Friday, June 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.
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 read– Daily edge before the open
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 !”
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 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.
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.”
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.
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.
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):
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.
Quadruple Witching Friday
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
“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.