September Rate Hike ?

Investor’s first read – Daily edge before the open
DJIA: 18,454
S&P 500:2,176
Nasdaq Comp.: 5,222
Russell 2000: 1,245
Wednesday, August 31, 2016 9:03 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
In her address Friday to the Monetary Policy Symposium, Fed Chair Janet Yellen, said the case for a rate hike has strengthened in recent months. Going forward, she expects interest on excess reserves, forward guidance and asset purchases will be important tools in its toolkit.
Yellen noted the next hike would depend on subsequent economic data and would be gradual, not rapid-fire, as some fear.
Presently, the Street gives a September hike a modest probability (36%), leaning more toward December (59%).
TODAY
Chances of a September rate hike may be increasing. Chain and discount store sales for the week ended August 27 jumped sharply, as did the Consumer Confidence Index. This morning, ADP Employment Report for August showed a job gain of 177,000 with July revised upward 15,000 to 194,000.
Friday brings the Employment Situation report at 8:30, currently estimated at 175,000 jobs added. That follows July’s 255,000 and June’s 252,000. New jobs.
So, here we are again. If the Street was a buyer it thought bad news was good, because it lessened the chance of a Fed rate increase, will it now think good news is bad and sell ?
The elections have had little impact on the market. That may change if it appears that the Libertarian Party ticket of Johnson/Weld will tip the scales in key states like Ohio.
The next FOMC meeting is September 20-21.
The Street must now decide whether it wants a growing economy or low interest rates.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:18,358; S&P 500:2,163; Nasdaq Comp.:5,196
RESISTANCE “today”: DJIA:18,481; S&P 500:2,178; Nasdaq Comp.:5,232
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
FED BUBBLE
The risk for over-reliance on Fed policy and low interest rates is that it forces investors to seek riskier and riskier stock and bond investments, which will ultimately result in a bubble burst.
We had bubble bursts in January 2000 with dot-coms, and again in 2008 with housing/derivatives. The next one could be the Fed bubble burst when investors get over extended in speculative issues only to find nothing the Fed can do, not even negative rates, can avert and soften the impact of an ugly recession.
Ms Yellen referred to the Fed’s toolkit in her Jackson Hole speech ( Interest on reserves, forward guidance and asset purchases), the implication being the Fed can use these to control future economic cycles. Lot’s of Luck, Ms Yellen.
That event can be months or a year out. Just be aware it can happen, because there will be little warning ahead of time. Prior to that, some nice money can be made, so long as investors watch their back.

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 August 26, 2016, a reasonable risk is 17,650 a more extreme risk is 17,587 Near-term upside potential is 18,527.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

