Market Fears Fed Interest Rate Bump Sept. 16 ?

Investor’s first read Daily edge before the open

DJIA:  16,374
S&P 500:  1,951
Nasdaq  Comp. 4,733
Russell 2000:   1,145

Friday:  Sept 4,  2015   8:55 a.m.

///////////////////////////////////////////////////////////////////////////////////////////////////////////

TODAY:

      The flash crash type plunge last month slashed 11% (intraday) off the S&P 500 and raised the odds of a much worse correction, possibly a Bear market.

     The market is struggling to rebound from that low with a mix of encouraging and discouraging days in the interim.

      The market averages are at a tipping point  between continued rebound and another leg down.

       The Bulls need a breakout above DJIA: 16,670 (S&P 500: 1,993; Nasdaq Comp.: 4,836 to set the stage for a full recovery; the Bears need a break below DJIA: 15,650 ( S&P 500: 1,905; Nasdaq Comp.: 4,500) to  trigger an ugly sell off.   

      Yesterday’s rally failure did some damage to the case for a breakout and run and will adversely impact today’s open.

       Again, The Bulls must hold the line and advance the ball here to prevent a full-scale sell off.

       If a market that has been discounted this much does not lure buyers  in, it will take much lower prices to do so and most likely a break below the Aug. 24 flash crash lows (DJIA: 15,370;  S&P 500: 1,867; Nasdaq Comp.: 4,292).

       While the Employment Situation report was short of projections, the prior month was revised up, prompting talk of a decision by the Fed to raise interest rates a smidge at its Sept. 16 FOMC meeting.

       The futures slipped after the report.

        I expect the market to sell off in advance and/or when the Fed reports that increase, but rally strongly shortly (maybe  an hour or two)  after that report.

…………………………………………………………………………

SUPPORT today: DJIA: 16,141; S&P 500: 1,927 ;  Nasdaq Comp.:4,666 .

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

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” (0.1498588) 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  Septembe2015,  a reasonable risk is 16,160; a more extreme risk is 15,954. Near-term upside potential is 17,176.  Note: A drop below DJIA 15,714  would be very bearish.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NEWS ENVIRONMENT    

        The following news has been  a contributor to recent market weakness, though most of these issues have been with us for weeks/months. 

-a flawed trading system allowed another flash crash with the DJIA dropping more than 1,000 points at the open Aug. 24. July business investment is picking up.

-Chinese stock markets worst drop since 2007,  currently rebounding

-European stocks on verge of bear market (Germany’s DAX off 20%)

-U.S. stocks recovering from ugly crunch

-Commodities at 16-year low, but oil stabilizing.

-currency meltdown

-No one has a clue when the Fed will bump interest rates, including the Fed. The latest comment was by N.Y. Fed’s Dudley who said an increase in Sept. is “Less compelling”.

-Brent oil and WTI oil rebounding from lows

      NOTE: Some of the Street’s pundits are arguing that this market behavior is unreasonable since the U.S. economy is doing well, if not great. Bear in mind, the stock market has historically been an early warning signal for the beginning of a recession, leading by as little as two months and as much as  13 months.

………………………………………………………………………………

  • STATUS OF MARKET: Bullish but in a correction  into the fall.
  • OPPORTUNITY: Volatility has set in, market has rebounded from August’s “flash crash”  and is approaching an area of resistance.
  • 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:  Having broken major support levels, the market is probing for a level that discounts uncertainties and negatives.
  •  

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 ?   An updated Q2 GDP reported came in at plus  3.7% (ann. rate) up from 2.3% initially reported.   Recession does not look like a real risk, so much as a “pause” in the economy.     

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.c

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

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

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

 

 

 

 

 

 

 

 

 

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.