Market Handles Friday the 13th

MARKET SUMMARY

- Market handles Friday the 13th, rumor of Summers to be names next week, less than great data for a modest gain.
- Retail worry: CEO's not seeing 'it' 4 years into the recovery.
- With 95% of wealth going to the upper 1%, no wonder retailers are worried, retail sales weak.
- Plenty of leadership keeps stocks higher overall.
- Still to come: FOMC and taper, more Syria, debt ceiling debate

Rumor mill, data strike early.

Japan's Nikkei news reported that Obama was ready to name Lawrence Summers Fed Chair as early as this coming week post-FOMC meeting. This 'news' outlet is known to start rumors to see the reaction. In a half hour the US reacted, renouncing any such notion.

There was more. PPI was stronger than expected (0.3% versus 0.2%) though the core was again at 0%. No rise in prices outside of what you need the most: housing, education, food, fuel. So, go ahead and buy another phone, TV, PC and just don't eat, go to work, or have enough education to use the new devices.

Oh, but retail sales showed that no one really wants to buy much of anything.

Retail Sales, August: 0.2% actual versus 0.4% expected, 0.4% prior (revised from 0.2%)

Retail Sales ex-auto, August: 0.1% actual versus 0.3% expected, 0.6% prior (revised from 0.5%)

Retail Sales ex-auto and gas: 0.1%

Indeed, retail CEO's are starting to express concern about this recovery. Friday, Sealed Air's CEO commented that four years into a recovery it doesn't feel like one: "We are in the fourth year of the recovery and it doesn't fell like a recovery. Because it's the first time ever that things, four years with a recovery, are feeling so iffy."

The retail sales don't show any swelling strength, and when you look at how the Administration's policies have impacted wealth distribution, it is no wonder the consumer is just not that strong. 95% of the wealth gain from 2009 to 2012 when to the top 1% of US citizens. Instead of creating solid, high quality traditional jobs as the US economy has always done, the policies from Obamacare to EPA have molded our workforce into a part-time, low-wage, government-dependent mass. Their answer to the changes their policies have wrought: tax the money back from those that received the money thanks to their actions to pay for more of the same programs. What did Einstein say about the definition of insanity?

In any event, even with the glum numbers, the FOMC and taper to come next week, the debt ceiling debate heating up, stocks did just fine Friday, bouncing back modestly after testing Thursday. It won't hurt come Monday that the US and Russia struck a deal on Syria's chemical weapons. Perhaps enough positives to offset the unknowns re the Fed?

Michigan Sentiment - Preliminary, September (9:55): 82.0 expected, 82.1 prior



Maybe they are not unknowns at this point. Most commentators Friday who know anything at all said the Fed HAD to taper or else lose all credibility. $5B would be enough; just to show everyone that yes things were still good enough to taper. The market expects it at this point.


Friday, as noted, it seems stocks had it figured. Stocks started up modestly, gave up the move, but then rose steadily (and slowly) to the close. No frills, just modest gains on lower volume in response to the Thursday weakness. Not bad, not great, just keeping a modest test going just fine.

SP500 4.57, 0.27%
NASDAQ 6.21, 0.17%
DJ30 75.42, 0.49%
SP400 0.22%
RUTX 0.52%
SOX 0.45%

Volume faded 11% on both NASDAQ and NYSE.


THE MARKET

OTHER MARKETS
Dollar: 1.3304 versus 1.3303 euro. Down on the week in a test, but then broke the 200 day SMA. Could not recover it Thursday or Friday despite intraday attempts.

Bonds: 2.89% versus 2.91% 10 year. All week bouncing in a narrow range voer support. Holding the line, waiting on the Fed and how much it will taper.

Oil: 108.21, -0.39. Selling to the 20 day EMA early in the week then walking laterally along that level the rest of the week. Still looks solid enough.

Gold: 1308.80, -21.50. Rough week for gold as it sold below both 50 day MA, unable to keep the nice reversal looking so nice.


STATS AND INTERNALS

NASDAQ
Stats: +6.22 points (+0.17%) to close at 3722.18
Volume: 1.45B (-11.37%)

Up Volume: 837.38M (+360.1M)
Down Volume: 585.65M (-454.35M)

A/D and Hi/Lo: Advancers led 1.51 to 1
Previous Session: Decliners led 1.78 to 1

New Highs: 103 (-28)
New Lows: 16 (+4)

S&P
Stats: +4.57 points (+0.27%) to close at 1687.99
NYSE Volume: 505M (-11.87%)

A/D and Hi/Lo: Advancers led 1.68 to 1
Previous Session: Decliners led 2.03 to 1

New Highs: 113 (-79)
New Lows: 113 (-11)

DJ30
Stats: +75.42 points (+0.49%) to close at 15376.06


THE CHARTS

SP500: Up on the week, closing it out with a sideways move Thursday and Friday. Solid early week, continuing the rally off the lower low in late August. Good run, so far a nice easy test, still a lot of resistance to push through at 1695 to 1700 and then the prior high. Working for now.

