Upside Breakout Possible – Careful !

Investor’s first read – Daily edge before the open
DJIA:16,069
S&P 500: 1,893
Nasdaq Comp:4,506
Russell 2000: 1,003
Friday: Jan. 29, 2016 9:05 a.m.
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What a slugfest between bulls and bears yesterday ! (Frazier/Ali).
While the market was up for the day, it did not breakout of the consolidation pattern, which is roughly DJIA 16,235 – 15,870 (S&P 500: 1,916 – 1,870). The judges are tallying their scorecards – we should have a decision today or Monday.
You can look at it one of two ways. The bulls are relentlessly chewing away at sell orders overhanging the market and will eventually win. Or two, the bears are dumping stocks relentlessly in face of the bulls buying and will eventually succeed and the market will plunge.
If the bulls win, the and the market breaks out on the upside, the risks of a rally failure will be very high. The market will run for a few days, but will then top out and plunge to test the January 20 lows, which is what will happen if the bears win.
Q4 earnings are mixed, but it is what the Street sees for 2016 that counts.
Oil was ahead following renewed rumors that OPEC members and Russia plan production cuts. I have stressed for weeks, that, “If production cuts are mentioned, the bottom “is in.” (see “OIL” below).
One problem with well publicized swing factors (oil) is the news whipsaw – “Yes they will, no they won’t”. Four of the six oil stocks mentioned herein on Jan. 7 hit my “panic” targets on Jan. 20 and are up sharply. Odds favor the selling climax in oil is over, but there is a chance this is just a bear rally in the group. Traders who bought the panic price can exit. Chasing the group is risky near-term since the rumors of production cuts may be premature.
A solid technical rally here could drive the market averages up to DJIA 16,537; S&P 500:1,944; Nasdaq Comp.: 4,682. Currently, I see that as a big stretch – it can happen, but needs help from corporate earnings projections, the economy and a Fed policy comment.
Without that input, a rally from this area would be challenged to reach DJIA” 16,316; S&P 500:1,932; Nasdaq Comp.: 4,655.
Dowside Risk:
Below DJIA 15,000 (S&P 500:1,750) would be a reasonable number. Toss in new negatives, and DJIA 14,000 (S&P 500: 1,650) are not out of the question.
After all, the 2007-2009 bear market declined 55%, this one is only down 11% now after a plunge of 15% to Jan. 20.
TODAY:
Global markets got a boost from the Bank of Japan’s decision increase stimulus when it adopted a negative interest rate, hammering both the yen and bond yields.
Ugh ! Does that really mean instead of the central bank paying a depositor for the use of their funds, the depositor pays the central bank to keep their money ? Yep !
I don’t see this as good news at all.
Odds favor a two-week, saw-toothed trading range above DJIA 15,500 (S&P 500: 1,840) before a breakout up or down. But we could get a breakout today, resulting in a run up for a few days, but fail to follow through.
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SUPPORT “today”: DJIA:15,978 ; S&P 500:1,881; Nasdaq Comp.:4,477
RESISTANCE ‘today”: DJIA:16,201; S&P 500:1,907; Nasdaq Comp.:4,534
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NEGATIVES/UNCERTAINTIES
The Street is spooked by a realization that the U.S. economy may be sagging in face of rising interest rates; a bitterly contested presidential election; the unknown consequences of an oil glut; and corporate earnings which may fail to achieve the 6.8% growth the Street expects, the second year in a row.
Under these conditions, the market must find a level that discounts negatives and uncertainties.
EARNINGS
Corporate earnings will rise to the surface in 2016 as the “decider”. The flow of Q4 earnings started with Alcoa’s (AA) report yesterday.
S&P 500 earnings for 2015 will drop some 5.5% (ex-energy – flat). The Street is looking for some 7% growth this year. As of Friday’s close, that works out to a P/E of 14.9 vs a 10-year average of 14.2. Projections were for growth of 8% last year and ended with zilch for the year, though the market held up well considering.
Stock prices won’t hold up as well if revisions start to plunge again this year. Expect a bear market if they do.
A decline of 20%, the criteria for a bear market, would take the S&P 500 down to 1,707. Based on FactSet.com’s current forecast of $125.71 for 2016 earnings, that would translate into a P/E of 13.6.
OIL :
Oil spiked last week after Khalid al-Falih, chairman of Saudi Aramco, said oil has overshot on the downside and will turn up. He did not indicate what would trigger a rise in price, but declined it would be production cuts, unless other non-OPEC countries cut production.
IF PRODUCTION CUTS ARE MENTIONED, THE BOTTOM “is in”.
I have been writing that 2016 is the year to buy oils.
For weeks, I have alerted readers to expect oil stocks to make a bottom in 2016, but have not seen the panic conditions that would signal capitulation. That panic occurred on Jan. 20, though it may not be the last selling climax.
Panic prices selected oil stocks:
Exxon (XOM): 67 (strong in down market due to yield); Chevron (CVX): 74 strong in down market due to high : Market sector oil service ETF (OIH): 21; SPDR S&P O&G ETF (XOP): 24; Vanguard energy ETF (VDE): 69; Energy select SPDR ETF (XLE): 50. These are “technical” projections only.
CONCLUSION: So far OIH, XOP, VDE, and XLE dipped below the panic price on Jan. 20, then rebounded above it. Neither XOM or CVX dropped enough to hit the panic price.
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ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS of the 30 DJIA Companies:
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages,
As of January 20, 2016, a reasonable risk is 15,737 a more extreme risk is 15,210. Near-term upside potential is 16,396
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – buying opportunity in mini-crash scenario
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45% depends on tolerance for risk.
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q1, 2016 earnings
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to mam.econoday.com.
…………………………………………………………
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 or as investment advice 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 in keeping with their tolerance for risk.

