Volatility Absent – Big Move in Offing ?

Investor’s first readDaily edge before the open

DJIA: 18,285
S&P 500: 2,130
Nasdaq  Comp.5,090
Russell 2000:1,256

Friday, May 22, 2015   9:02 a.m.

SUMMARY:

      This week’s economic data did little to boost stock prices. While April Housing Starts announced Tuesday boomed along with permits, other economic data was mixed.  Minutes from the FOMC meeting did little to stir the pot.

     Soft economic data suggests a Fed bump in interest rates is not coming until Q4, if then. Some fear a recession is in the wings, but those fears have come and gone frequently over the last six years of the economy’s recovery.

     No urgency to buy or sell.

     We’ve got a rest from the extreme volatility seen in recent months.  Granted it’s just been for several days, but the tone of the market has changed suggesting a consensus of sorts. I think the market is getting ready for a meaningful move.

     Two weeks ago, I  headlined  that the month of May will be a crossroads where the market will move decidedly up or down, breaking out of the  three month trading range, roughly (DJIA 17,600 – 18,200; S&P 500: 2,040 – 2,120; Nasdaq Comp.: 4,850 – 5,100). Bulls have a slight edge.

TODAY:

A move above DJIA: 18,316, S&P 500: 2,135; Nasdaq Comp.:5,099 improves the pattern with new highs  a good possibility.

Support today is: DJIA:18,249; 2,127; Nasdaq Comp.5,082.

ALERTALERTALERT

     The six months period between Nov. 1 and May 1 has historically been the best six months for the stock market.* The six months between May 1 and Nov. 1 has underperformed. Consistent as this seasonal pattern has been, it must be noted that opportunities to trade against these trends have occurred often.  Analysts and the press will make a lot of noise about this phenom in coming months –  be careful.
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My Technical Analysis of the 30 DJIA Companies:  

On occasion, I technically analyze each of the 30 DJIA stocks  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” (0.1498588) to get the DJIA for those levels.
     As of  May 14, a reasonable risk is 18,760. The upside potential is19,225 up from 18,334. That would be welcome.  

    Based on what we have seen in Q1 earnings, the current economic reports and timing of a Fed increase in interest rates, that’s hard to believe  – BUT the potential is there now. It needs a spark.

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KEY EXTERNAL FACTORS: 

-Stock market bubble – China
-Q1 earnings for some companies will suffer from U.S. dollar’s strength and plunge in oil prices.
-Market still keyed on the Fed and it’s first bump up in interest rates, which with a slight softening in recent economic reports looks like it may happen later rather than sooner.
Concern that the U.S. economy is beginning to slump. This week is mixed.

Note: Source of economic data

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

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*Stock Trader’s Almanac

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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