Street Awaits Jobs Report Friday

Investor’s first read – Daily edge before the open
DJIA: 18,503
S&P 500:2,180
Nasdaq Comp.: 5,232
Russell 2000: 1,244
Tuesday, August 30, 2016 9:03 a.m.
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As Americans, as humans, as people of faith, we are really, really, really being tested.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
It looks like the Street will begin to fret about a September rate hike in coming weeks with a Federal Open Market Committee (FOMV) meeting September 20-21.
That’s the latest Fedspeak !
Bumping interest rates up a smidge to 0.75 – 0.875 per cent from 0.25 – 0.50 per cent shouldn’t derail the economy, but are they willing to take the chance ?
In her address Friday to the Monetary Policy Symposium, Fed Chair Janet Yellen, said the case for a rate hike has strengthened in recent months. Going forward, she expects interest on excess reserves, forward guidance and asset purchases will be important tools in its toolkit.
Yellen noted the next hike would depend on subsequent economic data and would be gradual, not rapid-fire, as some fear.
The Street gives a September hike a modest probability (36%), leaning more toward December (59%).
TODAY
Last week, the Street was on hold, awaiting Fed Chief Janet Yellen’s comments Friday before the Monetary Policy Symposium, where she hinted at a rate increase possibly in September.
This week, the Street is awaiting the ADP Employment Wednesday (8:15 a.m.) and Employment Situation report Friday (8:30 a.m.) to see how much she is on target. Anything north of 200,000 new jobs would tilt odds in favor of a September rate increase.
Aside from interest rate angst, the investment environment is free from an overriding crisis. That’s fine, though booooring.
The elections have had little impact on the market. That may change if the Libertarian Party ticket of Johnson/Weld appears to be a swing factor in several key states like Ohio.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:18,423; S&P 500:2,176; Nasdaq Comp.:5,208
RESISTANCE “today”: DJIA:18,539; S&P 500:2,185; Nasdaq Comp.:5,245
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
FED BUBBLE
The risk for over-reliance on Fed policy and low interest rates is that it forces investors to seek riskier and riskier stock and bond investments, which will ultimately result in a bubble burst.
We had bubble bursts in January 2000 with dot-coms, and again in 2008 with housing/derivatives. The next one could be the Fed bubble burst when investors get over extended in speculative issues only to find nothing the Fed can do, not even negative rates, can avert and soften the impact of an ugly recession.
Ms Yellen referred to the Fed’s toolkit in her Jackson Hole speech ( Interest on reserves, forward guidance and asset purchases), the implication being the Fed can use these to control future economic cycles. Lot’s of Luck, Ms Yellen.
That event can be months or a year out. Just be aware it can happen, because there will be little warning ahead of time. Prior to that, some nice money can be made, so long as investors watch their back.

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 August 26, 2016, a reasonable risk is 17,650 a more extreme risk is 17,587 Near-term upside potential is 18,527.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

Street Ponders a Rate Increase

Investor’s first read – Daily edge before the open
DJIA: 18,395
S&P 500:2,169
Nasdaq Comp.: 5,218
Russell 2000: 1,238
Monday, August 29, 2016 9:13 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
In her address Friday to the Monetary Policy Symposium, Fed Chair Janet Yellen, said the case for a rate hike has strengthened in recent months. Going forward, she expects interest on excess reserves, forward guidance and asset purchases will important tools in its toolkit.
An astute observation (IMHO) regarding the nation’s lagging productivity came from Vice Chair Stanley Fischer, who said the key to boosting productivity (output per man-hour) is gained from fiscal and regulatory policies, such as improved infrastructure, better education, and incentives for private investment.
Yellen’s comments about rates were on the same page as those made recently by other Fed bank presidents Dudley, Lockhart, Williams, Mester , and Fischer all expecting a rate hike this year.
Yellen noted the next hike would depend on subsequent economic data and would be gradual, not rapid-fire, as some fear.
The Street gives a September hike a modest probability (30%), leaning more toward December (59%).
The Durable Goods report for July was last week’s big economic surprise with a 4.4 % rise in new orders. New home Sales in July sizzled with a gain of 12.4%, though sales of existing homes were flat.
The biggest news this week will be the ADP Employment Wednesday (8:15 a.m.) and Employment Situation report Friday (8:30 a.m.)
TODAY
The major market averages rallied Friday on Fed Chief Yellen’s comments, but failed to hold their gain.
Even so, the Fed demonstrated it still has a lock on the Street’s decision process. While the Street is wary of any interest rate increase, it appears to be encouraged by Yellen’s assurance that future rate bumps will be gradual.
We’ll get a better read first at 8:15 a.m. Wednesday when the ADP Employment report is released, but more importantly Friday at 8:30 a.m. when the Employment Situation report is released.
A strong report in excess of 225,000 new jobs would raise odds of a September 21, bump in rates. That would jolt the Street, as it begins to fear a pattern of continuing increases.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:18,361; S&P 500:2,164; Nasdaq Comp.:5,207
RESISTANCE “today”: DJIA:18,466; S&P 500:2,179; Nasdaq Comp.:5,234
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
FED BUBBLE
The risk for over-reliance on Fed policy and low interest rates is that it forces investors to seek riskier and riskier stock and bond investments, which will ultimately result in a bubble burst.
We had bubble bursts in January 2000 with dot-coms, and again in 2008 with housing/derivatives. The next one could be the Fed bubble burst when investors get over extended in speculative issues only to find nothing the Fed can do, not even negative rates, can avert and soften the impact of an ugly recession.
Ms Yellen referred to the Fed’s toolkit in her Jackson Hole speech ( Interest on reserves, forward guidance and asset purchases), the implication being the Fed can use these to control future economic cycles. Lot’s of Luck, Ms Yellen.
That event can be months or a year out. Just be aware it can happen, because there will be little warning ahead of time. Prior to that, some nice money can be made, so long as investors watch their back.