Street’s Mounting Fear – Earnings and Politics

Investor’s first read – Daily edge before the open
DJIA:15,944
S&P 500: 1,882
Nasdaq Comp4,468.:
Russell 2000: 1,002
Thursday: Jan. 28, 2016 9:08 a.m.
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The market spiked briefly when the minutes of this week’s FOMC meeting were released indicating no increase in the federal funds rate this time.
It looks like the Street was hoping for more assurance that the Fed won’t be raising the benchmark rate any time soon, because it sold off sharply thereafter.
The market isn’t getting a big boost from the stream of Q4 earnings/guidance reports with disappointments in Apple (AAPL), Boeing (BA), Norfolk Southern (NSC), US Steel (X), VMware (VMW)Coach (COH), Microsoft (MSFT), Procter Gamble (PG).
The Street is spooked about something more than the Fed, and it could be the prospect of another flat earnings season, possibly the above average levels of global corporate debt, and who will be running the country a year from now.
Then too, it may be “technical,” a correction to the grand bull market that increased the broad-based S&P 500 by 220% in a little less than 7 years.
A solid technical rally here could drive the market averages up to DJIA 16,537; S&P 500:1,944; Nasdaq Comp.: 4,682. Currently, I see that as a big stretch – it can happen, but needs help from corporate earnings projections, the economy and a Fed policy comment.
Without that input, a rally from this area would be challenged to reach DJIA” 16,316; S&P 500:1,932; Nasdaq Comp.: 4,655.
Dowside Risk:
Below DJIA 15,000 (S&P 500:1,750) would be a reasonable number. Toss in new negatives, and DJIA 14,000 (S&P 500: 1,650) are not out of the question.
After all, the 2007-2009 bear market declined 55%, this one is only down 11% now after a plunge of 15% to Jan. 20.
Odds favor a two-week, saw-toothed trading range above DJIA 15,500 (S&P 500: 1,840) before a breakout up or down.
TODAY:
It’s a toss-up at the open, but possession of the ball is increasingly important.
The market in consolidating after rebounding from last Wednesday’s climactic low. A break above DJIA 16,235 (S&P 500: 1,916 would pave the way for a sharp move up.
A break below DJIA 15,878 (S&P 500: 1,872) indicates a test of last week’s lows.
The price of oil is up sharply, which may influence the direction of a breakout.
Then too, a big jump in pre-market futures trading following the December Durable Goods report showing a surprise plunge of 5.1 pct. vs. projections of a gain of 0.2 pct. suggests the Street is still cheering bad news.
Why ?
Because it pressures the Fed to delay further interest rate increases.
WOW ! Bad news is good news is back ! Who are these guys/gals ?
Careful what you wish for.
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SUPPORT “today”: DJIA: 15,776; S&P 500: 1,861; Nasdaq Comp.: 4,426
RESISTANCE ‘today”: DJIA: 16,037; S&P 500:1,893; Nasdaq Comp.:4,504
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NEGATIVES/UNCERTAINTIES
The Street is spooked by a realization that the U.S. economy may be sagging in face of rising interest rates; a bitterly contested presidential election; the unknown consequences of an oil glut; and corporate earnings which may fail to achieve the 6.8% growth the Street expects, the second year in a row.
Under these conditions, the market must find a level that discounts negatives and uncertainties.
EARNINGS
Corporate earnings will rise to the surface in 2016 as the “decider”. The flow of Q4 earnings started with Alcoa’s (AA) report yesterday.
S&P 500 earnings for 2015 will drop some 5.5% (ex-energy – flat). The Street is looking for some 7% growth this year. As of Friday’s close, that works out to a P/E of 14.9 vs a 10-year average of 14.2. Projections were for growth of 8% last year and ended with zilch for the year, though the market held up well considering.
Stock prices won’t hold up as well if revisions start to plunge again this year. Expect a bear market if they do.
A decline of 20%, the criteria for a bear market, would take the S&P 500 down to 1,707. Based on FactSet.com’s current forecast of $125.71 for 2016 earnings, that would translate into a P/E of 13.6.
OIL :
Oil spiked last week after Khalid al-Falih, chairman of Saudi Aramco, said oil has overshot on the downside and will turn up. He did not indicate what would trigger a rise in price, but declined it would be production cuts, unless other non-OPEC countries cut production.
IF PRODUCTION CUTS ARE MENTIONED, THE BOTTOM “is in”.
I have been writing that 2016 is the year to buy oils.
For weeks, I have alerted readers to expect oil stocks to make a bottom in 2016, but have not seen the panic conditions that would signal capitulation. That panic occurred on Jan. 20, though it may not be the last selling climax.
Panic prices selected oil stocks:
Exxon (XOM): 67 (strong in down market due to yield); Chevron (CVX): 74 strong in down market due to high : Market sector oil service ETF (OIH): 21; SPDR S&P O&G ETF (XOP): 24; Vanguard energy ETF (VDE): 69; Energy select SPDR ETF (XLE): 50. These are “technical” projections only.
CONCLUSION: So far OIH, XOP, VDE, and XLE dipped below the panic price on Jan. 20, then rebounded above it. Neither XOM or CVX dropped enough to hit the panic price.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS of the 30 DJIA Companies:
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages,
As of January 20, 2016, a reasonable risk is 15,737 a more extreme risk is 15,210. Near-term upside potential is 16,396
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – buying opportunity in mini-crash scenario
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45% depends on tolerance for risk.
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q1, 2016 earnings
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to mam.econoday.com.
…………………………………………………………
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 or as investment advice 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 in keeping with their tolerance for risk.

