It’s Still October

Investor’s first read – Daily edge before the open
DJIA:18,161
S&P 500: 2,126
Nasdaq Comp.5,190:
Russell 2000:1,187
Monday, October 31, 2016 9:07 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
WHAT COULD HURT THE MARKET
The following are VALID CONCERNS that have impacted the stock market in the past. They have had limited impact in recent years, since the Street’s computers are mostly focused on Fed policy. At some point “other factors” will have a greater impact, so don’t disregard them. This will probably occur after a Fed bump in interest rates in December.
-The uncertainty of who will be elected president has pretty much vanished, and the Street’s concern may now turn to whether the Republicans will lose control of the Senate or even the U.S. House. That was not considered possible six weeks ago.
-NEW ! Factset has revised Q3 earnings reports to plus 1.6% from a negative 2%. If this holds, it ends the streak of negative quarterly earnings at 5.
-a downward revision of 2017’s S&P 500 earnings, currently expected by Factset to increase 12.8%. Oil industry earnings have been crushed over the last two years, punishing the S&P 500 earnings as a group. But, based on $55 WTI oil price projections, the oil industry stands to give back what it took away from the overall earnings for the 500. We’ll see.
– Reportedly, three-quarters of UK CEOs surveyed by KPMG are considering relocating HQs due to Brexit. After a four day rout, the British pound rebounded after PM Theresa May agreed to give Parliament a vote on her Brexit plan.
-October madness ! It defies quantification or reason, but it happens !
Just look at new uncertainty for the election with the FBI announcing it has new “staff” emails to study, though there is no way of knowing how relevant they are to candidate Clinton.
->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q3 EARNINGS
S&P 500 earnings for Q3 are now expected to increase 1.6%, not decline 2%. This shortfall has been expected, and shouldn’t have much impact. The U.S. dollar has been firming since May, which stands to hurt multinational earnings. While the Street has ignored earnings and their overvaluation by the benchmark S&P 500 for years, opting for full focus on the Fed’s policy on interest rates, that can change if the prospect for a sharp earnings rebound in 2017 vanishes.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POTENTIAL POSITIVES
.There is a historically high level of cash on the sidelines. A Bloomberg Markets survey indicates fund manager cash reserves are 5.8% well above 4.5% the level that is considered “extreme.”
Boding well for Friday’s GDP report is a sharp narrowing of the nation’s trade gap with jumps in exports in capital, consumer goods, and industrial supplies.
The PMI Services October flash report shows a sharp increase, the strongest this year. New orders are at an 11-month high, inflationary prices picking up.
September new home sales rose 3.1 percent, though August and July were revised downward. Sales are up 30 percent year/year. Prices gained 6.7 percent in the month to a median of $313,500. Inventory remains limited, which inhibits sales, but helps prices.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
TODAY
The “Best Six Months for Owning Stocks (November 1 to May 1)* is just around the corner, and time is running out for an ugly “October surprise”.
This will be a BIG week for announcements on the economy and by the Fed, which has its FOMC release at 2:00pm.m Wednesday of the minutes from its September 20 meeting , but no press conference. That suggests no bump in interest rates.
The most important economic news comes first on Wednesday (8:15 a.m.) with the ADP Employment report, then on Friday (8:30 a.m.) with the Employment Situation report. For a schedule of other reports, go to mam.econoday.com., there are too many to list here.
Yes, it’s still October. Can anything else happen ?
As of this moment, the market isn’t concerned about the Clinton emails. Amazing !
Uncertainty usually jolts the market, or simply puts a lid on prices.
It is generally assumed a Trump victory would adversely impact the market, since little is known what to expect. The market is telling us he is still unlikely to benefit enough from the uncertainty of Friday’s news to win.
Much can happen between now and November 8, and it doesn’t have to be October for that to happen.
I expect the market’s activity today to be contained between my support and resistance levels noted below.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today: DJIA:17,951:S&P 500:2,115; Nasdaq Comp.5,157
RESISTANCE “today”:DJIA:18,267;S&P 500:2,140; Nasdaq Comp.:5,228
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 October 21, 2016, a reasonable risk is 18,026 a more extreme risk is 17,986 Near-term upside potential is 18,481.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Q3, and 2016 earnings questionable with strong U.S. dollar. Forecasts for 2017 still for a gain in S&P 500 earnings of 12.9%.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
…………………………………………………………………….
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.

Signs of Inflation ??

