A Wait and See Day

Investor’s first read – Daily edge before the open
DJIA: 17,804
S&P 500: 2,071
Nasdaq Comp.:4,800
Russell 2000: 1,157
Tuesday, June 21, 2016 9:09 a.m.
Yesterday, I warned that “Buying a gap open has risks of paying up for stocks,” which was timely, since the Dow and S&P 500 gave back much of the day’s gain, the Nasdaq Comp. gave back all of it.
News that polls suddenly showed a shift toward a British preference for not exiting the EU on Thursday was the catalyst for the strong open, but second thoughts suggested the outcome was not be so certain.
But the Stoxx Europe 600 is up today as are stock index futures here, suggesting another attempt to run up.
Fed Chief Janet Yellen speaks before the Senate Banking Committee today and House Financial Services Committee tomorrow, both at 10 o’clock.
This should be a wait and see day, as rumors swirl about which side of the Brexit vote will prevail.
On the home front, aside from Yellen’s comments, there is little economic news.
SUPPORT: “today”: DJIA:17,736 ; S&P 500: 2,081; Nasdaq Comp.: 4,813.
RESISTANCE: “today” DJIA:17,877; S&P 500:2,093; Nasdaq Comp.:4,861.
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 June 17, 2016, a reasonable risk is 17,518 a more extreme risk is 17,388. Near-term upside potential is 17,901.Support here is being tested.
(I will repeat this regularly to keep readers aware of the potential for an April correction)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

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