Nasdaq and Russell Breakout

Investor’s first read Daily edge before the open

DJIA: 18,115
S&P 500: 2,121
Nasdaq  Comp.:  5,132
Russell 2000: 1,284

Friday, June 19, 2015   9:03 a.m.

TODAY

     The four month trading range intact since February for the DJIA (17,600 to 18,300) and  S&P 500: (2,040 to 2,130) remains intact, but the Nasdaq Comp. started to break out yesterday above 5,100.  A trading range for the Russell 2000 has been less clearly defined with the index of smaller companies  pressing upward to new highs.

      It’s “Quadruple Witching Friday when index futures, index options, stock options and stock futures expire.  This can trigger volatility.

      After a three day surge in the market, some profit taking would be normal with support today at DJIA: 17,995; S&P 500: 2,107; Nasdaq Comp.:5,086.

      There is room on the upside for another spike up to DJIA: 18,205; S&P 500:2,128; Nasdaq Comp.: 5,155.

SUMMARY

THE FED

      Not much was gained by bulls or bears Wednesday as Fed Chief Janet Yellen outlined the Fed’s current  position without saying anything in particular, but the bulls saved it all for yesterday’s market with gains across the board and all-time highs in the Nasdaq Composite and Russell 2000.

      Zero-based interest rates are all the Street seems to think is important. At some point, it will get skewered by reality – interest rates must rise not once but several times. Stock markets have done well with rates higher than they are now.

      Unless preceded by a correction in advance, be prepared for  the market’s first reaction to higher interest rates to be a plunge in prices.   Also be ready for a sharp rebound in prices as it dawns on the Street  its paranoia is unfounded.

       Conditions at the time will dictate how quickly the market will rebound.

GREECE

     While Greece’s woes have been a drag, a settlement would remove lift a lid of uncertainty over the market. Default would roil international markets. Odds favor a resolution, though this issue will re-surface again and again in the future.
 

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QUESTION:   Will people be able to think independently 20 years from now, or will they have to ask a hand-held computer for the answer ?  Then too, who posts the info they are accessing ? Final question:  If a tree falls in the forest, does a hand held computer hear it ?

    I am far from the smartest person in the country, city, on my block, or in my home, but don’t take over my ability to think things through.

    Think about it (if you haven’t already surrendered that option), where is this going ?

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ALERTALERTALERT, etc.

     The six months period between Nov. 1 and May 1 has historically been the best six months for the stock market.* The six months between May 1 and Nov. 1 has underperformed. Consistent as this seasonal pattern has been, it must be noted that opportunities to trade against these trends have occurred often.  Analysts and the press will make a lot of noise about this phenom in coming months –  be careful.

     The DJIA and S&P 500 are unchanged since April 30.
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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” (0.1498588) to get the DJIA for those levels.
     As of  June 5, a reasonable risk is 17,763; a more extreme risk is 17,556 The upside potential is has dropped with the market’s inability to follow through last week and is now 18,160.

   

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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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*Stock Trader’s Almanac

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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