Monday, June 23, 2014 8:45 a.m. BEFORE the OPEN
While the stock market has developed a thick skin to international events that in the past would have sent it reeling, investors cannot be indifferent to the possibility that suddenly it will dive.
All it would take is for the Street’s institutional money managers and the BIG money to step aside and let ordinary selling take its toll.
This is one of those situations where the lure to BUY is becoming intense, and why not, the market in general is edging up, more importantly, individual situations are beginning to sizzle.
At some point, the compulsion to buy will become unmanageable as this bull market ramps up comparable to bull markets of the past.
I call the overwhelming urge to buy the, “I can’t stand it anymore,” compulsion where an investor can’t wait for the market to open, so he/she can begin making easy money again.
Before it’s over, Investors are acting like crazed hunters who shoot at anything that moves. They chase over-priced stocks, penny stocks, rumors, tips, etc., and for a while gains come easily and the less one knows, the more money they make.
It’s a signal for the BIG money to sell.
Initially, as the market turns down in the first of many bear market plunges, they see the lower prices as a gift, and load up even more.
After a 25% to 45% drubbing, they “can’t stand the pain anymore” and sell – right as the BIG money is stepping back in to buy.
Making money in the stock market is complicated by human nature – fear and greed. Buying opportunities are juiciest when fear runs rampant, and most dangerous when speculative fever is hitting new highs.
Most serious students of the market know this, but at extremes, knowledge is trumped by emotions – everyone can be at risk.
While the S&P 500 is ahead 196% in this bull market, speculative fever can surge from here, though not without several short- and intermediate-term corrections intervening.
Odds favor a spike in prices this week and a 3-4 day correction. A two-to-three month sideways trading range can begin at any time, but it would offer opportunities.
Resistance today is DJIA 16,996, S&P 500: 1,971; Nasdaq Comp.: 4,377.
Support today is DJIA: 16,879; S&P 500: 1,954; 4,348.
Investor’s first read– Daily edge before the open
S&P 500: 1,962
Russell 2000: 1,188
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
(UPDATED ANALYSIS: June 20)
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 the close June 20, the near-term upside for the DJIA is 17,117. Reasonable support is 16,811, more extreme support is 16,718
Note: My daily support/resistance levels are more short-term oriented.
THIS WEEK’s ECONOMIC REPORTS:
Look for a very heavy schedule of releases on the economy this week, especially Monday and Tuesday for the housing industry.
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.”
PMI Mfg Flash Ix. (9:45):
Existing Home Sales (10:00):
ICSC GoldmanStore Sales (7:45):
FHFA HousePrice Ix. (9:00):
S&P Case Shiller HPI (9:00)):
New Home Sales (10:00):
Consumer Confidence (10:00):
Richmond Fed Mfg.(10:00):
MBA Purchase Apps (7:00):
Durable Goods Orders (8:30):
Corporate Profits (8:30):
PMI Services Flash (9:45):
Jobless Claims (8:30):
Personal Income/Outlays (8:30):
Kansas City Fed. Mfg. Ix.(11:00):
Consumer Sentiment (9:55):
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
June 20 DJIA 16,921 Spike Up Likely, No Room for Rally Failure
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.