Upside Breakout Needs – News Catalyst

Investor’s first read – Daily edge before the open
DJIA:16,639
S&P 500: 1,948
Nasdaq Comp.: 4,590.:
Russell 2000: 1,037
Monday: February 29, 2016 8:57 a.m.
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Again, I want to note that the pattern of trading over the last two months is a near mirror image of the rebound last October from the big sell off in August.
The August 2015 crunch, 11.4% in five days, was one of those “flash crash” phenoms that occurs when the highly leveraged, quant-driven trading mechanisms gets disjointed.
January’s 12.9% crunch took 14 days and was driven by concern about a host of things – plunging oil prices, earnings, the Fed, economy, Europe, and the election.
A double bottom marked the Aug./Sept. 2015 bottom with a solid rebound to previous highs. The Jan./Feb. bottom has yet to sustain a breakout from its base.
Picking a catalyst for a breakout is challenging. There are enough pockets of strength in the economy to encourage the Fed to bump interest rates at its March 15, FOMC meeting.
The Street is not expecting this. Fed action could trigger a break in the market.
Corporate earnings are expected to grow again in Q3 and Q4. Any downward revision to that expectation would hammer stocks. But it works both ways. Any upside revisions to 2016 earnings would drive stocks up sharply.
At some point, oil’s dominance will yield center stage to other issues, probably the Fed and earnings
TODAY:
The market was unable hold its gain Friday and closed at the lows for the day. My study of the charts of the 30 Dow industrials indicates tough going on the upside but no serious vulnerability on the downside. January’s correction took a lot of fluff out of prices. The bears can hope for a pullback, but need something nasty to drop the blue chips enough to mark a bear market.
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SUPPORT “today”: DJIA:16,486; S&P 500:1,926; Nasdaq Comp. :4,533.
RESISTANCE : “today”: DJIA:16,727; S&P 500:1,957; Nasdaq Comp.:4,596
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 February 26, 2016, a reasonable risk is 16,484 a more extreme risk is 16,258. Near-term upside potential is 16,840
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 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, and 2016 earnings as a whole.
The Street is counting on a big jump in Q3 and Q4.
////////////////////////////////////////////////////////////////////////////////////////////////
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.

Today’s Charts a Mirror Image of Oct. 2015

Investor’s first read – Daily edge before the open
DJIA:16,697
S&P 500: 1,951
Nasdaq Comp.:4,582
Russell 2000: 1,031
Friday: February 26, 2016 8:46 a.m.
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What must be noted here is that the pattern of trading over the last month is a near mirror image of the rebound last October from the big sell off in August. If today’s market mirrors the October 2015 rebound, this market stands to recoup all it lost in January.
The bulls were there in force again yesterday, pushing the market out above the February highs (DJIA:16,485; S&P 500: 1,947).
Under normal conditions, this breakout has the potential of a big follow through.
But, January’s plunge was more than the occasional “cleansing” of nervous investors and uncommitted buyers. We had that last October.
January was a response to serious concerns about a host of issues, including deflation, oil, economies here and abroad, the election, and earnings.
The Street is expecting Q1 and Q2 earnings to be downers, but expects Q3 and Q4 to rebound. Precise estimates vary too much to trust at this time. Obviously, upward revisions in earnings would launch a surge in the market, To the contrary, downward revisions would trigger a slide in prices and bear market. Expect these revisions to become more public in coming weeks.
TODAY:
Worth noting is only two of the DJIA 30 yesterday had volume exceeding average daily volume, Pfizer (PFE) and United Tech (UTX). The other 28 fell far, far short, not a good sign. Volume will have to pick up if the market is to move significantly higher, since selling can be expected to increase as the market moves into serious overhead supply.
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RESISTANCE : “today”: DJIA:16,893; S&P 500:1,971 ; Nasdaq Comp.:4,636
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 February 22, 2016, a reasonable risk is 16,243 a more extreme risk is 16,007. Near-term upside potential is 16,720
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 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, and 2016 earnings as a whole.
The Street is counting on a big jump in Q3 and Q4.
////////////////////////////////////////////////////////////////////////////////////////////////
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.