Street Hoping Fed Delays Rate Hikes

Investor’s first read – Daily edge before the open
DJIA:16,167
S&P 500: 1,903
Nasdaq Comp.:4,567
Russell 2000: 1,017
Wednesday: Jan. 27, 2016 9:01 a.m.
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There is no press conference scheduled after the FOMC meeting tomorrow, but I expect the Fed to find a way to try to stabilize the market turmoil that has roiled investment values this month.
Its best bet would be to indicate it will not raise its federal funds rate again until the markets settles down.
That’s a safe ploy – no firm commitment, just something implied to buy time.
It could trigger a rally, but there is something going on here beyond the Fed. It could be that 2016 earnings won’t be ahead the 7%-8% projected. The Street looked for that growth last year and ended up with zilch.
It may be political, but who is to blame ? We don’t know who will be contending. A mini-recession is possible.
Then too, it may be “technical,” a correction to the grand bull market that increased the broad-based S&P 500 by 220% in a little less than 7 years.
A solid technical rally here could drive the market averages up to DJIA 16,537; S&P 500:1,944; Nasdaq Comp.: 4,682. Currently, I see that as a big stretch – it can happen, but needs help from corporate earnings projections, the economy and a Fed policy comment.
Without that input, a rally from this area would be challenged to reach DJIA” 16,316; S&P 500:1,932; Nasdaq Comp.: 4,655.
Dowside Risk:
Below DJIA 15,000 (S&P 500:1,750) would be a reasonable number. Toss in new negatives, and DJIA 14,000 (S&P 500: 1,650) are not out of the question.
After all, the 2007-2009 bear market declined 55%, this one is only down 11% now after a plunge of 15% to Jan. 20.
Odds favor a two-week, saw toothed trading range above DJIA 15,500 (S&P 500: 1,840) before a breakout up or down.
TODAY:
Pre-market trading in stock index futures indicate a mixed-to-down open. Apple itself will lop 27 points off the DJIA after disappointing earnings last night.
The Street may want to hang in there for more Q4 earnings, but it’s really all about 2016. Good growth is a must for this bull market to have legs.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:16,267 ; S&P 500:1,914 ; Nasdaq Comp.:4,585.
RESISTANCE ‘today”: DJIA:16,081; S&P 500:1,893; Nasdaq Comp.: 4,541.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NEGATIVES/UNCERTAINTIES
The Street is spooked by a realization that the U.S. economy may be sagging in face of rising interest rates; a bitterly contested presidential election; the unknown consequences of an oil glut; and corporate earnings which may fail to achieve the 6.8% growth the Street expects, the second year in a row.
Under these conditions, the market must find a level that discounts negatives and uncertainties.
EARNINGS
Corporate earnings will rise to the surface in 2016 as the “decider”. The flow of Q4 earnings started with Alcoa’s (AA) report yesterday.
S&P 500 earnings for 2015 will drop some 5.5% (ex-energy – flat). The Street is looking for some 7% growth this year. As of Friday’s close, that works out to a P/E of 14.9 vs a 10-year average of 14.2. Projections were for growth of 8% last year and ended with zilch for the year, though the market held up well considering.
Stock prices won’t hold up as well if revisions start to plunge again this year. Expect a bear market if they do.
A decline of 20%, the criteria for a bear market, would take the S&P 500 down to 1,707. Based on FactSet.com’s current forecast of $125.71 for 2016 earnings, that would translate into a P/E of 13.6.
OIL :
Oil spiked last week after Khalid al-Falih, chairman of Saudi Aramco, said oil has overshot on the downside and will turn up. He did not indicate what would trigger a rise in price, but declined it would be production cuts, unless other non-OPEC countries cut production.
IF PRODUCTION CUTS ARE MENTIONED, THE BOTTOM IS IN.
I have been writing that 2016 is the year to buy oils.
For weeks, I have alerted readers to expect oil stocks to make a bottom in 2016, but have not seen the panic conditions that would signal capitulation. I am looking for a selling climax that depresses this group enough to attract the BIG money. With some help from the weakness in the stock market, and continued outpouring of gloom, a panic may occur, a high-volume, one-day spike down that closes on the upside.
The Saudi’s are playing a dangerous game. Too many big hitters getting hurt. Pressure from within or from the outside will force them to trigger a price rebound, just like they triggered a plunge.
Talk of $20 oil has been around for weeks pumped by the likes of Goldman Sachs, RBS and Morgan Stanley. International Monetary Fund’s chief, Christine Lagarde expects oil to stay low for a “sustained period.”
Now investment bank, Standard Chartered, is talking $10 oil, not seen since the big global crunch – 2009.
Keep it up, guys and girls, and you’ll create a full-scale PANIC !
FactSet .com is projecting a sizable rebound in 2016 and 2017, though that growth rate is based on earnings that have been hammered by the plunge in oil prices.
Panic prices selected oil stocks:
Exxon (XOM): 67 (strong in down market due to yield); Chevron (CVX): 74 strong in down market due to high : Market sector oil service ETF (OIH): 21; SPDR S&P O&G ETF (XOP): 24; Vanguard energy ETF (VDE): 69; Energy select SPDR ETF (XLE): 50. These are “technical” projections only and subject to change as conditions in the oil industry and stock market unfold. These prices are 12% – 16% below the current market and may never be hit. Under panic conditions, the prices at a turn are only hit momentarily. Orders must be placed below the market in advance to catch the lows. Obviously, this is only for investors who can afford the risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS of the 30 DJIA Companies:
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages,
As of January 20, 2016, a reasonable risk is 15,737 a more extreme risk is 15,210. Near-term upside potential is 16,396
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – buying opportunity in mini-crash scenario
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45% depends on tolerance for risk.
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q1, 2016 earnings
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to mam.econoday.com.
…………………………………………………………
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 or as investment advice 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 in keeping with their tolerance for risk

Street Expects Help From the Fed

Investor’s first read – Daily edge before the open
DJIA:15885
S&P 500: 1,877
Nasdaq Comp:4518
Russell 2000: 997
Tuesday: Jan. 26, 2016 9:07 a.m.
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Expect a technical rally today as the Street front-runs the release of the minutes from the FOMC meeting Wednesday at 2:00 p.m..
January’s harrowing plunge in stock prices has given the Fed an excuse to step in and prop the market. Its likely ploy would be to indicate it will not raise its federal funds rate again until the market settles down.
There is no press conference scheduled after the meeting, so the Street will have to read between the lines, or maybe a Fed official (Yellen or Bullard) will have some post-meeting comments.
I don’t think January’s decline is totally Fed based, so a rally based on what the Fed says is suspect. If robust, it would give investors a chance to raise cash.
A solid technical rally here could drive the market averages up to DJIA 16,537; S&P 500:1,944; Nasdaq Comp.: 4,682. Currently, I see that as a big stretch – it can happen, but needs help from corporate earnings projections, the economy and a Fed policy comment.
Without that input, a rally from this area would be challenged to reach DJIA” 16,316; S&P 500:1,932; Nasdaq Comp.: 4,655.
Dowside Risk:
Below DJIA 15,000 (S&P 500:1,750) would be a reasonable number. Toss in new negatives, and DJIA 14,000 (S&P 500: 1,650) are not out of the question.
This decline is related to the entire bull market March 2009 to May 2015, not just one of the legs of that bull market. A reasonable one-third retracement of the bull market would be DJIA 14,380 (S&P 500: 1,645).
After all, the 2007-2009 bear market declined 55%, this one is only down 11% now after a plunge of 15% to Jan. 20.
Odds favor a two-week, saw toothed trading range above DJIA 15,500 (S&P 500: 1,840) before a breakout up or down.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:15,803 ; S&P 500:1,862 ; Nasdaq Comp.:4,476.
RESISTANCE ‘today”: DJIA: 16,035; S&P 500:1,897 ; Nasdaq Comp.: 4,559.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NEGATIVES/UNCERTAINTIES
The Street is spooked by a realization that the U.S. economy may be sagging in face of rising interest rates; a bitterly contested presidential election; the unknown consequences of an oil glut; and corporate earnings which may fail to achieve the 6.8% growth the Street expects, the second year in a row.
Under these conditions, the market must find a level that discounts negatives and uncertainties.
EARNINGS
Corporate earnings will rise to the surface in 2016 as the “decider”. The flow of Q4 earnings started with Alcoa’s (AA) report yesterday.
S&P 500 earnings for 2015 will drop some 5.5% (ex-energy – flat). The Street is looking for some 7% growth this year. As of Friday’s close, that works out to a P/E of 14.9 vs a 10-year average of 14.2. Projections were for growth of 8% last year and ended with zilch for the year, though the market held up well considering.
Stock prices won’t hold up as well if revisions start to plunge again this year. Expect a bear market if they do.
A decline of 20%, the criteria for a bear market, would take the S&P 500 down to 1,707. Based on FactSet.com’s current forecast of $125.71 for 2016 earnings, that would translate into a P/E of 13.6.
OIL :
Oil spiked last week after Khalid al-Falih, chairman of Saudi Aramco, said oil has overshot on the downside and will turn up. He did not indicate what would trigger a rise in price, but declined it would be production cuts, unless other non-OPEC countries cut production.
IF PRODUCTION CUTS ARE MENTIONED, THE BOTTOM IS IN.
I have been writing that 2016 is the year to buy oils.
For weeks, I have alerted readers to expect oil stocks to make a bottom in 2016, but have not seen the panic conditions that would signal capitulation. I am looking for a selling climax that depresses this group enough to attract the BIG money. With some help from the weakness in the stock market, and continued outpouring of gloom, a panic may occur, a high-volume, one-day spike down that closes on the upside.
The Saudi’s are playing a dangerous game. Too many big hitters getting hurt. Pressure from within or from the outside will force them to trigger a price rebound, just like they triggered a plunge.
Talk of $20 oil has been around for weeks pumped by the likes of Goldman Sachs, RBS and Morgan Stanley. International Monetary Fund’s chief, Christine Lagarde expects oil to stay low for a “sustained period.”
Now investment bank, Standard Chartered, is talking $10 oil, not seen since the big global crunch – 2009.
Keep it up, guys and girls, and you’ll create a full-scale PANIC !
FactSet .com is projecting a sizable rebound in 2016 and 2017, though that growth rate is based on earnings that have been hammered by the plunge in oil prices.
Panic prices selected oil stocks: Exxon (XOM): 67 (strong in down market due to yield); Chevron (CVX): 74 strong in down market due to high : Market sector oil service ETF (OIH): 21; SPDR S&P O&G ETF (XOP): 24; Vanguard energy ETF (VDE): 69; Energy select SPDR ETF (XLE): 50. These are “technical” projections only and subject to change as conditions in the oil industry and stock market unfold. These prices are 12% – 16% below the current market and may never be hit. Under panic conditions, the prices at a turn are only hit momentarily. Orders must be placed below the market in advance to catch the lows. Obviously, this is only for investors who can afford the risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS of the 30 DJIA Companies:
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages,
As of January 20, 2016, a reasonable risk is 15,737 a more extreme risk is 15,210. Near-term upside potential is 16,396
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – buying opportunity in mini-crash scenario
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45% depends on tolerance for risk.
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q1, 2016 earnings
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to mam.econoday.com.
…………………………………………………………
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 or as investment advice 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 in keeping with their tolerance for risk

