Watch for "Trampoline" Effect on Stock Prices

George Brooks |

    Corrections are a healthy part of upswings as long as new negatives don’t surface after the market has dropped and is poised to rebound.

   The bulls have run the show non-stop since a 4.4% rally began in mid-May, and some consolidation is justified.

    The only news of interest prior to the open is positive as Mortgage Bankers’ Applications where apps for mortgages were up 9.0%, refi’s up 11.0% in the June 6 week.

    That suggests the pre-open weakness is “technically oriented, a temporary imbalance of buyers and sellers.

    The thing to watch here is the  “trampoline”  (bounce)  effect.  An old soft ball bounce indicates more downside, a golf ball bounce indicates an imminent recovery.

 TODAY:

    Support today is DJIA: 16,856;  S&P 500: 1,938;  Nasdaq Comp.: 4,307

    Resistance today is DJIA: 16,896; S&P 500:1,943;  Nasdaq: 4,317

    A one-day reversal where the market averages recoup their entire loss for the day would very bullish.

  Investor’s first readDaily edge before the open

DJIA:  16,945

S&P 500:  1,950

Nasdaq  Comp.: 4,337

Russell 2000:    1,172

Wednesday,  June  11, 2014      9:15 a.m.

EUROPE:

    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 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 9, the support for this  calculation is 16,801 and resistance is 17,176.

Note: My daily support/resistance  levels are more short-term oriented.

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THIS WEEK’s ECONOMIC REPORTS:

      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.”

TUESDAY:

NFIB Small Bus. Optimism Ix. (7:30): May index up to 96.6 from 95.2

ICSC Goldman Store Sales (7:45) Sales down 2.8 pct. in June 7 week from a gain of 2.9 pct. the prior week.  Year/year  now +3.0 pct. vs +3.1 pct.

JOLTS (10:00) Job Openings/Labor Turnover improved beyond expectations with 4.455 million job openings at the end of April vs 4.166 million in March. The hires-to-separations ratio remained unchanged.

Wholesale Trade (10:00). While inventories rose 1.1pct., sales rose 1.3  pct, keeping  the stock to sales ratio                                                                                                                                           

WEDNESDAY:

MBA Purchase Apps (7:00) Mortgage apps surged 9.0 pct and refi’s 11.0 pct. in the June 7 week

Treasury Budget (2:00)

THURSDAY:

Jobless Claims (8:30)

Retail Sales (8:30)

Bus. Inventories (10:00)

FRIDAY:

 

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RECENT POSTS:

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

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 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.

 

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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