Year-End Opportunities

NOTE:  I have added stocks to a new “TECHNICAL ANALYSIS ALERT LIST” (See below)

While the stock market’s normal trading pattern and volume is impacted by Christmas and New Year’s Day hitting on Wednesdays, there will be last minute buying and selling in selected stocks.

   Sudden waves of 2013 profit-taking will occur before next Wednesday. Intense buying by institutions may occur in stocks that have exceptional 2014 prospects, but are not over-priced. If the latter involves stocks on your “buy” list and you are “on holiday,” you may end up paying up for a targeted stock.

TODAY:

   Tuesday, I projected a spike  up to DJIA 16,400 (S&P 500:1,844)  I still see that before Friday.  

   There’s a lot of chatter about 2014 being a great year; a lot of chart patterns are upbeat, but pressing the upper limits of “short-term overbought.”

    I’m positive on the market and economy, but get  a little uneasy when  there are no one sees any wall of worry for the market to climb.

Investor’s first read– a daily edge before the open

DJIA: 16,357

S&P 500:  1,833

Nasdaq  Comp.:4,155

Russell 2000:  1,61

Wednesday, Dec. 26, 2013   9:13

THE FED:

 Janet Yellen’s Senate confirmation vote as Chair of the Federal Reserve has been delayed in face of Republican opposition until January 6.  This may be just another chess play or the beginning of a new problem.

   Now that the first taper has been announced, . the Fed is expected to wrap up QE in measured steps  at a $10 billion clip over the next seven sessions, but would alter its withdrawal if the economy falters.

   While taper is a change in Fed policy away from stimulation, the Fed insists it is not tightening, since it plans to hold interest rates down throughout 2014.

   

I AM GOING TO REPEAT THE FOLLOWING TO MAINTAIN AWARENESS OF THE POTENTIAL FOR A Q1 CORRECTION.

Best Six Months to own stocks:

Over the years the Stock Trader’s Almanac* has expounded on its significant finding that the stock market performs better  between November 1 and May 1 than between May 1 and November 1.

   The Almanac’s  “Best Six” goes back to 1950.  The six months is a snapshot between November and May.  Many major market advances often start before November, but the point made  here is the period between fall and May is where the action is.

 Is this going to be another “BEST six months to own stocks ?

The six months between November 1 and May 1, have consistently outperformed the six months between May 1 and November 1.*

   With a 5.7% rise in the DJIA since October 31, the Street is now wondering if the market is off to yet another “Best Six Months.” Out of the last 25 years, Nov.1 to May 1, have produced 19 up-years, 3 flats and 3 downers. The best years averaged gains of 11.8% with the best up 25.6% (1998 – 1999).

   THE DANGER:  over the last 25 years, there have been 14 corrections ranging between 6% and  16% during this November1  to May1 period. Seven of those started in January, two in December and four in February.

   TIMING – OPPORTUNITY STOCKS  New addition planned: alert to stocks with emerging technical patterns with potential. In a prolonged downturn, I would alert readers to stocks with vulnerable patterns.  All on the drawing board.

   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: $567.67) Positive.

Low volume Tuesday enabled  profit- takers to shave a few points off AAPL’s stock  after Monday’s $21 surge. Support is $566.

 Could break out again or back and fill for a few days even slip briefly to $564 before moving higher. Acts well.

Facebook (FB:57.96) Positive

Had buyers at $57 support, even on a slow day. Break above $58.32 paves way for low 60s.

IBM (IBM: $183.22)   Positive

Its double bottom at $172 – $173 is set. Its next big test will be to break through resistance at $184. Support is $181 – $182.  

Pulte Homes (PHM: $19.73)  Positive

The  housing industry must now demonstrate it can gain traction.  Support is now $19.50. Stock has had a pattern of sharp price jumps followed by a consolidation and pull back. There is a possibility of that here if it breaks above $20.

First Solar (FSLR:$55.29)  Neutral turning positive

Stock needs a credible institutional research report to assure investors FSLR’s fundamentals are not following China’s track. Stock is in its fourth day of consolidation after last week’s 4-point surge. If it gets a green light from the Street on fundamentals, it has a shot at $60.Support is $55.00

Nike (NKE:$77.66)   Positive 

Still doing battle with year-end sellers. Needs a hi-volume push across $78.50 to improve pattern. Tuesday’s low volume and short day doesn’t give me much of a read. Seams to be some uneasiness about retail right now with holiday sales lagging.  Support $77.25.  Don’t want to see a break below $76.50

Hewlett-Packard (HPQ:$28.16)  Positive. 

Another rally followed by a tight consolidation indicates it wants  to move across $30. Still digesting its surge 17 days ago. May need  more rest time between  $26 – $28 before  moving to a new 52-week high ($28.70). Support $27.80.

