Wednesday, September 10 , 2014 9:08 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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It was renewed angst about the timing of a Fed increase in interest rates that toppled stock prices yesterday. While such concern is nothing new, the twist this time is the prospect for a change in the wording about the timing of a rate increase by the Fed at its September 16-17 meeting.
Once again, it looks like a “read between the lines” issue. The Fed may change the wording about interest rates remaining low for a “considerable time” to something else, leaving the Street to ponder what that means.
With the Fed’s policy meeting, economic forecasts and press conference scheduled for next week, the Street is starting to worry now.
TODAY:
Concern for the timing of a Fed increase in interest rates has been with us for many months, but with a big Fed meeting next week, it has suddenly taken center stage.
That will put a damper on the stock market until the news conference next week and beyond, since doubts about Fed policy will linger beyond that date.
The tug of war continues, one day favoring Bulls, the next favoring the Bears.
After Friday’s upbeat market action, I expected another jump in stock prices, and was wrong. It still may happen, but technical damage was done yesterday.
The message here is, this is a nervous market with potential both ways with news flow calling most of the shots. There is the potential for a sizable move either way.
Resistance today is DJIA: 17, 053; S&P 500: 1,993; Nasdaq Comp: 4,566.
Support today is DJIA 16,952; S&P 500: 1,980; Nasdaq Comp: 4,533.
Investor’s first read – Daily edge before the open
DJIA: 17,013
S&P 500: 1,988
Nasdaq Comp.:4,552
Russell 2000: 1,154
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EUROPEAN CENTRAL BANK’S ECONOMIC STIMULUS
A surprise economic stimulus move by the European Central Bank (ECB) is driving the euro down sharply. The ECB cut its refinancing rate, reduced its deposit facility rate , lowered its lending facility, and initiated the purchase of euro-denominated covered bonds in an effort to jolt European economies out of lethargy. While the U.S. economy continues to inch forward, it could use help from abroad.
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INTERNATIONAL TENSIONS:
Ukraine/Russia – quiet for now, but has the potential to get uglier.
ISIS/Iraq/Syria – Euro/Mid-East coalition forming to counter ISIS’s territory and influence quest.
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TECHNICAL ANALYSIS OF EACH OF THE 30 DOW INDUSTRIALS (9/5) At key junctures, I technically analyze each of the 30 Dow industrials, then using the Dow’s “divisor” convert these results back into the DJIA. I seek a near-term resistance level and a primary and secondary support level.
As of Aug 29, the near-term resistance level is 17,318; the primary support is 16,990 and secondary support is 16,912.
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INTEREST RATES: On numerous occasions, I have reminded readers that stock prices can rise along with interest rates, but to a point where higher rates draw money away from stocks to bonds and where higher rates adversely impact the economy. Realistically, that point must be a lot higher than the zero-based interest rates existing today. I conceded that the stock market would take a brief hit when a move to higher rates was perceived by the Street, but stabilize before moving higher.
A recent study by Andrew Garthwaite, chief equity strategist for Credit Suisse concludes just that. Since 1977, he found the S&P 500 peaked no earlier than four months prior to the Fed’s first rate increase, but gained as much as 4 percent in the six months after the first increase. He notes, that while rate rises have increased volatility in the stock market, they did not mark the end of the bull market.
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THIS WEEK’s ECONOMIC REPORTS:
Very light week for reports. 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 Business Optimism Ix. (7:30):
ICSC Goldman Chain Store Sales (7:45):
JOLTS – Job Openings/Labor Turnover (10:00):
WEDNESDAY:
MBA Mortgage Purchase Apps (7:00):
Wholesale Trade (10:00):
THURSDAY:
Jobless Claims (8:30):
FRIDAY:
Retail Sales (8:30):
Import/Export Prices (8:30):
Consumer Sentiment (9:55):
Business Inventories (10:00):
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RECENT POSTS:
Aug 26 DJIA 17,076 Bull/Bear Tug of War at S&P 2000 Level
Aug 27 DJIA 17,106 Market poised for Sharp Move
Aug 28 DJIA 17, 122 2,000 on S&P 500 – Floor or Ceiling ?
Aug 29 DJIA 17, 079 How Long Will Bulls Prop the Market ?
Sept. 2 DJIA 17,098 What are Odds of a Big Correction of 8% – 12% ?
Sept. 3 DJIA 17,067 Breakout and Run – Followed by a Crunch
Sept. 4 DJIA 17,078 Bulls “Must” Take Charge NOW
Sept. 5 DJIA 17,069 Market to Tip Its Hand Today
Sept. 8 DJIA 17,173 Bullish Storm Surge Imminent ?
Sept. 9 DJIA 17,111 Bulls to be Tested Today
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.