Investor’s first read – Daily edge before the open
DJIA:18,169
S&P 500: 2,133
Nasdaq Comp.:5,215
Russell 2000:1,2041,189
Friday, October 28, 2016 9:07 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
WHAT COULD HURT THE MARKET
The following are VALID CONCERNS that have impacted the stock market in the past. They have had limited impact in recent years, since the Street’s computers are mostly focused on Fed policy. At some point “other factors” will have a greater impact, so don’t disregard them. This will probably occur after a Fed bump in interest rates in December.
-The uncertainty of who will be elected president has pretty much vanished, and the Street’s concern may now turn to whether the Republicans will lose control of the Senate or even the U.S. House. That was not considered possible six weeks ago.
-Q3 earnings reports in October, are expected to mark the sixth straight quarterly decline for the S&P 500.
-a downward revision of 2017’s S&P 500 earnings, currently expected by Factset to increase 12.8%. Oil industry earnings have been crushed over the last two years, punishing the S&P 500 earnings as a group. But, based on $55 WTI oil price projections, the oil industry stands to give back what it took away from the overall earnings for the 500. We’ll see.
– Reportedly, three-quarters of UK CEOs surveyed by KPMG are considering relocating HQs due to Brexit. After a four day rout, the British pound rebounded after PM Theresa May agreed to give Parliament a vote on her Brexit plan.
-October madness ! It defies quantification or reason, but it happens !
->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q3 EARNINGS
S&P 500 earnings for Q3 are expected to decline 2%, marking the sixth straight quarter of declining earnings.
This shortfall has been expected, and shouldn’t have much impact. What is not expected is if Q4 earnings fail to stabilize, and especially if the Street begins to revise 2017 earnings down from a projected growth rate of 12.8% .This week Factset revised this number down from 13.1%.
The U.S. dollar has been firming since May, which stands to hurt multinational earnings. While the Street has ignored earnings and their overvaluation by the benchmark S&P 500 for years, opting for full focus on the Fed’s policy on interest rates, that can change if the prospect for a sharp earnings rebound in 2017 vanishes.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POTENTIAL POSITIVES
.There is a historically high level of cash on the sidelines. A Bloomberg Markets survey indicates fund manager cash reserves are 5.8% well above 4.5% the level that is considered “extreme.”
We now have $51+ oil and efforts to put a lid on production. Pendulums do swing back from extremes, and the demise of profitability in the oil industry has clearly breached extremes, adversely impacting S&P 500 earnings. Year-ago numbers will be easier to beat in coming quarters, which would have a positive impact on S&P 500 earnings, helping to narrow the over valuation gap existing now.
Halliburton (HAL) reported a small profit in face of projections for a loss. Its stock closed 4.25% higher. Jefferies published 15 energy stocks with a “buy” or equivalent ratings from 75% of analysts polled by Factset.
Suddenly, it appears that Eurozone economies are picking up. The “flash” reading on the October E-zone PMI Composite Index rose sharply to 53.7 from 52.6 with Germany leading the way. The region experienced the largest increase in prices charged in five years. This is an interim reading in the PMI after a slump, but the pick up in inflation cannot be ignored.
Boding well for Friday’s GDP report is a sharp narrowing of the nation’s trade gap with jumps in exports in capital, consumer goods, and industrial supplies.
The PMI Services October flash report shows a sharp increase, the strongest this year. New orders are at an 11-month high, inflationary prices picking up.
September new home sales rose 3.1 percent, though August and July were revised downward. Sales are up 30 percent year/year. Prices gained 6.7 percent in the month to a median of $313,500. Inventory remains limited, which inhibits sales, but helps prices.
THE ELECTION
The market isn’t front-running an outcome of the election November 8. The Street expects a Clinton victory, as her policies going forward are somewhat predictable.
Trump is an unknown.
I am not 100% sure he won’t win. I give him a much better chance than the polls and pundits do. Any nosedive in prices in coming days will suggest Trumps odds are improving.
A Trump victory would probably lop about 3,000 to 3,500 points off the DJIA in a day or two due to the unknown factor. Circuit breakers would likely trim some of the losses, but no one will know what to expect for six-to-nine months, if then.
We would experience a new kind of volatility in the market and around the globe.
I think investors should just be prepared for any possibility. We could get a relief rally with a Clinton victory, since her administration would be more predictable, or we could be in for a lot of chaos, since there is no way to know what to expect with a Trump presidency.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
TODAY
The “Best Six Months for Owning Stocks (November 1 to May 1)* is just around the corner, and time is running out for an ugly “October surprise”. As noted yesterday, the surprise may be a market rally against all reason, namely uncertainty about an election outcome, especially relating to Congress.
Q3 GDP came in at an annualized rate of +2.9%, a bit better than expected. This is good for the economy, not good if you did not want the Fed to bump rates this year.
TECHNICAL:
If there is going to be an October “surprise,” there are only two days for it to happen.
Metal prices are up again (iron ore, copper, platinum, aluminum). This could be a blip or a sign business and inflation are picking up.
If you bought the iShares 20+year bond ETF in July in order to get a 2.44% yield, the value of your bond investment would be down 9.44% today. This is why I have warned readers that they could get hammered buying bonds after such a prolonged bull market.
If the Fed raises rates in December with the prospect of raising rates two or three times in 2017, the carnage will get worse.
The small company Russell 2000 broke down through key support levels going back to August yesterday This should not be happening in a bull market. Investors should be reaching for greater risk, not bailing out of the smaller company stocks with perceived greater growth prospects.
I see the potential for a big move today either way.
Right now, the market looks like it will start out on the upside. A sharp reversal of that initial move between 10 o’clock and 11 o’clock would signal a slide.
If it is gaining traction at that time, look for a good day Picture a tug of war and both sides giving ground but no significant loss. All of a sudden one side seems to be gaining the upper hand.
As complex as all this is, it boils down to a battle between buyers and sellers, the result being a move one way or the other, today 100+ points on the DJIA..
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today: DJIA: 18,079:S&P 500:2,121; Nasdaq Comp.:5,187
RESISTANCE “today”:DJIA:18,317;S&P 500:2,153; Nasdaq Comp.:5,261
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 October 21, 2016, a reasonable risk is 18,026 a more extreme risk is 17,986 Near-term upside potential is 18,481.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Q3, and 2016 earnings questionable with strong U.S. dollar. Forecasts for 2017 still for a gain in S&P 500 earnings of 12.9%.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
…………………………………………………………………….
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.

