RISKS

Investor’s first readDaily edge before the open

DJIA: 18,126
S&P 500: 2,120
Nasdaq  Comp.5,097
Russell 2000: 1,253

Friday, May 29, 2015   9:11 a.m.

SUMMARY:

     There are so many ingredients in this bull market stew. 

     -Adversities come and go prompting confidence one week doubts the next.

     -Fed policy triggers alternating surges and plunges in stock prices.

     -The economic recovery looks sustainable at times, not so at other. 

     -International tensions have more or less impact at times – always there.

     -Stock valuations seem over or under the norm depending on which era they

      are compared to.

    Corporate managements have drawn on a bag of tricks over the years  to grow their bottom lines, but are now challenged to grow the top line.

    This market is currently priced for moderate growth.  Exceptional growth calls for much higher prices.  No growth or lower results calls for an ugly correction.

     These diverse variables defy quantification, though many try. Trends, up and down, are readable , indecisiveness less so.

      In it for the long haul ?

      That makes sense until a 30% – 40% correction intervenes (and it will some day)

      There’s risk in owning, as well as “not” owning stocks.

       Cash “is” an investment. How much depends on one’s tolerance for risk.

TODAY:

      The bulls need to push prices higher with gains crossing 18,154 (DJIA; 2,122 (S&P 500); and 5,112 (Nasdaq Comp.)

       But they have to hold the line at 18,065 (DJIA; 2,112 (S&P 500); 5,080 (Nasdaq Comp.).

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ALERTALERTALERT

     The six months period between Nov. 1 and May 1 has historically been the best six months for the stock market.* The six months between May 1 and Nov. 1 has underperformed. Consistent as this seasonal pattern has been, it must be noted that opportunities to trade against these trends have occurred often.  Analysts and the press will make a lot of noise about this phenom in coming months –  be careful.
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My Technical Analysis of the 30 DJIA Companies:  

On occasion, I technically analyze each of the 30 DJIA stocks  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” (0.1498588) to get the DJIA for those levels.
     As of  May 22, a reasonable risk is 18,120; a more extreme risk is 17,990 The upside potential is has dropped with the market’s inability to follow through last week and is now 18,511. Yesterday’s drop reduces this number to “unlikely.”

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KEY EXTERNAL FACTORS: 

-Stock market bubble – China
-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. This week is mixed.

Note: Source of economic data

For a weekly economic calendar and good recap of  indicators, go to mam.econoday.com.

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*Stock Trader’s Almanac

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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