Churning Prior to a Big Move

Investor’s first read – Daily edge before the open
DJIA: 18,456
S&P 500: 2,170
Nasdaq Comp.:5,154
Russell 2000: 1,217
Friday, July 29, 2016 9:08 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THIS WEEK’S ECONOMIC REPORTS
The Federal Open Market Committee (FOMC) decided to stick with 0.25% – 0.50% for its benchmark rate, though was more upbeat than a month ago, citing a strong labor market and reduced risk of economic disruption abroad as a result of Britain’s intent to leave the European Union (EU).
This raised speculation of a rate increase at its September 21 meeting.
But Q2 GDP was reported today. The economy grew only 1.2% (annual rate) half of what economists had been estimating.
Anyone expecting a September rate hike can go back to the drawing board.
Yesterday’s reports were mixed. The S&P Case-Shiller Home prices Index for May was flat, but New Home Sales for June sizzled. The Richmond Fed Mfg. Index for July jumped smartly, but PMI Services for July slipped. Consumer Confidence held solid, but the State Street Investor Confidence tumbled. Wednesday: Durable Goods Orders for June were down sharply, Pending Home Sales for June were flat. Today: Imports exceeded imports in June for the International Trade Index, Jobless Claims were up a modest 14,000 for the July 23d week Kansas City Fed Index: July’s decrease reversed June’s advance. Today: 2nd Qtr GDP grew at a 1.2% annual rate., Chicago PMI (9:45), Consumer Sentiment (10:00).
The S&P 500 is pricey at 19.4 times for trailing earnings and 17.1 times on forward earnings. This compares with a 10-year average of 14.4 times and a 2006-2007 (pre-bear) multiple of 16-17.
Right now the market is comfortable with hopes that the gap between normal and pricey can be closed next year when earnings for the S&P are expected to rebound 13%. After five straight quarters of lower earnings, the market cannot hold these levels if the Street begins to doubt 2017 will improve significantly.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
TODAY
The market will be under pressure at the open following the Q2 GDP report, which suggests a stall in a slow growing economy, not from consumer spending, but from the corporate side.
Q2 earnings are mixed with positive and negative surprises containing stock prices within a narrow trading channel.
The S&P 500 is up 9.2% from its June 27 low, the Nasdaq Comp. up 12.7%, even in face of another down quarterly earnings report.
With long-bond interest rates at 1.51%, who can blame investors for seeking a return in yield stocks or in growth stocks via capital appreciation.
Investors seem a little too unconcerned with the risks that accompany a late-stage bull market faced with uncertainties non the least of which is a presidential election preceded by very negative and divisive campaigning.
The market has demonstrated its new normal now is, if it is going to go down, it will do so in a hurry, as it did in August 2015 and January this year.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today” DJIA:18,380 ; S&P 500:2,162; Nasdaq Comp.:5,141.
RESISTANCE “today” DJIA:18,503; S&P 500:2,175; Nasdaq Comp.:5,159.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
LATE STAGE BULL MARKET BEHAVIOR
This market has defied anything I have ever seen EXCEPT that is, near market tops.
News headlines of new all-time highs attracts interest especially from investors who have not participated in this bull market. Likewise, it is forcing investment professionals (brokers, money managers, hedge funds and newsletter writers) to become more fully invested.
It is characteristic of late bull market behavior to prompt talk of a “New Era.”
I have heard the New Era talk before. It comes on stream when the market hits new highs after a long bull run at a time just about everyone concludes the market simply has to go higher and they better jump on board.
I see fundamental and technical signs that warn of a top, but then I started seeing those three weeks ago. It is a matter of how high is high, and a momentum that is self fulfilling.
Bull markets can reach unthinkable extremes when investors stampede into stocks fearing being left behind.
Then too, fear of total ruin at bear market bottoms can trigger panicky selling as investors scramble to salvage what’s left of a portfolio after a 30% -45% plunge.
Major tops and bottoms are marked by extremes. Savvy investors know this. Even so, it is a challenge for any human to resist the urge to chase running stock prices at unreasonable heights, or get chased out after a harrowing plunge in stock prices.

NEW PROJECTION:
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 July 23, 2016, a reasonable risk is 18,476 a more extreme risk is 18,421c. Near-term upside potential is 18,828.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(So far this is not holding up)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Bloomberg.com (Excellent pre-market read)
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized 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.