Be Prepared for Either Election Outcome

Investor’s first read – Daily edge before the open
DJIA:18,199
S&P 500: 2,139
Nasdaq Comp.:5,250
Russell 2000:1,204
Thursday, October 27, 2016 9:07 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
WHAT COULD HURT THE MARKET
The following are VALID CONCERNS that have impacted the stock market in the past. They have had limited impact in recent years, since the Street’s computers are mostly focused on Fed policy. At some point “other factors” will have a greater impact, so don’t disregard them. This will probably occur after a Fed bump in interest rates in December.
-The uncertainty of who will be elected president has pretty much vanished, and the Street’s concern may now turn to whether the Republicans will lose control of the Senate or even the U.S. House. That was not considered possible six weeks ago.
-Q3 earnings reports in October, are expected to mark the sixth straight quarterly decline for the S&P 500.
-a downward revision of 2017’s S&P 500 earnings, currently expected by Factset to increase 12.8%. Oil industry earnings have been crushed over the last two years, punishing the S&P 500 earnings as a group. But, based on $55 WTI oil price projections, the oil industry stands to give back what it took away from the overall earnings for the 500. We’ll see.
– Reportedly, three-quarters of UK CEOs surveyed by KPMG are considering relocating HQs due to Brexit. After a four day rout, the British pound rebounded after PM Theresa May agreed to give Parliament a vote on her Brexit plan.
-October madness ! It defies quantification or reason, but it happens !
->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q3 EARNINGS
S&P 500 earnings for Q3 are expected to decline 2%, marking the sixth straight quarter of declining earnings.
This shortfall has been expected, and shouldn’t have much impact. What is not expected is if Q4 earnings fail to stabilize, and especially if the Street begins to revise 2017 earnings down from a projected growth rate of 12.8% .This week Factset revised this number down from 13.1%.
The U.S. dollar has been firming since May, which stands to hurt multinational earnings. While the Street has ignored earnings and their overvaluation by the benchmark S&P 500 for years, opting for full focus on the Fed’s policy on interest rates, that can change if the prospect for a sharp earnings rebound in 2017 vanishes.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POTENTIAL POSITIVES
.There is a historically high level of cash on the sidelines. A Bloomberg Markets survey indicates fund manager cash reserves are 5.8% well above 4.5% the level that is considered “extreme.”
We now have $51+ oil and efforts to put a lid on production. Pendulums do swing back from extremes, and the demise of profitability in the oil industry has clearly breached extremes, adversely impacting S&P 500 earnings. Year-ago numbers will be easier to beat in coming quarters, which would have a positive impact on S&P 500 earnings, helping to narrow the over valuation gap existing now.
Halliburton (HAL) reported a small profit in face of projections for a loss. Its stock closed 4.25% higher. Jefferies published 15 energy stocks with a “buy” or equivalent ratings from 75% of analysts polled by Factset.
Suddenly, it appears that Eurozone economies are picking up. The “flash” reading on the October E-zone PMI Composite Index rose sharply to 53.7 from 52.6 with Germany leading the way. The region experienced the largest increase in prices charged in five years. This is an interim reading in the PMI after a slump, but the pick up in inflation cannot be ignored.
Boding well for Friday’s GDP report is a sharp narrowing of the nation’s trade gap with jumps in exports in capital, consumer goods, and industrial supplies.
The PMI Services October flash report shows a sharp increase, the strongest this year. New orders are at an 11-month high, inflationary prices picking up.
September new home sales rose 3.1 percent, though August and July were revised downward. Sales are up 30 percent year/year. Prices gained 6.7 percent in the month to a median of $313,500. Inventory remains limited, which inhibits sales, but helps prices.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
TODAY
The “Best Six Months for Owning Stocks (November 1 to May 1)* is just around the corner, and time is running out for an ugly “October surprise”. As noted yesterday, the surprise may be a market rally against all reason, namely uncertainty about an election outcome, especially relating to Congress.
TECHNICAL:
The technical underpinnings going into today’s trading favor the bulls. The ball has changed hands frequently since early September. This is normal market action, considering the unknowns confronting portfolio decision makers in the Street.
If there is going to be an October “surprise,” there are only three days for it to happen.
The market isn’t front-running an outcome of the election November 8. The Street expects a Clinton victory, as her policies going forward are somewhat predictable.
Trump is an unknown.
I am not 100% sure he won’t win. I give him a much better chance than the polls and pundits do. Any nosedive in prices in coming days will suggest Trumps odds are improving.
A Trump victory would probably lop about 3,000 to 3,500 points off the DJIA in a day or two due to the unknown factor. Circuit breakers would likely trim some of the losses, but no one will know what to expect for six-to-nine months, if then.
We would experience a new kind of volatility in the market and around the globe.
I think investors should just be prepared for any possibility. We could get a relief rally with a Clinton victory, since her administration would be more predictable, or we could be in for a lot of chaos, since there is no way to know what to expect with a Trump presidency.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today: DJIA: 18,126:S&P 500:2,135; Nasdaq Comp.:5,240
RESISTANCE “today”:DJIA:18,281;S&P 500:2,151; Nasdaq Comp.:5,277
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 October 21, 2016, a reasonable risk is 18,026 a more extreme risk is 17,986 Near-term upside potential is 18,481.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Q3, and 2016 earnings questionable with strong U.S. dollar. Forecasts for 2017 still for a gain in S&P 500 earnings of 12.9%.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
…………………………………………………………………….
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.

Jump Ball !

Investor’s first read – Daily edge before the open
DJIA:18,169
S&P 500: 2,143
Nasdaq Comp.:5,283
Russell 2000:1,216
Wednesday, October 26, 2016 9:16 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
WHAT COULD HURT THE MARKET
The following are VALID CONCERNS that have impacted the stock market in the past. They have had limited impact in recent years, since the Street’s computers are mostly focused on Fed policy. At some point “other factors” will have a greater impact, so don’t disregard them. This will probably occur after a Fed bump in interest rates in December
-The uncertainty of who will be elected president has pretty much vanished, and the Street’s concern may now turn to whether the Republicans will lose control of the Senate or even the U.S. House. That was not considered possible six weeks ago.
-Q3 earnings reports in October, are expected to mark the sixth straight quarterly decline for the S&P 500.
-a downward revision of 2017’s S&P 500 earnings, currently expected by Factset to increase 12.8%. Oil industry earnings have been crushed over the last two years, punishing the S&P 500 earnings as a group. But, based on $55 WTI oil price projections, the oil industry stands to give back what it took away from the overall earnings for the 500. We’ll see.
– Reportedly, three-quarters of UK CEOs surveyed by KPMG are considering relocating HQs due to Brexit. After a four day rout, the British pound rebounded after PM Theresa May agreed to give Parliament a vote on her Brexit plan.
-October madness ! It defies quantification or reason, but it happens !
->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q3 EARNINGS
S&P 500 earnings for Q3 are expected to decline 2%, marking the sixth straight quarter of declining earnings.
This shortfall has been expected, and shouldn’t have much impact. What is not expected is if Q4 earnings fail to stabilize, and especially if the Street begins to revise 2017 earnings down from a projected growth rate of 12.8% .This week Factset revised this number down from 13.1%.
The U.S. dollar has been firming since May, which stands to hurt multinational earnings. While the Street has ignored earnings and their overvaluation by the benchmark S&P 500 for years, opting for full focus on the Fed’s policy on interest rates, that can change if the prospect for a sharp earnings rebound in 2017 vanishes.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POTENTIAL POSITIVES
.There is a historically high level of cash on the sidelines. A Bloomberg Markets survey indicates fund manager cash reserves are 5.8% well above 4.5% the level that is considered “extreme.”
We now have $51+ oil and efforts to put a lid on production. Pendulums do swing back from extremes, and the demise of profitability in the oil industry has clearly breached extremes, adversely impacting S&P 500 earnings. Year-ago numbers will be easier to beat in coming quarters, which would have a positive impact on S&P 500 earnings, helping to narrow the over valuation gap existing now.
Halliburton (HAL) reported a small profit in face of projections for a loss. Its stock closed 4.25% higher. Jefferies published 15 energy stocks with a “buy” or equivalent ratings from 75% of analysts polled by Factset.
Suddenly, it appears that Eurozone economies are picking up. The “flash” reading on the October E-zone PMI Composite Index rose sharply to 53.7 from 52.6 with Germany leading the way. The region experienced the largest increase in prices charged in five years. This is an interim reading in the PMI after a slump, but the pick up in inflation cannot be ignored.
TODAY
The “Best Six Months for Owning Stocks (November 1 to May 1)* is just around the corner, and time is running out for an ugly “October surprise”. As noted yesterday, the surprise may be a market rally against all reason, namely uncertainty about an election outcome, especially relating to Congress.
TECHNICAL:
A sharp rally at the open yesterday ran into a wall, as sellers overpowered buyers much like an evenly-balanced tug of war. Volatility will persist until November 8, though the uncertainty is not solely due to the election. It’s too early to tell if Q3 earnings for the S&P 500 will be better than expected, or if corporate guidance on future quarter earnings will improve, as hoped.
A pleasant surprise in earnings in Q3 and especially Q4 should trigger a surge in the market, which is starved for good fundamental news. Countering that would be a bump in interest rates in December. More import though is what will the Street expect from the Fed in 2017 – one more bump in rates, two, or three ?
The Street has feasted on low interest rates, running the market higher every time the Fed delays another bump in rates. What will it do if the Fed bumps rates several times in 2017 ?
The market will open on the downside today. Lower prices should attract some buying. It looked like the bulls had a slight edge yesterday, today favors the bears, but only slightly. Yes, it is October, and anything can happen. There is risk in being heavily invested, as well as totally out of the market.
Something in between may be the answer.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today: DJIA:18,096: S&P 500:2,134; Nasdaq Comp.:5,259
RESISTANCE “today”: DJIA:18,237;S&P 500:2,152; Nasdaq Comp.:5,301
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 October 21, 2016, a reasonable risk is 18,026 a more extreme risk is 17,986 Near-term upside potential is 18,481.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Q3, and 2016 earnings questionable with strong U.S. dollar. Forecasts for 2017 still for a gain in S&P 500 earnings of 12.9%.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
…………………………………………………………………….
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.

