Initial Greek “Solution” Rallies Suspect

Investor’s first read Daily edge before the open

DJIA: 17,683
S&P 500: 2,068
Nasdaq  Comp.4,991:
Russell 2000: 1,246c

Tuesday, July 7, 2015   9:06 a.m.

SUMMARY  

      Look for  a news whipsaw on Greece –  positives – negatives – positives – negatives, all prompting brief buying of stocks and certain foreign bonds followed by hurried selling in face of  disappointment.

     While European leaders were surprised by the Greek “no” vote, they had five years to prepare for this dilemma.

     Ultimately, the U.S. stock market will key on whether the economy here can rebound sharply from its Q1 slump, which has been blamed on the plunge in oil prices, weather and strength of the US dollar.

     Without a sudden resurgence in the economy, the stock market will have to find a new comfort level.

     But realistically, we won’t get a good read on our economy’s rebound for several months, a delay which could allow the market to slide sideways-to-down into September/October and a buying juncture.

TODAY:

     Risk this week is DJIA 17,326; S&P 500: 2,028; Nasdaq Comp.:4,893. This assumes uncertainty will continue without the semblance of a new agreement between Greece and its lenders that heads off disaster.

     Under these circumstances rally failures are a major risk, rebounds in response to news that  is reversed in a day or two.

     Expect a sharp rally today or tomorrow as new Greek proposals for a solution are announced and  assurances from its lenders that a deal of sorts (bridge funding) may be reached to head off a meltdown of Greece’s banking system and economy.

     Resistance if good news is announced: DJIA: 17,798; S&P 500: 2,078; Nasdaq Comp.:5,017.

     Resistance if no new is announced: DJIA:17,726; S&P 500: 2,071; Nasdaq Comp.: 4,998

     Support at the recent lows of DJIA: 17,664; S&P 500: 2,056; Nasdaq Comp.: 4,960 must hold to prevent another leg down.

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THE FED

      The guessing game continues – Will the Fed bump interest rates up in September, or later ?

      Obviously, their decision will key on the strength of the U.S. economy where housing is taking the lead and now consumer expectations are soaring.

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My Technical Analysis of the 30 DJIA Companies:   LOWER

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.
     As of  July 2,  a reasonable risk is 17,527; a more extreme risk is 17,380 The upside potential is has dropped with the market’s inability to follow through last week and is now 17,948.

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KEY EXTERNAL FACTORS: 

-Stock market bubble – China
Q2 earnings for some companies will suffer from U.S. dollar’s strength and plunge in oil prices.
-Market still keyed on the Fed and it’s first bump up in interest rates, which with a slight softening in recent economic reports looks like it may happen later rather than sooner.
Recent strength in employment and housing industry shifting concern from a weakening in the U.S. economy to enough strength to prompt an early bump up in interest rates.

-Greece

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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