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 August 26, 2016, a reasonable risk is 17,650 a more extreme risk is 17,587 Near-term upside potential is 18,527.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

Will the Bulls Step In or Yield to the Bears ?

Investor’s first read – Daily edge before the open
DJIA: 18,448
S&P 500:2,172
Nasdaq Comp.:5,212
Russell 2000: 1,240
Friday, August 26, 2016 9:03 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THE BULL
This is the second longest bull market in history (90 months) and the economic expansion accompanying it is the third longest (86 months) on record.
The S&P 500 Index is misleading, dominated by big-name stocks. Over the last 12 months, more than half of the 500 stocks have had declines of 20%, the benchmark that comprises a bear market. The mathematical weighting enabled the largest market cap stocks to offset the decline in those stocks.
TODAY
Fed Chief Janet Yellen speaks at 10 o’clock today at the Monetary Policy Symposium in Jackson Hole Wyoming.
Once again, the Street will parse every word of her statement in an attempt to get a feel for Fed policy going forward.
During the past week, several Fed bank presidents have warned that one, possibly two, bumps in rates are possible before year-end.
The market has been a bit soft in recent days, nervous that Yellen will confirm a rate increase before year-end.
If we get a sharp spike down this morning we will get a good read on just how aggressive the bulls are. That could only come as a result of what Fed’s Yellen implies in her speech.
While the second estimate of the annualized growth in Q2 GDP came in this morning at a positive 1.1% versus the first estimate a month ago of 1.2% suggests the economy is buoyant, expect Yellen to project a stronger second half, ergo the possibility of one or more rate increases.
That could be what drops the market sharply this morning. The bulls should jump on the lower prices, generating a one-day reversal until the last hour of trading.
If the bulls can hold the line after a bounce, we will continue to see a range bound stock market for another month. If that rally fails, a further correction is in the making.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:18,366; S&P 500:2,163; Nasdaq Comp.:5,164
RESISTANCE “today”: DJIA:18,547; S&P 500:2,183; Nasdaq Comp.:5,245
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
FED BUBBLE
The risk for over-reliance on Fed policy and low interest rates is that it forces investors to seek riskier and riskier stock and bond investments, which will ultimately result in a bubble burst.
We had bubble bursts in January 2000 with dot-coms, and again in 2008 with housing/derivatives. The next one could be the Fed bubble burst when investors get over extended in speculative issues only to find nothing the Fed can do, not even negative rates, can avert and soften the impact of an ugly recession.
That event can be months or a year out. Just be aware it can happen, because there will be little warning ahead of time. Prior to that, some nice money can be made, so long as investors watch their back.

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 August 12, 2016, a reasonable risk is 18,501 a more extreme risk is 18,404. Near-term upside potential is 18,808.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

Will the Street Buy this Dip ?

Investor’s first read – Daily edge before the open
DJIA: 18,481
S&P 500:2,175
Nasdaq Comp.:5,217
Russell 2000: 1,237
Thursday, August 25, 2016 8:47 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
THE BULL
This is the second longest bull market in history (90 months) and the economic expansion accompanying it is the third longest (86 months) on record.
The S&P 500 Index is misleading, dominated by big-name stocks. Over the last 12 months, more than half of the 500 stocks have had declines of 20%, the benchmark that comprises a bear market. The mathematical weighting enabled the largest market cap stocks to offset the decline in those stocks.
TODAY
Yesterday’s slippage, though not great, was unsettling to bulls who expected more support where it existed over the last two weeks.
Fed Chief Janet Yellen will speak Friday at 10 o’clock at the Fed’s annual Monetary Policy Symposium at Jackson Hole, Wyoming. The Street is hoping for clarification of the Fed’s policy.
Recent Fedspeak has suggested one more rate increase this year. She may suggest the same, but with a meaningless disclaimer that it “all depends….”.
The subject of Yellen’s Friday speech is the Fed’s toolkit. My guess is it outlines additional steps the Fed can take to prompt economic activity.
The Street is beginning to worry that Yellen may jolt the financial community with a more hawkish stance. That’s normal – it could happen, but the numbers coming in on the economy are mixed.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:18,403; S&P 500:2,167; Nasdaq Comp.:5,197
RESISTANCE “today”: DJIA:18,596; S&P 500:2,189; Nasdaq Comp.:5,259
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
FED BUBBLE
The risk for over-reliance on Fed policy and low interest rates is that it forces investors to seek riskier and riskier stock and bond investments, which will ultimately result in a bubble burst.
We had bubble bursts in January 2000 with dot-coms, and again in 2008 with housing/derivatives. The next one could be the Fed bubble burst when investors get over extended in speculative issues only to find nothing the Fed can do, not even negative rates, can avert and soften the impact of an ugly recession.
That event can be months or a year out. Just be aware it can happen, because there will be little warning ahead of time. Prior to that, some nice money can be made, so long as investors watch their back.

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 August 12, 2016, a reasonable risk is 18,501 a more extreme risk is 18,404. Near-term upside potential is 18,808.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

Yellen “Spike” Possible

Investor’s first read – Daily edge before the open
DJIA: 18,529
S&P 500: 2,182
Nasdaq Comp.:5,244
Russell 2000: 1,239
Tuesday, August 23, 2016 9:18 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS
S&P 500’s Q2 earnings are in the process of chalking up their fifth straight decline, with a drop of 3.2% according to FactSet.com.
Q3 is expected to be its sixth decline, or a drop of 0.25% with all of 2016 posting a loss of 0.4%.
Currently, 2017 earnings are expected to post a gain of 13%. Even if that happens, the S&P 500 would be pricey at 17.1 times earnings vs. a 10-year average of 15.9.
THE BULL
This is the second longest bull market in history (90 months) and the economic expansion accompanying it is the third longest (86 months) on record.
The S&P 500 Index is misleading, dominated by big-name stocks. Over the last 12 months, more than half of the 500 stocks have had declines of 20%, the benchmark that comprises a bear market. The mathematical weighting enabled the largest market cap stocks to offset the decline in those stocks.
TODAY
As expected, intraday volatility has increased, which can be attributed to comments by Fed officials increasingly in favor of a rate increase. Fed Chief Janet Yellen will address the Fed’s annual Monetary Policy Symposium at 10 o’clock, Friday at Jackson Hole, Wyoming.
Expect volatility to continue. Selling over the last five days has been absorbed in face of speculation of a bump in rates before year-end, but Yellen has the last word.
New Home Sales and the Richmond Manufacturing Index reports come at 10 o’clock today.
The Fed’s ultra-low interest rate policy has done little to trigger economic activity, beyond a survival mode. The subject of Yellen’s Friday speech is the Fed’s toolkit. My guess is it outlines additional steps the Fed can take to prompt economic activity.
The risk here for over-reliance on Fed policy and low interest rates is that it forces investors to seek riskier and riskier stock and bond investments, which will ultimately result in a bubble burst.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:18,481; S&P 500:2,177; Nasdaq Comp.:5,227
RESISTANCE “today”: DJIA:18,596; S&P 500:2,187; Nasdaq Comp.:5,257.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 August 12, 2016, a reasonable risk is 18,501 a more extreme risk is 18,404. Near-term upside potential is 18,808.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

