Market Approaching Key Resistance

Investor’s first read – Daily edge before the open
DJIA:16,899
S&P 500: 1,986
Nasdaq Comp.:4,703
Russell 2000: 1,665
Thursday: March 3, 2016 9:12 a.m.
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Ah yes ! When the fear of owning stocks turns to the fear of not owning stocks. That’s what’s starting to happen as stocks press upward, defying gravity.
That’s the human factor that makes the “buy low – sell high” advice so difficult to execute.
Only the instinctive trader had the guts to buy at the January and February bottoms when it seemed certain a bear market was only partly underway.
But now that the DJIA and S&P 500 have recouped two- thirds of their 2016 loss, there is pressure to BUY.
The “train leaving the station without you” has always created angst among investors. That same angst also caused them to sell near the bottoms in January and February.
It’s just humans being humans. But get on the wrong side of a move in the market, up or down, and the angst becomes real.
So, instinctive traders aside, be careful here. This looks a bit too pat. Just because the October 2015 market roared undeterred out of a big setback in August, is no guarantee today’s market will do the same, however similar the patterns.
Conventional technical analysis would lean toward a bump and grind market pressing up into late April, before a major correction.
Presently, I see major overhead supply starting around DJIA 17,176; S&P 500: 2,021; Nasdaq Comp.: 4,796. That’s where the market started to break down in January.
What would trigger a drop before then ?
Downward revisions in Q3 and Q4 earnings, for one. Fed action to increase rates this month (15th), and or, an increasing likelihood the Fed will follow up wit two more bumps this year. Finally, an inventory glut driven plunge in oil prices.
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SUPPORT “today”: DJIA:16,774 S&P 500:1,969; Nasdaq Comp. :4,668.
RESISTANCE : “today”: DJIA:16,996; S&P 500:1,996; Nasdaq Comp.:4,731
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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 new DJIA “divisor” (0.14602) 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 March 2, 2016, a reasonable risk is 16,716 a more extreme risk is 16,651. Near-term upside potential is 17,134
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 STATUS OF MARKET: Bearish – but trying to turn. Expect volatility
 OPPORTUNITY: RISK: Risk high, but opportunity for traders at lower levels.
 CASH RESERVE: 25% – 45%. Consider 75% now
 KEY FACTORS: Fear taking hold. Concern for the number and extent of additional bumps in interest rates by the Fed; strength of economic rebound; Outlook for Q1, and 2016 earnings as a whole.
The Street is counting on a big jump in Q3 and Q4.
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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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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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