Bulls Back, But “Must” Follow Through

Investor’s first read – Daily edge before the open
DJIA:16,484
S&P 500: 1,929
Nasdaq Comp4,545.:
Russell 2000: 1,022
Thursday: February 25, 2016 8:12 a.m.
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After a failure t break out above February’s rally high Tuesday, I noted the burden of proof was on the bulls.
They responded yesterday reversing a big sell off in early trading and even closed the major market averages on the plus side. That’s what’s called a one-day reversal.
The rationale is that the market has dramatically changed direction after a big move in the other direction, which has in the past signaled a continuation of the trend.
However, in a volatile market, that pattern is not as consistent, what with the impact of monster traders and a host of leveraged strategies.
What must be noted here is that the pattern of trading over that last month is a near duplicate of the rebound last October from the big sell off in August. If today’s market mirrors the October 2015 rebound, this market stands to recoup all it lost in January.
Do I believe that ? I can’t afford to exclude that possibility. The market is currently driven by the price of oil, but that will change to something else. My guess the new focus will be corporate earnings though they can’t be tracked daily like oil prices.
The Street is expecting Q1 and Q2 to be downers, but sees Q3 and Q4 rebounding. Precise estimates vary too much to trust at this time. Obviously, upward revisions would launch a surge in the market. And, of course, a slide in prices, a bear market if 2016 is flat.
January’s plunge was more than the occasional “cleansing” of nervous investors and uncommitted buyers. We had that last October.
This was a response to serious concerns about a host of issues (deflation, oil, economies here and abroad, earnings), but quite possibly the uncertainty of who will be elected in November.
Now it makes sense, that the eighth year of a two-term president has historically been a rough year. It is one of the key reasons last December I warned of a top in January and a rough year. BUT, I also noted there would be some buying opportunities.
What’s important is investors have cash on hand to take advantage of those junctions, and the guts to buy.
TODAY:
The bulls were there in force yesterday at lower prices, and are in position to blow the market out above the Fed. Highs (DJIA:16,485; S&P 500: 1,947). That would give the DJIA a shot at 16,664 and S&P500: 1,991.
Under no circumstances can the market give up what it recovered in yesterday’s rebound, which hit lows of DJIA: 16,403 and S&P 500: 1,891
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RESISTANCE : “today”: DJIA: 16,601; S&P 500: 1,944; Nasdaq Comp.:4,573.
SUPPORT “today”: DJIA:16,316; S&P 500:1,912; Nasdaq Comp.:4,496.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
To qualify as a BEAR MARKET
The DJIA must drop to 14,680, the S&P 500 to 1,707. The 2007 – 2009 bear was down 57%, 2000 – 2002 down 50%. The average decline of a bear market since 1971 is 31%.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 February 22, 2016, a reasonable risk is 16,243 a more extreme risk is 16,007. Near-term upside potential is 16,720
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 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, and 2016 earnings as a whole.
The Street is counting on a big jump in Q3 and Q4.
////////////////////////////////////////////////////////////////////////////////////////////////
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.

