Unfortunately – Still All About the Fed

Investor’s first readDaily edge before the open

DJIA:  17,084
S&P 500: 2,014
Nasdaq  Comp.4,830
Russell 2000: 1,165

Monday:  Oct. 12, 2015   9:09 a.m.

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SUMMARY:

      There are presently so many crosscurrents that  could move the market sharply in either direction.

China’s growth woes are well publicized, yet its stock markets rebounded overnight.

Industry sources indicate the tailspin in commodities, especially oil, has ended, the market action seems to confirm that.

       International tensions and U.S congressional dysfunction continue unabated, but lack impact on the markets.

       Q3 earnings are expected to disappoint, but firmness in the stock market suggests the Street doesn’t care.       

       One day it looks like the Fed could bump rates in December, the next day suggests sometime in 2016.  Public comments by Fed officials are all over the lot.

        It appears that the swing factor is still the Fed, and I think their news management is a disgrace. All markets would be better served without Fed officials publicly stating positions on when the Fed will raise rates. Fed Vice-Chair Stanley Fischer believes it will likely raise rates this year.  At 8:00a.m. tomorrow, St. Louis Fed’s James Bullard will speak. He is on record as expecting a rate increase in September.

        The market rebounded sharply when that did not happen. He tends to have an impact on the market.

TODAY:

      Friday’s Special Bulletin, “Raise Cash Reserve to 35%,” acknowledges the fact the market has recouped 50% to 75% of August’s plunge and will shortly press into the area from which it broke down where further upside will be more challenging.

      Commonly referred to as resistance or overhead supply, this area can be expected to attract sellers who saw portfolios plunge in August, as well as traders who responded to my August 24 “Trader’s Buy,” and are taking profits.

      The base formed between August 24 and early October is impressive and should hold above DJIA 16,000 (S&P 500: 1,900).

      Watch for buying on any weakness.  If the bulls jump in quickly, more upside is likely.  There is room to run higher, but more sellers will be encountered as it rises.       

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SUPPORT today:  DJIA: 16,968; S&P 500:2,001; Nasdaq Comp.:4,796

RESISTANCE today: DJIA:17,216; S&P 500: 2,029;  Nasdaq Comp.:4,863

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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 9, 2015,  a reasonable risk is 16,990 a more extreme risk is 16,876. Near-term upside potential is 17,377. 
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  • STATUS OF MARKET: Bullish but “at risk” of  a bear market.
  • OPPORTUNITY: RISK: Above average with news sensitive market.
  • CASH RESERVE: 35%
  • 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.

*Stock Trader’s Almanac ( New edition should be out – get it !)

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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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