Rally at Open Must Hold

Investor’s first read Daily edge before the open

DJIA: 17,826
S&P 500: 2,081
Nasdaq  Comp.: 4,931
Russell 2000:    1,251
Monday, April 20, 2015   8:57 a.m.

CONCLUSION:

    Friday’s message was to track the bull’s reaction to selling that showed up prior to the open.  The bulls had been buyers on dips over the last two weeks. A continuance of that pattern  would give  all-time highs a chance in coming weeks.  A no-show would signal a change in  sentiment and a decline to a “comfort” level.

    The DJIA lost 357 points (intraday) by early afternoon, but managed a rally in the final hour of trading. Stability, or a  follow through to yesterday’s  late-day bounce is critical.

    Pre-open futures trading suggests a rise at the open

    The villain this time is Greece’s debt problems, but mixed Q1 earnings and economic reports didn’t help. A potential bubble burst in China’s stock market added some angst along with Yemen’s problems and a spurt in crude oil prices.

    On the positive, is that all these issues suggest the Fed may be slow to raise interest rates. 

    The DJIA, S&P 500, the Nasdaq Comp.  remain locked in a three month trading range  (DJIA 17,600 – 18,200; S&P 500: 2,040 – 2,115; Nasdaq Comp.: 4,845 – 5,040).

     My technical analysis of each  of the 30 DJIA stocks indicates a reasonable risk to 17,687, with a more extreme risk to 17,500.

Today’s “minor” support: DJIA: 17,785; S&P 500: 2,076 ;  Nasdaq Comp.:4,920  

Those levels must hold or the market will test March support  generally at DJIA 17,580 (S&P 500: 2,050; Nasdaq Comp.: 4,860)

    KEY FACTORS: 

Greece is again at risk of default
-Q1 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.
Concern that the U.S. economy is beginning to slump.

COMMENTS:

A rebound in oil prices is a new uncertainty for the Street to adjust to. Expect the three month trading range to be resolved on the upside or downside within three weeks and the move beyond those borders can be dramatic. Least expected is a plunge.

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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