Once again, we are back in a “news-sensitive” market with the prospect of stock prices getting whipsawed by changes in the outlook for the taper, Syria, the economy and another White House/Congressional standoff.
The impact of Syria has a chance of lightening up first, but not taper, the economy and the threat of a destructive confrontation in Washington.
Rallies based on Syria will be short-lived.
While we won’t know what the Fed officially decides on taper until after the FOMC meeting and Bernanke’s speech September 18, odds are increasing it will not taper in September.
Anticipation of a delay in taper would trigger a rally in stock prices but the Street would still be saddled with the uncertainty of when will the Fed begin ?
The Street must run the gauntlet in coming months.
I see a positive outcome with a strong recovery starting in October and November.
The BIG money may jump the gun and buy ahead of time.
TODAY:
What will happen in Syria ? Just knowing, is worth a rally.
Expect a mixed open, odds favoring an early rally will give way to another sell off down to DJIA 14,645 (S&P 500: 1,610).
Investor’s first read– an edge before the open
DJIA: 14,776
S&P 500: 1,630
Nasdaq Comp.: 3,578.52
Russell 2000: 1,013
Wednesday, August 28, 2013 (8:55 a.m.)
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.
Apple(AAPL: $ 488.59 )
Note: Targeted the Turn around Apr. and Jun. 2013 (double bottom). This is follow up.
Pattern: Positive, consolidating recent up move.
Resistance: $491
Support: $500 support broken and $486 hit as indicated possible, AAPL stil in consolidation and probing for a level that discounts new negatives in overall market. Icahn must like this. Can’t get in his head, but I’d guess he’ll nibble a shade below $480, maybe $476.
Facebook (FB – $39.64 )
Note: Targeted the turnaround Sept. 2012, this is the follow up.
Pattern: Positive – Broke out of consolidation on increased volume Friday and followed through with another pop Monday, but yesterday was enough to cause the most enthusiastic buyers to take ten.
Resistance: $40.10
Support: No chance yesterday, new level $38.75
IBM ($182.74 ) No change from Friday
Note: Started coverage Aug. 7, 2013 after big plunge in stock
Pattern: Negative
Resistance: $183
Support: Look for break below $180, but after attempt to hold at $180.75. Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years. Unless the fundamentals are horrendous it is due for institutional buying, most likely in this area and possibly at or a smidge below $180.
Right now, there are sellers that must be taken out.
Each point up or down impacts the DJIA by about 13 points.
PulteGroup (PHM- $15.59 ) Alert –
Note: Started coverage Aug. 12, 2013
Pattern: Neutral.
Resistance: $16
Support: $14 – possible delayed response to overall market negatives. Drop to $14 possible. The price of lumber is dropping, not a good sign.
First Solar (FSLR:$36.84)
Note: Started coverage: Aug.: 22, 2013
Pattern: Negative, ran into sellers at $40, again at $39. Big gap between $46 and $42 will be hard to work through. Yesterday’s action hurt chances for near-term rally.
Resistance:$39.20
Support: $35 but that is vulnerable with $32.75 next stop
Target (TGT:63.26)
Note: Started coverage Aug: 22, 2013:
Pattern: Negative
Resistance: $61.55
Market action last 4 days was ugly ! Stock needs big buyer or it is headed for $61 – $62.
Hewlett-Packard (HPQ: )
Note: Started coverage Aug. 23, 2013
Pattern: Negative, probing for comfort level
Resistance: $22.50.
Support: $21.90 but untested. A late-day volume spike suggest some buying interest, Without buyers here $19.85 is possible in a bad market.
eBay (eBay:51.28) Needs good news, or breakdown likely
Note: Started coverage Aug. 28, 2013
Pattern: Neutral/bearish
Resistance: $51.65
Support: $49.90 Stock should get a buyer in here as it has on five occasions this year. If that happens, the intensity of that rally must be studied. Failure to develop heavy volume suggests a break below $50 and drop into the mid-40s.
Amazon.com (AMZN: 280.93)
Note: Started coverage Aug. 28
Pattern: Bullish, but correction must find support soon
Resistance: $284.60
Support: $268 – $272 with rally attempt at $276
I do not own, nor am I short AAPL, FB, IBM, PHM, FSLR ,TGT, HPQ, EBAY, AMZN.
ECONOMIC REPORTS:
Heavy schedule this week, also speeches by Federal Reserve officials
For a detailed account of past and current economic reports, including charts go to: mam.econoday.com – www.mam.econoday.com
MONDAY:
Durable Goods (8:30) Down 7.8 pct vs. projection for a 4.0 pct decline, Ex transportation was a drop of 0.6 pct.
Dallas Fed Mfg (10:30) August index dropped to 7.3 from 11.4. New orders were 5.4 vs 10.8.
TUESDAY:
ICSC Goldman Store Sales (7:45) Index rose 0.2 pct for week ended 8/24
S&P Case-Shiller Home Prices (9:00) June +12.07 pct. y/y vs. +12.20 pct May
Consumer Confidence (10:00) August index better than expected at 81.5 vs. 81.0 July
Richmond Fed Mfg. Ix. (10:00) Up big in August with index plus 14 from a minus 14 July. New orders index plus 16 vs. minus 15
WEDNESDAY:
Pending Home Sales (10:00) Proj.: Jul. -1.0 pct.
THURSDAY:
Q2 GDP (8:30) Proj.: +2.2 pct. at annual rate. Comparisons affected by annual revision
Jobless Claims (8:30) Proj.: 330,000 for week ended 8/24 vs. 336,000 for prior week.
Corporate Profits (8:30) No proj.
Bloomberg Consumer Comfort Ix. (9:45) No proj.
Fed’s Jeffrey Lacker speaks (2:00)
Fed Balance Sheet (4:30) Proj.:
Fed’s James Bullard speaks (7:45 p.m.
FRIDAY:
Personal Income/Outlays (8:30) Proj.: Jul. PI +0.2 pct., Expenditures +0.3 pct
Fed’s James Bullard speaks 9:00)
Chicago PMI (9:45) Proj.: Aug. index 53.0 vs. 52.3 Jul.
Consumer Sentiment (9:55) Proj.: Aug. index 80.0
RECENT POSTS: 2013
Aug 15 DJIA 15,337 “October Buying Opportunity at Much Lower Levels”
Aug 16 DJIA 15,112 “Fed Pressed for Clarification – Rallies Suspect”
Aug 19 DJIA 15,081 “Will Fed Intervene to Stop the Carnage ?”
Aug 20 DJIA 15,010 “Rally Ahead of Wednesday’s FOMC Minutes”
Aug 21 DJIA 15,002 “No September Taper = Bad For Stock Market”
Aug 22 DJIA 14,897 “Street’s Angst Not About First Taper, but……”
Aug 23 DJIA 14,963 “Big Day: Rebound or Rally Failure ?”
Aug 26, DJIA 15,010 “Fed Policy Change – Big Impact on Stock Market ?”
Aug 27 DJIA 14,946 “No Quick Solution for Market’s Negatives – DJIA 14,250 ?
*Stock Trader’s Almanac – New edition due shortly
George Brooks
“Investor’s first read – an edge before the open”
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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.
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