Monday, March 31, 2014

Much of the Market Looks Pretty Solid

MARKET SUMMARY

- A relief attempt gets the same treatment as other rally efforts.
- Looked ready to go, but was not.
- Outside of some spectacular selloffs, much of the market looks pretty solid.
- Indices still divided, no pattern looks that great, but there are many good upside patterns out there.
- Spending and Incomes rise, but revisions are huge and you just have to question the numbers given the real numbers.
- Cannot count out SP500 rallying from here. Cannot count on it either.

Finally the setup. Growth stocks spending over a week redefining the term 'growth' as community punching bag. Biotech drug stocks in need of their own Rx. Big names such as AMZN, NFLX, PCLN, GOOG suddenly treated as the Rodney Dangerfields of the market.


You want to make your wife scream when having sex? Call her.
Talk about fat. I'm so fat that that when I stand in the corner the police tell me to break it up. I'm so fat that when I lie on the beach the Save the Whales people keep trying to roll me back in.
(surprisingly few good shots of Dangerfield on the web)


The 'F' word mentioned every other hour on CNBC and other financial networks (you know, 'froth'). The actual open questioning of whether the bull market built on FOMC QE could survive given the Fed, similar to the Malaysian government regarding the missing airliner, finally admitted the obvious that yes, someday it would have to remove stimulus.

Thus after 4 of 5 sessions lower on NASDAQ, 5 straight on RUTX, and over a week of floundering along below the prior highs on SP500 and DJ30, we were looking for a bit of a relief move. At least in growth, the doormat for sellers the past week and one-half.

Indeed, stocks did start Friday in good shape with NASDAQ well outpacing the large cap NYSE stocks to the upside. Futures were up 12 points versus fair value, and while a higher open is the de facto kiss of death for this stock market, given NASDAQ was disproportionately down versus the NYSE and since it was ripe for a relief bounce given its gutting, it SEEMED somewhat logical to think a relief move was coming.

It did. NASDAQ jumped up through its lower channel line and RUTX surged up to its 50 day EMA. 52 points upside for NASDAQ (1.25%), 16 for RUTX (1.4%). Even the Dow ran up to its trendline in the surge. Over a week of losses in the growth indices, end of the week, end of the month, end of the quarter (at least on Monday) . . . yes, primed for a relief move and it was starting. Cool.

Well, you know what happened to this relief move. Same old story. All this relief move did was let any pressure to bounce out of the bottle. Kind of an upside relief valve: downside pressure gets too high, pop upside intraday, draw in some bids, then flop back down. Growth stocks were definitely stretched lower with RUTX posting its worst week in almost two years. They were primed for a relief rally. Alas, after Friday are still stretched to the downside, but the intraday surge (again, 52 NASDAQ points!) released whatever demand there was. When the bids were exhausted no one else wanted stocks and the move was sold.

Stocks recovered in the last two hours though 'recovered' is an overly generous, CNBC-perma-bull-type word. They stopped selling is more apt. The sellers had their victory, no reason to get penalized for excessive celebration after the rout. Almost shockingly, given the higher start on all indices, that 'recovery' allowed all indices to close positive on the session.

SP500 8.58, 0.46%
NASDAQ 4.53, 0.11%
DJ30 58.83, 0.36%
SP400 0.54%
RUTX 0.03%
SOX 0.73%

Volume: Sank significantly, -20% NYSE, -10% NASDAQ. Below average on both exchanges, the first time for NASDAQ in six sessions. At least no dumping; traders wanted just to get the week over, and there was plenty of distribution on the week for NASDAQ, with even NYSE suffered some dumping.

A/D: Even with the indices coughing up good gains, breadth was not bad, indeed very good in some cases. NYSE 2.5:1, NASDAQ just positive. You might wonder where the moves were, but outside of the growth areas that are getting hit, and indeed even in some of the sectors getting hit, the action is not that bad. Thus SP500, SP400, DJ30, and SOX are holding up rather nicely all things considered.


THE MARKET

OTHER MARKETS

Euro/Dollar: Bounced the back half of the week but that after falling early on. The action kept it in a range just below the 50 day EMA.

1.3752 versus 1.3748 versus 1.3788 versus 1.3823 versus 1.3842 versus 1.3794 versus 1.3776 versus 1.3831 versus 1.3930 versus 1.3925 versus 1.3907 versus 1.3858 versus 1.3907 versus 1.3870 versus 1.3869 versus 1.3872 versus 1.3857 versus 1.3735 versus 1.3737 versus 1.3730 versus 1.3805

Dollar/Yen: After a week of lateral moves the dollar broke sharply higher Friday.

