PANIC ?

Investor’s first readDaily edge before the open

DJIA:  17,646
S&P 500: 2,075
Nasdaq  Comp:5,031
Russell 2000: 1,166

Monday:  Oct. 26, 2015   9:11 a.m.

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PANIC ! More confirmation that the only thing the Street’s computers value is assurance that interest rates will remain low per the Fed’s zero-base policy, which has been intact since 2008, when it was designed to counter a total meltdown.

     Add to this, China’s continued efforts to stimulate its economy with yet another decrease in its one-year lending rate, and ECB’s Mario Draghi’s comments that the bank  may increase QE in December, and investors are rushing to buy stocks where if there isn’t some yield, there may be appreciation.

     It’s as if zero-based interest rates, perhaps “negative” rates (you pay them to hold your money), are here to stay, and stocks are your only hope for a return, even if they become seriously over-priced .

     Panics work both ways. We saw it on the downside in August, now we see it on the upside.  

     The FOMC meets this week with a report at 2:00 p.m. Wednesday (no press conference), but a bump in interest rates is not expected, though the Street will parse every word the committee says.

     This is a big week for reports on the economy with New Home Sales (10:00a.m.) and the Dallas Fed Mfg. Ix (10:30)  today. (Go to mam.econoday.com for the complete schedule and details for the week).

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SUPPORT today: DJIA: 17,556; S&P 500: 2,065; Nasdaq Comp.: 5,003

RESISTANCE today: DJIA: 17,735 S&P 500:2,087; Nasdaq Comp.:5,056

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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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