Bulls Slight Edge to Be Tested Today

Investor’s first readDaily edge before the open

DJIA:  17,215
S&P 500: 2,033
Nasdaq  Comp:4,886
Russell 2000: 1,162

Monday:  Oct. 19, 2015   9:09 a.m.

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    Housing will dominate the news this week with the Housing Market index (today 10:00 a.m.), Housing Starts (Tues. 8:30), MBA Apps Wed. 7:00 a.m.) Existing Home Sales (Thur. 10:00 a.m.).  Worth noting, Leading (economic) Indicators will be reported Thur. 10:00 a.m..
    The stock market rebounded last Thursday on speculation in the Wall Street Journal  that the likelihood of the Fed’s raising rates in 2015 is falling as the U.S. economy shows signs of job market weakness amid low inflation.

     So far, Fed Chief Janet Yellen is on record as believing a hike by year-end is possible.  Presently the “no’s” have it. That can change as we know in a heartbeat, so a cash reserve is justified depending on one’s tolerance for risk – 10%, 25%, 45% or higher.

TODAY:

     Last week’s reversal on reshaped the technical pattern to favor the bulls, suggesting the market will need to press higher into overhead supply, an area from which the market plunged sharply in August, before encountering serious resistance.

     A word of caution, if someone with clout (Fed official, publisher, market guru) indicates there is a better than even chance the Fed will raise rates in December, the market is vulnerable again.

     From time to time, the market is news sensitive. While the Fed hogs center stage, other candidates could be  a fiscal crisis in the European Union, a failure bu Congress  to raise the debt ceiling by Nov. 3, a major derivative/ hedge fund failure or a worsening Mid-East crisis.

     The biggest positive is that the next six months is historically the best period for owning stocks.* It beats the May through October six months by a wide margin.

TODAY:

     Last Thursday’s abrupt turn up changed a negative pattern into a positive one. While we have so often seen  the market turn up and down in response to statements by Fed officials, there are movements in the market  unrelated to Fed activity.

    The pre-open futures are trading down but not enough to tip the scales in favor of the bears.

     We need to watch to see how quickly the bulls step in on any pullback. Aggressive buying now indicates a surge across DJIA 17,400 (S&P 500: 2,057).

Failure to step in once again raises the risk of a sharp decline.

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SUPPORT today:  DJIA:17,119 ; S&P 500:2,022; Nasdaq Comp.:4,858

RESISTANCE today: DJIA:17,265 ; S&P 500:2,037; Nasdaq Comp.:4,903

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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.

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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  October 14, 2015,  a reasonable risk is 16,793 a more extreme risk is 16,527. Near-term upside potential is 17,137. 
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  • STATUS OF MARKET: Bullish but “at risk” of  a bear market.
  • OPPORTUNITY: RISK: Above average with news sensitive market.
  • CASH RESERVE: 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.

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

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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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