Damaged Goods – Bulls Challenged

Investor’s first read – Daily edge before the open
DJIA:16,093
S&P 500: 1,906
Nasdaq Comp: 4,591:
Russell 2000: 1,020
Monday: Jan. 25, 2016 8:56 a.m.
/////////////////////////////////////////////////////////////////////////////////////////////////////////
This does not look like hotly contested turf. Down 8.4% in 3 weeks. Stocks should have attracted more frenzied buying.
Maybe the Street’s computer algorithms weren’t programmed to hit a curve ball, and buyers will show up this week.
Sometimes it just takes the best computer known to man (human brain) to sense a change in the market’s direction.
If a solid technical rally developed here, it would drive the market averages up to DJIA 16,537; S&P 500:1,944; Nasdaq Comp.: 4,682. Currently, I see that as a big stretch – can happen, but needs help from corporate earnings projections, the economy and a Fed policy comment.
Without that input, a rally from this area would be challenged to reach DJIA” 16,316; S&P 500:1,932; Nasdaq Comp.: 4,655.
Odds favor a two-week, saw-toothed trading range above DJIA 15,500 (S&P 500: 1,840) before moving in one direction or another.
Dowside Risk:
Below DJIA 15,000 (S&P 500:1,750) would be a reasonable number. Toss in new negatives, and DJIA 14,000 (S&P 500: 1,650) are not out of the question.
After all, the 2007-2009 bear market declined 55%, this one is only down 11% now after a plunge of 15% to Jan. 20.
The Fed could step in here to gum things up with a statement Wednesday about a policy change, i.e. no more rate increases, maybe the suggestion of some version of QE if things get bad.
This would happen coming out of their FOMC meeting Wednesday though there is no press conference scheduled.
Fed comments would produce a very dangerous rally, one which could shortly reverse into another brutal down-leg.
This isn’t totally a Fed thing. And it’s not totally China, or oil.
This is an eerie fear of the unknown, because markets don’t plunge like this with all news known. Something else may be afoot.
Last Wednesday was a classic selling climax with the DJIA down 566 points (-3.5%), the S&P 500 down 69 points (3.7%) at the lows for the day before a sharp rebound.

NOTE: Oil spiked again Friday following a comment by Saudi Aramco’s chairman. Bear market rally ?? (see “OIL” below)
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:15,983 ; S&P 500:1,893; Nasdaq Comp.:4,563 .
RESISTANCE ‘today”: DJIA: 16,196; S&P 500:1,918; Nasdaq Comp.:4,620.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ALERT:
Expect the Fed (Yellen or Bullard) to step in once again to try to stabilize stock prices. Most effective would be comments that they won’t raise rates again until the markets stabilize.
Fed’s James Bullard tried to stabilize the market Thursday Jan. 14 before the open with a similar inference. My response: “Don’t buy his rally.”
A rally that day was followed buy a DJIA 666-point (4%) plunge.
The market will find its own comfort level. A lot of investors got hurt by his untimely comments.
NEGATIVES/UNCERTAINTIES
The Street is spooked by a realization that the U.S. economy may be sagging in face of rising interest rates; a bitterly contested presidential election; the unknown consequences of an oil glut; and corporate earnings which may fail to achieve the 6.8% growth the Street expects, the second year in a row.
Under these conditions, the market must find a level that discounts negatives and uncertainties.
EARNINGS
Corporate earnings will rise to the surface in 2016 as the “decider”. The flow of Q4 earnings started with Alcoa’s (AA) report yesterday.
S&P 500 earnings for 2015 will drop some 5.5% (ex-energy – flat). The Street is looking for some 7% growth this year. As of Friday’s close, that works out to a P/E of 14.9 vs a 10-year average of 14.2. Projections were for growth of 8% last year and ended with zilch for the year, though the market held up well considering.
Stock prices won’t hold up as well if revisions start to plunge again this year. Expect a bear market if they do.
A decline of 20%, the criteria for a bear market, would take the S&P 500 down to 1,707. Based on FactSet.com’s current forecast of $125.71 for 2016 earnings, that would translate into a P/E of 13.6.
OIL :
Oil spiked last week after Khalid al-Falih, chairman of Saudi Aramco, said oil has overshot on the downside and will turn up. He did not indicate what would trigger a rise in price, but declined it would be production cuts, unless other non-OPEC countries cut production.
IF PRODUCTION CUTS ARE MENTIONED, THE BOTTOM IS IN.
I have been writing that 2016 is the year to buy oils.
For weeks, I have alerted readers to expect oil stocks to make a bottom in 2016, but have not seen the panic conditions that would signal capitulation. I am looking for a selling climax that depresses this group enough to attract the BIG money. With some help from the weakness in the stock market, and continued outpouring of gloom, a panic may occur, a high-volume, one-day spike down that closes on the upside.
The Saudi’s are playing a dangerous game. Too many big hitters getting hurt. Pressure from within or from the outside will force them to trigger a price rebound, just like they triggered a plunge.
Talk of $20 oil has been around for weeks pumped by the likes of Goldman Sachs, RBS and Morgan Stanley. International Monetary Fund’s chief, Christine Lagarde expects oil to stay low for a “sustained period.”
Now investment bank, Standard Chartered, is talking $10 oil, not seen since the big global crunch – 2009.
Keep it up, guys and girls, and you’ll create a full-scale PANIC !
FactSet .com is projecting a sizable rebound in 2016 and 2017, though that growth rate is based on earnings that have been hammered by the plunge in oil prices.
Panic prices selected oil stocks: Exxon (XOM): 67 (strong in down market due to yield); Chevron (CVX): 74 strong in down market due to high : Market sector oil service ETF (OIH): 21; SPDR S&P O&G ETF (XOP): 24; Vanguard energy ETF (VDE): 69; Energy select SPDR ETF (XLE): 50. These are “technical” projections only and subject to change as conditions in the oil industry and stock market unfold. These prices are 12% – 16% below the current market and may never be hit. Under panic conditions, the prices at a turn are only hit momentarily. Orders must be placed below the market in advance to catch the lows. Obviously, this is only for investors who can afford the risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS of the 30 DJIA Companies:
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages,
As of January 20, 2016, a reasonable risk is 15,737 a more extreme risk is 15,210. Near-term upside potential is 16,396
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – buying opportunity in mini-crash scenario
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45% depends on tolerance for risk.
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q1, 2016 earnings
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to mam.econoday.com.
…………………………………………………………
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 or as investment advice 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 in keeping with their tolerance for risk

