Best of All Worlds ?

Investor’s first readDaily edge before the open

DJIA:  17,828
S&P 500: 2,104
Nasdaq  Comp:5,127
Russell 2000: 1,186

Tuesday:  Nov. 3, 2015   9:09 a.m.

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      What could be better than an economy that is holding its ground, but not so strong the Fed can justify an bump in interest rates ?

      We may have just that, clearly the market is acting like it.

       While the DJIA, S&P 500 and Nasdaq Comp. have not hit new all-time highs they have recouped most of their losses from highs posted earlier in the year. The Russell 2000 lags.

        From the close yesterday, a new all-time high would only take a move of  2.9% for the DJIA, 1.5% the S&P 500 and 2.0% for the Nasdaq Comp.. The smaller company Russell 2000 needs a move of 9.3% to hit its all-time high.

      The market in deep into resistance territory where sellers would be expected.  After all, these are levels where the market ran into a wall between March and June with persistent selling continuing at lower prices in July and August when stock prices plunged precipitously to the August 24 lows.

      So far, there has not been enough resistance to slow the surge starting in early October.

      Yesterday’s economic reports were upbeat with the PMI manufacturing report  for October at a 6-month high, Construction spending for September beating projections, and the ISM manufacturing Index holding at the same level as in the last two months. Today we get Factory Orders at 10 o’clock.

      Tomorrow, Fed Chief Janet Yellen speaks at 10:00 a.m., with  the Fed’s  William Dudley and Stanley Fischer speaking at *:30 a.m. and 9:10 a.m. respectively on Thursday.  All three are heavy hitters.

      So, do we get some clarity on when the Fed will bump rates ?

      It would be the first.

      The Fed may have raised rates at its September meeting had it not have been concerned for global economics.  Those concerns appear to have lifted, so a Fed decision depends on reports on the U.S. economy over the next six weeks.

      Be prepared for an impact on the stock and bond markets in coming days as a result of comments from these three.

     

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SUPPORT “today”: DJIA:17,773 ; S&P 500: 2,097; Nasdaq Comp.:5,111

RESISTANCE “today”: DJIA:17,956; S&P 500:2,117; Nasdaq Comp.:5,156

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NOTE: Support and resistance levels are where I expect the intraday prices of the DJIA, S&P 500 and Nasdaq Comp. to reverse or close. Buyers should be cautious when a resistance level is reached but consider buying when support levels are reached. Sellers should consider taking action when resistance levels are reached and defer selling when support levels are reached. These levels are picked daily and based on my application of technical analysis.

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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 DJIA “divisor” (0.149677) 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  November 2, 2015,  a reasonable risk is 17,450 a more extreme risk is 17,364. Near-term upside potential is 17,878.
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  • STATUS OF MARKET: Bullish but “at risk” of  a correction, especially Fed-based
  • OPPORTUNITY: RISK: Risk increases with higher market, but light on the Street is GREEN in spite of negatives.
  • CASH RESERVE: 25% – 45% depends on tolerance for risk.
  • KEY FACTORS:  Fed decision on rates; strength of economic rebound; Outlook for Q3/Q4 earnings; Stimulus Europe/China a catalyst !!
  • CONCLUSION:  Encouraged by the prospect the Fed won’t raise interest rates this year due to softness in the economy, the stock market has exploded from a consolidation area established after the August 24 “flash crash” and has penetrated deep into a resistance area developed when the market broke down  in August.

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Note: Source of economic data

For a weekly economic calendar and good recap of  indicators, go to mam.econoday.com.

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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication

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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

 

 

 

 

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