This Could Get Ugly

Investor’s first readDaily edge before the open

DJIA:  17,448
S&P 500: 2,045
Nasdaq  Comp:5,005
Russell 2000: 1,154

Friday:  Nov. 13, 2015   6:16 a.m.

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     It took five days for the market to  react to the November 6, October jobs report, which now increases the odds that the Fed will announce an increase in its federal funds rate on December 16. The Fed has held tough on its zero-based rate since 2008.

      The market had surged on October 14th after a Wall Street Journal  article implied a Fed rise in rates would not happen this year.

      The big question now is how much will the market have to decline to discount a bump in rates and subsequent bumps ?

      And what if  economic indicators between now and the FOMC meeting December 15 – 16 indicate the better-than-expected jobs report was a fluke ?

      Several days ago, I referred to this market as a phony market, since its direction is solely based on whether and when the Fed will raise rates and not on other key factors like earnings, international tensions, Congressional dysfunction, global economics. 

      This could get ugly.

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SUPPORT “today”: DJIA:17,317; S&P 500:2,041; Nasdaq Comp.:4,927

RESISTANCE “today”: DJIA:17,609; S&P 500:2,066;Nasdaq Comp.:5,058

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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  November 7, 2015,  a reasonable risk is 17,731 a more extreme risk is 17,590. Near-term upside potential is 18,237.
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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% depends on tolerance for risk.
  • KEY FACTORS:  Fed decision on rates; strength of economic rebound; Outlook for Q3/Q4 earnings; Stimulus Europe/China a catalyst !!
  • CONCLUSION: Suddenly, odds of a December bump up in interest rates has increased dramatically. Over the years, the market has sold off when it appeared that an increase was imminent.  It did not do so after the announcement Friday, but did on Monday as the Street began projecting the timing of subsequent rate increases in 2016 – 2017.
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Note: Source of economic data

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

*Stock Trader’s Almanac

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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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