Uncertainty (The Fed, Earnings, Election)

Investor’s first read – Daily edge before the open
DJIA: 18,472
S&P 500: 2,166
Nasdaq Comp.: 5,139
Russell 2000: 1,218
Thursday, July 28, 2016 9:04 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THIS WEEK’S ECONOMIC REPORTS
The Federal Open Market Committee (FOMC) decided to stick with 0.25% – 0.50% for its benchmark rate, though was more upbeat than a month ago, citing a strong labor market and reduced risk of economic disruption abroad as a result of Britain’s intent to leave the European Union (EU).
This raised speculation of a rate increase at its September 21 meeting. Less than a year ago the Fed planned four rate increases in 2016, so don’t hold your breath.
Yesterday’s reports were mixed. The S&P Case-Shiller Home prices Index for May was flat, but New Home Sales for June sizzled. The Richmond Fed Mfg. Index for July jumped smartly, but PMI Services for July slipped. Consumer Confidence held solid, but the State Street Investor Confidence tumbled. Wednesday: Durable Goods Orders for June were down sharply, Pending Home Sales for June were flat. Today: International Trade, Jobless Claims (8:30), Kansas City Fed Index (11:00). Friday: 2nd Qtr GDP (8:30), Chicago PMI (9:45), Consumer Sentiment (10:00).
The S&P 500 is pricey at 19.4 times for trailing earnings and 17.1 times on forward earnings. This compares with a 10-year average of 14.4 times and a 2006-2007 (pre-bear) multiple of 16-17.
Right now the market is comfortable with hopes that the gap between normal and pricey can be closed next year when earnings for the S&P are expected to rebound 13%. After five straight quarters of lower earnings, the market cannot hold these levels if the Street begins to doubt 2017 will improve significantly.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q2 EARNINGS
Earnings will be released in coming weeks. Along with that, the Street will have to deal with revisions of future earnings and corporate guidance. Expect those to be lower than projected.
FactSet.com’s earnings projections for Q2 call for a drop of 3.7% vs. an estimate of a drop of 2.8% three months ago. While oil and related industries account for much of this decline, eight sectors have lower growth rates now than at Mar.31. A Q2 decline would be the first time Y/Y earnings have declined five consecutive quarters since Q3 2008 – Q3 2009, the Great Recession.
What is more, a stronger U.S. dollar stands to adversely impact Q3 and Q4, S&P 500 earnings, which the Street was counting on to justify these prices.
This factor is already showing up in FactSet’s calculations with its projected earnings growth for Q3 dropping to a minus 0.1% from a plus 3.3% projected on March 31.
TODAY
Bulls and bears are at a standoff as we head into the open today. The Street should be happy, though not surprised by the Fed’s decision to hold pat on interest rates this month.
Whether the Street will be uneasy about speculation on a September bump will play out today and tomorrow.
Meanwhile Q2 earnings pour in with mixed results. Everyone knows Q2 will be down making it the fifth straight quarter of flat-to-down reports. Q3 and Q4 have been expected to post some growth. Now Q3 is questionable.
There is enough uncertainty about the Fed, earnings and the election to justify deferring aggressive buying and locking in some profits.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today” DJIA: 18,392; S&P 500: 2,157; Nasdaq Comp.:5,121
RESISTANCE “today” DJIA:18,535; S&P 500:2,171; Nasdaq Comp.:5,146.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
LATE STAGE BULL MARKET BEHAVIOR
This market has defied anything I have ever seen EXCEPT that is, near market tops.
News headlines of new all-time highs attracts interest especially from investors who have not participated in this bull market. Likewise, it is forcing investment professionals (brokers, money managers, hedge funds and newsletter writers) to become more fully invested.
It is characteristic of late bull market behavior to prompt talk of a “New Era.”
I have heard the New Era talk before. It comes on stream when the market hits new highs after a long bull run at a time just about everyone concludes the market simply has to go higher and they better jump on board.
I see fundamental and technical signs that warn of a top, but then I started seeing those three weeks ago. It is a matter of how high is high, and a momentum that is self fulfilling.
Bull markets can reach unthinkable extremes when investors stampede into stocks fearing being left behind.
Then too, fear of total ruin at bear market bottoms can trigger panicky selling as investors scramble to salvage what’s left of a portfolio after a 30% -45% plunge.
Major tops and bottoms are marked by extremes. Savvy investors know this. Even so, it is a challenge for any human to resist the urge to chase running stock prices at unreasonable heights, or get chased out after a harrowing plunge in stock prices.

NEW PROJECTION:
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 July 23, 2016, a reasonable risk is 18,476 a more extreme risk is 18,421c. Near-term upside potential is 18,828.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(So far this is not holding up)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Bloomberg.com (Excellent pre-market read)
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized 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.