102.81 versus 101.24 versus 101.99 versus 102.26 versus 102.25 versus 102.25 versus 102.42 versus 102.51 versus 101.40 versus 101.75 versus 101.29 versus 101.67 versus 102.71 versus 102.90 versus 103.24 versus 103.33 versus 103.07 versus 102.31 versus 102.19 versus 101.38 versus 101.82 versus 102.10 versus 102.38 versus 102.16 versus 102.47 versus 102.51 versus 102.35 versus 102.25 versus 102.43 versus 101.86

Bonds: Faded some Friday but that after a breakout from the 8 week range.

10 year: 2.71% versus 2.68% versus 2.70% versus 2.75% versus 2.73% versus 2.77% versus 2.78% versus 2.77% versus 2.67% versus 2.70% versus 2.65% versus 2.65% versus 2.72% versus 2.77% versus 2.78% versus 2.79% versus 2.74% versus 2.69% versus 2.67% versus 2.60% versus 2.66% versus 2.69% versus 2.67% versus 2.70% versus 2.74% versus 2.73% versus 2.75%


Oil: 101.67, +0.43. A breakout week of sorts for oil as well, finally topping the 200 day SMA Thursday and Friday.

Gold: 1293.90, -0.80. Another down week for gold as it tries to test the prior break but is having a hard time finding a floor.


MARKET STATISTICS

NASDAQ
Stats: +4.53 points (+0.11%) to close at 4155.76
Volume: 2.014B (-10.17%)

Up Volume: 1.07B (+241.96M)
Down Volume: 932.96M (-487.04M)

A/D and Hi/Lo: Advancers led 1.01 to 1
Previous Session: Decliners led 1.54 to 1

New Highs: 34 (+14)
New Lows: 41 (-14)

S&P
Stats: +8.58 points (+0.46%) to close at 1857.62
NYSE Volume: 567M (-20.14%)

A/D and Hi/Lo: Advancers led 2.49 to 1
Previous Session: Advancers led 1.15 to 1

New Highs: 85 (+23)
New Lows: 62 (-22)

DJ30
Stats: +58.83 points (+0.36%) to close at 16323.06


THE CHARTS

No significant change in the closing prices Friday, and thus the relative positioning remains the same: NASDAQ and RUTX down hard and through support, SP500, DJ30, SP400, SOX holding support.

SP500, DJ30: Holding over the 20 day, still working laterally. DJ30 hit the trendline on the high and faded back to the 20 day EMA. Same lower high, same crappy pattern, but also the same refusal to give in. SP500 is also in the same pattern, but it is sitting on top of support and trying to defy the prior pattern in the uptrend, i.e. selling back off of this kind of top. Still don't expect it to, but as with DJ30, it has not given in.

NASDAQ: Moved up through the lower trendline of its 2012 channel and then gave it up. Less than impressive bounce. Even with the weekend and some lower volume there were not enough buyers to keep NASDAQ up. Instead it could not hold the gains, again, and was dumped back near flat. Still oversold but does not have the votes right now to hold an upside move.

RUTX: Surged upside to the 50 day EMA then coughed up 15 points to close flat. As with NASDAQ, the small caps are oversold, but finding buyers is hard to do, at least buyers that want to stick with the stocks. When buyers move in, sellers swarm and sell more than the buyers can handle. Still a lack of buyers wanting to hold the small caps, and the Friday move likely clears out some more buyers as whatever upside pressure there was released.


LEADERSHIP

Most stocks in the market holding up just fine. Maybe not great, but just fine. It is the spectacular collapse in a few areas such as biotechs, internets, specific leaders in some sectors, and large drops from some big names (PCLN, NFLX, AMZN, GOOG) that gives the market the appearance of significant upheaval. That, and of course, some pretty crappy index patterns.

Biotechs: Some said money was already moving back into these stocks. No bounce. None. BIIB, CELG, GILD.

Financials: Still in the test, but some very decent patterns. Boring, but decent. JPM, BAC, STT, WFC.

Metals: Steel (some of it) looks pretty steely, e.g. AKS, SCHN, MTL. Not beautiful in all cases, but some can actually make money.

Electronics: Big names such as KLAC, SLAB are okay. Smaller names, e.g. ANAD, ALTI not.

Internet: Still under pressure but some of the leaders look very interesting, e.g. YY, VIPS. Of course the Pamplona running of the bulls looks interesting as well; doesn't mean I am going to jump in the middle of action. Have to show the move, but they are set up well.

Energy: Good week and not a bad Friday. We were watching BHI, and we watched it so much it jumped. Rookie mistake, taking pictures versus getting involved. KOG is getting its legs under it again. SPN is breaking to a higher high in a big base. Might be some opportunity even without a pullback.


SENTIMENT INDICATORS

Notice the number of ads for trading services and 'new' trading schemes that are based upon formulas to produce profits again and again and again (defining probabilities and trading accordingly. Hmmm. Sounds familiar . . .)? Radio, internet, television.

That tells us the retail investor is there and is responding to these ads. They try them periodically and if there is no response they pull them and wait. Now they are getting interest so they are running them with more and more frequency.

Why is this relevant? Because we know the retail player always comes in late and is always enamored with the hottest fad. Right now that is IPO's. Hey, we are playing them as well, but because they are setting up good patterns and surging, attracting money. Not because they are an IPO and they are 'hot.'

At some point all of the money is in and there is no more. The retail investor is usually the last money, the money that buys and has no one to sell to. This can go on, however, for months and months and months (recall the internet boom that was called a bubble for two years before it broke). Even though a stove is hot, you still use it for cooking because you know how to use it. You just have to watch for the signs that it is getting too hot and will burn the food and of course, you.

Keep this in mind as we watch the continuing market action.

VIX: 14.41; -0.21
VXN: 18.09; -0.4
VXO: 13.45; -0.57

Put/Call Ratio (CBOE): 0.96; +0.12


Bulls and Bears:

Bulls bounced right back up: 54.7 versus 52.0. Good grief. Yes, still elevated.

Bears AGAIN holding at 17: 17.5 versus 17.4 versus 17.4 versus 15.1 from 17.2 for two weeks and 17.4 for three weeks prior to that.

Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.




Note the extreme bullishness: it was this high in 2007 at the crash, in early 2005 as well.

Bulls: 54.7 versus 52.0%
54.6% 53.5% 46.5% 41.8% 45.9% 53.1% 57.6 56.1 60.6% 61.6% 60.0%
58.2% 57.1% 55.7% 53.6% 52.6% 55.2% 52.6 49.5 42.3% 45.4 46.4% 44.3% 42.3% 37.1% 37.1% 38.1% 43.3%.

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

Bears: 17.5% versus 17.4%
15.1% 17.2% 17.2% 17.4% 17.4% 15.3% 15.1 15.3% 15.2% 15.2% 14.0 14.3 14.3% 14.4 15.5 15.5% 15.6% 16.5% 18.5 21.6% 20.6% 18.6% 20.6% 21.6% 22.7% 23.7% 23.8% 21.6%.

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.


NEWS:

Personal Income February: 0.3% versus 0.2% versus 0.3% January

Spending February: 0.3% versus 0.3% versus 0.2% (down from 0.4%)

Income and spending were in line so all must be well. Incomes up 0.3% again. Well that is great given the analysis from the last jobs report shows weekly incomes hitting a 4 year low, falling as the recovery supposedly gains speed. Average hourly rates were reported up nicely that same month. What does this mean? First, the economic recovery is not going well for many in the US. Second, you cannot trust the government's headlines.

Revisions: Spending was revised in half for January as it turns out consumers did not spend a record $70B on services as was heralded in January even with the storms hitting (giving rise to the idea 'just think what it will be like when the storms end'). Indeed, the January Services number was revised down almost 30% to $50B. February service spending fell to $26B, almost half of January's revised lower level.

Higher healthcare costs dominated the spending. Hmmm, were not our costs supposed to be down with all of the great changes in healthcare? $2500 on average? We HAD heard some commentators claiming costs were down, but those claims suddenly grew quiet a couple of months back. Seems they got the word from above to tone it done.

Indeed costs WERE coming down . . . even before the ACA got going. We all know the stories, many from personal experience even if Senator Reid calls us liars, that since the ACA kicked in our policies were cancelled and we had to buy new, more costly policies (yes that is the norm even with the law 'changes' allowing insurers to keep selling 'inferior' policies). Also, despite even more shouts of 'liars' with respect to those saying they were having to pay their ACA penalties now, it turns out that those of us who pay quarterly income tax estimated payments are indeed seeing healthcare related costs go up because the tax form expressly says, pay your estimated penalty this quarter! Many are required to spend money to NOT be insured (the so-called tax that is a penalty).

Now you see it, right? THAT is how you get spending higher: pass a law that requires, despite multiple unilateral executive changes and extensions, people to either buy more expensive insurances or pay a penalty. Think about it: those who already had insurance, not those who are getting subsidies and are riding our wallets, get hit twice: First with higher priced policies and second paying for the subsidies of others through more taxes, e.g. on your home sale. That is a nice little fact in the law that we had to pass to see what was in it.

Now THAT is the kind of spending that really gens up the economy right? Transfer payments and subsidies. We have seen how well this kind of Keynesian redistribution affects 'massive' capital investment in the economy: last week saw cap-ex investment fall in both Durables Orders (-1.5%!) and in Q4 GDP (revised to a measly 0.43%). Indeed, investment in the US economy now goes by the names stock buyback and special dividend. There is virtually no serious capital investment in our country. I have said it before and it is getting worse: we are hollowing out the US economy by the policies our leaders implement and the behavior those policies promote, expectedly or unexpectedly.


