Two-Three Day Correction Healthy

Investor’s first read – Daily edge before the open
DJIA:17582
S&P 500:2,049
Nasdaq Comp.; 4,821
Russell 2000: 1,097
Wednesday: March 23, 2016 8:58 a.m.
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EARNINGS
In two weeks Q1 earnings will begin to flow and are projected to be down, as are Q2 earnings. It doesn’t get more fundamental than earnings, yet other issues have dominated the attention of the Street so far this year.
April could be the “decider” on whether 2016 is a bear market year, or just a volatile one with big swings up and down as we near the November election.
S&P Capital IQ is projecting S&P 500’s earnings in Q1 to drop 7.0% and Q2 to drop 2.1%.* Earnings are projected to rise only 1.5%, down from a projection of plus 7.4% as recently as January.
Hopefully, a weak dollar will enable companies to post better numbers than currently projected. They will have to in order to justify the current level of stock prices.
The Fed
I am alarmed that the Fed is so fickle, flip-flopping on policy. It looks like their credibility is at the same level as their interest rate policy – zero plus a smidge.
What’s really bad with its inconsistency is a time will come when a policy position needs to be taken seriously, and no one will believe them.
TODAY:
My March 11 upside target for my technical analysis of each of the 30 Dow industrials (17,586) was reached Friday. The DJIA and S&P 500 have nearly recouped what was lost since the December peak from which stocks plunged, though the Nasdaq Comp. and Russell 2000 are lagging.
Without unexpected bad news, the market should soon find a level where increasing volatility sets in with prices trading in a wide range up and down until late April when odds favor another correction as the election draws nearer.
The U.S. dollar is strong again today, in fact it has been strong for four days now. A plunge in the dollar following last week’s FOMC meeting triggered a rally in commodities and stocks, but so far hasn’t had the reverse impact – yet.
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SUPPORT ‘today”: DJIA:17,483; S&P 500:2,035; Nasdaq Comp.:4,791.
RESISTANCE : “today”: DJIA:17,696; S&P 500:2,063; Nasdaq Comp.:4,853.
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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 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 March 11, 2016, a reasonable risk is 17,073 a more extreme risk is 16,970. Near-term upside potential is 17,586
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 STATUS OF MARKET: Neutral – but vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 25% – 45%. Consider 75% now
 KEY FACTORS: Outlook for Q1, and 2016 earnings questionable.
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Note: Source of economic data
*Briefing.com
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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