Monday, June 16, 2014 9:18 a.m. Before the open
Uncertainty has suddenly impacted global stock and currency markets as tensions rise between Russia and Ukraine and the violence in Iraq escalates sending oil prices higher.
So far, the fighting in Iraq has not affected Iraqi oil exports since 60% of its crude reserves and terminals are located in Shiite controlled areas well south of the conflict, however the potential fro disruption is real.
The prospect for a rise in stock prices near-term is fading. The likelihood of a sideways trading range in coming months is increasing with the DJIA trading between 16,400 and 16,900 a good bet, though international events can widen that range.
A host of releases on the status of the economy are due out this week (see below). Any indication the recovery from the winter slump is not gaining traction would trigger a sharp slide in stock prices. So far the stock market (the best barometer for economic health) is not suggesting that will be the case.
Pre-market future’s trading indicates a small decline at the open, however a drop below DJIA 16,700 (S&P 500: 1,925, Nasdaq Comp.:4,285) suggests another leg down.
Quadruple Witching Friday looms this week when stock index futures, stock index options, stock options and single stock options expire on the same day. Stock options expire on 3rd Friday each month. All four expire on the 3rd Friday in March, June, September and December.
This even used to have a big short-term impact of stocks, not so much anymore. Even so, “heads up !”
Investor’s first read – Daily edge before the open
S&P 500: 1,936
Nasdaq Comp.: 4,310
Russell 2000: 1,162
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
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 June 12, the reasonable support for the DJIA is 16,573, the more extreme support level is 16,443 and the short-term resistance is 16,896.
Note: My daily support/resistance levels are more short-term oriented.
THIS WEEK’s ECONOMIC REPORTS:
Look for a heavier schedule of releases on the economy this week, including a press conference by Fed chief Janet Yellen at 2:30 following the release of the minutes from the FOMC meeting 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.”
Empire State Mfg Ix. (8:30):
Industrial Prod. (9:15):
Housing Mt Ix. (10:00):
FOMC meeting begins
ICSC-Goldman Store Sales (7:45):
Consumer Price Ix. (8:30):
Housing Starts (8:30):
MBA Purchase Apps (&:00):
FOMC meeting announcement(2:00)
Fed. press conference – Yellen (2:30):
Jobless Claims (8:30):Philly Fed Svy (10:00):
Leading Indicators (10:00):
Quadruple Witching Friday
June 2 DJIA 16,717 Decision Time for Stocks ?
June 3 DJIA 16,743 Economy “Must” Accelerate, or…
June 4 DJIA 16,722 Correction in Stocks Without Robust Economic Rebound
June 5 DJIA 16,737 Bulls Must Pick It Up, or Lose the Ball
June 6 DJIA 16,836 Easy Does It ! Dow 20,000, But Not in Straight Line
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
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.