BIG Money Must Step In or 15,000 DJIA

Investor’s first read – Daily edge before the open
DJIA:15,882
S&P 500: 1,868
Nasdaq Comp:4,472
Russell 2000: 997
Friday: Jan. 22, 2016 8:56 a.m.
/////////////////////////////////////////////////////////////////////////////////////////////////////////
The stock market is down 13% in only 3 weeks, and this is all the interest it attracts ?
Well, let’s give it a chance, just sit close to the exit. We can get a nice technical rally here with the market averages reaching DJIA 16,537; S&P 500:1,944; Nasdaq Comp.: 4,682. Currently, I see that as a big stretch – can happen, but needs help from corporate earnings projections, the economy and Fed.
Without “help,” I think this market is in trouble and will go lower.
How much lower ?
Below DJIA 15,000 (S&P 500:1,750) would be a reasonable number. Toss in new negatives, and DJIA 14,000 (S&P 500: 1,650) are not out of the question.
After all, the 2007-2009 bear market declined 55%, this one is only down 15%.
The Fed could step in here to gum things up with a statement about a policy change, i.e. no more rate increases, maybe a version of QE.
Fed comments would produce a very dangerous rally, one which would reverse into another brutal down-leg.
This isn’t totally a Fed thing. And it’s not totally China, or oil.
This is an eerie fear of the unknown, because markets don’t plunge like this. Something else may be afoot.
Wednesday was a classic selling climax with the DJIA down 566 points (-3.5%), the S&P 500 down 69 points (3.7%) at the lows for the day before a sharp rebound.
NOTE: Oil spiked again today following a comment by Saudi Aramco’s chairman. (see “OIL” below)
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:15,771; S&P 500:1,853 ; Nasdaq Comp.:4,421. These levels should not be seen today. A break below, would be bad.
RESISTANCE ‘today”: DJIA:16,107 ; S&P 500:1,897 ; Nasdaq Comp.:4,521.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ALERT:
Expect the Fed (Yellen or Bullard) to step in once again to try to stabilize stock prices. Most effective would be comments that they won’t raise rates again until the markets stabilize.
Fed’s James Bullard tried to stabilize the market Thursday Jan. 14 before the open with a similar inference. My response: “Don’t buy his rally.”
A rally that day was followed buy a DJIA 666-point (4%) plunge.
The market will find its own comfort level. A lot of investors got hurt by his untimely comments.
NEGATIVES/UNCERTAINTIES
The Street is spooked by a realization that the U.S. economy may be sagging in face of rising interest rates; a bitterly contested presidential election; the unknown consequences of an oil glut; and corporate earnings which may fail to achieve the 6.8% growth the Street expects, the second year in a row.
Under these conditions, the market must find a level that discounts negatives and uncertainties.
EARNINGS
Corporate earnings will rise to the surface in 2016 as the “decider”. The flow of Q4 earnings started with Alcoa’s (AA) report yesterday.
S&P 500 earnings for 2015 will drop some 5.5% (ex-energy – flat). The Street is looking for some 7% growth this year. As of Friday’s close, that works out to a P/E of 14.9 vs a 10-year average of 14.2. Projections were for growth of 8% last year and ended with zilch for the year, though the market held up well considering.
Stock prices won’t hold up as well if revisions start to plunge again this year. Expect a bear market if they do.
A decline of 20%, the criteria for a bear market, would take the S&P 500 down to 1,707. Based on FactSet.com’s current forecast of $125.71 for 2016 earnings, that would translate into a P/E of 13.6.
OIL :
Oil spiked yesterday after Khalid al-Falih, chairman of Saudi Aramco said oil has overshot on the downside and will turn up. He did not indicate what would trigger a rise in price, but declined it would be production cuts, unless other non-OPEC countries cut production.
IF PRODUCTION CUTS ARE MENTIONED, THE BOTTOM IS IN.
I have been writing that 2016 is the year to buy oils.
For weeks, I have alerted readers to expect oil stocks to make a bottom in 2016, but have not seen the panic conditions that would signal capitulation. I am looking for a selling climax that depresses this group enough to attract the BIG money. With some help from the weakness in the stock market, and continued outpouring of gloom, a panic may occur, a high-volume, one-day spike down that closes on the upside.
The Saudi’s are playing a dangerous game. Too many big hitters getting hurt. Pressure from within or from the outside will force them to trigger a price rebound, just like they triggered a plunge.
Talk of $20 oil has been around for weeks pumped by the likes of Goldman Sachs, RBS and Morgan Stanley. International Monetary Fund’s chief, Christine Lagarde expects oil to stay low for a “sustained period.”
Now investment bank, Standard Chartered, is talking $10 oil, not seen since the big global crunch – 2009.
Keep it up, guys and girls, and you’ll create a full-scale PANIC !
FactSet .com is projecting a sizable rebound in 2016 and 2017, though that growth rate is based on earnings that have been hammered by the plunge in oil prices.
Panic prices selected oil stocks: Exxon (XOM): 67 (strong in down market due to yield); Chevron (CVX): 74 strong in down market due to high : Market sector oil service ETF (OIH): 21; SPDR S&P O&G ETF (XOP): 24; Vanguard energy ETF (VDE): 69; Energy select SPDR ETF (XLE): 50. These are “technical” projections only and subject to change as conditions in the oil industry and stock market unfold. These prices are 12% – 16% below the current market and may never be hit. Under panic conditions, the prices at a turn are only hit momentarily. Orders must be placed below the market in advance to catch the lows. Obviously, this is only for investors who can afford the risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS of the 30 DJIA Companies:
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages,
As of January 20, 2016, a reasonable risk is 15,686 a more extreme risk is 15,327. Near-term upside potential is 16,263
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – buying opportunity in mini-crash scenario
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45% depends on tolerance for risk.
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q1, 2016 earnings
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to mam.econoday.com.
…………………………………………………………
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 or as investment advice 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 in keeping with their tolerance for risk

