The Economy, Interest Rates, Fed Taper, Stock Prices

George Brooks |

Veterans Day:Take a moment to appreciate the sacrifice U.S. military veterans and their families make and have had to make in the past; those who survived and those who didn’t.

   Reports of greater-than-expected Q3  GDP growth of 2.8% last week triggered a sharp plunge in stock prices for fear strength in the economy would give the Fed a reason to taper out of QE early.

   But reports that the GDP was distorted by inventory build and components that had to be estimated  since data was delayed by the government shutdown prompted a rebound in stock prices. .

   The rebound held even though Friday’s Employment Situation report sported a much greater increase in new hires than projected – a gain of 204,000 vs. the 120,000 forecast.

   Suddenly, the Street doesn’t know whether it believes bad is good or good is bad, a tradeoff between continued taper and a flat economy or less taper and a booming economy.

   What is troubling is the fact  the benchmark 10-year yield jumped sharply Friday. If it stays there, it could indicate the Fed will taper earlier than March which most economists expect, perhaps December or January.

  If you are looking for an answer at the open, you will have to wait. The Street doesn’t seem to know which way to go.

TODAY:

   Looks like we are back in a news whipsaw with the Street marching to a pair of drummers – the Fed and the economy. 

   Toss in early profit-taking and portfolio window dressing by institutions and  you get increased volatility.

Resistance is DJIA: 15,865 (S&P 500: 1,778)

Support is DJIA: 15,705  (S&P 500: 1,764)

Investor’s first reada daily edge before the open

DJIA: 15,761

S&P 500: 1,770

Nasdaq  Comp.3,919

Russell 2000: 1,099

Monday, Nov. 11, 2013     (9:01 a.m.)    

   NOTE: I see too many news items presented in “video” rather than print.  I don’t have time or patience to watch a video played at someone else’s pace. I prefer to speed-read print and if I want it for reference, make a copy. Anyone who has laboriously transcribed verbal  can sympathize.  What are they thinking  ?  Or aren’t they ?

   TECH WATCH:   Changes: Adding Nike (NKE), Polaris Industries (PII) and  Pandora (P) and dropping Target (TGT) and eBay (EBAY).

   I am considering the elimination of the Tech Watch section and offering it in a separate publication on a subscription basis.

I would be able to cover more companies, and would not be constrained by a pre-market deadline. Comments welcome: sensiblesleuth@gmail.com. Include opinion about how you think I could even improve commentary bearing in mind these are NOT buy/sell comments.

   The following are based on technical analysis only and  are not to be taken as buy or sell recommendations, but as one of many factors that must be considered in the decision process. Comments do not take into consideration earnings reports, or changes in institutional ratings, company guidance. Technical analysis is based on one’s interpretation of  the impact buying and selling have on the price of a stock and is therefore not an exact science. News and events can change an interpretation instantly. 

Apple (AAPL: $520.56) Positive.

Remains in consolidation, but rebounded from Thursday’s setback. Support is $518.Some selling at $521. Once past that, AAPL can rise to $526.

Facebook (FB: $47.53) Positive

Market rebound helped prevent further downside for FB. Could slip lower, $45.70  is a key support.  Resistance to upside is $50 and $52.

IBM (IBM: $)  Negative, but has the potential now to turn positive.

Resistance now $180.60. Support $179.  This is a turning pattern that needs time..

Pulte Homes (PHM: $16.85)  Positive

Support at $17.60 failed to hold when interest rates rose Friday and taper talk picked up again. Whole housing group took a hit. Support is now $16.20, resistance $17.95.

First Solar (FSLR:$60.50)  Positive

Blowout earnings last week prompted buying and panicky short covering.  Support is now $60. Rise above $61 needed to move stock to  $63 - $65.

Nike (NKE:$77.12) Positive

Rebounded from  targeted support at $75.60 and closed at resistance targeted at $77.  May need to trade sideways for several days before moving higher.  Posted a neat two-day reversal. Support now $76.70.

