RUMORS Galore Will Whipsaw Stocks

Investor’s first read – Daily edge before the open
DJIA: 17,409
S&P 500: 2,036
Nasdaq Comp.4,691:
Russell 2000: 1,107
Wednesday, June 29, 2016 9:07 a.m.
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Stocks and commodities rose for the second day as investors sought bargains and the likelihood efforts at damage control would be employed to reduce fallout.
Investors will scramble again today pick up stocks in hopes that the market will rebound to approach all-time highs as it did in Q4 of 2015 and March/April this year after taking a nasty tumble.
EXPECT RUMORS:
– that Brexit will be reversed by parliament, or ignored by a new prime minister. The referendum is not legally binding, and reportedly, a lot of Brits regret voting to leave, including Boris Johnson, the biggest proponent of exit.
-that the EU will move to address Britain’s EU gripes like the immigration issue.
-fallout won’t be as bad as feared, since Britain will still be part of the European economy, doing business will be more complicated.
-the EU has survived crises before like the fiscal crisis in 2009 – 2010 when Italy. Greece, Portugal, Spain, and Ireland were on the ropes and needed help.
-a Fed-fix: talk is already circulating that the Fed won’t raise interest rates until 2018.
-Fed jawboning: a army of Fed officials (with credentials) will be dispatched to allay fears of U.S. fallout, the return to QE if necessary – whatever it takes to run the market back up in time for the next crisis.
Brexit upstaged all other issues that comprise market valuation, and will do so for some time. Q3 and Q4 earnings will have to be addressed, as well as the direction of the U.S. economy.
And what about the November election – remember ? That could dwarf Brexit as November closes in.
And what about a rumor that other nations will consider an “exit.” It would only take an unfounded rumor to trash stocks again.
Sorry for the Mr. negative stuff, but I hate to see investors get hurt, and paying up for stocks in face of the uncertainties and negatives out there that are not yet discounted is a good way to do so.
Stocks will rebound at the open with room to run a bit more, a lot more if the Fed fires some hopeful salvos, or rumors noted below start to fly.
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SUPPORT “today”: DJIA:17,258; S&P 500:2,012; Nasdaq Comp.:4,666.
RESISTANCE “today” DJIA:17,451; S&P 500:2,043 ; Nasdaq Comp.:4,712 .
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NEW PROJECTION:
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 new DJIA “divisor” (0.14602) 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 June 24, 2016, a reasonable risk is 17,285 a more extreme risk is 16,778. Near-term upside potential is 17,698.
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ELECTION YEAR PATTERN BEARISH AFTER MARCH
(I will repeat this regularly to keep readers aware of the potential for an April correction)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
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 STATUS OF MARKET: Neutral – but very, very vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q2, and 2016 earnings questionable. Fed has market under its spell.
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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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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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