MONDAY

Given the Friday surge and purge it may be that a relief bounce does not develop, so we grabbed some BEAV puts, cleared some upside, and this weekend we look at downside and upside plays in order to play the next break. Even with the breakdown in NASDAQ and RUTX, the next move is not that clear. The market is divided, and typically a divided market does not stand, but MANY sectors and stocks are performing quite well. It is the magnitude of the collapses that has everyone's attention, but on close review this weekend we find many sectors and stocks still in quite good position.

Looking at the charts you would think at least a relief bounce is called for. Then you get the Friday up then down action on NASDAQ/RUTX, and you also remember that SP500 has to change its stripes and RALLY off this kind of pattern, something it did not do even during the salad days of full frontal, $85B/month QE.

That said, there is rotation occurring, and when you have rotation you CANNOT count out the market holding, shifting assets elsewhere, and the breaking higher. Thus you cannot assume SP500 will necessarily break lower from this pattern. Indeed, given there is some rotation, however, it may be time for it to do just that.

So, we look at plays upside that fit the rotation scenario (and a few others that could bounce from good patterns in growth sectors), as well as some more downside even without an bounce upside. Based on the action Friday, some stocks that sold through support still look weak given they tried a bounce back through the broken support and were thrown back.

If the market is going to continue selling as we believe, we would love to see a 2-3 day test upside to set things up very nicely. The quarter end/new quarter start may accommodate us though Friday certainly was a disappointment.


This is my grandson Jake, my son Alan, and this is my other son Charlie, a continuing source of disappointment for me.

Of course we would love to see that, but the market doesn't move to accommodate our desires. So, we have to be ready to take our positions whichever way the big M goes. Given SP500, SP400, SOX and even DJ30 are still holding support, more upside from here is still a plausible possible scenario.

As the market turned choppy, however, we got significantly lighter in upside positions and have stepped into more downside. At this juncture we are ready to go either way so to speak. Not that there is anything wrong with that.


Jerry and George with the NYU student reporter.



SUPPORT AND RESISTANCE

NASDAQ: Closed at 4155.76

Resistance:
4189 is the November 2012 trendline
The 50 day EMA at 4218
4246.55 is the January 2014 peak
4277 is the March lower gap point
4289 is the upper channel line for the November 2012 to present uptrend.
4289 is the July 2000 recovery high
4372 is the March 2014 high

Support:
4104 is the lower gap point from 12/20/13
4070 is the series of highs from late November/early December
3991 is the prior November 2013 high and the post-bear market high.
3967 is the October 2013 post-bear market high.
The 200 day SMA at 3899
3855 is the November low
3819 is the early October high
3801 is the September 2013 high.
The October low at 3750
3697 is the August high and a prior post-bear market high in the recovery.


S&P 500: Closed at 1857.62

Resistance:
1883.57 is the recent all-time high hit in early March.

Support:
The December and January highs at 1848
The 50 day EMA at 1841
1837 is the December 2012 up trendline
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high
1768 is the December 3013 low
The 200 day SMA at 1749
1730 is the September 2013 peak
1710 is the August 2013 peak.
1698 to 1700 are the July and August interim highs
1687 is the May high and post-bear market high
1685 is the mid-August 2013 upper gap point
1657 is the late August upper gap point
1654 is the June 2013 peak
1646 is the October 2013 low just before the surge into early 2014
1627 is the August 2013 low


Dow: Closed at 16,323.06

Resistance:
16,416 is a lower trendline off the 11/2012 low
16,506 is the March 2014 peak
16,589 is the December 2013 all-time high

Support:
16,257 is the January 2014 low
16,179 is the November 2013 peak.
The 50 day EMA at 16,183
15,739 is the December 2013 low
15,696 is the September 2013 peak
The 200 day SMA at 15,677
15,659 is the August 2013 peak
15,542 is the May 2013 intraday high
15,318 is the June closing high
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)
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

March 28 - Friday
Personal Income, February (8:30): 0.3% actual versus 0.2% expected, 0.3% prior
Personal Spending, February (8:30): 0.3% actual versus 0.3% expected, 0.2% prior (revised from 0.4%)
PCE Prices - Core, February (8:30): 0.1% actual versus 0.1% expected, 0.1% prior
Michigan Sentiment - Final, March (9:55): 80.0 actual versus 80.0 expected, 79.9 prior

March 31 - Monday
Chicago PMI, March (9:45): 60.1 expected, 59.8 prior

April 1 - Tuesday
ISM Index, March (10:00): 54.1 expected, 53.2 prior
Construction Spendin, February (10:00): 0.1% expected, 0.1% prior
Auto Sales, March (14:00): 5.2M prior
Truck Sales, March (14:00): 7.0M prior

April 2 - Wednesday
MBA Mortgage Index, 03/29 (7:00): -3.5% prior
ADP Employment Chang, March (8:15): 215K expected, 139K prior
Factory Orders, February (10:00): 1.1% expected, -0.7% prior
Crude Inventories, 03/29 (10:30): 6.619M prior

