Today’s Rally Must Hold

Investor’s first readDaily edge before the open

DJIA:  17,168
S&P 500: 2,018
Nasdaq  Comp:4,840
Russell 2000: 1,144

Thursday:  Oct. 22, 2015   9:01 a.m.

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      What we had  a “one-day reversal” yesterday where the market averages gave back all of the gain for the day and posted a loss, as well.

      This is a minor negative pattern, suggesting the bulls were reluctant to reach for stocks in face of increasing resistance starting at (DJIA (17,315); S&P 500 (2,040); Nasdaq Comp.(4,915).

      Stock-index futures indicate a big jump at the open. Unless this rally fails, the bulls are ready to attack overhead supply again.

      Since early 2015, stocks traded within a wide range before breaking down in August ending with the flash crash on August 24 with the DJIA down 2,000 points in four days.  Since then, it has worked its way back up, recouping two-thirds of its loss.

      The risk of another leg down  still can happen, but odds don’t favor it, since the bulls are buying on dips. 

      The news-front sports plenty of negatives, some serious enough to tank the market, but the Street cares only about the Feds timing of the first bump up in interest rates. It went to a zero-0.25% rate on federal funds in December 2008.

      I scanned the charts of the 30 Dow stocks this morning and two-thirds were positive (uptrends, consolidations), 4 negative, and 4 neutral. Corrections to the positive patterns can result in a pullback, but turning negative would take  a major piece of bad news.

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RESISTANCE today: DJIA: 17,347; S&P 500:2,048; Nasdaq Comp.:4,924

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NOTE:  There is no FOMC meeting scheduled for November, and no press conference scheduled for October. If a press conference is suddenly scheduled for October, it will be a tip off to an announcement of a rate increase, likewise  for a meeting/press conference is scheduled for November.     >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

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  October 14, 2015,  a reasonable risk is 16,793 a more extreme risk is 16,527. Near-term upside potential is 17,355.
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  • STATUS OF MARKET: Bullish but “at risk” of  a correction, especially Fed based
  • OPPORTUNITY: RISK: Above average with news sensitive market.
  • CASH RESERVE: 25% – 45%
  • KEY FACTORS:  Fed decision on rates; strength of economic rebound; Outlook for Q3/Q4 earnings; technical underpinnings weakening
  • CONCLUSION:  Encouraged by the prospect the Fed won’t raise interest rates this year due to softness in the economy, the stock market has rebounded from a support level established after the August 24 “flash crash.” It is now beginning to probe into an area from which it broke down in August where the upside should be more challenging.

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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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