Post-Convention Spike Up Must Hold

Investor’s first read – Daily edge before the open
DJIA: 18,473
S&P 500: 2,169
Nasdaq Comp.5,110:
Russell 2000: 1,216
Wednesday, July 27, 2016 9:04 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THIS WEEK’S ECONOMIC REPORTS
The FOMC meets again today with a report at 2:00 Wednesday. There will be no press conference, so don’t expect a change in interest rate policy. There will be a lot of economic reports this week. Yesterday’s reports were mixed. The S&P Case-Shiller Home prices Index for May was flat, but New Home Sales for June sizzled. The Richmond Fed Mfg. Index for July jumped smartly, but PMI Services for July slipped. Consumer Confidence held solid, but the State Street Investor Confidence tumbled. Today: Durable Goods (8:30), Pending Home Sales (10:00). Thursday: International Trade, Jobless Claims (8:30), Kansas City Fed Index (11:00). Friday: 2nd Qtr GDP (8:30), Chicago PMI (9:45), Consumer Sentiment (10:00).
The S&P 500 is pricey at 19.4 times for trailing earnings and 17.1 times on forward earnings. This compares with a 10-year average of 14.4 times and a 2006-2007 (pre-bear) multiple of 16-17.
Right now the market is comfortable with hopes that the gap between normal and pricey can be closed next year when earnings for the S&P are expected to rebound 13%. After five straight quarters of lower earnings, the market cannot hold these levels if the Street begins to doubt 2017 will improve significantly.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q2 EARNINGS
Earnings will be released in coming weeks. Along with that, the Street will have to deal with revisions of future earnings and corporate guidance. Expect those to be lower than projected.
FactSet.com’s earnings projections for Q2 call for a drop of 3.7% vs. an estimate of a drop of 2.8% three months ago. While oil and related industries account for much of this decline, eight sectors have lower growth rates now than at Mar.31. A Q2 decline would be the first time Y/Y earnings have declined five consecutive quarters since Q3 2008 – Q3 2009, the Great Recession.
What is more, a stronger U.S. dollar stands to adversely impact Q3 and Q4, S&P 500 earnings, which the Street was counting on to justify these prices.
This factor is already showing up in FactSet’s calculations with its projected earnings growth for Q3 dropping to a minus 0.1% from a plus 3.3% projected on March 31.
TODAY
The political conventions have had no effect on the market, but concern about the outcome of the election in November may as it draws closer.
Q2 earnings will highlight the fact corporations are having difficulty engineering favorable results at the bottom line with the fifth straight flat-to declining quarterly earnings report.
Look for Q3 to be the sixth. Q4 was hoped to be the big turnaround, but with a strong U.S. dollar persisting, we may see another disappointment.
Alas, we have 2017, when the Street is looking for a 13% bounce. Granted oil companies can’t continue to be a drag as they have over the past year, but oil prices are slipping again, ergo an uncertainty.
BUT, does the Street even care ?
In this sense, the market is very fickle. There have been times when earnings reports dominated the market’s behavior. Other times, it was an economic indicator like Jobless Claims, or the Employment Situation report.
The Fed calls the shots today even in face of some ugly stuff in other areas.
That can change in a heartbeat, be alert to that possibility.
Buyers are there on dips, but the market is technically overvalued. The S&P 500 is up 8.9% in four weeks.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today” DJIA:18,367; S&P 500:2,163; Nasdaq Comp.:5,086
RESISTANCE “today” DJIA:18,567; S&P 500:2,186; Nasdaq Comp.:5,134.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
LATE STAGE BULL MARKET BEHAVIOR
This market has defied anything I have ever seen EXCEPT that is, near market tops.
News headlines of new all-time highs attracts interest especially from investors who have not participated in this bull market. Likewise, it is forcing investment professionals (brokers, money managers, hedge funds and newsletter writers) to become more fully invested.
It is characteristic of late bull market behavior to prompt talk of a “New Era.”
I have heard the New Era talk before. It comes on stream when the market hits new highs after a long bull run at a time just about everyone concludes the market simply has to go higher and they better jump on board.
I see fundamental and technical signs that warn of a top, but then I started seeing those three weeks ago. It is a matter of how high is high, and a momentum that is self fulfilling.
Bull markets can reach unthinkable extremes when investors stampede into stocks fearing being left behind.
Then too, fear of total ruin at bear market bottoms can trigger panicky selling as investors scramble to salvage what’s left of a portfolio after a 30% -45% plunge.
Major tops and bottoms are marked by extremes. Savvy investors know this. Even so, it is a challenge for any human to resist the urge to chase running stock prices at unreasonable heights, or get chased out after a harrowing plunge in stock prices.

NEW PROJECTION:
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 July 23, 2016, a reasonable risk is 18,476 a more extreme risk is 18,421c. Near-term upside potential is 18,828.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(So far this is not holding up)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Bloomberg.com (Excellent pre-market read)
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized 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.