Bulls Challenged By Pullback

Investor’s first read – Daily edge before the open
DJIA:16,431
S&P 500: 1,921
Nasdaq Comp.: 4,503.:
Russell 2000: 1,012
Wednesday: February 24, 2016 8:54 a.m.
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Recently, the market has been in lockstep with the price of oil, but a new drummer will eventually emerge to set the tone. It could be the Fed (again), or it could be 2016 earnings revisions. The Street is expecting Q3 and Q4 to bail out another flat year. Any change for the worse there and this market is overpriced.
OIL:
My post Feb 18, in response to Saudi’s production “freeze” warned of surprises. I noted, “One thing I have learned over the years about agreements, pacts, cease fires, etc. is that doubts surface before anything even close to finalization.”
So, it should not surprise anyone that Saudi’s oil minister, Ali al Naimi said yesterday that he didn’t see production cuts anytime soon. Oil had been rising on the freeze news, but is now declining along with the stock market. That can change in a heartbeat if other OPEC or non-OPEC nations announce they are ready to fall in line with anything the Saudis want.
Along those same lines, don’t expect anything in the stock market from a peace announcement in Syria. Too many loose ends.
TODAY
The breakout above the February highs Monday failed to follow through on Tuesday, and suddenly the burden of proof is on the bulls to prevent another leg down.
If the bulls can hold the line here or in the area of DJIA 15,891; S&P 500: 1,861; Nasdaq Comp.:4,331, a bear market can be avoided.
Even so, a meaningful surge is going to be difficult in light of a host of uncertainties.
The Street really doesn’t know what to do, and neither do its algo-computers. It is keyed on oil prices for whatever reason is not clear, perhaps the plunge suggests deflation is possible.
This too will change, and my guess is corporate earnings will call the shots.
January’s plunge, the worst since at least 1950, was a warning shot that must be respected. That doesn’t mean several strong rallies are impossible, they are probable. But this is a high risk market, all it needs is something to trigger a panic.
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SUPPORT “today”: DJIA:16,217; S&P 500:1,896; Nasdaq Comp.:4,457. These levels should hold, but with this volatility, anything canhappen.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
To qualify as a BEAR MARKET
The DJIA must drop to 14,680, the S&P 500 to 1,707. The 2007 – 2009 bear was down 57%, 2000 – 2002 down 50%. The average decline of a bear market since 1971 is 31%.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 February 22, 2016, a reasonable risk is 16,243 a more extreme risk is 16,007. Near-term upside potential is 16,720
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 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, and 2016 earnings as a whole.
The Street is counting on a big jump in Q3 and Q4.
////////////////////////////////////////////////////////////////////////////////////////////////
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.

Fed Change of Heart Possible ?

Investor’s first read – Daily edge before the open
DJIA:16,620
S&P 500: 1,945
Nasdaq Comp.:4,570.:
Russell 2000: 1,021
Tuesday: February 23, 2016 9:12 a.m.
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CONCLUSION:
The DJIA and S&P 500 are up 7.5% in less than two weeks. That’s a big move based mostly on a Saudi Arabia’s initiative to freeze, not cut, production of oil. A cut will require other OPEC and non-OPEC nations to agree and that may take two to three months.
With inflation edging up and U.S. employment numbers looking upbeat, the Fed may begin to hint of another rate increase in March, kind of a warning shot just in case economic conditions justify it.
So quickly moods can change from an urge to sell out as the market was plummeting in January, to an urge to go all-in now that oil prices are surging and stock prices, as well.
That’s the human nature part of this business, but that’s why the danger of buying and selling at the wrong time comes into play.
This is a high risk market, one where the Street got snookered in January, and one which the Street would love to get a second chance to lighten up if prices rise much further.
This news-sensitive market deserves respect, because it can turn on a dime, not just due to a setback in the oil picture, but as a result of a comment by the Fed, about a downward revision in 2016 earnings, economic/fiscal problems abroad.
Today we may get clarification on a schedule for oil production cuts, when Saudi’s Oil Minister, Ali al-Naimi, addresses the HIS CERAWEEK conference in Houston.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:16,548; S&P 500:1,936; Nasdaq Comp.:4,545 .
RESISTANCE “today”: DJIA: 16,713; S&P:1,955 ; Nasdaq Comp.:4,596
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
To qualify as a BEAR MARKET
The DJIA must drop to 14,680, the S&P 500 to 1,707. The 2007 – 2009 bear was down 57%, 2000 – 2002 down 50%. The average decline of a bear market since 1971 is 31%.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 February 22, 2016, a reasonable risk is 16,243 a more extreme risk is 16,007. Near-term upside potential is 16,720
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 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, and 2016 earnings as a whole.
The Street is counting on a big jump in Q3 and Q4.
////////////////////////////////////////////////////////////////////////////////////////////////
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.