April 3 - Thursday
Challenger Job Cuts, March (7:30): -24.4% prior
Initial Claims, 03/29 (8:30): 320K expected, 311K prior
Continuing Claims, 03/22 (8:30): 2850K expected, 2823K prior
Trade Balance, February (8:30): -$39.5B expected, -$39.1B prior
ISM Services, March (10:00): 53.5 expected, 51.6 prior
Natural Gas Inventor, 03/29 (10:30): -57 bcf prior

April 4 - Friday
Nonfarm Payrolls, March (8:30): 197K expected, 175K prior
Nonfarm Private Payr, March (8:30): 205K expected, 162K prior
Unemployment Rate, March (8:30): 6.6% expected, 6.7% prior
Hourly Earnings, March (8:30): 0.2% expected, 0.4% prior
Average Workweek, March (8:30): 34.4 expected, 34.2 prior


By: Jon Johnson, Editor
Copyright 2014 | All Rights Reserved

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

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Monday, March 24, 2014

Change is afoot. Expiration? Rebalance?

MARKET SUMMARY

- Change is afoot. Indices run higher, reverse to losses. Expiration? Rebalance? Rotation or more?
- International and domestic issues driving markets.
- Fed-speak affirms Yellen's comments.
- Still some excellent upside opportunity though ready to play some downside as well.

Changes.

The stock market and indeed other markets are showing some change, post-Yellen and even before. Perhaps they are just digesting the Yellen 'considerable time' definition. Maybe, but some of the move started before the Wednesday FOMC press conference though it was no doubt exacerbated by Yellen's comments. Perhaps there is rotation into new areas taking place. Perhaps the overall bull run based on QE is facing its end as QE continues its withdrawal and the economy and thus market have to rely on old fashioned growth. The following discusses those changes then we take up the market action.

Geopolitical changes.

The past few weeks injected some uncertainty abroad and domestically. With the invasion of Crimea, geopolitical issues are heightened to seemingly forgotten levels. Russia has Crimea and is making the same comments that led to the Crimean annexation about East Ukraine and Estonia. An aggressor sees an opportunity and is taking it as the world appears more transfixed by a missing airplane than countries that come up missing.

This adds to and perhaps exacerbates the ongoing situations in Syria where Russia dominates the conversation, Iran, North Korea, China/Japan conflict, and perhaps Venezuela and other South American countries.

Indeed, Friday we learned that Russia is ready to announce a natural gas supply agreement with China, its new-found friend after decades of animosity, and the two are talking about a commodity-backed currency to supplant the dollar. This alliance and its aims truly threaten the dollar as the world's reserve currency. A power play is underway between the US, China, and Russia, and it is no forgone conclusion as even the US has publicly admitted its weakened position by virtue of the Defense Secretary's 'the days are gone' comments regarding the US' ability to dominate the air and seas.

Sure China has its problems (economic bubble caused by too much stimulus, massive pollution that will sap its economy, corporate defaults gain speed the past week) as does Russia (still a rather smallish, totally commodities dominated economy), but the US has some of the same issues (massive debt, massive increases in government and regulation, giving up principals of free markets and free markets that made it strong) . A loss of the reserve currency status would be a huge blow to the US given its fiat currency is supporting so much debt and greatly disrupt the balance of power, reducing the US' ability to influence world events. Some may think that is a good thing, but the consequences to the US economy are not.

Economic issues

Economically, the data continues suggesting economic improvement, but still no great economic run. We have come out of the Great Recession, if we really have given the 100+M still unemployed or out of the workforce, 46+M on food stamps, weekly wages hitting a four year low. Tax receipts are at an all-time high, a phenomena that occurs after taxes are initially hiked in a moderate economic recovery, indicating that some areas are working. The US could be energy independent, giving it a great leg up on any competition, as that sector is the one area clearly leading the US economy and pulling several other sectors with it as the demand for oilfield related equipment surges.

The problem is that even with those jobs, most of the jobs created are low-paying service sector jobs. The policies the Administration has implemented, claimed to raise the middle class, are razing the middle class. All semantics. All lip service. The US middle class has never been this strapped since the Great Depression. Fitting I suppose given the report released two weeks back that crunched the numbers and now says this recovery is the worst in US history, worse than the recovery from the Great Depression.

On top of that you have the FOMC in the position of having to withdraw stimulus. Too much for too long. It had its intended effect, i.e. inflating financial assets. Though Bernanke had said the same thing many times before, Friday comments from Dallas Fed President Fisher made headlines when he said QE was a 'massive gift intended to boost wealth' and that the 'efficacy of QE has been exhausted.' QE is going to be removed as there will be no taper outside financial market collapse. Then rates will rise. Yellen said so and on Friday Mr. Bullard confirmed this saying that the 6 month comments were 'in line' with Fed surveys.