Metal Prices Picking UP – a Message ?

Investor’s first read – Daily edge before the open
DJIA:18,223
S&P 500: 2,151
Nasdaq Comp.:5,309
Russell 2000:1,226
Tuesday, October 25, 2016 9:15 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
WHAT COULD HURT THE MARKET
The following are VALID CONCERNS that have impacted the stock market in the past. They have had limited impact in recent years, since the Street’s computers are mostly focused on Fed policy. At some point “other factors” will have a greater impact, so don’t disregard them. This will probably occur after a Fed bump in interest rates in December
-The uncertainty of who will be elected president has pretty much vanished, and the Street’s concern may now turn to whether the Republicans will lose control of the Senate or even the U.S. House. That was not considered possible six weeks ago.
-Q3 earnings reports in October, are expected to mark the sixth straight quarterly decline for the S&P 500.
-a downward revision of 2017’s S&P 500 earnings, currently expected by Factset to increase 12.8%. Oil industry earnings have been crushed over the last two years, punishing the S&P 500 earnings as a group. But, based on $55 WTI oil price projections, the oil industry stands to give back what it took away from the overall earnings for the 500. We’ll see.
– Reportedly, three-quarters of UK CEOs surveyed by KPMG are considering relocating HQs due to Brexit. After a four day rout, the British pound rebounded after PM Theresa May agreed to give Parliament a vote on her Brexit plan.
-October madness ! It defies quantification or reason, but it happens !
->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q3 EARNINGS
S&P 500 earnings for Q3 are expected to decline 2%, marking the sixth straight quarter of declining earnings.
This shortfall has been expected, and shouldn’t have much impact. What is not expected is if Q4 earnings fail to stabilize, and especially if the Street begins to revise 2017 earnings down from a projected growth rate of 12.8% .This week Factset revised this number down from 13.1%.
The U.S. dollar has been firming since May, which stands to hurt multinational earnings. While the Street has ignored earnings and their overvaluation by the benchmark S&P 500 for years, opting for full focus on the Fed’s policy on interest rates, that can change if the prospect for a sharp earnings rebound in 2017 vanishes.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POTENTIAL POSITIVES
.There is a historically high level of cash on the sidelines. A Bloomberg Markets survey indicates fund manager cash reserves are 5.8% well above 4.5% the level that is considered “extreme.”
We now have $51+ oil and efforts to put a lid on production. Pendulums do swing back from extremes, and the demise of profitability in the oil industry has clearly breached extremes, adversely impacting S&P 500 earnings. Year-ago numbers will be easier to beat in coming quarters, which would have a positive impact on S&P 500 earnings, helping to narrow the over valuation gap existing now.
Halliburton (HAL) reported a small profit in face of projections for a loss. Its stock closed 4.25% higher. Jefferies published 15 energy stocks with a “buy” or equivalent ratings from 75% of analysts polled by Factset.
Suddenly, it appears that Eurozone economies are picking up. The “flash” reading on the October E-zone PMI Composite Index rose sharply to 53.7 from 52.6 with Germany leading the way. The region experienced the largest increase in prices charged in five years. This is an interim reading in the PMI after a slump, but the pick up in inflation cannot be ignored.
TODAY
The “Best Six Months for Owning Stocks (November 1 to May 1)* is just around the corner, and time is running out for an ugly “October surprise”. As noted yesterday, the surprise may be a market rally against all reason, namely uncertainty about an election outcome, especially relating to Congress.
Reports on the economy here and abroad have been all over the map for years. Central banks around the world have pursued policies designed to trigger more inflation with QE and zero-based interest rates. What if they suddenly get their wish ?
Commodities are showing signs of rebounding from a prolonged slump with metals leading the charge, namely iron ore, zinc, aluminum, copper, and nickel).
A December bump in interest rates by the Fed, could be followed by as many as two bumps in 2017, depending on the economy with housing perking up. Some economists are looking for the 10-year treasury to top 2% by the end of 2017, up from 1.76 today.
What is the last thing expected ?
TECHNICAL: Yesterday, the market closed at its high for the day after five straight days where it closed close to the lows for the day. That indicates a lot of selling (overhead supply) has been absorbed, setting the stage for a rebound in coming weeks.
We will see how the tug of war plays out in the interim. Bulls have a slight edge based on yesterday’s show of strength, but it’s still October !
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today: DJIA:18,159: S&P 500:2,143; Nasdaq Comp.:5,286
RESISTANCE “today”:DJIA:18,297;S&P 500:2,163; Nasdaq Comp.:5,327
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 October 21, 2016, a reasonable risk is 18,026 a more extreme risk is 17,986 Near-term upside potential is 18,481.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Q3, and 2016 earnings questionable with strong U.S. dollar. Forecasts for 2017 still for a gain in S&P 500 earnings of 12.9%.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
…………………………………………………………………….
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.

