Market Probing Resistance – Careful

Investor’s first read – Daily edge before the open
S&P 500: 2,064
Nasdaq Comp:5,045
Russell 2000: 1,152
Thursday: Dec. 24, 2015 9:02 a.m.
Trading in the stock market will end at 1:00p.m. today
The year end rally continues, as institutions re-invest the proceeds from year-end sales, as well as new monies.
I haven’t seen many bullish forecasts for 2016, which is bullish in and of itself.
Mutual fund redemptions are running high, another positive.
I continue to warn of a down January and several broader swings in the market throughout the year vs. 2015’s two dozen saw tooth swings up and down of varying magnitudes.
Oil is rebounding without a selling climax as BIG money begins to nibble at lower prices.
Is this the bottom for oil ?
Odds favor it is either a rally in a bear oil market, or a rally that will be followed by a test of the recent lows. (see below)
The long holiday weekend starts at 1:00 p.m. for those who have business to conduct, which suggests a low-volume day, but some nice upside. There are still five trading days left in 2015.
This is the fourth day of the year end rally and the market averages are starting to press into a resistance level , beginning at my resistance levels noted below. The market can move beyond these levels, but buyers begin hitting more selling.
New buys, except in highly depressed issues become more risky as the market moves deeper into resistance. At some point soon, the market will hit a wall.
SUPPORT “today”: DJIA:17,546; S&P 500:2,057; Nasdaq Comp.:5,032
RESISTANCE “today”: DJIA: 17,698; S&P 500:2,073; Nasdaq Comp.:5,073
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.
I am not an expert on oil or commodities, not even close, but basic industries in a free fall will eventually become attractive either by way of a change (or perception thereof) in the fundamentals or extreme undervaluation as a result of emotional /panic selling.
The severe plunge in Brent and West Texas Intermediate crude oil prices over the last 18 months has crushed oil stocks and the stocks of related industries.
The potential exists for a selling climax in these stocks as negative press and industry forecasts gain momentum forcing investors to simply dump these stock, funds and ETFs indiscriminately, hammering prices down to a point they attract enough bargain hunters to stabilize prices.
There can be false rallies along the way, sucking traders in prematurely, creating losses within hours, days. These are usually triggered by rumors or commentary by industry sources, mainly OPEC..
Timing buys can be treacherous even for the pros.
Whether oil stocks will get hit this hard depends on whether institutions with a long-term horizon believe they are a bargain and step in.
There is an opportunity shaping up for those who can afford the risk.
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
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 December 11, 2015, a reasonable risk is 17,023 a more extreme risk is 16,643. Near-term upside potential is 17,611.
 STATUS OF MARKET: Bullish but “at risk” of a major correction in January.
 OPPORTUNITY: RISK: Risk increases with higher market, but light on the Street is GREEN in spite of negatives. January plunge possible.
 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: Fed bump in interest rates now official.
Note: Source of economic data
For a weekly economic calendar and good recap of indicators, go to
*Stock Trader’s Almanac
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

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