Fed’s Yellen to Speak Friday

Investor’s first read – Daily edge before the open
DJIA: 18,552
S&P 500: 2,183
Nasdaq Comp.:5,238
Russell 2000: 1,238
Monday, August 22, 2016 9:18 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
When you shuffle along in this investment environment pretty much assured it is safe to buy long-term bonds and stocks, you should know from experience nirvana never lasts forever, and the picture can change for some unanticipated reason.
Deflation is a bigger danger than inflation. The economy can stumble and tank, yet it seems to regain its balance without falling.
I prefer to dwell on the positive, but have a responsibility to keep investors alert for unhittable sinkers.
The Street is solely focused on Fed policy, nothing else counts – until suddenly it does.
Based on the markets resilience to any whisp of bad news, I suspect most of the Street’s algos are programmed to act and react to the same set of metrics.
The computers have been saying – buy on dips. What is to prevent them from saying sell, all at the same time ? Happened a year ago, and in January.
The problem facing investors is, the market is not indicating anything has changed, so why not leverage up and try for some semblance of a return. It has worked in the past. It even worked in October 2015 and February after the big breaks ?
EARNINGS
S&P 500’s Q2 earnings are in the process of chalking up their fifth straight decline, with a drop of 3.2% according to FactSet.com.
Q3 is expected to be its sixth decline, or 0.25% with all of 2016 posting a loss of 0.4%.
Currently, 2017 earnings are expected to post a gain of 13%. Even if that happens, the S&P 500 would be pricey at 17.1 times earnings vs. a 10-year average of 15.9.
THE BULL
This is the second longest bull market in history (90 months) and the economic expansion accompanying it is the third longest (86 months) on record.
The S&P 500 Index is misleading, dominated by big-name stocks. Over the last 12 months, more than half of the 500 stocks have had declines of 20%, the benchmark that comprises a bear market. The mathematical weighting enabled the largest market cap stocks to offset the decline in those stocks.
TODAY
Sunday, Federal Reserve, Vice Chairman Stanley Fischer warned that a hike in interest rates is still a possibility. His comment comes after three colleagues, Dudley, Lockhart and Williams also warned of a hike last week.
All eyes will be on Fed Chief Janet Yellen who will speak at the Fed’s annual Monetary Policy Symposium this Friday at Jackson Hole, Wyoming.
Look for a mixed open today and a test of support (DJIA: 18,495, S&P 500: 2,172). There is overhead supply at DJIA 18,581 (S&P 500:2,189) that must be overcome.
Most likely, the Street will wait for Yellen’s comments before making any big decision.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:18,495; S&P 500:2,172; Nasdaq Comp.:5,209
RESISTANCE “today”: DJIA:18,581; S&P 500:2,189; Nasdaq Comp.:5,251.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 August 12, 2016, a reasonable risk is 18,501 a more extreme risk is 18,404. Near-term upside potential is 18,808.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

Bulls Must “Bring It !”