Thus the die is cast: Stimulus will be removed and it is up to the US economy to take over without the training wheels. Unfortunately, it is having to take over in a still weak state as the recovery is weak and there are extraordinarily serious world issues confronting the US.

Thus it is no wonder there is some change in the markets as they adjust to the recent domestic and international events in an attempt to assign the correct value to assets post-QE and in a new world where the dollar is threatened.


THE MARKETS

The Action

Stocks lost ground Friday after what was considered a good Thursday. As we pointed out, however, Thursday was not good as the indices gained on low trade, breadth was at best flat, and leaders were stumbling further. Expiration and index rebalancing dominated the Friday action as stocks opened higher then sold off. After a day of opening higher and closing higher last week, the older pattern returned: higher open, lower close. The indices showed potential reversal patterns: the push higher then reversing downside. Massive volume though it was expiration and rebalance day.

The indices did not break their trends. Thus there could be ongoing rotation as we noted in the reports this past week. Financials are getting money and despite some breaks in some leading stocks in the category, chips/electronics still look quite good. Rotation can look like a market readying to break down. Thus is it very important to keep an eye on sectors to see which start to move higher, if any. There are still sectors looking quite good, and thus you need to be ready to act upon where the money is moving. At the same time, however, you must be ready to act to the downside if stocks overall break or even if you just want to play some areas that were leading but are now suffering outflows of cash.

SP500 -5.49, -0.29%
NASDAQ -42.50, -0.98%
DJ30 -28.28, -0.17%
SP400 -0.13%
RUTX -0.44%
SOX -0.87%

Volume: +107% NYSE, +62% NASDAQ

A/D: NYSE 1.4:1, NASDAQ -1.4:1

Growth was the clear laggard as NASDAQ took a sharp hit as it reversed in a high to low engulfing pattern. As noted, no trend breaks but some character change is occurring.


OTHER MARKETS

Euro/Dollar: Dollar weaker after a big surge off support post-FOMC/Yellen comments.

1.3794 versus 1.3776 versus 1.3831 versus 1.3930 versus 1.3925 versus 1.3907 versus 1.3858 versus 1.3907 versus 1.3870 versus 1.3869 versus 1.3872 versus 1.3857 versus 1.3735 versus 1.3737 versus 1.3730 versus 1.3805

Dollar/Yen: Lost just a bit of ground after surging higher Wednesday.

102.25 versus 102.42 versus 102.51 versus 101.40 versus 101.75 versus 101.29 versus 101.67 versus 102.71 versus 102.90 versus 103.24 versus 103.33 versus 103.07 versus 102.31 versus 102.19 versus 101.38 versus 101.82 versus 102.10 versus 102.38 versus 102.16 versus 102.47 versus 102.51 versus 102.35 versus 102.25 versus 102.43 versus 101.86

Bonds: After a fade Wednesday and Thursday, bonds surged Friday, holding over the 50 day EMA.

10 year: 2.77% versus 2.78% versus 2.77% versus 2.67% versus 2.70% versus 2.65% versus 2.65% versus 2.72% versus 2.77% versus 2.78% versus 2.79% versus 2.74% versus 2.69% versus 2.67% versus 2.60% versus 2.66% versus 2.69% versus 2.67% versus 2.70% versus 2.74% versus 2.73% versus 2.75%


Oil: 99.55, +0.65. All week oil moved laterally below the 50 day EMA. Broke through on Friday but could not hold the move.

Gold: 1335.80, +5.60. Hard week as gold started selling even before Wednesday's FOMC meeting. Easily held above the 50 day EMA and indeed bounced modestly Friday, but not a strong attempt to recover.


MARKET STATISTICS

NASDAQ
Stats: -42.5 points (-0.98%) to close at 4276.79
Volume: 2.959B (+62.31%)

Up Volume: 979.59M (-60.41M)
Down Volume: 2.08B (+1.289B)

A/D and Hi/Lo: Decliners led 1.38 to 1
Previous Session: Advancers led 1.09 to 1

New Highs: 172 (+31)
New Lows: 24 (+1)

S&P
Stats: -5.49 points (-0.29%) to close at 1866.52
NYSE Volume: 1.187B (+107.52%)

Up Volume: 2.58B (+490M)
Down Volume: 2.49B (+1.32B)

A/D and Hi/Lo: Advancers led 1.41 to 1
Previous Session: Decliners led 1.01 to 1

New Highs: 207 (+105)
New Lows: 82 (-1)

DJ30
Stats: -28.28 points (-0.17%) to close at 16302.77


THE CHARTS

Potential reversal signals last week but nothing that broke the trends. Friday was mixed with NYSE large caps holding on better thanks to the rise of financial stocks last week, but all indices showed a negative signal with high to low reversals. Big volume but that was attributed to expiration and index rebalance.