More Wait and See

Investor’s first read – Daily edge before the open
DJIA: 18,493
S&P 500: 2,168
Nasdaq Comp.: 5,097
Russell 2000: 1,209
Tuesday, July 26, 2016 8:52 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THIS WEEK’S ECONOMIC REPORTS
The FOMC meets today with a report at 2:00 Wednesday. There will be no press conference, so don’t expect a change in interest rate policy. There will be a lot of economic reports this week. Today: S&P Case-Shiller Home prices (9:00 a.m.), PMI Services – flash (9:45), New Home Sales, Consumer Confidence, Richmond Mfg., State Street Investor Confidence all at 10:00. Wednesday: Durable Goods (8:30), Pending Home Sales (10:00). Thursday: International Trade, Jobless Claims (8:30), Kansas City Fed Index (11:00). Friday: 2nd Qtr GDP (8:30), Chicago PMI (9:45), Consumer Sentiment (10:00).

The S&P 500 is pricey at 19.4 times for trailing earnings and 17.1 times on forward earnings. This compares with a 10-year average of 14.4 times and a 2006-2007 (pre-bear) multiple of 16-17.
Right now the market is comfortable with hopes that the gap between normal and pricey can be closed next year when earnings for the S&P are expected to rebound 13%. After five straight quarters of lower earnings, the market cannot hold these levels if the Street begins to doubt 2017 will improve significantly.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q2 EARNINGS
Earnings will be released in coming weeks. Along with that, the Street will have to deal with revisions of future earnings and corporate guidance. Expect those to be lower than projected.
FactSet.com’s earnings projections for Q2 call for a drop of 3.7% vs. an estimate of a drop of 2.8% three months ago. While oil and related industries account for much of this decline, eight sectors have lower growth rates now than at Mar.31. A Q2 decline would be the first time Y/Y earnings have declined five consecutive quarters since Q3 2008 – Q3 2009, the Great Recession.
What is more, a stronger U.S. dollar stands to adversely impact Q3 and Q4, S&P 500 earnings, which the Street was counting on to justify these prices.
This factor is already showing up in FactSet’s calculations with its projected earnings growth for Q3 dropping to a minus 0.1% from a plus 3.3% projected on March 31.
TODAY
At some point, the market will have to adjust to the uncertainty of the November elections. The party platforms are just too far apart.
What’s more, the market is trading at all-time highs, up 9% in four weeks, which makes it vulnerable in the event that investors feel the need for cash just in case they don’t like the way things are shaping up.
With interest rates low and destined to stay low, investors as buying “yield” wherever they can find it, driving P/Es for the S&P 500 well beyond the norm.
As a result, any attempt for the market to pull back is met with buyers.
We are well into the Q2 earnings reports. So far, the Street is unfazed, even though this will be the fifth straight quarter of flat-to-declining earnings.
It seems the Street has become desensitized to any news outside of Fed policy. There should be more volatility under these conditions. I expect that to pick up as we get closer to the elections.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today” DJIA:18,471; S&P 500:2,165; Nasdaq Comp.:5,093
RESISTANCE “today” DJIA:18,541; S&P 500:2,172; Nasdaq Comp.:5,105.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
LATE STAGE BULL MARKET BEHAVIOR
This market has defied anything I have ever seen EXCEPT that is, near market tops.
News headlines of new all-time highs attracts interest especially from investors who have not participated in this bull market. Likewise, it is forcing investment professionals (brokers, money managers, hedge funds and newsletter writers) to become more fully invested.
It is characteristic of late bull market behavior to prompt talk of a “New Era.”
I have heard the New Era talk before. It comes on stream when the market hits new highs after a long bull run at a time just about everyone concludes the market simply has to go higher and they better jump on board.
I see fundamental and technical signs that warn of a top, but then I started seeing those three weeks ago. It is a matter of how high is high, and a momentum that is self fulfilling.
Bull markets can reach unthinkable extremes when investors stampede into stocks fearing being left behind.
Then too, fear of total ruin at bear market bottoms can trigger panicky selling as investors scramble to salvage what’s left of a portfolio after a 30% -45% plunge.
Major tops and bottoms are marked by extremes. Savvy investors know this. Even so, it is a challenge for any human to resist the urge to chase running stock prices at unreasonable heights, or get chased out after a harrowing plunge in stock prices.

NEW PROJECTION:
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 July 23, 2016, a reasonable risk is 18,476 a more extreme risk is 18,421c. Near-term upside potential is 18,828.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(So far this is not holding up)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Bloomberg.com (Excellent pre-market read)
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized 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 Week Reports on the Economy

Investor’s first read – Daily edge before the open
DJIA: 18,570
S&P 500: 2,175
Nasdaq Comp.:5,100
Russell 2000: 1,212
Monday, July 25, 2016 9:11 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THIS WEEK’S ECONOMIC REPORTS
The FOMC meets tomorrow with a report at 2:00 Wednesday. There will be no press conference, so don’t expect a change in interest rate policy. There will be a lot of economic reports this week. Tuesday: S&P Case-Shiller Home prices (9:00 a.m.), PMI Services – flash (9:45), New Home Sales, Consumer Confidence, Richmond Mfg., State Street Investor Confidence all at 10:00. Wednesday: Durable Goods (8:30), Pending Home Sales (10:00). Thursday: International Trade, Jobless Claims (8:30), Kansas City Fed Index (11:00). Friday: 2nd Qtr GDP (8:30), Chicago PMI (9:45), Consumer Sentiment (10:00).