Easy Does It ! Market Up 7% in Seven Days

Investor’s first read – Daily edge before the open
DJIA:16,391
S&P 500: 1,917
Nasdaq Comp.:4,504
Russell 2000: 1,010
Monday: February 22, 2016 9:02 a.m.
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This weekend, I waded through a whole lot of U.S. and global economic, monetary, fundamental, oil, and technical data with no shortage of interpretations and opinions, and can only conclude uncertainty is about the only thing that is punching to new highs.
January’s 9.5% plunge, the worst in 66 years, even worse than 2009, indicates the Street doesn’t have a handle on what will happen this year.
But two rebounds (Jan. 20 and Feb.11) suggest there are buyers “at a price,” responding to the Fed’s hint it won’t be in a hurry to raise rates at its next FOMC meeting March 15-16, as well as to speculation that Saudi Arabia’s Feb. 16 announcement (Doha accord) about a freeze” of oil production at current levels would lead to cuts and a rebound in prices.
This issue may get clarification Tuesday when Saudi’s Oil Minister, Ali al-Naimi, addresses the HIS CERAWEEK conference in Houston.
With the Fed and oil hogging center stage, not too much ink is given to global economics. Rightly so. It too is a mix of positives and negatives. For a broad bush account, see mam.econoday.com.
CONCLUSION:
On Dec. 14 I warned that the market will top out during the first week in January 2016 entering correction of 8% – 14%. Subsequently, I indicated 2016 would be a rough year, but with several buying opportunities.
January is history, and I hold to the expectation of the rough year, but with a few buying opportunities. The latter will require timing and a willingness to buy when the market is down and looking like it is going down further – not easy to do.
This morning, the DJIA is set to break out above the February highs of 16,485, but the S&P 500 Nasdaq Comp. and Russell 2000 have further to go. The DJIA is what the press (not Street) focuses on, so the breakout should attract a lot of attention.
Buying breakouts in an uncertain investment environment like this is risky. The DJIA is already up 6.6% in seven days. Cool it !
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RESISTANCE “today”: DJIA:16,591; S&P:1,938 ; Nasdaq Comp.:4,531
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
To qualify as a BEAR MARKET
The DJIA must drop to 14,680, the S&P 500 to 1,707. The 2007 – 2009 bear was down 57%, 2000 – 2002 down 50%. The average decline of a bear market since 1971 is 31%.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 February 17, 2016, a reasonable risk is 15,854 a more extreme risk is 15,738. Near-term upside potential is 16,576 The abrupt change here is due to last week’s sharp rebound.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 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, and 2016 earnings as a whole.
The Street is counting on a big jump in Q3 and Q4.
////////////////////////////////////////////////////////////////////////////////////////////////
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.

