Street Keying on Yellen's Wednesday Comments

George Brooks |

TuesdaySeptember  16 , 2014     9:16 a.m.  BEFORE the OPEN

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SUMMARY:

   The Street is anxiously awaiting Fed Chief Janet Yellen’s press conference Wednesday, 2:30 pm following the FOMC meeting for a better feel for the timing of an increase in the Fed’s benchmark interest rate. The Fed’s bond purchase program is scheduled to end in October.

   This is Yellen’s last chance to comment on interest rates until  The December 16-17 FOMC meeting .

    Since no press conference is scheduled for the October 28-29 meeting and there is no November FOMC meeting, guidance is likely the week UNLESS the Fed schedules a press conference for the October meeting.

 TODAY:  

   The Nasdaq Comp.  took hit yesterday, as profit taking hammered information technology stocks. This group was overdue for some selling, having been up 5.1% since June vs. a 1.3% gain for the S&P 500.

   A hint by Yellen that interest rates won’t increase until after Q  1 will boost the stock market.  If Yellen hints a rise could come sooner rather than later, the market will drop.

    If a correction is overdue, the market will take a hit regardless what she says.

That is a better than 50-50 probability. It would also set up an October/November buying opportunity – beware.

Support todayis DJIA: DJIA: 16,969; S&P 500: 1,981; Nasdaq Comp.: 4,501.

 If the Street believes Yellen’s comments Wednesday will suggest a rise in interest rates earlier than Q2, this support level will vanish in a flash.

Resistance todayis: DJIA 17,094; S&P 500: 1,991; Nasdaq Comp. 4,539. 

The Street will most likely wait for comments by Yellen before buying aggressively if she implies a rise in rates is not imminent.

Investor’s first readDaily edge before the open

DJIA: 17,031

S&P 500: 1,984

Nasdaq  Comp.:4,518   

Russell 2000: 1,146

 

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THE FED and INTEREST RATE EXPECTATIONS:

   All eyes will be on Fed Chief Janet Yellen’s comments at 2:30 Wednesday, as the Street seeks a better idea of when the Fed will raise its benchmark interest rate, currently targeted for mid-2015.

   Market weakness last week is attributed to concerns that increasing traction in the U.S. economy would prompt the Fed  to raise rates earlier in 2015.

to zero.  Clearly it would put some extra spendable dollars in the hands of people who rely on income from money market funds, CDs and other sources of fixed income.

       This IS GOING TO HAPPEN. Instead of  hoping it will happen later rather than sooner, the Street should base its projections on the assumption that rates have already bumped up.

   The U.S. economy should be able to accommodate a slight increase in interest rates from next to nothing.  The economy would benefit from the extra income higher rates would  generate from fixed income so many people rely on.

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INTERNATIONAL TENSIONS:

   Ukraine/Russia – quiet for now, but has the potential to get uglier.

   ISIS/Iraq/Syria – A Euro/Mid-East coalition is forming to counter ISIL’s territory and influence quest.

    This can get uglier than ugly where it is now. The possibility of a major war resulting must be considered.

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TECHNICAL ANALYSIS OF EACH OF THE 30 DOW INDUSTRIALS (9/12)  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  September 12, the near-term resistance level is 17,135; the primary support is 16,890 and secondary support is 16,500.

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THIS WEEK’s ECONOMIC REPORTS:

    The center of focus this week will be the FOMC meeting and Fed Chief Janet Yellen’s news conference at 2:30 p.m. Wednesday.  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.”

MONDAY:

Empire State Mfg. Svy (8:30): September index up to 27.14 from 14.69 in August.  New orders 16.86 up from 14.40

Industrial Production (9:15): August was down 0.1 pct. after a gain in July of 0.4 pct..

TUESDAY:

FOMC meeting begins

ICSC Goldman Store Sales (7:45): Dropped 2.6 pct in the Sept. 13 week over the prior week.  Year/year is +3.0 pct..

PPI-FD (8:30):

WEDNESDAY:

Consumer Price Ix.(8:30):

Housing Market Ix.(10:00):

FOMC announcement (2:00):

Fed press conference – Yellen (2:30):

THURSDAY:

Jobless Claims (8:30):

Housing Starts (8:30):

Philly Fed Svy (10:00)

FRIDAY:

Leading Indicators (10:00):

Quadruple Witching Friday

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RECENT POSTS:

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

Sept. 10  DJIA  17,013  Stock Market Back on the “Edge”

Sept, 11  DJIA  17,068  Last Chance for Bulls to Avoid Crunch

Sept. 12  DJIA  17,049  The Fed, Elections, Geopolitics Stymie Bulls

Sept. 15  DJIA  16,987  A Brief Yellen Rally This Week ?

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 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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