Sudden Surge in Inflation ??

Investor’s first read – Daily edge before the open
DJIA:18,145
S&P 500: 2,141
Nasdaq Comp.:5,257
Russell 2000:1,218
Monday, October 24, 2016 8:47 a.m.
Apology: My deadline is 9:15, but I try to get this out closer to 9:00, well before the market opens at 9:30. This often involves a scramble to factor in late breaking news or changing indicators leaving little time for proofing.
But a typo in the headline is nonsense. It is the last step in the process and far more difficult than one would think. Friday’s headline was awkward, but “It’s” instead of “It”, well what can I say, but am better than that !
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
WHAT COULD HURT THE MARKET
The following are VALID CONCERNS that have impacted the stock market in the past. They have had limited impact in recent years, since the Street’s computers are mostly focused on Fed policy. At some point “other factors” will have a greater impact, so don’t disregard them. This will probably occur after a Fed bump in interest rates in December
-In debate #3 Donald Trump indicated he would not commit to conceding a loss if Hillary Clinton wins, that everyone will have to wait until the election returns are in before he would give his decision. This is a first, and it could create a lot of angst and uncertainty. There is no historical precedent.
-The uncertainty of who will be elected president has pretty much vanished, and the Street’s concern may now turn to whether the Republicans will lose control of the Senate or even the U.S. House. That was not considered possible six weeks ago.
-Q3 earnings reports in October, are expected to mark the sixth straight quarterly decline for the S&P 500.
-a downward revision of 2017’s S&P 500 earnings, currently expected by Factset to increase 12.8%. Oil industry earnings have been crushed over the last two years, punishing the S&P 500 earnings as a group. But, based on $55 WTI oil price projections, the oil industry stands to give back what it took away from the overall earnings for the 500. We’ll see.
– Reportedly, three-quarters of UK CEOs surveyed by KPMG are considering relocating HQs due to Brexit. After a four day rout, the British pound rebounded after PM Theresa May agreed to give Parliament a vote on her Brexit plan.

-October madness ! (defies quantification or reason, but happens !
->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q3 EARNINGS
S&P 500 earnings for Q3 are expected to decline 2%, marking the sixth straight quarter of declining earnings.
This shortfall has been expected, and shouldn’t have much impact. What is not expected is if Q4 earnings fail to stabilize, and especially if the Street begins to revise 2017 earnings down from a projected growth rate of 12.8% .This week Factset revised this number down from 13.1%.
The U.S. dollar has been firming since May, which stands to hurt multinational earnings. While the Street has ignored earnings and their overvaluation by the benchmark S&P 500 for years, opting for full focus on the Fed’s policy on interest rates, that can change if the prospect for a sharp earnings rebound in 2017 vanishes.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POTENTIAL POSITIVES
.There is a historically high level of cash on the sidelines. A Bloomberg Markets survey indicates fund manager cash reserves are 5.8% well above 4.5% the level that is considered “extreme.”
We now have $51+ oil and efforts to put a lid on production. Pendulums do swing back from extremes, and the demise of profitability in the oil industry has clearly breached extremes, adversely impacting S&P 500 earnings. Year-ago numbers will be easier to beat in coming quarters, which would have a positive impact on S&P 500 earnings, helping to narrow the over valuation gap existing now.
Halliburton (HAL) reported a small profit in face of projections for a loss. Its stock closed 4.25% higher. Jefferies published 15 energy stocks with a “buy” or equivalent ratings from 75% of analysts polled by Factset.
(Note: December 8, 2015 – Investor’s first read “Selling Climax Oil stocks at lower levels. January 7, 2016 – “Selling Climax Possible, Panic Prices Selected Oil Stocks targeted lows stocks would hit before the turn.
This was a classic case of exploiting an extreme, a selling climax in an industry group that was crushed. Chevron (CHV) and Exxon (XOM) did not decline to my buy targets, the others did, but only for a day. Classic chart reading – easy to target, but having the guts to step in and actually buying is why buying low and selling high is so difficult. It is not the human thing to do, unless you have a lot of money to spread around, which is the edge the BIG money has.
Suddenly, it appears that Eurozone economies are picking up. The “flash” reading on the October E-zone PMI Composite Index rose sharply to 53.7 from 52.6 with Germany leading the way. The region experienced the largest increase in prices charged in five years. This is an interim reading in the PMI after a slump, but the pick up in inflation cannot be ignored.
TODAY
The “Best Six Months for Owning Stocks (November 1 to May 1)* is just around the corner. As with any seasonal pattern, the beginning and ending month can vary, but generally speaking this six month period is far better than the May1 to November one.
There is a lot of cash on the sidelines, and selling pressures have been steady. The market is over valued by historical benchmarks. The key is 2017 earnings. If revised down – trouble. If revised up – new leg in bull market. The Street will move before the news.
So what about the so-called “October surprise” that gets so much ink this time of year ? As a surprise, its timing isn’t anything that can be nailed down accurately, just be aware it can happen. More than likely, an October surprise would be a nasty plunge, that is what is generally expected. Don’t be surprised if it is a surge in the stock market instead.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today: DJIA:18,081: S&P 500:2,132; Nasdaq Comp.:5,237
RESISTANCE “today”: DJIA:18,299;S&P 500:2,159; Nasdaq Comp.:5,301
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 October 21, 2016, a reasonable risk is 18,026 a more extreme risk is 17,986 Near-term upside potential is 18,481.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Q3, and 2016 earnings questionable with strong U.S. dollar. Forecasts for 2017 still for a gain in S&P 500 earnings of 12.9%.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
…………………………………………………………………….
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.

