Buyers Hit a Wall Yesterday

Investor’s first readDaily edge before the open

DJIA: 17,511
S&P 500
: 2,093
Nasdaq  Comp.: 5,059  
Russell 2000: 1,214

Wednesday,  Aug. 19, 2015   9:09 a.m.

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TODAY: 

     Yesterday the Bulls attacked overhead supply and ran into a wall with all four market averages closing close to their lows for the day.

      What happened ?

       The Bulls simply didn’t have the momentum (or will) to push up through sellers that showed up.  The news front is unchanged,  this is pretty much a matter of  a lack of lack of follow through by both Bulls and Bears at certain levels, ergo volatility.  This kind of market action is only tradable by traders with huge positions where only fractions of a point are needed to clip a profit.

       A soft open is expected today. If the Bulls are serious, they will be buyersand the market will find support at DJIA:17,416 ; S&P 500:2,084; Nasdaq Comp. : 5,032.

        A break below DJIA 17,341; S&P 500: 2,079; Nasdaq Comp.: 5,012 would raise the odds of another leg down.

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NOTE: Support and resistance levelcs 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.
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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 12,  a reasonable risk is 17,357; a more extreme risk is 17,233. Near-term upside potential is 17,790. Friday’s stability improved the low/high numbers here.

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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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