No Where Else to Invest ???

Investor’s first readDaily edge before the open

DJIA:  17,623
S&P 500: 2,071
Nasdaq  Comp:5,034
Russell 2000: 1,159

Tuesday:  Oct. 27, 2015   9:11 a.m.

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Understandably, the market paused yesterday with minutes from the FOMC meeting due for release at 2:00 p.m. Wednesday and a host of economic reports this week which could influence the Fed to raise interest rates in December or sometime in 2016.

      Durable Goods were reported  today and were down more than expected, S&P Case-Shiller was reported at 9:00.  PMI Services (9:45); Consumer Confidence, Richmond Fed Mfg., and State Street Investor Confidence at 10:00).

      With Europe trending toward more QE and China dropping its one-year benchmark rate for the 6th time in a year, it doesn’t seem likely the U.S. Fed can justify a rate rise anytime soon.

       There is a good chance the Street concludes that common stocks offer the only chance for an investor to make a return, either through dividends, or appreciation, or both.

        So what, they conclude, if Q3 or Q4 earnings are down, even if the 2016 earnings gain is revised downward. So what, if global economies, they conclude, are soft, as long as interest rates here and abroad remain at zero, or negative, the Street will buy stocks.

       Actually, this has been the Street’s mentality for years, why change now ?

       “Single issue” decision making is self-serving and in this case could power the market higher well beyond anyone’s wildest dreams, as it did in the dot-com bubble in 2001 with the S&P at 46 times earnings, Nasdaq many times higher.

       So yes, the market CAN run a lot higher, as the speculative fever, train leaving the station angst, sets everyone up for the slaughter.

       It becomes the greater fool’s game, where you buy a stock at exorbitant levels hoping a greater fool buys your stock at an even higher price.

       One strategy is to walk away.  Won’t happen.  Human nature (greed, peer pressure) gets in the way.

        Another strategy is “all-in” where an investor eventually gives all his gains back in the crash.

       Finally, one can maintain a healthy cash reserve as a cushion against the ultimate bubble burst. While this investor forfeits some appreciation, he is still making money and is more aware of risk and more likely to bail before the crash does irreparable damage.
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SUPPORT today: DJIA:17,506 ; S&P 500:2,057 ; Nasdaq Comp.:4,996

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NOTE:  There is no FOMC meeting scheduled for November, and no press conference scheduled for this month. If a press conference is suddenly scheduled this week, it will be a tip off to an announcement of a rate increase, likewise  for a meeting/press conference is scheduled for November.     >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

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.

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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” (0.149677) 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  October 14, 2015,  a reasonable risk is 17,510 a more extreme risk is 17,430. Near-term upside potential is 18,045.
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  • STATUS OF MARKET: Bullish but “at risk” of  a correction, especially Fed based
  • OPPORTUNITY: RISK: Risk increases with higher market, but light on the Street is GREEN in spite of negatives.
  • CASH RESERVE: 25% – 45%
  • KEY FACTORS:  Fed decision on rates; strength of economic rebound; Outlook for Q3/Q4 earnings; Stimulus Europe/China a catalyst !!
  • CONCLUSION:  Encouraged by the prospect the Fed won’t raise interest rates this year due to softness in the economy, the stock market has exploded from a consolidation area established after the August 24 “flash crash” and has penetrated deep into a resistance area developed when the market broke down  in August.

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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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