Polaris Inds. (PII:142.96)  Positive

Pulled back after hitting a new 52-week high Tuesday. Support $142

Amazon (AMZN: $399.20) Positive

Tuesday’s stall suggests a consolidation before  a sustained move across $400. Sellers put a lid on it at $400 for most of the shortened trading day Tuesday. May have to slip to $396.

Pandora Media (P:$28.77) Positive.

Here we go again – like following a drunk driver. Support $28.40. Needs  several days of heavy upside volume to push it into the low 30s.  Big difference of opinion on the Street on this one.

NEW !   NEW !  NEW !  – Technical analysis ALERT list

The following is a “Technical” alert list, stocks that have indicated an improved technical pattern.  I will not follow up in detail like the stocks above. These are not buys or sells, but simply alerts that their  technical pattern is improving. Normal intraday fluctuations can  offer a lower price than that listed here. Positive patterns can be interrupted by corrections.

   Warning: An improving technical pattern can be reversed instantly by negative commentary from the Street, broker downgrades, etc. These are “snapshots” at a given time. Good timing can target pinpoint lower prices in some cases. Most stocks are technically attractive because they sketched out a positive upbeat pattern. Some will be because they are showing signs of rebounding from a depressed condition. If after additional due diligence you decide to buy any of these stocks, always protect yourself with a stop cell in line with your tolerance for risk

ALERT LIST:.

Align Technologies (ALGN:58.04 )  Listed here (12/23) at $57.03

Gentex (GNTX: $32.95)   Listed here (12/23) at $32.64

Netease (NTES: $75.52)  Listed here (12/23) at $74.51

Spirit Airlines (SAVE: $46.14)  Listed here (12/23) at $46.06)

Valeant Pharm (VRX: $112.62)Listed here (12/23) at $112

Dycom (DY:27.34 )  Listed here (12/23)12/23) at $28.05

Cognex (CGNX: $37.32)Listed here (12/23) at $36.09)

Salex Pharm. (SLXP: $89.13)  Listed here (12/23) at $87.61

ADDED :

Natus Medical (BABY:$22.80 ) Listed here (12/24) at $22.80

Sierra Wireless (SWIR:$22.33) Listed (12/24) at $22.33

NOTE: I AM NEITHER LONG OR SHORT ANY OF THE ABOVE STOCKS

THE ECONOMY: 

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.”

MONDAY:

Personal Income/Spending (8:30)Nov. Personal Income was +0.5 pct, but still considered “soft.”

PCE Prices (8:30)

Michigan Consumer Sentiment (9:55) Dec. index  up sharply from Nov. 75.1

TUESDAY:  Market closes 1 p.m.

Durable Goods (8:30) Nov. up 3.5 pct. vs drop of 0.7 pct. Oct.

FHFA Housing Prices (9:00) Oct.  index up 0.5 pct.

New Home Sales (10:00) dropped 2.1 pct. but ahead of estimates

WEDNESDAY: Christmas

THURSDAY:

Jobless Claims (8:30) Down 42,000 to 338,000 – week ended  12/21.

FRIDAY:

RECENT POSTS – 2013

Dec 5   DJIA 15,889  “December’s Two Dilemmas – Watch Your Back”

Dec 6  DJIA 15,821   “No Fed Taper=December Rally – Correction Q1 ?

Dec 9  DJIA 16,020  “Investor Angst Intensifies”

Dec 10 DJIA 16,025 “ Two Big Dates Loom – What to Watch”

Dec 11 DJIA 15,973  “Year End Rally ?

Dec 12 DJIA 15,843  “Trading Opportunities Imminent – First a BUY – Then a

                                     SELL”

Dec 13 DJIA15,739  “Best Six Months Ahead ? Not Without an Ugly Correction in

                                    the Interim”

Dec 16 DJIA               January 30 Taper ?  If So, Fed Needs to Schedule a Press

                                    Conference – a Tip off”

Dec 17 DJIA 15,755   Fed to Taper January 30 ? It Should, Here’s Why

Dec 19 DJIA  15,875 Taper Today=Sell Off Followed by a rally – No

                                    No Taper=Rally Followed by a sell off”

Dec 23, DJIA 16,221  New Feature : “Technical “Alert” List.”

Dec 24  DJIA 16,294  Buyer Panic ?  Or Seller Ambush ?

*Stock Trader’s Almanac;Get it !  This is the most comprehensive compendium of investing savvy between two covers I have ever encountered in my 47 years of writing about the market. Got my first in 1968.  There you have it ! I’m an old duff, but I have programmed my computer (brain) with smarts gained from writing about the market in an unbelievably challenging stretch of  market activity.  I endorse the Almanac – It’s loaded with references, stats, valuable studies, and insight.

  George  Brooks

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

[email protected]

……………………………………………..

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.