SP500: Surged to a new high then reversed to close negative. No trend break, no support break. The financials rose last week in a rotation to that sector. But note: they didn't do a darn thing for the index.

NASDAQ: Recovered last week from the early March selling, but did not move to a new high, did not threaten a new high. It started losing some leadership on the week. It did not break, but it tested the November 2012 upper channel line for the second time in two weeks. Friday was a gap higher to a high for the week but then it reversed to close on the trendline. Weakening but has not broken.

DJ30: One of the Thursday leaders, the Dow rallied again Friday but posted a pretty spectacular reversal as it moved through the trendline then flared out and closed below it. Still lagging the other indices.

RUTX: Small gaps spent all wee bumping a long term trendline starting back in the 1990's. Look at the 20 year RUTX chart. Look at the magnitude and angle of the last move from 2012. This cannot sustain. No other run in the past is this big or straight higher. Even if some of those prior rallies were built in part on easy money (though mostly economic growth) this current move is massively out of the norm. Even those moves built on economic growth had to correct hard. This one is built on QE. QE is ending. Even with a 'normal' economy, this move is unsustainable. It will correct.

SOX: SOX is clearly the market leader. Broke to a new decade high with this last move starting in early March. Gapped, tested and last week surged higher. Friday was off but SOX remains the leader in the stock market, and it has room to move versus sitting on top of a big, historically outsized run. You see, SOX too has posted a dramatic rise off the November 2012 asset buying initiative, but note that its long term chart is nothing like the other indices. It is in a multiyear trading range, now bumping at the top of the range, just breaking higher with this last move. SOX could be on the brink of a new level of trading, and how it tests this move will tell the tale.


SENTIMENT INDICATORS

VIX: 15; +0.48
VXN: 17.35; +1.17
VXO: 13.26; +0.17

Put/Call Ratio (CBOE): 0.9; +0.14

Bulls and Bears:

Bulls retreated from almost extreme levels. Still elevated.

Bears again holding at 17: 17.4 versus 17.4 versus 15.1 from 17.2 for two weeks and 17.4 for three weeks prior to that.

Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.




Note the extreme bullishness: it was this high in 2007 at the crash, in early 2005 as well.

Bulls: 52.0 versus 55.1%
54.6% 53.5% 46.5% 41.8% 45.9% 53.1% 57.6 56.1 60.6% 61.6% 60.0%
58.2% 57.1% 55.7% 53.6% 52.6% 55.2% 52.6 49.5 42.3% 45.4 46.4% 44.3% 42.3% 37.1% 37.1% 38.1% 43.3%.

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

Bears: 17.4% versus 17.4%
15.1% 17.2% 17.2% 17.4% 17.4% 15.3% 15.1 15.3% 15.2% 15.2% 14.0 14.3 14.3 14.4 15.5 15.5% 15.6% 16.5% 18.5 21.6% 20.6% 18.6% 20.6% 21.6% 22.7% 23.7% 23.8% 21.6%.

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

The past week the stock market and other markets had to deal with new realities. The end of QE is real as is the time of easier money. The new Fed chairman put a time on it. QE reductions continue at $10B/meeting. With $55B/month after the last reduction, you are looking at roughly 6 months until zero, then six months to start raising rates. 12 months is about how long the market looks ahead. Thus, it got the news as to the timetable and it is such that it has to deal with it now in addition to the issues from the rest of the world. Thus the turmoil last week.

Sure it didn't seem like much on the surface. All of the indices held their trends and heck, they were even up Thursday after the FOCM meeting. Financials rose as money moved their way given the Fed's signals. But what is good for financials good for everything else that has risen on QE? ONLY if the economy recovers at a better pace. It is showing signs of improvement but I am concerned it is just more of the modest recovery, not the historical US strength. If that is the case, there is no way these high stock prices are justified, and the hiccups seen last week might well be the precursors to long corrections as seen in the long term charts of the indices reviewed earlier.

That said, looking at the electronics/chips area there are still many very good setups, and coupled with the breakout from a long-term trading range, this could be a very good area to mine for the upside. Indeed we are looking at this area again this weekend for more upside.

At the same time there are big names breaking, and indeed some of the indices are in position to play if they break. If the market ends up topping, it takes time for it to happen. As with any move, however, there are early leaders, in this case stocks that fall first. We will look at playing some of those, and if the move develops, more will arise. If not, we make some money on stocks that needed to correct as they set up for new upside moves.

Again, the indices remain in their uptrends and indeed SOX is breaking through old resistance. We still want to play that trend even if some names that led the last move struggle. As noted Thursday, perhaps they will set up again and return to aid a further market rally.

Times of change are always tough on investors because turns are what hurts the most. Thus we went ahead and closed some positions Thursday and Friday and indeed have pared positions overall over the past few weeks as the change started to take shape in individual stocks.