Investor’s first read – Daily edge before the open
DJIA: 18,597
S&P 500: 2,187
Nasdaq Comp.5,240:
Russell 2000: 1,236
Friday, August 19, 2016 9:18 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
EARNINGS
S&P 500’s Q2 earnings are in the process of chalking up their fifth straight decline, while at the same time posting one new all-time high after another.
Q3 is expected to be its sixth decline, with Q4 posting a gain of around 5%, but that’ s compared with a bummer quarter a year ago.
Normally, markets decline in expectation of a drop in earnings growth, but five in a row ?
Currently, 2017 earnings are expected to post a gain of 13%. Even if that happens, the S&P 500 would be pricey at 17.1 times earnings vs. a 10-year average of 15.9.
THE BULL
This is the second longest bull market in history (90 months) and the economic expansion accompanying it is the third longest (86 months) on record.
The S&P 500 Index is misleading, dominated by big-name stocks. Over the last 12 months, more than half of the 500 stocks have had declines of 20%, the benchmark that comprises a bear market. The mathematical weighting enabled the largest market cap stocks to offset the decline in those stocks.
TODAY
S&P futures signal a mixed-to-down open, most likely due to comments yesterday by Fed San Francisco president John Williams that the Street can expect a rate increase “sooner rather than later.”
FOMC minutes from the July meeting released Wednesday indicated a split in sentiments among Fed members.
Could this trigger a correction, combined with the uncertainty of the November election ?
There are still buyers on dips in prices. If these buyers suspect a Fed hawks (rate increase advocates) will prevail, buyers will vanish and sellers hit the exit with nice profits.
Fed Chief Janet Yellen will speak at the economic forum at Jackson Hole next Friday.
Should we get a change in the pattern of buying on dips in prices, a decline will be abrupt and steep.
While the last two days of trading have been one-day reversals to the upside they lack intensity, almost by default the market closed at the highs for the day.
The bulls must “reach” for stocks here, otherwise yield to the bears.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:18,539; S&P 500:2,181; Nasdaq Comp.:5,214
RESISTANCE “today”: DJIA:18,613; S&P 500:2,189; Nasdaq Comp.:5,256.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 August 12, 2016, a reasonable risk is 18,501 a more extreme risk is 18,404. Near-term upside potential is 18,808.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

Bulls Looking to 2017 Earnings Rebound

Investor’s first read – Daily edge before the open
DJIA: 18,573
S&P 500: 2,182
Nasdaq Comp.:5,228
Russell 2000: 1,227
Thursday, August 18, 2016 9:08 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Differences of opinion within an organization are healthy as long as they merge into a reasonable conclusion. But the policy of an organization with as much global impact as the Federal Reserve must remain consistent from one policy announcement to the next. As it stands, individual Fed members express different points of view between meetings giving the impression there is no real policy that decisions in the financial community can be based on.
Yesterday, the market was greeted by the Fed’s Dudley and Lockhart who said a September rate increase was possible, Lockhart implying more than one bump was possible. That was followed at mid-day by the Fed’s Bullard who really didn’t see more than one bump. The market dropped at the open, but recouped its loss after Bullard’s comments.
Today, Kaplan spoke at 8 o’clock and Williams will speak at 4 o’clock. At risk here is a total lack of credibility, so bad that the Street does not respond to any policy announcement.
Minutes of the July 26 FOMC meeting were released yesterday with a slight bias to no rate increase near-term.
EARNINGS
S&P 500’s Q2 earnings are in the process of chalking up their fifth straight decline, while at the same time posting one new all-time high after another.
Q3 is expected to be its sixth decline, with Q4 posting a gain of around 5%, but that’ s compared with a bummer quarter a year ago.
Normally, markets decline in expectation of a drop in earnings growth, but five in a row ?
Currently, 2017 earnings are expected to post a gain of 13%. Even if that happens, the S&P 500 would be pricey at 17.1 times earnings vs. a 10-year average of 15.9.
THE BULL
This is the second longest bull market in history (90 months) and the economic expansion accompanying it is the third longest (86 months) on record.
The S&P 500 Index is misleading, dominated by big-name stocks. Over the last 12 months, more than half of the 500 stocks have had declines of 20%, the benchmark that comprises a bear market. The mathematical weighting enabled the largest market cap stocks to offset the decline in those stocks.
TODAY
European markets, the British pound and Euro were buoyed by weakness in the U.S. Dollar which hit a 3-month low.
S&P 500 futures are mixed prior to the open.
The market regained all of its early losses yesterday, most likely as a result of conflicting statements by Fed officials. This pattern is referred to as a one-day reversal. When to the upside, it is normally bullish.
If the market is looking for an excuse to go down, it is struggling to find one.
As noted in numerous posts here, when the plug is pulled in this market, it will drop sharply with very little warning, as a lot of computer programs say the same thing – SELL.
The bulls continue to buy on dips, hopeful for a sharp rebound in 2017 earnings.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:18,483 ; S&P 500:2,171; Nasdaq Comp.:5,201
RESISTANCE “today”: DJIA:18,649; S&P 500:2,192; Nasdaq Comp.:5,258.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 August 12, 2016, a reasonable risk is 18,501 a more extreme risk is 18,404. Near-term upside potential is 18,808.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