NASDAQ: Strong early week move pushed NASDAQ to a new high. Then testing Wednesday to Friday, tapping the November trendline on the low and rebounding. Very solid.

DJ30: Just one day off for the Dow last week, finishing strong. Just below the May closing highs and in prime shape to set up a right shoulder to a head and shoulders pattern. Thus far not showing signs of slowing.

SP400: Gapped upside Tuesday then worked laterally the rest of the week. Filled the gap early August after clearing the May high. Good recovery, but still major resistance from here to 1243, then again the high at 1261.

RUTX: Gapped higher Tuesday along with the other indices, then working laterally to complete the week. Matched the July high and measuring the August high at 1064 (closed at 1054). Nice flag, and that can lead to a nice upside break.

SOX: A nice week as well, gapping upside Tuesday to almost match the July peak, then an easy 1-2-3 test into the weekend. Measuring the move toward the high. Might take a few days to do it, but looks good.


LEADERSHIP

Many sectors are contributing. Telecom, energy, technology, biotech, internet. We are going to look at some more internet, e.g. a new play on YY, still looking at MELI. As for telecom UBNT looks solid.

This fade after the last leg higher is allowing some good movers to set up once more as noted above. Others that are not leaders yet are turning things around after forming rounded bottoms. AGU, FALC and others could provide new support for a continued market move.

Despite the issues facing the market, notably the Fed taper next week, stocks are being accumulated and those not making runs yet can, as noted provide the next wave of upside moves.
































SENTIMENT INDICATORS

VIX: 14.16; -0.13
VXN: 14.7; -0.05
VXO: 13.91; 0

Put/Call Ratio (CBOE): 0.77; -0.09


Bulls and Bears:

Bulls improved slightly, bears declined slightly as would be expected with the market gains. Slowing the moves a bit after big breaks.




Bulls: 37.1 versus 38.1% versus 43.3%. Diving below the early July, late June levels. 48.4% versus 51.5% versus 52.1% versus 46.9% versus 43.8% versus 41.7% versus 46.8% versus 43.8% versus 45.8% versus 52.1% versus 54.2% versus 52.1% versus 47.9% versus 44.3% versus 47.4% versus 50.5%.

Background: Last undercut 35%, the threshold for bullishness, in early June 2012.

Bears: 23.7 versus 23.8% versus 21.6%. Finally breaking free from the 20 level that held for three weeks, and now matching the highs from late June and early July. Starting to get there but needs to jump toward 30.

Background: Over 35% is the threshold to be really be a good upside indicator. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.


MONDAY

FOMC meeting and a decision on the taper amount. $5B minimum, $20B max. Likely in the $5 to $10B/month range. Germany elections. Debt Ceiling debate. More economic data starting off fast with Empire Manufacturing, Industrial Production, Capacity Utilization.

The deal on the Syrian chemical weapons likely helps, but there may be some standing around until Wednesday. Stocks rallied well last week then tapered the move somewhat themselves to end the week with their lateral moves, holding the gains as they rest and test the last run.

The nice thing about waiting around some is it allows some tests to set up better and other stocks to put some touches on their bases. Then if the market likes what it hears, or more accurately, hears what it expects, e.g. $5 or $10B in taper, then the market is set to continue higher and take aim on those prior post-bear market or all-time highs as the case may be.

As good plays continue to develop, we will focus on those and be ready when they make a break. Remember, leaders tend to start their moves ahead of the rest of the market as seen on the last leg higher.

Have a great weekend!


Retail sales for August, Michigan Sentiment September preliminary, and PPI are up for Friday. Then there are the worries about what could happen over the weekend with Syria. There is another issue. The data has been so far off to be virtually meaningless. Is it a smokescreen to confuse the return of decline? The government has no one to blame but itself. If it puts out such divergent and incomplete statistics then investors and others start to wonder.


Support and resistance

NASDAQ: Closed at 3722.18

Resistance:
3773 is the upper channel line for the November 2012 to present uptrend.
Next major resistance is around 4100 as NASDAQ hits 13 year highs

Support:
3694 is the August high and the post-bear market high.
3699 is the November 2012 up trendline
The July 2013 intraday high at 3625
The 50 day EMA at 3610
3573 is the August 2013 low
3532 is the May intraday high
3521 is the August 2000 low.
3502 is the May 2013 closing high
The 2011 up trendline at 3372
The 200 day SMA at 3334
3295 is the June 2013 low selloff
3227 is the April 2000 intraday low
3197 is the September 2012 post-bear market high
3171 is the October intraday high


S&P 500: Closed at 1687.99

Resistance:
1687 is the May high and post-bear market high
1698 to 1700 are the July and August interim highs
1710 is the August 2013 peak

