month. All four expire on the 3rd Friday in March, June, September and December.

    This even used to have a big short-term impact of stocks, not so much anymore. Even so, “heads up !”

EUROPE:

    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

(UPDATED ANALYSIS)

    At key junctures, I technically analyze each of the 30 Dow industrials seeking a reasonable near-term support and a more extreme support level, 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.

    As of June 12, the reasonable support for the DJIA is 16,573, the more extreme support level is 16,443, and the short-term resistance is 16,896. We have now punched through that resistance level. The DJIA was 16,734 when I did the projection.

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

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THIS WEEK’s ECONOMIC REPORTS:

    Look for a heavier schedule of releases on the economy this week, including a press conference by Fed chief Janet Yellen at 2:30 following the release of the minutes from the FOMC meeting Wednesday.

      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.”

MONDAY:

Empire State Mfg Ix. (8:30): Hit a 4-yr. high at 19.28 May vs 19.01 in Apr. New orders also hit a 4-yr. hi at 18.36

Industrial Prod. (9:15): May up 0.6 pct. after a drop of 0.3 pct. (revised) in Apr. Capacity utilization is 79.1 vs. 78.6

Housing Mt Ix. (10:00): Index jumped to 49 from 45 in May which is promising, though “traffic” remains in a slump at 36.

TUESDAY:

FOMC meeting begins

ICSC-Goldman Store Sales (7:45): Sales up 0.4 pct. for the 6/14 week. Year/year is +3.1 pct. vs. +3.0 pct.

Consumer Price Ix. (8:30): Up 0.4 pct. May vs. +0.3 pct. Apr.  X-food/energy up 0.3 pct. May vs. +0.2 pct. Apr..

Housing Starts (8:30): Down 6.5 pct. May after gain of 12.7 pct. Apr.

WEDNESDAY:

MBA Purchase Apps (&:00): Apps plunged 9.2 pct. in the June 13 week; Refis dropped 13.0 pct. (ugh!)

FOMC meeting  announcement(2:00)

Fed. press conference – Yellen (2:30):

THURSDAY:

Jobless Claims (8:30): Down 6,000 to 312,000 for the June 4 week

Philly Fed Svy (10:00):Up sharply in June to 17.8 from 15.4 in May; New orders also up sharply to 16.8 from 10.7

Leading Indicators (10:00): Advanced 0.5 pct. in May from 0.3 pct. in Apr.

FRIDAY:

Quadruple Witching Friday

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RECENT POSTS:

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

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 t 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 

A Game-On Analysis,  LLC publication

George  Brooks

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

Brooks007read@aol.com

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.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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