Fed Speak a Jolt for the Market

Investor’s first read – Daily edge before the open
DJIA: 18,552
S&P 500: 2,186
Nasdaq Comp.:5,248
Russell 2000: 1,231
Wednesday, August 17, 2016 9:08 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Just when investors thought it was safe to go out into the market and NOT fear a Fed hike in interest rates, the Fed’s William Dudley and Dennis Lockhart said yesterday a September bump was a possibility, Lockhart hinting more than one could be in the cards before year-end.
Is this about control ?
Granted, July’s employment report was a welcome improvement over June’s paltry showing, but reports on the U.S. economy continue to be mixed, as were mortgage apps for August 12 week, down 4.0%. Housing is one of the bright spots in the U.S. economy. So why all of a sudden do we have warnings of a rate hike now ?
The Fed’s James Bullard speaks at one o’clock today. Next to Fed Chief Janet Yellen, he sports the greatest impact on stock prices among the bullpen of Fed bank presidents. Time for our hardhats ?
EARNINGS
S&P 500’s Q2 earnings are in the process of chalking up their fifth straight decline, while at the same time posting one new all-time high after another.
Q3 is expected to be its sixth decline, with Q4 posting a gain of around 5%, but that’ s compared with a bummer quarter a year ago.
Normally, markets decline in expectation of a drop in earnings growth, but five in a row ?
Currently, 2017 earnings are expected to post a gain of 13%. Even if that happens, the S&P 500 would be pricey at 17.1 times earnings vs. a 10-year average of 15.9.
THE BULL
This is the second longest bull market in history (90 months) and the economic expansion accompanying it is the third longest (86 months) on record.
The S&P 500 Index is misleading, dominated by big-name stocks. Over the last 12 months, more than half of the 500 stocks have had declines of 20%, the benchmark that comprises a bear market. The mathematical weighting enabled the largest market cap stocks to offset the decline in those stocks.
TODAY
Is this the beginning of a correction, the one I expected to start several months ago ?
The odds are increasing, now that the Fed is becoming more aggressive. Like I said in recent posts, if the BIG money steps aside, there is nothing to prevent a correction. If new negatives hit the market along the way, the correction can get ugly.
Gradual, “step-down” corrections have not been the norm in recent years. Today, corrections tend to be abrupt and without warning like the sharp 12%+ crunches in August 2015 and January this year.
Fortunately, institutions have been buyers on dips, in enough size to turn the market averages back up to post new highs.
But, as I have noted, these surges up have come without regard for stagnant corporate earnings and a historically over-priced stock market.
The bulls have been solely focused on a lenient Fed policy. But that may be changing, so what benchmarks will control stock prices now.
In truth, a small bump in rates shouldn’t adversely impact the economy or stock prices. Bull markets have endured with higher, even increasing interest rates in the past.
Well, it’s a relativity issue. A Fed move to tighten credit at this level is as much feared by the Street as when rates were in the high single digits decades ago.
I have wrongly suggested a healthy cash reserve several months ago, but preservation of capital must be respected. Investors do not want to spend six to twelve months recouping ugly losses when the market finally rebounds from a sharp correction.
Like so many false alarms in the past, a correction now may be history in a week or so. It is really about tolerance for risk.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA: 18,473; S&P 500:2,171; Nasdaq Comp.:5,196
RESISTANCE “today”: DJIA:18,597; S&P 500:2,185; Nasdaq Comp.:5,244.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 August 12, 2016, a reasonable risk is 18,501 a more extreme risk is 18,404. Near-term upside potential is 18,808.
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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.
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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.
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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.