 Hewlett-Packard (HPQ: $25.94)  Positive

Recent strength due to its $3.5 billion U.S. Navy order. Rebounded steadily from Thursday’s setback and can now attack resistance at $26.25. Support is $25.75.

Polaris Inds. (PII:127.13)  Positive

Stabilized Thursday after high-volume spike down. Rebound was disappointing. PII needs a big buyer to get it back on track after Thursday’s crunch. Support $126.55.  Resistance is now $130.

Amazon (AMZN: $350.31) Positive

Raymond James’ Aaron Kessler  raised his rating to Strong Buy from Market found support at $342 with nice rebound following. Needs to push across Resistance at $351.

Pandora Media (P:$26.74) Positive.

Opinions on P vary, but seem in line with investors’ long or short position. This one can move sharply either way. Earnings due Nov. 21 after the close. A dangerous stock to be on the wrong side of.  Thursday’s drop did not change its positive status. Resistance at $26.85 needs to be broken  to give P a shot at higher prices.

THE ECONOMY:

While the economic reports released this week are few in number, they are significant.   Though the accuracy of these reports may still be suspect due to the shutdown, the Street will be watching for clues about the economy’s strength, since it will influence  the timing of Fed taper.   With renewed concern about an early Fed taper, Fed. Chief Bernanke’s speech Wednesday, 7:00p.m. will be parsed for clues. For a detailed account of past and current economic reports, including charts go to: mam.econoday.com - www.mam.econoday.com

MONDAY:

 Veteran’s Day: Market open, banks closed

NFIB Small Business Optimism Ix. (7:30):  Proj.: Index 93.3 Oct vs. 93.9 Sept.

TUESDAY:

Fed’s Fisher speaks (3:00a.m.) ?

Fed’s Narayana speaks 1:00p.m.

Fed’s Lockhart speaks (1:50a.m.)

WEDNESDAY:

Fed. chiefBernanke speaks (7:00p.m.)

THURSDAY:

Jobless Claims (8:30) Proj.  330,000 for week ended 11/9

Productivity/Costs (8:30)  Proj.: Q3 +2.3pct.

Fed’s Plosser speaks(9:a.m.)

FRIDAY:

Empire State Mfg. Svy (8:30) Proj.: Index Nov. 5.5 vs. 1.52 Oct.

Import/Export Prices(8:30) Proj. Oct. -0.5 pct.

Industrial Production (9:15) Proj. Oct. +0.1pct.  vs. +0.6 Sept.

Wholesale Trade (10:00) Proj.  Sept. +0.4pct.

RECENT POSTS - 2013

Oct 25 DJIA   15,509   “Best Six Months for Owning Stocks”

Oct 28 DJIA   15,570   “Do I Detect Speculative “Fever “ ? If So, What Can  

                                       Happen”

Oct 29 DJIA   15,568  “ When Will the Small Investor Plunge ?”

Oct 30 DJIA   15,680  “Don’t Rule Out Fed Taper by Year-End”

Oct 31 DJIA   15,618  “Easy Does It ! Market Nervous, Needs Breather”

Nov 1  DJIA   15,545  “Rally Failure, Correction to Continue ?

Nov 4  DJIA   15,615  “Room to Run – Just Ditch the Blinders”

Nov 5  DJIA   15,639  “Market Crossroads – Which Way ?

Nov 6  DJIA   15,618   “Bulls Hold the Edge, But What About Interest Rates ?

Nov 7  DJIA   15,747  “Early Profit Taking or Warning of a Correction ?”

Nov 8 DJIA   15,593  “Time for the Street to Get Off the Fed Teat”

  George  Brooks

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

sensiblesleuth@gmail.com

*STOCK TRADERS ALMANAC: The new annual Stock Trader’s Almanac  is off the press.  This is a “must,” always has been, if you are a serious  investor, or intend to be a serious investor. Visit stocktradersalmanac.com for details

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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.

 

 

 

 

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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