Sell Off Into Fall Possible

Investor’s first readDaily edge before the open

DJIA: 17,776
S&P 500: 2,081
Nasdaq  Comp.: 4,997
Russell 2000: 1,248

Wednesday, July 8, 2015   9:16 a.m.

SUMMARY  

  GREECE   

      As expected, a news whipsaw on Greece –  positives – negatives – positives – negatives, is underway running stocks up yesterday after a big plunge, then turning them down in pre-market trading today. 

     Greece’s Prime Minister, Alexis Tsipras, has until Sunday to submit a new proposal when 28 European Union members (19 euro zone members will members will meet in Brussels to decide Greece’s fate.

     A lot is at stake, odds favor a settlement of sorts and the end to the crisis. Obviously, failure to agree would extend the crisis as Greece’s banking system and economy crash and survival of the euro becomes questionable.

CHINA

      Unsettling to say the least. Markets there correcting huge up move with Shanghai Composite down 27% after 117% surge.  It will grow as an uncertainty as negatives there unfold.

TODAY:

     Yesterday, stock prices rebounded  after a sharp plunge in early trading. The rebound was robust with market averages closing close to the highs for the day – bullish. 

      But pre-market trading in stock index futures today indicates lower prices at the open. That suggests a “test” of yesterday’s lows (DJIA: 17,465; S&P 500: 2,044; Nasdaq Comp.: 4,902.

      Those lows must hold to prevent another leg down possibly to DJIA 17,326; S&P 500: 2,028; Nasdaq Comp.:4,893.  

      Another “one-day reversal” would be bullish in spite of Greece.

       Ultimately, the U.S. stock market will key on whether the economy here can rebound sharply from its Q1 slump, which has been blamed on the plunge in oil prices, weather and strength of the US dollar.

     Without a sudden resurgence in the economy, the stock market will have to find a new comfort level.

     But realistically, we won’t get a good read on our economy’s rebound for several months, a delay which could allow the market to slide sideways-to-down into September/October and a buying juncture.

     SUPPORT today is DJIA: 17,576; S&P 500: 2,059; Nasdaq Comp.: 4,926. This support is highly susceptible to news flow.

     A robust rebound from a successful test here has the chance of taking the market higher to DJIA: 17,903; S&P 500: 2,096; Nasdaq Comp.: 5,039.

      Traders may want to play this one for a hit and run, but better be ready to bail out if a rally occurs but loses steam.         

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THE FED

      The guessing game continues – Will the Fed bump interest rates up in September, or later ?

      Obviously, their decision will key on the strength of the U.S. economy where housing is taking the lead and now consumer expectations are soaring.

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My Technical Analysis of the 30 DJIA Companies:   LOWER

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” (0.1498588) to get the DJIA for those levels.
     As of  July 2,  a reasonable risk is 17,527; a more extreme risk is 17,380 The upside potential is has dropped with the market’s inability to follow through last week and is now 17,948.

   

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KEY EXTERNAL FACTORS: 

-Stock market bubble – China
Q2 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.
Recent strength in employment and housing industry shifting concern from a weakening in the U.S. economy to enough strength to prompt an early bump up in interest rates.

-Greece

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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