The S&P 500 is pricey at 19.4 times for trailing earnings and 17.1 times on forward earnings. This compares with a 10-year average of 14.4 times and a 2006-2007 (pre-bear) multiple of 16-17.
Right now the market is comfortable with hopes that the gap between normal and pricey can be closed next year when earnings for the S&P are expected to rebound 13%. After five straight quarters of lower earnings, the market cannot hold these levels if the Street begins to doubt 2017 will improve significantly.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q2 EARNINGS
Earnings will be released in coming weeks. Along with that, the Street will have to deal with revisions of future earnings and corporate guidance. Expect those to be lower than projected.
FactSet.com’s earnings projections for Q2 call for a drop of 3.7% vs. an estimate of a drop of 2.8% three months ago. While oil and related industries account for much of this decline, eight sectors have lower growth rates now than at Mar.31. A Q2 decline would be the first time Y/Y earnings have declined five consecutive quarters since Q3 2008 – Q3 2009, the Great Recession.
What is more, a stronger U.S. dollar stands to adversely impact Q3 and Q4, S&P 500 earnings, which the Street was counting on to justify these prices.
This factor is already showing up in FactSet’s calculations with its projected earnings growth for Q3 dropping to a minus 0.1% from a plus 3.3% projected on March 31.
TODAY
So far, the Street only cares about Fed interest rate policy. Except for stocks of companies that “miss” projections, the Street could care less whether the market is pricey relative to earnings.
It seems indifferent to the November elections.
This reminds me so much of the reverse of the bear market bottom in early 2009. Today investors don’t think the market can go down and stay down. Then they didn’t think the market could go up and stay up.
This time it is a Fed bubble which will burst like the dot-com bubble in January 2000 and Housing/derivative bubble in October 2007.
It shows no inclination to do so –yet.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today” DJIA:18,517; S&P 500:2,168; Nasdaq Comp.:5,075
RESISTANCE “today” DJIA:18,633; S&P 500:2,182; Nasdaq Comp.:5,117.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
LATE STAGE BULL MARKET BEHAVIOR
This market has defied anything I have ever seen EXCEPT that is, near market tops.
News headlines of new all-time highs attracts interest especially from investors who have not participated in this bull market. Likewise, it is forcing investment professionals (brokers, money managers, hedge funds and newsletter writers) to become more fully invested.
It is characteristic of late bull market behavior to prompt talk of a “New Era.”
I have heard the New Era talk before. It comes on stream when the market hits new highs after a long bull run at a time just about everyone concludes the market simply has to go higher and they better jump on board.
I see fundamental and technical signs that warn of a top, but then I started seeing those three weeks ago. It is a matter of how high is high, and a momentum that is self fulfilling.
Bull markets can reach unthinkable extremes when investors stampede into stocks fearing being left behind.
Then too, fear of total ruin at bear market bottoms can trigger panicky selling as investors scramble to salvage what’s left of a portfolio after a 30% -45% plunge.
Major tops and bottoms are marked by extremes. Savvy investors know this. Even so, it is a challenge for any human to resist the urge to chase running stock prices at unreasonable heights, or get chased out after a harrowing plunge in stock prices.

NEW PROJECTION:
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 July 23, 2016, a reasonable risk is 18,476 a more extreme risk is 18,421c. Near-term upside potential is 18,828.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(So far this is not holding up)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Bloomberg.com (Excellent pre-market read)
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized 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 Selling Into Q2 Earnings ?

