Who Wants It Most … Bulls….or Bears ?

Investor’s first read Daily edge before the open

DJIA:  16,049
S&P 500: 1,884
Nasdaq  Comp.: 4,517
Russell 2000:  1,083

Wednesday:  Sept. 30,  2015   8:36 a.m.

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      The ADP Employment report came at 8:15 a.m. today with Sept. payrolls up 200,000.  The Employment Situation report will come at 8:30 a.m. Friday, since “employment” has a bearing on a Fed decision to raise interest rates. 

      Monday’s  crunch wiped out any chance that the 17-day consolidation phase following the Aug. 24 flash crash could serve as a base for a rebound.     

       Bearish sentiment  has intensified  with so many global hotspots, none the least of which is plunging commodity prices.    What is happening there is beginning to look like the kind of “extreme” that will mark a turning point, ergo a  reversal ideally  after one big “flush.”  Commodities in general, especially copper have been crushed. Who in their right mind would buy them ?  hmmm.

       Q3 earnings will start to hit the Street in coming weeks along with adjustments in future estimates/guidance. I can’t see how they will make good reading, but stocks in general are down going into the report period, which helps (if you are long).    

 MY BAD:  Yesterday’s projection for the market averages was meant for the week, not Tuesday alone – damn.  We got a lot of  quarter-end churning yesterday, suggesting buyers had met sellers head-on,  but yesterday’s projection of DJIA: 16,494 ;  S&P 500: 1,952; Nasdaq Comp.:4,738 will  be a stretch for this week especially without a larger gain yesterday. Even so, with a follow through tomorrow and Friday, it’s possible.

TODAY:

      This rally surprised the Street, but I felt sentiment was getting too bearish.  Part of  this buying is related to institutional quarter-end adjustments, but some has to be bargain hunting.

       Buying here must become feverish if this rally is to  hold. A rally failure would pave the way for another leg down. We’ll have to see who wants it most – Bulls….or Bears ?

       Fed Chief Yellen speaks at 2:00 p.m.. She alone can stifle a rally. Nothing against her personally, but  the Fed has lost credibility. We are better off without ANYONE from the Fed speaking.  BEWARE !

        RESISTANCE “today”: DJIA:16,263; S&P 500:1907;  Nasdaq Comp.: 4,574 .

      

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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.

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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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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  September 28, 2015,  a reasonable risk is 15,586 a more extreme risk is 15,079. Near-term upside potential is 16,575.  Note: A drop below DJIA 15,713  would be very bearish.
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NEWS ENVIRONMENT    

        The following news has been  a contributor to recent market weakness, though most of these issues have been with us for weeks/months. 

-Chinese stock markets worst drop since 2007,  currently rebounding

-European stocks on verge of bear market (Germany’s DAX off 20%)

-U.S. stocks recovering from ugly crunch

-Commodities at 16-year low, but oil stabilizing.

-currency meltdown

      NOTE: Some of the Street’s pundits are arguing that this market behavior is unreasonable since the U.S. economy is doing well, if not great. Bear in mind, the stock market has historically been an early warning signal for the beginning of a recession, leading by as little as two months and as much as  13 months.

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  • STATUS OF MARKET: Bullish but “at risk” of  a bear market.
  • OPPORTUNITY: Volatility has set in, market has rebounded from August’s “flash crash”  but will likely drop to a lower level.
  • RISK: Above average with news sensitive market.
  • CASH RESERVE: 25%
  • KEY FACTORS:  Fed decision on rates; strength of economic rebound; Outlook for Q3/Q4 earnings; technical underpinnings weakening
  • CONCLUSION:  Having broken major support levels, the market is probing for a level that discounts uncertainties and negatives.
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Note: Source of economic data

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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