Odds Increase for Fed Bump in Rates

Investor’s first readDaily edge before the open

DJIA:  17,863
S&P 500: 2,099
Nasdaq  Comp:5,127
Russell 2000: 1,190

Friday:  Nov. 6, 2015   9:11 a.m.

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      This bull market is 6 ½ years old. In that time, the S&P 500 has risen 220%, the Nasdaq Composite 313%. This is the second longest bull market, the 1990 – 1998 bull lasted 93 months and rose 304% (S&P 500).

      That’s powerful stuff ! 

      What is missing ?

      Rank speculation – over-the-top urgency to own stocks by savvy investors, more so, un-savvy investors, most new to the scene.  People are not leaving good jobs to trade the market for a living.  People are not talking stocks on the golf course, beauty solons, locker rooms, water coolers, church, airports, household, etc.

      This has been a private party – moneyed investors and the “pros.” The public is mostly absent.

      That may not happen in this bull market. The Silent Gen (87 – 70) is hunkered down and boomers (69 – 51) easing into a change in lifestyle leaving Gen “X” (50 – 35) and the Millennials (34 – 26) to run stocks of good and dubious value into the stratosphere.

      If by chance it does, this will become the grandest bull market of all time, followed by a monstrous crash.

TODAY:

      The Fed is leaning toward a December 16 bump up in interest rates, the first change since 2008.

       This bull market (March 9, 2009 – present) has gotten its legs from the likelihood of a zero-based interest rate policy continuing indefinitely.

       With the October jobs report at 271,000 new hires exceeding all projections, the odds of a Fed bump in rates increases dramatically.

       The Street will now have to decide if “good is good,” a stronger economy but the trade-off being slightly higher interest rates, vs the long-standing belief and driver of the bull market that “bad is good” since it ensured  no-action by the Fed.                                                                                                                                  >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

SUPPORT “today”: DJIA:17,687; S&P 500:2,076; Nasdaq Comp.:5,071

A one-day reversal to the upside here would of course be very bullish. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.     

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  November 2, 2015,  a reasonable risk is 17,450 a more extreme risk is 17,364. Near-term upside potential is 17,878.
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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% 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:  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.

…………………………………………………………

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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