Bulls Gassed

Investor’s first read – Daily edge before the open
DJIA:16,413
S&P 500: 1,917
Nasdaq Comp.: 4,487
Russell 2000: 1,004
Friday: February 19, 2016 9:02 a.m.
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If a freeze in oil production is the best we can hope for, that may not be enough to power recoup 2016’s losses.
But don’t count out the Federal Reserve. Timely speeches by Governors have a tendency to impact stock prices at key junctures. Wednesday the Fed dispatched St. Louis Fed president James Bullard to assure the Street an interest rate hike at this time was not his preference. Last year he was a big advocate for hikes. Expect the Fed to be hyping the market in coming weeks, especially if it looks like the Jan./Feb. double bottom is in jeopardy.
The Fed’s credibility is hurting. We would like to know they have a handle on events and prospective events. This is what happens when an organization gets cute with stock prices.
Oil ( and the stock market) would get an additional boost if other oil producers fall in line with the Saudi’s and Russia. It would make sense if they did, no one can afford to see the price of oil go lower.
No room for unpleasant surprises here.
If the DJIA and S&P 500 break out above the February highs of 16,485 and 1,947, it would trigger a surge of buying.
If we are in a bear market, that is based on more than oil, that breakout would be a fake out and the market would plunge again.
Be aware this can happen, as well.
This is a dangerous market. I don’t think the Street knows what to make of it. I only know to respect its surliness and unpredictability.
Today will open down. If the bulls have anything left in their tank, they will reverse today’s slide. My feeling is a correction is needed first before any upside is possible.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA: 16,273; S&P 500: 1,901; Nasdaq Comp.:4,448
RESISTANCE “today”: DJIA:16,576; S&P 500:1,935: Nasdaq Comp.:4,526
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THE MAKING OF A BEAR
Unless triggered by some horrific event, a bear market isn’t obvious at first. It begins with slippage as if it is just another correction in an up trending bull market. But rallies fail to attract enough buyers to reach new highs. Some begin to sell, others remain on the sidelines. Interest fades and bids weaken in face of one disappointment after another – new negatives surface – stocks start to slide – the Street’s optimism wanes, then sours. Fear mounts, then accelerates, as investors start to raise cash. No longer is it heresy to mention the word “bear.” Doomsters re-surface with talk of DOW 6,000. Fear turns to panic. No one, not anyone, wants to buy a stock. Selling intensifies. “If only I sold at a higher level,” investors lament, “I could be buying here.” The selling drives prices lower until one day when no matter how much selling there is, the market doesn’t go lower (capitulation).
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
To qualify as a BEAR MARKET
The DJIA must drop to 14,680, the S&P 500 to 1,707. The 2007 – 2009 bear was down 57%, 2000 – 2002 down 50%. The average decline of a bear market since 1971 is 31%.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 February 17, 2016, a reasonable risk is 15,854 a more extreme risk is 15,738. Near-term upside potential is 16,576 The abrupt change here is due to last week’s sharp rebound.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 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, and 2016 earnings as a whole.
The Street is counting on a big jump in Q3 and Q4.
////////////////////////////////////////////////////////////////////////////////////////////////
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.

Breakout Fake Out “Possible” – Careful !

Investor’s first read – Daily edge before the open
DJIA:16,453
S&P 500: 1,926
Nasdaq Comp.:4,534
Russell 2000: 1,010
Thursday: February 18, 2016 9:07 a.m.
/////////////////////////////////////////////////////////////////////////////////////////////////////////
Just be very careful here. One word out of the oil patch to just infer production cuts are out of the question, that a freeze at current levels is the best that can be hoped for, and everything heads south.
One thing I have learned over the years about agreements, pacts, cease fires, etc. is that doubts surface before anything is even close to finalization. If the market rallies on the news, it can reverse quickly if a hitch develops.
Oil ( and the stock market) would get an additional boost if other oil producers fall in line with the Saudi’s and Russia. It would make sense if they did, no one can afford to see the price of oil go lower.
The rally in the DJIA and S&P 500 that started last week came off the January lows setting up a potential double bottom, that with some additional positive news could take the market higher (DJIA 16,930; S&P 500: 1,991).
If the DJIA and S&P 500 break out above the February highs of 16,485 and 1,947, it would trigger a surge of buying.
If we are in a bear market, that is based on more than oil, that breakout would be a fake out and the market would plunge again.
Be aware this can happen, as well.
This is a dangerous market. I don’t think the Street knows what to make of it. I only know to respect its surliness and unpredictability.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”:DJIA:16,301 ; S&P 500: 1,909; Nasdaq Comp.: 4,487.
RESISTANCE “today”: DJIA:16,576 ; S&P 500:1,940; Nasdaq Comp.:4,567
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THE MAKING OF A BEAR
Unless triggered by some horrific event, a bear market isn’t obvious at first. It begins with slippage as if it is just another correction in an up trending bull market. But rallies fail to attract enough buyers to reach new highs. Some begin to sell, others remain on the sidelines. Interest fades and bids weaken in face of one disappointment after another – new negatives surface – stocks start to slide – the Street’s optimism wanes, then sours. Fear mounts, then accelerates, as investors start to raise cash. No longer is it heresy to mention the word “bear.” Doomsters re-surface with talk of DOW 6,000. Fear turns to panic. No one, not anyone, wants to buy a stock. Selling intensifies. “If only I sold at a higher level,” investors lament, “I could be buying here.” The selling drives prices lower until one day when no matter how much selling there is, the market doesn’t go lower (capitulation).
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
To qualify as a BEAR MARKET
The DJIA must drop to 14,680, the S&P 500 to 1,707. The 2007 – 2009 bear was down 57%, 2000 – 2002 down 50%. The average decline of a bear market since 1971 is 31%.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 February 17, 2016, a reasonable risk is 15,854 a more extreme risk is 15,738. Near-term upside potential is 16,576 The abrupt change here is due to last week’s sharp rebound.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 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, and 2016 earnings as a whole.
The Street is counting on a big jump in Q3 and Q4.
////////////////////////////////////////////////////////////////////////////////////////////////
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.