It Will Be All About 2017 Earnings

Investor’s first read – Daily edge before the open
DJIA:18,162
S&P 500: 2,141
Nasdaq Comp.:5,241
Russell 2000:1,219
Friday, October 21, 2016 9:12 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
WHAT COULD HURT THE MARKET
-In debate #3 Donald Trump indicated he would not commit to conceding a loss if Hillary Clinton wins, that everyone will have to wait until the election returns are in before he would give his decision. This is a first, and it could create a lot of angst and uncertainty. There is no historical precedent.
-The uncertainty of who will be elected president has pretty much vanished, and the Street’s concern may now turn to whether the Republicans will lose control of the Senate or even the U.S. House. That was not considered possible six weeks ago.
-Q3 earnings reports in October, which are expected to mark the sixth straight quarterly decline for the S&P 500.
-a downward revision of 2017’s S&P 500 earnings, currently expected by Factset to increase 12.8%. Oil industry earnings have been crushed over the last two years, punishing the S&P 500 earnings as a group. But, based on $55 WTI oil price projections, the oil industry stands to give back what it took away from the overall earnings for the 500. We’ll see.
– Reportedly, three-quarters of UK CEOs surveyed by KPMG are considering relocating HQs due to Brexit. After a four day rout, the British pound rebounded after PM Theresa May agreed to give Parliament a vote on her Brexit plan.
-October madness ! (defies quantification or reason, but happens !
->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q3 EARNINGS
S&P 500 earnings for Q3 are expected to decline 2%, marking the sixth straight quarter of declining earnings.
This shortfall has been expected, and shouldn’t have much impact. What is not expected is if Q4 earnings fail to stabilize, and especially if the Street begins to revise 2017 earnings down from a projected growth rate of 12.8% .This week Factset revised this number down from 13.1%.
The U.S. dollar has been firming since May, which stands to hurt multinational earnings. While the Street has ignored earnings and their overvaluation by the benchmark S&P 500 for years, opting for full focus on the Fed’s policy on interest rates, that can change if the prospect for a sharp earnings rebound in 2017 vanishes.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POTENTIAL POSITIVES
.There is a historically high level of cash on the sidelines. A Bloomberg Markets survey indicates fund manager cash reserves are 5.8% well above 4.5% the level that is considered “extreme.”
We now have $51+ oil and efforts to put a lid on production. Pendulums do swing back from extremes, and the demise of profitability in the oil industry has clearly breached extremes, adversely impacting S&P 500 earnings. Year-ago numbers will be easier to beat in coming quarters, which would have a positive impact on S&P 500 earnings, helping to narrow the over valuation gap existing now.
Halliburton (HAL) reported a small profit in face of projections for a loss. Its stock closed 4.25% higher. Jefferies published 15 energy stocks with a “buy” or equivalent ratings from 75% of analysts polled by Factset.
(Note: December 8, 2015 – Investor’s first read “Selling Climax Oil stocks at lower levels. January 7, 2016 – “Selling Climax Possible, Panic Prices Selected Oil Stocks targeted lows stocks would hit before the turn.
This was a classic case of exploiting an extreme, a selling climax in an industry group that was crushed. Chevron (CHV) and Exxon (XOM) did not decline to my buy targets, the others did, but only for a day. Classic chart reading – easy to target, but having the guts to step in and actually buying is why buying low and selling high is so difficult. It is not the human thing to do, unless you have a lot of money to spread around, which is the edge the BIG money has.
TODAY
The “Best Six Months for Owning Stocks (November 1 to May 1)* is just around the corner. As with any seasonal pattern, the beginning and ending month can vary, but generally speaking this six month period is far better than the May1 to November one.
Be prepared for a better environment for stocks. Expect the Best Six Months to have several setbacks, but generally the tone is upbeat.
The market has been at best – muddled, with no clear trend, just waffling in face of election year uncertainties and frequently changing Fed stated policy goals.
The bulls have been nibbling in recent days, but not bullish enough to reach for stocks. The bears have had stock for sale , but not stressed enough to dump indiscriminately.
This kind of lethargy is enough to create soooo much disinterest in the stock market that investors miss a great opportunity. That can come from a swift sell off that only a few are alert enough to capitalize on, or it can arise quickly out of a bump-along market that suggests nothing of interest is about to happen.
What I am saying here is, stay on top of this market. If you think watching it is a drag, you should try writing about it.
There is a lot of cash on the sidelines, and selling pressures have been steady. The market is over valued by historical benchmarks. The key is 2017 earnings. If revised down – trouble. If revised up – new leg in bull market. The Street will move before the news.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today: DJIA:18,081: S&P 500:2,127; Nasdaq Comp.:5,218
RESISTANCE “today”: DJIA:18,218;S&P 500:2,145; Nasdaq Comp.:5,249
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 September 16, 2016, a reasonable risk is 18,129 a more extreme risk is 17,908 Near-term upside potential is 18,435.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Q3, and 2016 earnings questionable with strong U.S. dollar. Forecasts for 2017 still for a gain in S&P 500 earnings of 12.9%.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
…………………………………………………………………….
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 Step Up, or……….