Investor’s first read – Daily edge before the open
DJIA: 18,517
S&P 500: 2,165
Nasdaq Comp.:5,073
Russell 2000: 1,203
Friday, July 22, 2016 9:01 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
My Time Warner Internet connection failed me yesterday
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Currently, the focus is where it should be –corporate earnings. Beating estimates isn’t all that tough these days, since they are set on the low side to begin with. While American Express (AXP), Intel (INTC) and Travelers (TRV), American Airlines (AAL), General Electric (GE) beat projections, They declined in the after market. BIG money selling into earnings ??
The S&P 500 is pricey at 19.4 times for trailing earnings and 17.1 times on forward earnings. This compares with a 10-year average of 14.4 times and a 2006-2007 (pre-bear) multiple of 16-17.
Right now the market is comfortable with hopes that the gap between normal and pricey can be closed next year when earnings for the S&P are expected to rebound 13%. After five straight quarters of lower earnings, the market cannot hold these levels if the Street begins to doubt 2017 will improve significantly.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q2 EARNINGS
Earnings will be released in coming weeks. Along with that, the Street will have to deal with revisions of future earnings and corporate guidance. Expect those to be lower than projected.
A stronger U.S. dollar stands to adversely impact Q3 and Q4, S&P 500 earnings, which the Street was counting on to justify these prices.
Earnings projections for Q2 call for a drop of 5.3% vs. an estimate of a drop of 2.8% three months ago. While oil and related industries account for much of this decline, nine sectors have lower growth rates now than at Mar.31. This would bring the P/E for the S&P 500 to 16.4 compared to a 5-year average on 14.6 (data FactSet.com). A Q2 decline would be the first time Y/Y earnings have declined five consecutive quarters since Q3 2008 – Q3 2009, the Great Recession.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
TODAY
This market has defied anything I have ever seen EXCEPT that is, near market tops.
News headlines of new all-time highs attracts interest especially from investors who have not participated in this bull market. Likewise, it is forcing investment professionals (brokers, money managers, hedge funds and newsletter writers) to become more fully invested.
It is characteristic of late bull market behavior to prompt talk of a “New Era.”
I have heard the New Era talk before. It comes on stream when the market hits new highs after a long bull run at a time just about everyone concludes the market simply has to go higher and they better jump on board.
I see fundamental and technical signs that warn of a top, but then I started seeing those three weeks ago. It is a matter of how high is high, and a momentum that is self fulfilling.
Bull markets can reach unthinkable extremes when investors stampede into stocks fearing being left behind.
Then too, fear of total ruin at bear market bottoms can trigger panicky selling as investors scramble to salvage what’s left of a portfolio after a 30% -45% plunge.
Major tops and bottoms are marked by extremes. Savvy investors know this. Even so, it is a challenge for any human to resist the urge to chase running stock prices at unreasonable heights, or get chased out after a harrowing plunge in stock prices.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today” DJIA:18,405; S&P 500:2,153; Nasdaq Comp.:5,041
RESISTANCE “today” DJIA:18,563; S&P 500:2,169; Nasdaq Comp.:5,084.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NEW PROJECTION:
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 July 15, 2016, a reasonable risk is 18,415 a more extreme risk is 18,346. Near-term upside potential is 18,723.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(So far this is not holding up)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Bloomberg.com (Excellent pre-market read)
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized 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.

More About Earnings Than Politics

Investor’s first read – Daily edge before the open
DJIA: 18,559
S&P 500: 2,163
Nasdaq Comp.:5,036
Russell 2000: 1,200
Wednesday, July 20, 2016 9:03 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
TODAY
ALERT: Thursday will feature some key economic reports, including Jobless Claims, Philly Fed Business Outlook , Chicago Fed Activity, all at 8:30 a.m.. The FHFA House Price Index (9:00 a.m.), Existing Home Sales (10:00), and Leading Indicators (10:00) round out the week.
The results of both conventions of little consequence. Right now, the focus is where it should be –corporate earnings. Beating estimates isn’t all that tough these days, since they are set on the low side to begin with. That’s not so say a “miss” won’t whack a stock’s price, likewise a disappointing “beat.”
The S&P 500 is pricey at 19.4 times on trailing earnings and 17.1 times on forward earnings. This compares with a 10-year average of 14.4 times and a 2006-2007 (pre-bear) multiple of 16-17.
Presently, the general estimate for 2017 is for a growth rate of 13%.
While the last 12 months earnings have been adversely impacted by the plunge in oil industry earnings, 2017 should be helped by that industry’s rebound.
Right now the market is comfortable with hopes that the gap between normal and pricey can be closed next year.
If hopes are dashed, we have a problem at these levels.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q2 EARNINGS
Earnings will be released in coming weeks. Along with that, the Street will have to deal with revisions of future earnings and corporate guidance. Expect those to be lower than projected.
A stronger U.S. dollar stands to adversely impact Q3 and Q4, S&P 500 earnings, which the Street was counting on to justify these prices.
Earnings projections for Q2 call for a drop of 5.3% vs. an estimate of a drop of 2.8% three months ago. While oil and related industries account for much of this decline, nine sectors have lower growth rates now than at Mar.31. This would bring the P/E for the S&P 500 to 16.4 compared to a 5-year average on 14.6 (data FactSet.com). A Q2 decline would be the first time Y/Y earnings have declined five consecutive quarters since Q3 2008 – Q3 2009, the Great Recession.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today” DJIA:18,541; S&P 500:2,161; Nasdaq Comp.:5,032
RESISTANCE “today” DJIA:18,587; S&P 500:2,166; Nasdaq Comp.:5,043.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NEW PROJECTION:
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 July 15, 2016, a reasonable risk is 18,415 a more extreme risk is 18,346. Near-term upside potential is 18,723.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(So far this is not holding up)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Bloomberg.com (Excellent pre-market read)
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized 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.