Investors Starting to Panic

Investor’s first read – Daily edge before the open
DJIA:16,196
S&P 500: 1,895
Nasdaq Comp.:4,435
Russell 2000: 995
Wednesday: February 17, 2016 9:07 a.m.
/////////////////////////////////////////////////////////////////////////////////////////////////////////
Try to put yourself in the position of a money manager with a pile of cash to invest. The market is down a hefty 9% in six weeks. The 2009 – 2015 bull surge has given back 16% of its gain.
The economy has some weak spots, but not signaling recession. European markets and the price of oil are stable for now. The Mid-East is what it has been for years, the Fed is ready to pass on another interest rate increase if the economy weakens further.
Why not go all-in ?
Yes, why not ?
Apparently the Street is as wary as I. If the light was bright green, the managers of money would be stampeding to pick up quality stocks that are selling at a big discount.
Granted the shock and awe of January’s plunge has rattled a lot of cages. Without a huge spark to ignite enough of a surge to chew through overhead supply that a sharp plunge creates, the bulls are going to have a tough time moving the chains.
Failure here means another leg down, soon
There is a chance the market can break out above the Feb. highs (DJIA: 16,510; S&P 500:1,947; Nasdaq Comp.: 4,636).
At that point, the bulls would be tempted to go all-in, thinking there will be no bear market, that the ugly correction is history.
If the bulls can run the table, their prayers are answered.
If not, and the break out would be a fake out, and they will get crushed by the bear market that follows.
Now is the time to be aware this can happen, that a breakout at that level could be a fake out, and going all-in would be risky. Objectivity, at that point, when a lot of others are jumping on board, will be difficult.
TODAY
The market will open up sharply this morning, as investors scramble to pick up stocks before they run too far (!!!).
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RESISTANCE “today”: DJIA:16,371; S&P 500:1,917 ; Nasdaq Comp.:4,487
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THE MAKING OF A BEAR
Unless triggered by some horrific event, a bear market isn’t obvious at first. It begins with slippage as if it is just another correction in an up trending bull market. But rallies fail to attract enough buyers to reach new highs. Some begin to sell, others remain on the sidelines. Interest fades and bids weaken in face of one disappointment after another – new negatives surface – stocks start to slide – the Street’s optimism wanes, then sours. Fear mounts, then accelerates, as investors start to raise cash. No longer is it heresy to mention the word “bear.” Doomsters re-surface with talk of DOW 6,000. Fear turns to panic. No one, not anyone, wants to buy a stock. Selling intensifies. “If only I sold at a higher level,” investors lament, “I could be buying here.” The selling drives prices lower until one day when no matter how much selling there is, the market doesn’t go lower (capitulation).
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
To qualify as a BEAR MARKET
The DJIA must drop to 14,680, the S&P 500 to 1,707. The 2007 – 2009 bear was down 57%, 2000 – 2002 down 50%. The average decline of a bear market since 1971 is 31%.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 February 12, 2016, a reasonable risk is 15,854 a more extreme risk is 15,738. Near-term upside potential is 16,388. The abrupt change here is due to last week’s sharp rebound.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 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, and 2016 earnings as a whole.
The Street is counting on a big jump in Q3 and Q4.
////////////////////////////////////////////////////////////////////////////////////////////////
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.