Investor’s first read – Daily edge before the open
DJIA:18,202
S&P 500: 2,144
Nasdaq Comp.5,246:
Russell 2000:1,222
Thursday, October 20, 2016 9:12 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
WHAT COULD HURT THE MARKET
-In debate #3 Donald Trump indicated he would not commit to conceding a loss if Hillary Clinton wins, that everyone will have to wait until the election returns are in before he would give his decision. This is a first, and it could create a lot of angst and uncertainty. There is no historical precedent.
-The uncertainty of who will be elected president has pretty much vanished, and the Street’s concern may now turn to whether the Republicans will lose control of the Senate or even the U.S. House. That was not considered possible six weeks ago.
-Q3 earnings reports in October, which are expected to mark the sixth straight quarterly decline for the S&P 500.
-a downward revision of 2017’s S&P 500 earnings, currently expected by Factset to increase 12.8%. Oil industry earnings have been crushed over the last two years, punishing the S&P 500 earnings as a group. But, based on $55 WTI oil price projections, the oil industry stands to give back what it took away from the overall earnings for the 500. We’ll see.
– Reportedly, three-quarters of UK CEOs surveyed by KPMG are considering relocating HQs due to Brexit. After a four day rout, the British pound rebounded after PM Theresa May agreed to give Parliament a vote on her Brexit plan.
-October madness ! (defies quantification or reason, but happens !
->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q3 EARNINGS
S&P 500 earnings for Q3 are expected to decline 2%, marking the sixth straight quarter of declining earnings.
This shortfall has been expected, and shouldn’t have much impact. What is not expected is if Q4 earnings fail to stabilize, and especially if the Street begins to revise 2017 earnings down from a projected growth rate of 12.8% .This week Factset revised this number down from 13.1%.
The U.S. dollar has been firming since May, which stands to hurt multinational earnings. While the Street has ignored earnings and their overvaluation by the benchmark S&P 500 for years, opting for full focus on the Fed’s policy on interest rates, that can change if the prospect for a sharp earnings rebound in 2017 vanishes.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POTENTIAL POSITIVES
.There is a historically high level of cash on the sidelines. A Bloomberg Markets survey indicates fund manager cash reserves are 5.8% well above 4.5% the level that is considered “extreme.”
We now have $51+ oil and efforts to put a lid on production. Pendulums do swing back from extremes, and the demise of profitability in the oil industry has clearly breached extremes, adversely impacting S&P 500 earnings. Year-ago numbers will be easier to beat in coming quarters, which would have a positive impact on S&P 500 earnings, helping to narrow the over valuation gap existing now.
Halliburton (HAL) reported a small profit in face of projections for a loss. Its stock closed 4.25% higher. Jefferies published 15 energy stocks with a “buy” or equivalent ratings from 75% of analysts polled by Factset.
(Note: December 8, 2015 – Investor’s first read “Selling Climax Oil stocks at lower levels. January 7, 2016 – “Selling Climax Possible, Panic Prices Selected Oil Stocks targeted lows stocks would hit before the turn.
This was a classic case of exploiting an extreme, a selling climax in an industry group that was crushed. Chevron (CHV) and Exxon (XOM) did not decline to my buy targets, the others did, but only for a day. Classic chart reading – easy to target, but having the guts to step in is why buying low and selling high is so difficult. It is not the human thing to do, unless you have a lot of money to spread around, which is the edge the BIG money has.
TODAY
The “Best Six Months for Owning Stocks (November 1 to May 1)* is just around the corner. As with any seasonal pattern, the beginning and ending month can vary, but generally speaking this six month period is far better than the May1 to November one.
A correction in coming weeks would set up an attractive buying opportunity.
Five days ago, the market averages spiked down and reversed as a result of Fed Chief Yellen’s comment about tightening credit only after the inflation rate reached 3% rather than the 2% level which is the current threshold for action.
I expected a robust rebound, but the four days that followed reflected confusion, as the four days of trading failed to close at the highs for the day.
The bulls will have to pick it up, unless something else is restraining them from more aggressive buying – economy ? Q3 earnings ? The Fed ?
After Yellen’s comment regarding 3% inflation, there is a question about just what is Fed policy, does the Fed have one, or are they winging it as they go along ?
If they are, the Street is going to have to key on other issues and Q4 and CY 2017 earnings would be the first in line. The Street is counting on a sharp rebound in earnings in 2017. If it happens, it will erase most of the current overvaluation of stocks. If the earnings rebound doesn’t develop, the market will head lower, and there is little the Fed can do about it, though they will try.
The Bulls needs to demonstrate leadership and take the DJIA above 18,270 (S&P 500: 2,150), then in a week or so, on above DJIA 18,400 (S&P 500: 2,170).
The stage is being set for a sustainable rally. The Street got what it wants from Yellen. If corporate guidance and projected earnings shows a big rebound in the energy and capital goods sectors, we will get that rally, and it could be big.
We are not seeing evidence right now the bulls are big believers. Without a big thrust of buying, the market looks lower.
A flash-crash ?
It’s still possible. Odds do not favor one, but we should get a better read in the next 3 – 4 days.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT today: DJIA:18,097: S&P 500:2,127; Nasdaq Comp.:5,203
RESISTANCE “today”: DJIA:18,297; S&P 500:2,154; Nasdaq Comp.:5,259
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 September 16, 2016, a reasonable risk is 18,129 a more extreme risk is 17,908 Near-term upside potential is 18,435.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Q3, and 2016 earnings questionable with strong U.S. dollar. Forecasts for 2017 still for a gain in S&P 500 earnings of 13.4%. It has been there for months in spite of deteriorating earnings this year. Any downward revision could impact the market significantly.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
…………………………………………………………………….
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 Rally to Attack Overhead Supply