Volatile Week – Crosscurrents

Investor’s first read – Daily edge before the open
DJIA: 18,533
S&P 500: 2,166
Nasdaq Comp.5,055:
Russell 2000: 1,207
Tuesday, July 19, 2016 9:03 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
TODAY
Convention rhetoric during these two weeks should create some volatility, but corporate earnings may cause more. No longer is an earnings “beat” as dramatic as it was before guidance and Street estimates were intentionally set low to allow the “beat.”
The key now will be guidance and estimates for Q4 when the Street is hoping for a rebound to offset the drag of preceding quarters. At some point, earnings will have to be factored into the buy/sell equation.
The Street is looking past the current 5-quarters of declining earnings to a snapback in Q4 and 2017 when energy is no longer expected to be as big a d drag.
If that rebound happens ahead of schedule, we are going higher. If earnings fail to rebound, we are going lower no matter what the Fed does.
Fed policy has done little over the years except to prop the stock market, which based on what we know now, is overpriced.
ALERT: Thursday will feature some key economic reports, including Jobless Claims, Philly Fed Business Outlook , Chicago Fed Activity, all at 8:30 a.m.. The FHFA House Price Index (9:00 a.m.), Existing Home Sales (10:00), and Leading Indicators (10:00).
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q2 EARNINGS
Earnings will be released in coming weeks. Along with that, the Street will have to deal with revisions of future earnings and corporate guidance. Expect those to be lower than projected.
A stronger U.S. dollar stands to adversely impact Q3 and Q4, S&P 500 earnings, which the Street was counting on to justify these prices.
Earnings projections for Q2 call for a drop of 5.3% vs. an estimate of a drop of 2.8% three months ago. While oil and related industries account for much of this decline, nine sectors have lower growth rates now than at Mar.31. This would bring the P/E for the S&P 500 to 16.4 compared to a 5-year average on 14.6 (data FactSet.com). A Q2 decline would be the first time Y/Y earnings have declined five consecutive quarters since Q3 2008 – Q3 2009, the Great Recession.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today” DJIA:18,481; S&P 500:2,162; Nasdaq Comp.:5,042
RESISTANCE “today” DJIA:18,591; S&P 500:2,173; Nasdaq Comp.:5,071.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NEW PROJECTION:
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 July 15, 2016, a reasonable risk is 18,415 a more extreme risk is 18,346. Near-term upside potential is 18,723.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(So far this is not holding up)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Bloomberg.com (Excellent pre-market read)
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized 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.

One More Time ?

Investor’s first read – Daily edge before the open
DJIA: 18,516
S&P 500: 2,161
Nasdaq Comp.5,029:
Russell 2000: 1,205
Monday, July 18, 2016 8:53 a.m.
As a sometimes contrarian, a Friday July 15, Marketwatch article caught my eye – “Record Highs on Wall Street is forcing bears to throw in the towel …High-yield funds see largest one-day inflow on record on July 11.”
Excerpts from the article include:
-bears who doubted the market for years decided it was time to join the rally.”
-“the day when bears capitulated into risk assets.”
-“fixed income flows shifted markedly toward riskier assets, including high yield, EM [Emerging Markets] and leveraged loans..”
-“Largest daily inflows to HY [high yield] bond funds on record ($2.1bn)
-“when the S&P 500 ended in record territory, investors poured $6.4 billion into U.S. stock exchange-traded funds.”
This smacks of the late stage of a bull market in stocks and bonds. Really, both are at all-time highs, and even the bears are scrambling to buy ?
What happened to the Street adage, “Buy low, sell high” ? Don’t ask corporate managements that question, their repurchase of shares at these levels continue at a blistering pace.
How much further can either go ? What if just rumors of inflation heat up ?
Major market turns are not accompanied by headlines about the turn, but rather by headlines of a continuation of the trend in force. A few contrary thinkers can scream “BUY” or “SELL” and no one listens.
At market tops, people are making easy money, and don’t want to hear about an end to the party. At bottoms, everyone is too scared to buy. Human nature never ceases to amuse.
We are beginning to see signs of a stretched out bull market, driven by the logic that with interest rates low (Long bond yields 1.57%), there is no other place to invest with any hope of a return.
The market is ignoring risks that have warrant more respect, namely the fifth straight quarter of declining earnings for the S&P 500, excessive valuations on top of that, and an aging bull market and economic expansion.
Throughout this bull market, the Street has marched to the Fed stimulus drumbeat and little else has mattered, but on two occasions within the past two years, the market plunged.
A 5-day 11.7% plunge by the S&P 500 in August 2015 (15.8% drop -Nasdaq) and a 12.9% (15.7%drop Nasdaq) drop in January.
The next correction should be every bit as sharp. My message here is BE ALERT that this can happen.
The Street is looking past the current 5-quarters of declining earnings to a snapback in Q4 and 2017 when energy is no longer expected to be a drag.
If that rebound happens ahead of schedule, we are going higher. If earnings fail to rebound, we are going lower no matter what the Fed does.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q2 EARNINGS
Earnings will be released in coming weeks. Along with that, the Street will have to deal with revisions of future earnings and corporate guidance. Expect those to be lower than projected.
A stronger U.S. dollar stands to adversely impact Q3 and Q4, S&P 500 earnings, which the Street was counting on to justify these prices.
Earnings projections for Q2 call for a drop of 5.3% vs. an estimate of a drop of 2.8% three months ago. While oil and related industries account for much of this decline, nine sectors have lower growth rates now than at Mar.31. This would bring the P/E for the S&P 500 to 16.4 compared to a 5-year average on 14.6 (data FactSet.com). A Q2 decline would be the first time Y/Y earnings have declined five consecutive quarters since Q3 2008 – Q3 2009, the Great Recession.
TODAY
Two political party conventions in two weeks – UGH ! This week we will hear about how bad things are, next week how good things are.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today” DJIA:18,447; S&P 500:2,251; Nasdaq Comp.:5,009
RESISTANCE “today” DJIA:18,587; S&P 500:2,161; Nasdaq Comp.:5,048.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NEW PROJECTION:
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 July 15, 2016, a reasonable risk is 18,415 a more extreme risk is 18,346. Near-term upside potential is 18,723.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(I will repeat this regularly to keep readers aware of the potential for an April correction)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Bloomberg.com (Excellent pre-market read)
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized 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.

