Big Day “if” Bulls Show Up

Investor’s first read Daily edge before the open

DJIA: 17,408
S&P 500
: 2,083
Nasdaq  Comp.: 5,033
Russell 2000: 1,204

Friday,  Aug. 14, 2015   9:09 a.m.

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TODAY: 

      Yesterday’s stall came as expected with some negative spillover into today’s open.

      In a press conference, the People’s Bank of China (PBOC) assured the world further devaluations in its currency (yuan) were not forthcoming, since it wasn’t needed to grow exports. We’ll see.

     For the moment, it removes an uncertainty from global investing, others remain, primarily economic growth here and in Europe and Asia where economies appear to be sluggish.

     Selling at the open Wednesday took prices low enough to attract buyers, but they weren’t chasing stocks yesterday.

      Today will tell us just how comfortable the BIG money is  buying in face of winless alternatives – an economic rebound triggers an increase in interest rates by the Fed, a slumping economy  crunches corporate earnings going forward. Ugh.

      The only constant is volatility. 

       Watch closely for the bulls to show their hand between 9:50 and 10:30 today. If they show up, look for a BIG day.      

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RESISTANCE:  DJIA: 17,456; S&P 500:2,089 ;  Nasdaq Comp.: 5,056.

There is a chance the bulls will jump in here. In that case resistance will come at a higher level:  DJIA: 17,567; S&P 500: 2,098; Nasdaq Comp: 5,087.    

SUPPORT: DJIA:17,307; S&P 500: 2,076; Nasdaq Comp.: 5,017

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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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  • STATUS OF MARKET: Bullish but vulnerable to a continued correction/consolidation into the fall
  • OPPORTUNITY: Volatility has set in, market reversed Tuesday after quick plunge and will be rebounding into resistance (again).
  • RISK: Above average with news sensitive market.
  • CASH RESERVE: 25%
  • KEY FACTORS:  Fed decision on rates; strength of economic rebound; Outlook for Q3/Q4 earnings; technical underpinnings weakening
  • CONCLUSION:  Big week for economic reports plus FOMC meeting and a report (no press conference) at 2:00 Wednesday.
  •  

SUMMARY 

     The biggest factor here is the U.S. economy.  Will it rebound from its reported Q1 slump, which most likely  was distorted by weather, oil prices, the impact of a strong US dollar, even seasonality ? So far, results are mixed. Yesterday’s news indicates softness in chain store sales and Consumer Confidence, but a bit of strength in PMI Services  and good strength in Richmond Fed Manufacturing.

     Recession does not look like a real risk, so much as a “pause” in the economy.

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My TECHNICAL ANALYSIS  of the 30 DJIA Companies:  (As of 8/11).

 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” (0.1498588) 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 11,  a reasonable risk is 17,250; a more extreme risk is 17,056The upside potential is has dropped with the market’s inability to follow through last week and is now 17,758.

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KEY EXTERNAL FACTORS: 

-Devaluation of the Chinese yuan

-U.S. economy – rebound Q3 and Q4 ?

-Fed increase in interest rates

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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