Bulls Need Big News – Pronto

Investor’s first read – Daily edge before the open
DJIA:15,973
S&P 500: 1,861
Nasdaq Comp4,337.:
Russell 2000:971
Monday: February 15, 2016 8:53 a.m.
/////////////////////////////////////////////////////////////////////////////////////////////////////////
This rally is normal. Last Thursday I said to look for a series of sell offs, which if well-timed can give traders a chance to scalp a quick profit. I added Friday or Monday (??) seems to be one of them if the market gets crunched big today. It got crunched big, but the rally started that day, gained traction Friday and will jump out big at the open today.
We’ll give Fed Chief Janet Yellen half credit for the reversal, and of course the rebound in oil prices. The latter got further impetus from talks over the weekend between Saudi Arabia and Russia to freeze (not cut) production.
Finally, markets here are getting a boost from a rally in European Stocks Monday while the market was closed here for Presidents’ Day. Stocks abroad were rebounding from levels not seen since 3013 and reflected a renewed confidence central banks there would employ whatever stimulus was required to generate economic recovery.
THIS IS A VERY IMPORTANT JUNCTURE. We have the appearance of a double bottom in the DJIA and S&P 500 after rebounding from the January 20 lows. The Nasdaq Comp. and Russell 2000 rebounded after breaking the January lows.
Today will open strong. For this rebound to have legs it desperately needs good news, first on 2016 earnings guidance, second on the economy. There are some signs both are struggling.
If earnings are to grow impressively, it will take a surge in Q3 and Q4 to do it. The manufacturing inventory to sales ratio is rising sharply. If sales don’t pick up, there will be a lot of inventory hangover to work through this year, not good for manufacturing, which some think is in a recession.
TODAY:
I agree with a bounce here, but am wary how long it will last. A rally failure would hurt an already weak bull case, could even trigger another leg down.
Historically, stock markets turn down ahead of the onset of a recession, the lead time varying between two and 12 months.
The plunge in the market this year is telling us something is out of whack, to be alert for the unknown, or worsening of the known.
The bulls will be challenged to wade through a lot of selling in route to a climb back to last year’s highs (DJIA: 18,351; S&P 500: 2,134; Nasdaq Comp.: 5,231).
I think they will give it a good try, but get gunned down before or slightly above the Feb. highs (DJIA: 16,510; S&P 500:1,947; Nasdaq Comp.: 4,636).This is a DANGEROUS market.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RESISTANCE “today”: DJIA:16,213 ; S&P 500:1,889 ; Nasdaq Comp.:4,398
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THE MAKING OF A BEAR
Unless triggered by some horrific event, a bear market isn’t obvious at first. It begins with slippage as if it is just another correction in an up trending bull market. But rallies fail to attract enough buyers to reach new highs. Some begin to sell, others remain on the sidelines. Interest fades and bids weaken in face of one disappointment after another – new negatives surface – stocks start to slide – the Street’s optimism wanes, then sours. Fear mounts, then accelerates, as investors start to raise cash. No longer is it heresy to mention the word “bear.” Doomsters re-surface with talk of DOW 6,000. Fear turns to panic. No one, not anyone, wants to buy a stock. Selling intensifies. “If only I sold at a higher level,” investors lament, “I could be buying here.” The selling drives prices lower until one day when no matter how much selling there is, the market doesn’t go lower (capitulation).
To qualify as a BEAR MARKET
The DJIA must drop to 14,680, the S&P 500 to 1,707. The 2007 – 2009 bear was down 57%, 2000 – 2002 down 50%. The average decline of a bear market since 1971 is 31%.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 February 12, 2016, a reasonable risk is 15,854 a more extreme risk is 15,738. Near-term upside potential is 16,388. The abrupt change here is due to last week’s sharp rebound.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 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.