Market Needs Huge Catalyst to Hold

Investor’s first read – Daily edge before the open
DJIA:15,766
S&P 500: 1,859
Nasdaq Comp:4,471
Russell 2000: 999
Thursday: Jan. 21, 2016 8:56 a.m.
/////////////////////////////////////////////////////////////////////////////////////////////////////////
Last Friday’s blog, “Selling Climax – Tuesday Traders’ Buy” came a day late (Wednesday).
This was a classic selling climax with DJIA down 566 points (-3.5%), the S&P 500 down 69 points (3.7%) at the lows for the day before a sharp rebound.
There is a chance institutional buying will stabilize the market for a week or so with big swings in both directions. That can be a base for a rebound or simply a way station leading to another leg down.
The DJIA can drop below 15,000 (S&P 500 1,750) under present conditions. Toss in new negatives, and DJIA 14,000 (S&P 500: 1,650) are not out of the question.
This month’s freefall has produced a lot of attractively priced stocks, which SHOULD attract bargain hunters. If they do not jump in here in a hurry, we are going lower.
Worth noting, the 2007-2009 bear market declined 55%, this one is only down 15%.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA: 15,621; S&P 500:1,836; Nasdaq Comp.:4,426. The market should be able to hold a gain today. If it can’t new lows are in the offing Friday or next week.
RESISTANCE ‘today”: DJIA:15,993; S&P 500:1,881; Nasdaq Comp.:4,536 .
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ALERT:
Expect the Fed (Yellen or Bullard) to step in once again to try to stabilize stock prices. Most effective would be comments that they won’t raise rates again until the markets stabilize.
Fed’s James Bullard tried to stabilize the market Thursday Jan. 14 before the open with a similar inference. My response: “Don’t buy his rally.”
A rally that day was followed buy a DJIA 666-point (4%) plunge.
The market will find its own comfort level. A lot of investors got hurt by his untimely comments.
NEGATIVES/UNCERTAINTIES
The Street is spooked by a realization that the U.S. economy may be sagging in face of rising interest rates; a bitterly contested presidential election; the unknown consequences of an oil glut; and corporate earnings which may fail to achieve the 6.8% growth the Street expects, the second year in a row.
Under these conditions, the market must find a level that discounts negatives and uncertainties.
EARNINGS
Corporate earnings will rise to the surface in 2016 as the “decider”. The flow of Q4 earnings started with Alcoa’s (AA) report yesterday.
S&P 500 earnings for 2015 will drop some 5.5% (ex-energy – flat). The Street is looking for some 7% growth this year. As of Friday’s close, that works out to a P/E of 14.9 vs a 10-year average of 14.2. Projections were for growth of 8% last year and ended with zilch for the year, though the market held up well considering.
Stock prices won’t hold up as well if revisions start to plunge again this year. Expect a bear market if they do.
A decline of 20%, the criteria for a bear market, would take the S&P 500 down to 1,707. Based on FactSet.com’s current forecast of $125.71 for 2016 earnings, that would translate into a P/E of 13.6.
OIL :
Expect a selling climax within two months, however, just one word about production cuts by a well-placed Mid-East official and the bottom “is in.”
I have been writing that 2016 is the year to buy oils.
For weeks, I have alerted readers to expect oil stocks to make a bottom in 2016, but have not seen the panic conditions that would signal capitulation. I am looking for a selling climax that depresses this group enough to attract the BIG money. With some help from the weakness in the stock market, and continued outpouring of gloom, a panic may occur, a high-volume, one-day spike down that closes on the upside.
The Saudi’s are playing a dangerous game. Too many big hitters getting hurt. Pressure from within or from the outside will force them to trigger a price rebound, just like they triggered a plunge.
Talk of $20 oil has been around for weeks pumped by the likes of Goldman Sachs, RBS and Morgan Stanley. International Monetary Fund’s chief, Christine Lagarde expects oil to stay low for a “sustained period.”
Now investment bank, Standard Chartered, is talking $10 oil, not seen since the big global crunch – 2009.
Keep it up, guys and girls, and you’ll create a full-scale PANIC !
FactSet .com is projecting a sizable rebound in 2016 and 2017, though that growth rate is based on earnings that have been hammered by the plunge in oil prices.
Panic prices selected oil stocks: Exxon (XOM): 67 (strong in down market due to yield); Chevron (CVX): 74 strong in down market due to high : Market sector oil service ETF (OIH): 21; SPDR S&P O&G ETF (XOP): 24; Vanguard energy ETF (VDE): 69; Energy select SPDR ETF (XLE): 50. These are “technical” projections only and subject to change as conditions in the oil industry and stock market unfold. These prices are 12% – 16% below the current market and may never be hit. Under panic conditions, the prices at a turn are only hit momentarily. Orders must be placed below the market in advance to catch the lows. Obviously, this is only for investors who can afford the risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS of the 30 DJIA Companies:
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages,
As of January 20, 2016, a reasonable risk is 15,686 a more extreme risk is 15,327. Near-term upside potential is 16,263
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – buying opportunity in mini-crash scenario
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45% depends on tolerance for risk.
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q1, 2016 earnings
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to mam.econoday.com.
…………………………………………………………
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 or as investment advice 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 in keeping with their tolerance for risk

Would Dow 15,000 Attract the Big Money ?