What If Inflation Picked Up Out of Nowhere ?

Investor’s first read – Daily edge before the open
DJIA: 18,506
S&P 500: 2,163
Nasdaq Comp.:5,034
Russell 2000: 1,202
Thursday, July 15, 2016 8:23 a.m.
Because I was wrong recently when I expected this market to sell off before the recent surge, is no reason to get caught up in this madness and go all-in.
I don’t err often, but am quick to admit it when I do. However, I still think this is a phony market, propped by the belief that low interest rates are all that count.
The market is ignoring risks that have warrant more respect, namely the fifth straight quarter of declining earnings for the S&P 500, excessive valuations on top of that, and an aging bull market and economic expansion.
Throughout this bull market, the Street has marched to the Fed stimulus drumbeat and little else has mattered,
But, suddenly other factors override the fantasy that ultra low interest rates are the elixir for the economy. It could just be an unexpected event, or the sudden awareness that the market is overvalued and the market adjusts to more realistic levels.
It happened twice in the last twelve months. A 5-day drop 11.7% plunge of the S&P 500 in August 2015 (15.8% drop -Nasdaq) and a 12.9% (15.7%drop Nasdaq) stunned the Street.
The next correction should be every bit as sharp. My message here is BE ALERT that this can happen.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q2 EARNINGS
Earnings will be released in coming weeks. Along with that, the Street will have to deal with revisions of future earnings and corporate guidance. Expect those to be lower than projected.
A stronger U.S. dollar stands to adversely impact Q3 and Q4, S&P 500 earnings, which the Street was counting on to justify these prices.
Earnings projections for Q2 call for a drop of 5.3% vs. an estimate of a drop of 2.8% three months ago. While oil and related industries account for much of this decline, nine sectors have lower growth rates now than at Mar.31. This would bring the P/E for the S&P 500 to 16.4 compared to a 5-year average on 14.6 (data FactSet.com). A Q2 decline would be the first time Y/Y earnings have declined five consecutive quarters since Q3 2008 – Q3 2009, the Great Recession.
TODAY
We are witnessing yet another bubble due to burst. In 1999, it was the dot-com craze. In 2007, it was housing/derivatives. It is now a Fed bubble, where the Fed does everything it can to prop the market. It could persist for many months. But the economy and stock market cannot be artificially propped indefinitely.
Put another way, there are negatives that are not discounted in these record prices, simply because the Street is only focused on Fed stimulus.
All this changes for the better “if” corporate earnings take off more than expected (+ 10%) in Q4, and for the worse if out of nowhere inflation picks up. If it’s the latter, both stock and bond market would plunge.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today” DJIA:18,447; S&P 500:2,157; Nasdaq Comp.:5,018;
RESISTANCE “today” DJIA:18,635; S&P 500:2,176; Nasdaq Comp.:5,068
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NEW PROJECTION:
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 July 11, 2016, a reasonable risk is 16,970 a more extreme risk is 16,812. Near-term upside potential is 18,579.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(I will repeat this regularly to keep readers aware of the potential for an April correction)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Bloomberg.com (Excellent pre-market read)
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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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.