Bulls Betting 2016 Earnings To Rebound

Investor’s first readDaily edge before the open

DJIA:  17,217
S&P 500: 2,030
Nasdaq  Comp:4,880
Russell 2000: 1,163

Wednesday:  Oct. 21, 2015   9:01 a.m.

/////////////////////////////////////////////////////////////////////////////////////////////////////////

         Looks like the market is tiptoeing through the Q3 earnings report period, as if it were a minefield.

        While  An $8.58 drop in IBM yesterday cost the DJIA 57 points, jumps of $3.57, $2.63 and $2.04 in United Tech (UTX), Travelers (TRV) and Apple (AAPL) respectively added 55 points to the average – a wash.

    Q3 S&P 500 earnings will be down year/year, and based on FactSet surveys, Q4 will be also.  The current strength in the stock market suggests the Street knows that and is not concerned, since earnings in 2016 are expected to be to be up.

    That must be one thing powering this market in face of a host of negatives. The other is the expectation that the Fed won’t bump rates up this year. Alas, the market must be climbing a wall of worry, which it has been doing throughout most of this bull market.

    The message here is, don’t worry about the market when there are things to worry about, just worry when there are not !

    I monitor daily charts with periods of 2-years, 6 and 3 months, 10, 5 and 2 days to get a feel for what is happening. A two-year chart shows a huge and extended area of supply  distribution looming over the market that must be plowed through to get to new highs.

      This overhead supply has existed  since the beginning of the year for the DJIA beginning at 17,400 on up to 18,000. For the S&P 500, it starts at  2,050 and ranges up to 2015.

      All this means is there are potential sellers at higher prices, investors who saw the supposedly stable DJIA drop 2,000 points in 4 days and will want to lighten up when prices return to the point from which they plunged. Potential selling could come from traders who hopefully bought this blog’s Aug. 24 pre-market advice.**               It’s beginning to look  like a no-brainer for the bulls, especially since we have entered the six months (Nov.1 to May1) period that has been so good to investors over the years.*

       Only a major rally failure can change “what’s wrong with this picture.”       

.……………………………………………………………………….

SUPPORT today:  DJIA:17,167;  S&P500:2,024 ; Nasdaq Comp.:4,865

RESISTANCE today: DJIA: 17,347; S&P 500:2,048; Nasdaq Comp.:4,924

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.     

NOTE:  There is no FOMC meeting scheduled for November, and no press conference scheduled for October. If a press conference is suddenly scheduled for October, it will be a tip off to an announcement of a rate increase, likewise  for a meeting/press conference is scheduled for November.     >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

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  October 14, 2015,  a reasonable risk is 16,793 a more extreme risk is 16,527. Near-term upside potential is 17,137. 
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

  • STATUS OF MARKET: Bullish but “at risk” of  a correction, especially Fed based
  • OPPORTUNITY: RISK: Above average with news sensitive market.
  • CASH RESERVE: 25% – 45%
  • KEY FACTORS:  Fed decision on rates; strength of economic rebound; Outlook for Q3/Q4 earnings; technical underpinnings weakening
  • CONCLUSION:  Encouraged by the prospect the Fed won’t raise interest rates this year due to softness in the economy, the stock market has rebounded from a support level established after the August 24 “flash crash.” It is now beginning to probe into an area from which it broke down in August where the upside should be more challenging.

//////////////////////////////////////////////////////////////////////////////////////////////////////////

Note: Source of economic data

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

…………………………………………………………

*Stock Trader’s Almanac ( New edition should be out – get it !)

** pre-market blog –  “Trader’s BUY,” August 24, with the “flash crash” driving the DJIA down 1,000 points going into the open. …………………………………………………………

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

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *