No One Talking About Earnings – YET !

Investor’s first read – Daily edge before the open
S&P 500:2,019
Nasdaq Comp4,750.:
Russell 2000: 1,084
Tuesday: March 15, 2016 9:08a.m.
This is a big week for reports on the economy. Today: PPI-FD, Retail Sales, Empire State Mfg. (8:30); Business Inventories and the Housing Market Index (10:00). Wednesday: CPI and Housing Starts (8:30); Industrial Production (9:15) and the FOMC report (2:00) and press conference (2:30). Thursday: Jobless Claims, Philly Fed Business Outlook (8:30), JOLTS and Leading Indicators (10:00); Friday: Consumer Sentiment (10:00).
The FOMC reports at 2:00 a.m. Wednesday followed by Fed Chief Janet Yellen’s press conference. A bump in interest rates is not expected, but don’t be surprised if Yellen jolts the Street with comments about rate increases during the rest of 2016, assuming inflation and employment edge higher.
Note: Fed speakers Friday: Dudley (9:00), Rosengren (11:00), and Bullard (3:00) Note: Bullard tends to be a “market mover !” (and I think he enjoys the role).
EARNINGS’s Patrick J. O’Hare called attention to a little known (appreciated) projection by S&P Capital I.Q. for 2016 earnings. S&P now projects earnings for S&P 500 this year to grow 1.7% vs. its January target of plus 7.4% . Q1 earnings are now projected to be down 6.8% from January’s projection of plus 1.2%. Q2 are projected at minus 2.0%.
If this is the case, the S&P 500, just 5.2% off its all-time high, is vulnerable to a serious correction.
Watch for moves in oil prices to begin to lose their impact on stock prices. That may happen within the next three weeks. That would signal a change in the Street’s focus to something else, probably earnings. Oil was down yesterday, the market held steady !
The FOMC meets this week with an economic report and press conference Wednesday at 2:00 and 2:30 a.m. respectively. The Fed is expected to pass on another bump in rates, but comments by Fed Chief Janet Yellen about additional rate bumps this year may jolt the Street.
The market has momentum, as sideline sitters start to jump in. Odds favor a push a bit higher, then a sideways saw-toothed trading range into mid-to-late April when the market becomes vulnerable to a major sell off.
Traders should use any strength to feed out a little more stock. Investing should be selective.
Again, I am looking for a slowdown in the rebound that started in February and a saw-toothed, sideways trend into April FOLLOWED BY A CORRECTION. The temptation now is to jump in with both feet. That becomes more and more risky as the market edges up. The correction can come earlier if triggered by an event, such as projections for disappointing earnings in 2016, a drop in oil prices, or commentary by the Fed interest rates will rise sharply this year.
SUPPORT ‘today”: DJIA:17,058; S&P 500:1,998 ; Nasdaq Comp.:4,691;
RESISTANCE : “today”: DJIA:17,316; S&P 500:2,031; Nasdaq Comp.:4,761.
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 11, 2016, a reasonable risk is 17,073 a more extreme risk is 16,970. Near-term upside potential is 17,586
 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.
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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