Support:
1685 is the mid-August 2013 upper gap point
The 50 day EMA at 1661
1657 is the late August upper gap point
1654 is the June 2013 peak
1627 is the August 2013 low
1576 from October 2007, the prior all-time high
The 200 day SMA at 1575
1573 is the June 2013 closing low
1569.48 is the 78% Fibonacci retracement of the April to May 2013 run
1560 is the June 2013 reversal low
1556 from July 2007
1541 is the April 2013 closing low in that pullback inside the uptrend
1539 from June 2007
1531 is the recent high
1499 from January 2008
1475 is the September 2012 high
1471 is the October 2012 intraday high
1466 is the September 2012 closing peak and rally closing high
1440 from November 2007 closing lows


Dow: Closed at 15,376.06

Resistance:
15,542 is the May 2013 intraday high
16,659 is the August 2013 peak

Support:
15,318 is the June closing high
The 50 day EMA at 15,154
15,050 from the August 2013 interim recovery high
14,888 is the April peak and prior all-time high
14,844 is the June intraday low
14,762 is the August 2013 low
14,551 is the June 2013 intraday low on the selloff (14,659 closing)
The 200 day SMA at 14,538
14,198 from the October 2007 high
14,149 is the February 2013 high
14,022 from 7-07 peak
14,010 from the early February 2013 consolidation


Economic Calendar

September 9 - Monday
Consumer Credit, July (15:00): $10.4B actual versus $13.0B expected, $11.9B prior (revised from $13.8B)

September 10 - Tuesday
JOLTS - Job Openings, July (10:00): 3.689M actual versus 3.869M prior (revised from 3.936M)

September 11 - Wednesday
MBA Mortgage Index, 09/07 (7:00): -13.5% actual versus 1.3% prior
Wholesale Inventories, July (10:00): 0.1% actual versus 0.2% expected, -0.2% prior
Crude Inventories, 09/07 (10:30): -0.219M actual versus -1.836M prior

September 12 - Thursday
Initial Claims, 09/07 (8:30): 292K actual versus 327K expected, 323K prior
Continuing Claims, 08/31 (8:30): 2871K actual versus 2975K expected, 2944K prior (revised from 2951K)
Export Prices ex-ag., August (8:30): -0.1% actual versus -0.2% prior (revised from 0.0%)
Import Prices ex-oil, August (8:30): -0.2% actual versus -0.4% prior
Natural Gas Inventories, 09/07 (10:30): 65 bcf actual versus 58 bcf prior
Treasury Budget, August (14:00): -$147.9B actual versus -$146.0B expected, -$190.5B prior

September 13 - Friday
Retail Sales, August (8:30): 0.4% expected, 0.2% prior
Retail Sales ex-auto, August (8:30): 0.3% expected, 0.5% prior
PPI, August (8:30): 0.2% expected, 0.0% prior
Core PPI, August (8:30): 0.1% expected, 0.1% prior
Michigan Sentiment - Preliminary, September (9:55): 82.0 expected, 82.1 prior
Business Inventories, July (10:00): 0.3% expected, 0.0% prior


September 16 - Monday
Empire Manufacturing, September (8:30): 9.0 expected, 8.6 prior
Industrial Production, August (9:15): 0.5% expected, 0.0% prior
Capacity Utilization, August (9:15): 77.8% expected, 77.6% prior

September 17 - Tuesday
CPI, August (8:30): 0.2% expected, 0.2% prior
Core CPI, August (8:30): 0.2% expected, 0.2% prior
Net Long-Term TIC Flows, July (9:00): -$66.9B prior
NAHB Housing Market Index, September (10:00): 59 expected, 59 prior

September 18 - Wednesday
MBA Mortgage Index, 09/14 (7:00): -13.5% prior
Housing Starts, August (8:30): 910K expected, 896K prior
Building Permits, August (8:30): 943K expected, 943K prior
Crude Inventories, 09/14 (10:30): -0.219M prior
FOMC Rate Decision, September (24:30): 0.25% prior
FOMC Rate Decision, September (14:00): 0.25% expected, 0.25% prior

September 19 - Thursday
Initial Claims, 09/14 (8:30): 340K expected, 292K prior
Continuing Claims, 09/07 (8:30): 2880K expected, 2871K prior
Current Account Balance, Q2 (8:30): -$100.0B expected, -$106.1B prior
Existing Home Sales, August (10:00): 5.30M expected, 5.39M prior
Philadelphia Fed, September (10:00): 9.0 expected, 9.3 prior
Leading Indicators, August (10:00): 0.6% expected, 0.6% prior
Natural Gas Inventories, 09/14 (10:30)

By: Jon Johnson, Editor
Copyright 2013 | All Rights Reserved

Jon Johnson is the Editor of The Daily at InvestmentHouse.com

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