Investor’s first read – Daily edge before the open
DJIA:16,016
S&P 500: 1,881
Nasdaq Comp:4,476
Russell 2000: 994
Wednesday: Jan. 20, 2016 9:07 a.m.
/////////////////////////////////////////////////////////////////////////////////////////////////////////
Yesterday I headlined, “Institutions Must ‘Want It,’ or Else !”
The answer was “or Else.” After a morning rally failed to attract buyers, the market sold off and closed flat.
Futures trading prior to the open today indicates another plunge in prices, as much as 300+ points for the DJIA, 33 points for the S&P 500.
This is bear market stuff, or something just as painful.
I want to emphasize that, while I have been expecting January to be a downer since early December and the year to be rough, I do expect several buying junctures during the year, one in the near future.
What happens in these persistent plunges is fear of a freefall mounts, and investors become too paralyzed to buy, and who can blame them.
We are told to “Buy low, sell high,” but no one tells us how to overcome the fear that accompanies the lows.
NEGATIVES/UNCERTAINTIES
The Street is spooked by a realization that the U.S. economy may be sagging in face of rising interest rates; a bitterly contested presidential election; the unknown consequences of an oil glut; and corporate earnings which may fail to achieve the 6.8% growth the Street expects, the second year in a row.
Under these conditions, the market must find a level that discounts negatives and uncertainties.
TODAY
While we are not officially in a bear market yet, it acts like one. August’s 12% freefall was more of a “flash crash.” The current plunge is more fundamental,
After an 12% shellacking, there are a lot of attractively priced stocks, and I can understand why institutions with a hoard of cash would be in there buying.
Nevertheless, the 2007-2009 bear market declined 55%, this one is only down 13%.
The DJIA can drop below 15,000 (S&P 500 1,750) under present conditions. Toss in new negatives, and DJIA 14,000 (S&P 500: 1,650) are not out of the question.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA: 15,586; S&P 500:1,830 ; Nasdaq Comp.:4,355
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS
Corporate earnings will rise to the surface in 2016 as the “decider”. The flow of Q4 earnings started with Alcoa’s (AA) report yesterday.
S&P 500 earnings for 2015 will drop some 5.5% (ex-energy – flat). The Street is looking for some 7% growth this year. As of Friday’s close, that works out to a P/E of 14.9 vs a 10-year average of 14.2. Projections were for growth of 8% last year and ended with zilch for the year, though the market held up well considering.
Stock prices won’t hold up as well if revisions start to plunge again this year. Expect a bear market if they do.
A decline of 20%, the criteria for a bear market, would take the S&P 500 down to 1,707. Based on FactSet.com’s current forecast of $125.71 for 2016 earnings, that would translate into a P/E of 13.6.
OIL :
Expect a selling climax within two months, however, just one word about production cuts by a well-placed Mid-East official and the bottom “is in.”
I have been writing that 2016 is the year to buy oils.
For weeks, I have alerted readers to expect oil stocks to make a bottom in 2016, but have not seen the panic conditions that would signal capitulation. I am looking for a selling climax that depresses this group enough to attract the BIG money. With some help from the weakness in the stock market, and continued outpouring of gloom, a panic may occur, a high-volume, one-day spike down that closes on the upside.
The Saudi’s are playing a dangerous game. Too many big hitters getting hurt. Pressure from within or from the outside will force them to trigger a price rebound, just like they triggered a plunge.
Talk of $20 oil has been around for weeks pumped by the likes of Goldman Sachs, RBS and Morgan Stanley. International Monetary Fund’s chief, Christine Lagarde expects oil to stay low for a “sustained period.”
Now investment bank, Standard Chartered, is talking $10 oil, not seen since the big global crunch – 2009.
Keep it up, guys and girls, and you’ll create a full-scale PANIC !
FactSet .com is projecting a sizable rebound in 2016 and 2017, though that growth rate is based on earnings that have been hammered by the plunge in oil prices.
Panic prices selected oil stocks: Exxon (XOM): 67 (strong in down market due to yield); Chevron (CVX): 74 strong in down market due to high : Market sector oil service ETF (OIH): 21; SPDR S&P O&G ETF (XOP): 24; Vanguard energy ETF (VDE): 69; Energy select SPDR ETF (XLE): 50. These are “technical” projections only and subject to change as conditions in the oil industry and stock market unfold. These prices are 12% – 16% below the current market and may never be hit. Under panic conditions, the prices at a turn are only hit momentarily. Orders must be placed below the market in advance to catch the lows. Obviously, this is only for investors who can afford the risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS of the 30 DJIA Companies:
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages,
As of January 15, 2016, a reasonable risk is 15,757 a more extreme risk is 15,327. Near-term upside potential is 16,347
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – buying opportunity in mini-crash scenario
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45% depends on tolerance for risk.
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q1, 2016 earnings
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to mam.econoday.com.
…………………………………………………………
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 or as investment advice 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 in keeping with their tolerance for risk

Institutions Must “Want It,” Or Else !

Investor’s first read – Daily edge before the open
DJIA:15,988
S&P 500: 1,880
Nasdaq Comp: 4,488
Russell 2000: 1,607
Tuesday: Jan. 19, 2016 8:21 a.m. (S&P futures +24.25)
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Based on pre-market trading, Friday’s 390-point plunge in the DJIA was enough to attract buyers today. I was expecting Friday’s weakness to spill over into today. Didn’t happen. This is a risky rally to buy, especially after prices have been marked up at the open. Cool it !
Several things happened over the weekend to offset the selling, Stock markets in China and Europe rallied, oil ticked up a bit and some in the Street don’t expect China’s woes to get worse.
A lot of technical damage has been done so far this year. There will be a lot of overhead supply to meet buyers as the market attempts to recoup its loss of 11% since this slide began December 29.
While we are not in a bear market, it acts like one. August’s 12% freefall was more of a “flash crash.” The current plunge is more fundamental, a realization that the U.S. economy may be sagging in face of rising interest rates (however slight); a bitterly contested presidential election in; the unknown consequences of an oil glut;and corporate earnings which may fail to achieve the 6.8% growth the Street expects, the second year in a row.
After an 11% shellacking, there are a lot of attractively priced stocks, and I can understand why institutions with a hoard of cash would be in there buying.
I think the question is, will they pay-up for stocks enough to run the market back up enough to make new purchases at the open today worth the risk ?
The market will be challenged to top DJIA 16,297; S&P 500: 1,913; Nasdaq Comp.:4,591 this week.
While I have been expecting January to be a downer since early December and the year to be rough, I expect several buying junctures during the year, one in the near future.
Under these conditions, the market must find a level that discounts negatives and uncertainties.
TODAY:
The two biggest obstacles for timing a bottom are:
– short-lived rallies in a decline that appear to be “the turn,” but are followed by another sell off.
-new negatives that suddenly appear when the market is close to a rebound. That can turn a 12% decline into a 20% decline, or a 20% decline into an outright rout.
I see a possibility of the DJIA getting below 15,000 (S&P: 1,750), but not in a straight line.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: Failure of this rally to hold its gain would be very bearish. In fact, a rally like this offers a good “read” on how serious institutions are about buying. Persistent buying on dips is a good sign. A one or two day rally doesn’t do it. Institutions must want it.
RESISTANCE ‘today”: DJIA: 16,270; S&P 500:1,895 ; Nasdaq Comp.:4,573.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS
Corporate earnings will rise to the surface in 2016 as the “decider”. The flow of Q4 earnings started with Alcoa’s (AA) report yesterday.
S&P 500 earnings for 2015 will drop some 5.5% (ex-energy – flat). The Street is looking for some 7% growth this year. As of Friday’s close, that works out to a P/E of 14.9 vs a 10-year average of 14.2. Projections were for growth of 8% last year and ended with zilch for the year, though the market held up well considering.
Stock prices won’t hold up as well if revisions start to plunge again this year. Expect a bear market if they do.
A decline of 20%, the criteria for a bear market, would take the S&P 500 down to 1,707. Based on FactSet.com’s current forecast of $125.71 for 2016 earnings, that would translate into a P/E of 13.6.
OIL :
Expect a selling climax within two months, however, just one word about production cuts by a well-placed Mid-East official and the bottom “is in.”
I have been writing that 2016 is the year to buy oils.
For weeks, I have alerted readers to expect oil stocks to make a bottom in 2016, but have not seen the panic conditions that would signal capitulation. I am looking for a selling climax that depresses this group enough to attract the BIG money. With some help from the weakness in the stock market, and continued outpouring of gloom, a panic may occur, a high-volume, one-day spike down that closes on the upside.
The Saudi’s are playing a dangerous game. Too many big hitters getting hurt. Pressure from within or from the outside will force them to trigger a price rebound, just like they triggered a plunge.
Talk of $20 oil has been around for weeks pumped by the likes of Goldman Sachs, RBS and Morgan Stanley. International Monetary Fund’s chief, Christine Lagarde expects oil to stay low for a “sustained period.”
Now investment bank, Standard Chartered, is talking $10 oil, not seen since the big global crunch – 2009.
Keep it up, guys and girls, and you’ll create a full-scale PANIC !
FactSet .com is projecting a sizable rebound in 2016 and 2017, though that growth rate is based on earnings that have been hammered by the plunge in oil prices.
Panic prices selected oil stocks: Exxon (XOM): 67 (strong in down market due to yield); Chevron (CVX): 74 strong in down market due to high : Market sector oil service ETF (OIH): 21; SPDR S&P O&G ETF (XOP): 24; Vanguard energy ETF (VDE): 69; Energy select SPDR ETF (XLE): 50. These are “technical” projections only and subject to change as conditions in the oil industry and stock market unfold. These prices are 12% – 16% below the current market and may never be hit. Under panic conditions, the prices at a turn are only hit momentarily. Orders must be placed below the market in advance to catch the lows. Obviously, this is only for investors who can afford the risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS of the 30 DJIA Companies:
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages,
As of January 15, 2016, a reasonable risk is 15,757 a more extreme risk is 15,327. Near-term upside potential is 16,347
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – buying opportunity in mini-crash scenario
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45% depends on tolerance for risk.
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q1, 2016 earnings
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to mam.econoday.com.
…………………………………………………………
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 or as investment advice 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 in keeping with their tolerance for risk