Investor’s first read – Daily edge before the open
DJIA:18,161
S&P 500: 2,139
Nasdaq Comp.:5,243
Russell 2000:1,217
Wednesday, October 19, 2016 9:12 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
WHAT COULD HURT THE MARKET
-The uncertainty of who will be elected president has pretty much vanished, and the Street’s concern may now turn to whether the Republicans will lose control of the Senate or even the U.S. House. That was not considered possible six weeks ago.
-Q3 earnings reports in October, which are expected to mark the sixth straight quarterly decline for the S&P 500.
-a downward revision of 2017’s S&P 500 earnings, currently expected by Factset to increase 12.8%. Oil industry earnings have been crushed over the last two years, punishing the S&P 500 earnings as a group. But, based on $55 WTI oil price projections, the oil industry stands to give back what it took away from the overall earnings for the 500. We’ll see.
Reportedly, three-quarters of UK CEOs surveyed by KPMG are considering relocating HQs due to Brexit. After a four day rout, the British pound rebounded after PM Theresa May agreed to give Parliament a vote on her Brexit plan.
-October madness ! (defies quantification or reason, but happens !
->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q3 EARNINGS
S&P 500 earnings for Q3 are expected to decline 2%, marking the sixth straight quarter of declining earnings.
This shortfall has been expected, and shouldn’t have much impact. What is not expected is if Q4 earnings fail to stabilize, and especially if the Street begins to revise 2017 earnings down from a projected growth rate of 12.8% .This week Factset revised this number down from 13.1%.
The U.S. dollar has been firming since May, which stands to hurt multinational earnings. While the Street has ignored earnings and their overvaluation by the benchmark S&P 500 for years, opting for full focus on the Fed’s policy on interest rates, that can change if the prospect for a sharp earnings rebound in 2017 vanishes.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POTENTIAL POSITIVES
But let’s not overlook two potential catalysts.
We now have $50+ oil and efforts to put a lid on production. Pendulums do swing back from extremes, and the demise of profitability in the oil industry has clearly breached extremes, adversely impacting S&P 500 earnings. Year-ago numbers will be easier to beat in coming quarters, which would have a positive impact on S&P 500 earnings, helping to narrow the over valuation gap existing now.
That’s what can happen if the price of oil stabilizes and moves higher.
TODAY
The S&P 500 is up 6.3% so far this year, with 53% of the days advancing.
The “Best Six Months for Owning Stocks (November 1 to May 1)* is just around the corner. As with any seasonal pattern, the beginning and ending month can vary, but generally speaking this six month period is far better than the May1 to November one.
The question now is, will we see lower prices between now and a general liftoff ?The uncertainty about who will win the presidency is less now according to polls than several weeks ago, but control of the Senate and House up in the air. I am not sure that the Street has factored that into its decision process.
At some point, a historically high level of cash on the sidelines will fuel a sustained recovery in the stock market. According to Bloomberg Markets (Oct. 18) cash reserves held by fund managers surveyed have reached 5.8% of portfolios, well above the 4.5% level considered by contrarians as extreme.
The upside of so much cash on the sidelines is not just that its investment can drive stocks up, but that sellers then have cash to buy another stock. The downside of that would be if the sellers want out and have no intention of re-investing.
It looks like the Fed has moved the goalposts. Last week, Fed Chief Janet Yellen implied that it may raise the 2% inflation target it has targeted as a threshold for raising rates to 3% if it thinks it will help stimulate the economy. Her remarks encouraged buyers to step in Monday just as the market was testing a key support level.
The S&P 500 is now in the sixth straight quarter of declining earnings. While the crunch in energy and related industries has adversely impacted these quarters, this industry will eventually contribute positively to the S&P’s results.
The Street is counting on a sharp rebound in earnings in 2017. If it happens, it will erase most of the current overvaluation of stocks. If the earnings rebound doesn’t develop, the market will head lower, and there is little the Fed can do about it, though they will try.
While the market averages gave back all of their gains yesterday, they will attempt to run higher today and hold the gain. Another rally failure would be a bad sign.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT today: DJIA:17,998: S&P 500:2,127; Nasdaq Comp.:5,209
RESISTANCE “today”: DJIA:18,246; S&P 500:2,152; Nasdaq Comp.:5,209
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 September 16, 2016, a reasonable risk is 18,129 a more extreme risk is 17,908 Near-term upside potential is 18,435.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Q3, and 2016 earnings questionable with strong U.S. dollar. Forecasts for 2017 still for a gain in S&P 500 earnings of 13.4%. It has been there for months in spite of deteriorating earnings this year. Any downward revision could impact the market significantly.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
…………………………………………………………………….
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.

Is The Fed Setting Up Stagflation

Investor’s first read – Daily edge before the open
DJIA:18,086
S&P 500: 2,126
Nasdaq Comp.:5,199
Russell 2000:1,210
Tuesday, October 18, 2016 9:12 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
WHAT COULD HURT THE MARKET
-The uncertainty of who will be elected president has pretty much vanished, and the Street’s concern may now turn to whether the Republicans will lose control of the Senate or even the U.S. House. That was not considered possible six weeks ago.
-Q3 earnings reports in October, which are expected to mark the sixth straight quarterly decline for the S&P 500.
-a downward revision of 2017’s S&P 500 earnings, currently expected by Factset to increase 12.8%. Oil industry earnings have been crushed over the last two years, punishing the S&P 500 earnings as a group. But, based on $55 WTI oil price projections, the oil industry stands to give back what it took away from the overall earnings for the 500. We’ll see.
Reportedly, three-quarters of UK CEOs surveyed by KPMG are considering relocating HQs due to Brexit. After a four day rout, the British pound rebounded after PM Theresa May agreed to give Parliament a vote on her Brexit plan.
-October madness ! (defies quantification or reason, but happens !
->>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Q3 EARNINGS
S&P 500 earnings for Q3 are expected to decline 2%, marking the sixth straight quarter of declining earnings.
This shortfall has been expected, and shouldn’t have much impact. What is not expected is if Q4 earnings fail to stabilize, and especially if the Street begins to revise 2017 earnings down from a projected growth rate of 12.8% .This week Factset revised this number down from 13.1%.
The U.S. dollar has been firming since May, which stands to hurt multinational earnings. While the Street has ignored earnings and their overvaluation by the benchmark S&P 500 for years, opting for full focus on the Fed’s policy on interest rates, that can change if the prospect for a sharp earnings rebound in 2017 vanishes.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POTENTIAL POSITIVES
But let’s not overlook two potential catalysts.
We now have $50+ oil and efforts to put a lid on production. Pendulums do swing back from extremes, and the demise of profitability in the oil industry has clearly breached extremes, adversely impacting S&P 500 earnings. Year-ago numbers will be easier to beat in coming quarters, which would have a positive impact on S&P 500 earnings, helping to narrow the over valuation gap existing now.
That’s what can happen if the price of oil stabilizes and moves higher.
TODAY
Friday, Fed Chair Janet Yellen added yet another wrinkle to anyone attempting to understand just where the Fed is going with its policy. Yellen inferred that a “high pressure” policy may be the only way for the Fed to achieve its economic growth goals which suggests tightening may not have to start until inflation advances beyond its 2 percent target.
What this says is, the Fed may raise rates in December, but do not expect multiple rate increases in 2017, which some analysts believe would be the norm.
It took a day for decision makers to conclude this was bullish, though there is a chance that inflation will suddenly kick in beyond expectations. The Fed will then blindside investors with unexpected rapid increases in rates, even though the economy struggles – stagflation.
If the Street has nothing to fret about a series of rate hikes (money tightening), it will believe this bull market can run untethered to new highs, which in itself would be inflationary as it creates euphoria, which leads to yet another bubble.
Based on stock-index futures trading, the DJIA should “gap” at the open, posting a gain of 145 points in the first hour of trading. There is no reason to expect that surge will not to hold, but a rally failure would be bearish.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RESISTANCE “today”: DJIA:18,217; S&P 500:2,141; Nasdaq Comp.:5,237
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 September 16, 2016, a reasonable risk is 18,129 a more extreme risk is 17,908 Near-term upside potential is 18,435.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Q3, and 2016 earnings questionable with strong U.S. dollar. Forecasts for 2017 still for a gain in S&P 500 earnings of 13.4%. It has been there for months in spite of deteriorating earnings this year. Any downward revision could impact the market significantly.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*Stock Trader’s Almanac
…………………………………………………………………….
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.