Trader’s Buy “If” Market is Hit Big Today

Investor’s first read – Daily edge before the open
DJIA:17,477
S&P 500: 2,049
Nasdaq Comp:5,037
Russell 2000: 1,170
Friday: Dec. 4, 2015 9:06 a.m.
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Whether yesterday’s sell off is attributable to the realization that the Fed will bump rates up on December 16, or to the realization that terrorism within the United States is likely to intensify is not important. Both are contributors. I think the Street can cope with the Fed, terrorism from without the United States is a new reality.
The San Bernardino shooting is not going to be an isolated act of terror. It suggests more to come. And everyone now wonders “where.”
Obviously, fear of more terrorism will have an impact on the economy, especially if another incident occurs in the near future.
For now, the market must deal with the Fed’s first bump in interest rates and how soon the Street expects another bump. The latter would indicate the economy is beginning to hum, which for anyone with half a brain should be accepted as good news.
The strength in the Employment Situation report released this morning supports a Fed bump in rates on the 16th. November new hires were 211,000, the unemployment rate was 5.0%.
The stock-index futures responded on the upside, but that surge is fading at presstime.. We need to see if the market can hold its gain going into the weekend.
We have what’s called a triangle formation going back to early October. If the market averages drop below DJIA: 17,400; S&P 500:2,030; Nasdaq Comp.:4,975, we can expect a sideways trading range with a base of DJIA: 17,210; S&P 500: 2,019; Nasdaq Comp: 4,955.
A year-end rally would get a boost if the trendline of the triangle holds.
Again – too early to predict with conviction, expect a sell–off in January.
A big spike down this morning would give nimble traders a buying opportunity.
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SUPPORT “today”: DJIA:17,327; S&P 500:2,033; Nasdaq Comp.:4,993.
RESISTANCE ‘today”:DJIA:17,597; S&P 500:2,063; Nasdaq Comp.:5,071
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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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ELECTION YEAR MARKETS
Pre-presidential election years have a record of being the best of the four-year election cycle with presidential election years running a close second. But the eighth year of a two-term presidency is the exception with the S&P 500 losing an average of 10.9% going back to 1901.*
This supports my expectation of a correction in January setting the precedent of a volatile year for stocks in 2016.
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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 19, 2015, a reasonable risk is 17,580 a more extreme risk is 17,436. Near-term upside potential is 17,967
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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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