Enjoy the Syria “alternative” respite.As a crisis, it will resurface from time to time as doubts arise about Syria’s compliance and delays in progress occur. Suddenly, one of these issues will pop up, triggering the threat of U.S. military action, and the market will quickly drop, if only for a week or so until the present “deal” is back on the table.
However, for the time being, it is on the back burner of crises, allowing Fed taper and a government shutdown/default to dominate the direction of stock prices.
As noted before, an announcement of the first Fed taper next Wednesday stands to drop stock prices briefly and be followed by a rally. No taper, extends uncertainty and stands prompt a brief rally and be followed by a sell-off.
Expect no end to the divisive rhetoric accompanying the battle over an increase in the debt ceiling, and the threat of a government if certain concessions aren’t met by the White House.
The market wants to run, it is evident in its buoyancy even in face of the well publicized uncertainties and negatives.
While so much emphasis has been placed on the Fed’s first taper, I am not sure the Street has fully discounted the uncertainties associated with a final taper possibly by mid-2014 under a new chairman of the Fed.
That’s worth some thought before getting over extended in stocks. I expect this bull market to run the full cycle ending with huge speculation in small company stocks, BUT NOT without a nasty 10%-plus correction.
CHANGE DOW JONES INDUSTRIAL AVERAGE:
Three components of the Dow Jones Industrial Average (DJIA) will change next week in a move designed to give a better balance to the impact each will have on the changes in the average.
The DJIA is a price-based average as compared with the S&P 500, which is market value based (shares x price). Higher priced stocks have a greater impact on changes in the DJIA vs. lower priced stocks. A one percent change in IBM ($186.60) has nearly 13 times the impact on the DJIA as a one percent change in Bank of America (BAC: $14.61).
New additions include Goldman Sachs (GS: $165.14), Visa (V: $184.59) and Nike (NKE: $66.82). Removed are: Bank of America (BAC: $14.61), Hewlett-Packard: HPQ: $22.27) and Alcoa (AA: $8.05).
The DJIA is calculated by adding up the prices of its 30 components then dividing the sum by its “divisor.”
Investor’s first read– an edge before the open
S&P 500: 1,683
Nasdaq Comp. ; 3,729
Russell 2000: 1,055
Wednesday, Sept. 11, 2013 (9:13)
TECHNICAL OBSERVATION – STOCKS:
The following are observations based solely on technical analysis and don’t give consideration to fundamentals or changes in brokerage ratings which can have an immediate impact on stocks, justified or not. The idea here is to give readers insight into the likely trends and turns in the stock’s price, short-and long-term.
I picked up on AAPL and FB last year when they were in a tailspin, and picked up on IBM, Pulte, First Solar, Target, and Hewlett-Packard recently for the same reason. These are not buy or sell recommendations, and are not stocks I have recommended.
NOTE: Expect support and resistance levels to change more frequently under adverse and uncertain conditions like those we are experiencing presently..
WARNING: This market is highly “news sensitive,” with everything at the present negative. Any break for the better in the mid-East, taper, or in the threat of a government shutdown in October will trigger a rally, especially in stocks below, since they have been hammered already.
Resistance/support levelsare “tight” and more easily penetrated than if I gave readers “general” resi/spt levels.
Note: Bottom was targeted at $385 for the turn around Apr. and Jun. 2013 (double bottom). continue to follow
Resistance: $489 assuming much lower open today
AAPL taking hit in face of concerns that its just released low-priced IPhone is too high-priced to compete
Facebook (FB – $43.60)
Note: Bottom was targeted below $18 for a turnaround Sept. 2012. Continue to follow.
Pattern: Positive –
Recent strength attributed to Sun Trust Robinson Humphrey’s increase in price target to $55 from $40. May rest a few days between $43.75 and $44.50
Note: Started coverage Aug. 7, 2013 after big plunge in stock
Support: $185.60 Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years.
PulteGroup (PHM- $16.29 )
Note: Started coverage Aug. 12, 2013
Pattern: Now positive with big move yesterday
Support: $16.10 Got the big buyer it needed Monday to counter industry negatives that resurfaced with the jump in mortgage rates.
First Solar (FSLR:$39.73)
Note: Started coverage: Aug.: 22, 2013
Pattern:Turned positive yesterday, may struggle to pass $42
Target (TGT: 64.73) Watch closely for turn
Note: Started coverage Aug: 22, 2013:
Pattern: Positive with yesterday’s breakout of its base
Had a buyer every day last week, but seller showed up Friday. Buyer returned yesterday
Note: Started coverage Aug. 23, 2013
Pattern: Negative, but tracing out a nice base above $22
Support: $22.05 A drop below $21.50 suggests drop below $20
HPQ looks like it can hold in this $22 – $23 area. Sharp drop from $26 created overhead supply (a lid) $19.85 is possible but only in a bad market.
eBay (eBay: $53.49)
Note: Started coverage Aug. 28, 2013
Pattern: Turned positive yesterday, up from neutral
Support: $ 51.60
Amazon.com (AMZN: $300.36)
Note: Started coverage Aug. 28
Support: Support now $294
I do not own, nor am I short AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com
Fed’s John Williams speaks (11:00)
Consumer Credit (3:00 p.m.) Proj.: $12.3 bil.
NFIB Small Bus. Optimism Ix.(7:30) Proj.: Ix Aug. 95.0 vs. July 94.1
JOLTS (10:00) Jobs Opening Labor Turnover Svy. Proj.: July 9.9275 mil. vs. 3.936 mil June
Wholesale Trade (10:00) Proj.: July +0.3 pct vs. June drop of 0.2 pct.
Jobless Claims (8:30) Proj.: for 9/7/13 330,000 vs. 323,000 prior week.
Import/Export Prices (8:30) Proj.: Aug. +0.5 pct.
Producer Price Ix. (8:30) Proj.: Aug. +0.2 pct. ; Ex. food/energy: +0.1 pct.
Retail Sales (8:30) Proj.: Aug. +0.5 pct. ; Excl. motor veh. +0.3 pct.
Consumer Sentiment (9:55) Proj.: Aug Ix. 82.0 vs. mid-month 82.1
Business Inventories (10:00) Proj.: July +0.3 pct.
RECENT POSTS: 2013
Sep 3 DJIA 14,810 “Market Up Sharply – Someone Know Something ?”
Sep 4 DJIA 14,833 “What Must Happen for the Bull to Snort”
Sep 5 DJIA 14,930 “ September Taper – Buying Opportunity ?
Sep 6 DJIA 14,937 “Market Wants to Run – Are You Ready ?”
Sep 9 DJIA 14,,932 “Breakout or Fakeout ? Syria/Fed Taper”
Sep 10 DJIA 15,063 “Easy Does It !
“Investor’s first read – an edge before the open”
The writer of Investor’s first read, George Brooks, is not 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. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk. Brooks may buy or sell stocks referred to herein.