Selling Climax – Tuesday “Trader’s” Buy

Investor’s first read – Daily edge before the open
DJIA:16,379
S&P 500: 1,921
Nasdaq Comp: 4,615:
Russell 2000: 1,025
Friday: Jan. 15, 2016 8:41 a.m.
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FLASH: Tuesday “TRADER’S BUY” after 796-point plunge DJIA
/////////////////////////////////////////////////////////////////////////////////////////////////////////
Yesterday I warned, “There is a chance we get a rally today, especially with the Fed’s James Bullard speaking at 8:15 today. Don’t buy his rally.
In response to Bullard’s speech yesterday, the market rallied with the DJIA closing up 227 points.
As I warned, pre-open trading indicates the market will drop sharply at the open, raising the likelihood investors jumping in on Bullard’s comments will be looking at losses on yesterday’s purchases.
In his speech, Bullard said the crunch in oil prices has diminished inflation expectations, which could force the Fed to rethink the four quarter-point rate hikes expected this year.
It’s bad enough unsavory types manipulate stocks and the stock market, but the Federal Reserve should be held to a higher standard.
According to the forecasting firm Microeconomic Advisors, next to Fed Chief Janet Yellen, Bullard’s speeches are the most effective in moving financial markets.
Okay, we understand the Fed is feeling heat for its belated decision to raise rates, and is concerned with January’s free fall in stock prices, but it can be injurious to investor interest to step in and interfere with the normal flow of stock prices.
Here’s why. Bullard’s timely comments at 8:15 Thursday morning, 75 minutes before the open, reversed Wednesday’s DJIA 364-point plunge leading to a sharp rally, which undoubtedly drew investors in to the market.
IF Bullard’s comments stopped the plunge in stock prices and enabled the market to recoup January’s 10% loss, then investors are well served.
But pre-open futures trading indicate the market will open on the downside today. The Fed and Bullard are responsible for sucking investors into the market prematurely, causing them to incur losses on top of the losses they have already suffered, and a great disservice has been performed.
The market is best allowed to seek a level that discounts negatives and uncertainties, without attempts by the Fed to micro-manage its trend.
I was supportive of the Fed throughout much of this bull market. While it helped prevent a global meltdown in 2008-2009, it must step back and let the market find its comfort level.
EARNINGS
Corporate earnings will rise to the surface in 2016 as the “decider”. The flow of Q4 earnings started with Alcoa’s (AA) report yesterday.
S&P 500 earnings for 2015 will drop some 5.5% (ex-energy – flat). The Street is looking for some 7% growth this year. Projections were for growth of 8% last year and ended with zilch for the year, though the market held up well considering.
Stock prices won’t hold up as well if revisions start to plunge again this year. Expect a bear market if they do.
TODAY:
While I have been expecting January to be a downer since early December and the year to be rough, I expect several buying junctures during the year, but at lower prices.
This market is probing for a level that discounts anxieties. Institutions must find some of these lower prices attractive. Expect rallies from time to time some triggered by news, some by high-level comments and some just “technical,” a sudden shift in the balance/imbalance of buyers and sellers.
I see a possibility of the DJIA getting below 15,000 (S&P: 1,750)
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:15,901; S&P 500:1,866 ; Nasdaq Comp.:4,593
RESISTANCE ‘today”: DJIA:16,448 ; S&P 500:1,929; Nasdaq Comp.:4.481
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
OIL : Bounced yesterday – just a bear market rally. Expect a selling climax within two months
I have been writing that 2016 is the year to buy oils.
For weeks, I have alerted readers to expect oil stocks to make a bottom in 2016, but have not seen the panic conditions that would signal capitulation. I am looking for a selling climax that depresses this group enough to attract the BIG money. With some help from the weakness in the stock market, and continued outpouring of gloom, a panic may occur, a high-volume, one-day spike down that closes on the upside.
However, just one word about production cuts by a well-placed official and the bottom “is in.”
The Saudi’s are playing a dangerous game. Too many big hitters getting hurt. Pressure from within or the outside will force them to trigger a price rebound, just like they triggered a plunge.
Talk of $20 oil has been around for weeks pumped by the likes of Goldman Sachs, RBS and Morgan Stanley. International Monetary Fund’s chief, Christine Lagarde expects oil to stay low for a “sustained period.”
Now investment bank, Standard Chartered, is talking $10 oil, not seen since the big global crunch – 2009.
Keep it up, guys and girls, and you’ll create a full-scale PANIC !
Panic prices selected oil stocks: Exxon (XOM): 67; Chevron (CVX): 74: Market sector oil service ETF (OIH): 21; SPDR S&P O&G ETF (XOP): 24; Vanguard energy ETF (VDE): 69; Energy select SPDR ETF (XLE): 50. These are “technical” projections only and subject to change as conditions in the oil industry and stock market unfold. These prices are 12% – 16% below the current market and may never be hit. Under panic conditions, the prices at a turn are only hit momentarily. Orders must be placed below the market in advance to catch the lows. Obviously, this is only for investors who can afford the risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS of the 30 DJIA Companies:
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages,
As of January 7, 2016, a reasonable risk is 15,901 a more extreme risk is 15,621. Near-term upside potential is 16,698
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – buying opportunity in mini-crash scenario
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45% depends on tolerance for risk.
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q3/Q4 earnings; Stimulus Europe/China a catalyst !!
 CONCLUSION: Bear market (20% drop S&P 500) likely
 //////////////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to mam.econoday.com.
…………………………………………………………
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 or as investment advice 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 in keeping with their tolerance for risk