Volatility Index Says “No Sweat” – Really ?

Investor’s first read – Daily edge before the open
DJIA: 18,041
S&P 500:2,095
Nasdaq Comp.:4,863
Russell 2000: 1,154
Thursday: April 28, 2016 8:49 a.m.
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As expected, the Fed did not bump rates yesterday. More importantly, it eliminated the words “global economic and financial developments continue to pose risks” from the text of its FOMC minutes, suggesting its decision process is no longer influenced by negatives abroad !!
While Jobs growth is strong and the housing market has improved, business fixed investment and net exports have been soft. The median projections by FOMC members is still for two rate increases in 2016 (down from four in December).
What did jolt the market was the decision by the Bank of Japan (BOJ) last night to pass on further stimulus, leaving interest rates and asset purchases unchanged.
It was hoped Japan, the world’s third largest economy would ramp up its stimulus, which would have global benefits. Stock markets around the world took a hit this morning as a result.
West Texas intermediate oil for June delivery closed at $45.33 a barrel, its highest close since November, in response to yesterday’s FOMC report indicating the Fed was less concerned about global economies.
TODAY
The Nasdaq Composite declined yesterday in face of weakness in tech stocks. The market will open lower today after the Bank of Japan’s announcement over night not to further stimulate its economy.
What cannot be overlooked is the CBOE Volatility Index (VIX). Based on index options puts and calls, the VIX is referred to as the “investor fear gauge,” bullish after rising sharply, bearish when down big-time.
Hitting four year lows, the VIX is telling us the Street hasn’t a fear in the world – close to la-la land.
The best opportunities in the stock market exist at extremes when things couldn’t get worse (BUY), or things couldn’t get better (SELL).
The market can go down because it is top heavy – the sudden show of sellers with few buyers to catch stocks, or a drop can be triggered by unexpected news. This market is ever so vulnerable to a piece of bad news. It is top heavy, but can get more top heavy with the DJIA reaching 18,304.
With the hope for a decent return on fixed income, high yield stocks are still attractive, though many selling above average P/Es.
Watch this one carefully, it is a snake in the grass.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:17,941; S&P 500:2,083; Nasdaq Comp.:4,836.
RESISTANCE “today”: DJIA:18,109; S&P 500:2,103; Nasdaq Comp.:4,884.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Apr. 22, 2016, a reasonable risk is 17,792 a more extreme risk is 17,634. Near-term upside potential is 18,340.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(I will repeat this regularly to keep readers aware of the potential for an April correction)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
CORRECTIONS IN SPRING LAST SIX YEARS
The S&P 500 is in its 8th year of a bull market, selling at 17.8 X earnings, only 2.5% off its all-time highs, after a 212% bull rise.
Corrections started in spring in each of the last six years, the biggest being 19.8% in 2011, and smallest 2.3% in 2,014.
They started: 2010 (Apr. 26), 2011(May 2), 2012 (May 1), 2013 (May 22), 2014 ( May 13), 2 015 (May 15). The 2014 correction was insignificant, the 2015 more of a trading peak that trended sideways-to-down before the August flash crash.
So far, Q1 earnings are mixed-to-slightly better than projected. The key will be guidance and projections for Q3 and Q4.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 25% – 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q1, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

Investor’s first read – Daily edge before the open
DJIA: 18,041
S&P 500:2,095
Nasdaq Comp.:4,863
Russell 2000: 1,154
Thursday: April 28, 2016 8:49 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
As expected, the Fed did not bump rates yesterday. More importantly, it eliminated the words “global economic and financial developments continue to pose risks” from the text of its FOMC minutes, suggesting its decision process is no longer influenced by negatives abroad !!
While Jobs growth is strong and the housing market has improved, business fixed investment and net exports have been soft. The median projections by FOMC members is still for two rate increases in 2016 (down from four in December).
What did jolt the market was the decision by the Bank of Japan (BOJ) last night to pass on further stimulus, leaving interest rates and asset purchases unchanged.
It was hoped Japan, the world’s third largest economy would ramp up its stimulus, which would have global benefits. Stock markets around the world took a hit this morning as a result.
West Texas intermediate oil for June delivery closed at $45.33 a barrel, its highest close since November, in response to yesterday’s FOMC report indicating the Fed was less concerned about global economies.
TODAY
The Nasdaq Composite declined yesterday in face of weakness in tech stocks. The market will open lower today after the Bank of Japan’s announcement over night not to further stimulate its economy.
What cannot be overlooked is the CBOE Volatility Index (VIX). Based on index options puts and calls, the VIX is referred to as the “investor fear gauge,” bullish after rising sharply, bearish when down big-time.
Hitting four year lows, the VIX is telling us the Street hasn’t a fear in the world – close to la-la land.
The best opportunities in the stock market exist at extremes when things couldn’t get worse (BUY), or things couldn’t get better (SELL).
The market can go down because it is top heavy – the sudden show of sellers with few buyers to catch stocks, or a drop can be triggered by unexpected news. This market is ever so vulnerable to a piece of bad news. It is top heavy, but can get more top heavy with the DJIA reaching 18,304.
With the hope for a decent return on fixed income, high yield stocks are still attractive, though many selling above average P/Es.
Watch this one carefully, it is a snake in the grass.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”: DJIA:17,941; S&P 500:2,083; Nasdaq Comp.:4,836.
RESISTANCE “today”: DJIA:18,109; S&P 500:2,103; Nasdaq Comp.:4,884.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 Apr. 22, 2016, a reasonable risk is 17,792 a more extreme risk is 17,634. Near-term upside potential is 18,340.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
ELECTION YEAR PATTERN BEARISH AFTER MARCH
(I will repeat this regularly to keep readers aware of the potential for an April correction)
The market is tracking a pattern for presidential election years where an administration is in its second term.* The news is bad.
Historically, these markets have declined in Jan./Feb., rallied in March then topped out in early April, plunged in May with brief rallies in June and August and a plunge into October prior to the election.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
CORRECTIONS IN SPRING LAST SIX YEARS
The S&P 500 is in its 8th year of a bull market, selling at 17.8 X earnings, only 2.5% off its all-time highs, after a 212% bull rise.
Corrections started in spring in each of the last six years, the biggest being 19.8% in 2011, and smallest 2.3% in 2,014.
They started: 2010 (Apr. 26), 2011(May 2), 2012 (May 1), 2013 (May 22), 2014 ( May 13), 2 015 (May 15). The 2014 correction was insignificant, the 2015 more of a trading peak that trended sideways-to-down before the August flash crash.
So far, Q1 earnings are mixed-to-slightly better than projected. The key will be guidance and projections for Q3 and Q4.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 STATUS OF MARKET: Neutral – but vulnerable. Expect volatility
 OPPORTUNITY: RISK: Risk high, Profit taking justified.
 CASH RESERVE: 25% – 45%. Consider 75% now if tolerance for risk is low.
 KEY FACTORS: Outlook for Q1, and 2016 earnings questionable. Fed has market under its spell.
////////////////////////////////////////////////////////////////////////////////////////////////
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
…………………………………………………………………….
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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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