December Rate Hike Back in News

Investor’s first readDaily edge before the open

DJIA: 17,867
S&P 500: 2,106
Nasdaq  Comp:5,142
Russell 2000: 1,190

Thursday:  Nov. 5, 2015   8:46 a.m.

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      At 10 o’clock yesterday, Fed Chief Janet Yellen said an improving economy sets the stage for a December interest-rate hike, if the economy continues to improve. “A rate hike would be a   live possibility,” she said.  New York Fed President William Dudley agreed.

      To its credit, the stock market did not fall apart

      The market has momentum. Each time it pulls back, buyers step in. The DJIA, S&P 500 and Nasdaq Comp. are chewing through levels that produced sellers over the last six months without much trouble even with increasing prospects that the Fed will announce its first bump in interest rates since it implemented its zero-based fed funds policy in 2008 to head off a global meltdown.

      News on the economy is mixed, the international scene is getting more precarious. Q3 earnings are a bit better than expected, but @4 looks worse.

      Risk increases with each move up in prices after a 12.6% surge in the S&P 500 in a month. Yet, each uptick seems to convince the Street the market is going higher.

      The fact the market had a mini crash in August and can recoup that loss in two months without any significant change in the underlying fundamentals is a warning that conventional methods of valuing securities is of little value.   

      Timing for buys and sells is critical, yet conventional timing parameters are inconsistent at times. There is little correlation between moves in the market and fundamentals, except for perceptions of what the Fed will do on interest rates.                                                                                                                                       >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

SUPPORT “today”: DJIA:17,791; S&P 500:2,093; Nasdaq Comp.:5,121

RESISTANCE “today”: DJIA:18,007; S&P 500:2,118; Nasdaq Comp.:5,189

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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.

…………………………………………………………

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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