This week we have looked at many sectors in the market and see many undergoing change. It is still time to be patient, but that does not mean just ignoring stocks. There are still great opportunities in electronics and indeed drug stocks despite some big name hits. We looked exhaustively at financials and there may be some possibilities develop off the initial run. We want to see good tests, however, to commit money, and even then the stocks that CAN produce good gains are few.

So, a bit of patience but that simply means playing very good patterns in sectors that are still strong. Electronics is one. At the same time we will look at downside plays given the market is in change, and if it breaks we can play some early movers and then many more on tests of initial drops.


SUPPORT AND RESISTANCE

NASDAQ: Closed at 4276.79

Resistance:
4289 is the July 2000 recovery high
4372 is the March 2014 high

Support:
4277 is the March lower gap point
4272 is the upper channel line for the November 2012 to present uptrend.
4246.55 is the January 2014 peak
The 50 day EMA at 4225
4173 is the November 2012 trendline
4104 is the lower gap point from 12/20/13
4070 is the series of highs from late November/early December
3991 is the prior November 2013 high and the post-bear market high.
3967 is the October 2013 post-bear market high.
The 200 day SMA at 3880
3855 is the November low
3819 is the early October high
3801 is the September 2013 high.
The October low at 3750
3697 is the August high and a prior post-bear market high in the recovery.


S&P 500: Closed at 1866.42

Resistance:
1883.57 is the recent all-time high hit in early March.

Support:
The December and January highs at 1848
The 50 day EMA at 1837
1830 is the December 2012 up trendline
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high
1768 is the December 3013 low
The 200 day SMA at 1743
1730 is the September 2013 peak
1710 is the August 2013 peak.
1698 to 1700 are the July and August interim highs
1687 is the May high and post-bear market high
1685 is the mid-August 2013 upper gap point
1657 is the late August upper gap point
1654 is the June 2013 peak
1646 is the October 2013 low just before the surge into early 2014
1627 is the August 2013 low


Dow: Closed at 16,302.77

Resistance:
16,359 is a lower trendline off the 11/2012 low
16,506 is the March 2014 peak
16,589 is the December 2013 all-time high

Support:
16,257 is the January 2014 low
16,179 is the November 2013 peak.
The 50 day EMA at 16,157
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak
The 200 day SMA at 15,647
15,542 is the May 2013 intraday high
15,318 is the June closing high
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)
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

March 25 - Tuesday
Case-Shiller 20-city Index, January (9:00): 13.3% expected, 13.4% prior
FHFA Housing Price I, January (9:00): 0.8% prior
Consumer Confidence, March (10:00): 78.2 expected, 78.1 prior
New Home Sales, February (10:00): 445K expected, 468K prior

March 26 - Wednesday
MBA Mortgage Index, 03/22 (7:00): -1.2% prior
Durable Orders, February (8:30): 1.0% expected, -1.0% prior
Durable Goods -ex transports, February (8:30): 0.3% expected, -1.1% prior
Crude Inventories, 03/22 (10:30): 5.850M prior

March 27 - Thursday
Initial Claims, 03/22 (8:30): 330K expected, 320K prior
Continuing Claims, 03/15 (8:30): 2900K expected, 2889K prior
GDP - Third Estimate, Q4 (8:30): 2.6% expected, 2.4% prior
GDP Deflator - Third, Q4 (8:30): 1.6% expected, 1.6% prior
Pending Home Sales, February (10:00): -0.2% expected, 0.1% prior
Natural Gas Inventor, 03/22 (10:30): -48 bcf prior

March 28 - Friday
Personal Income, February (8:30): 0.2% expected, 0.3% prior
Personal Spending, February (8:30): 0.3% expected, 0.4% prior
PCE Prices - Core, February (8:30): 0.1% expected, 0.1% prior
Michigan Sentiment - Final, March (9:55): 80.0 expected, 79.9 prior



By: Jon Johnson, Editor
Copyright 2014 | All Rights Reserved

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

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Sunday, March 16, 2014

Stocks Continue Their Weeklong Decline

MARKET SUMMARY

- After 5 weeks of gain with the geopolitical and economic issues piled on, stocks continue their weeklong decline.
- Little change, still in overall uptrends, heading toward strong support levels.
- Recent leadership mostly holds, some folds, some defensive areas improve.
- Michigan Sentiment dips in March.
- Russia readies to invade East Ukraine using the same 'rationale' it used to invade Crimea: to 'defend compatriots.' Can we invade Russia to defend our 'compatriots?'
- Russia dumping US treasuries, China next.
- EPA audit reveals 90% of transactions improper, prohibited, or in error. And the government wants to run healthcare. Efficiently. Cheaply. For real.
- Letting the test make next strong support and then we see if the trend holds.

A week-plus of testing and likely more this week as the indices seek solid support.

There is really not much to discuss regarding the Friday action as it was the same as seen all week: struggling early in the session, unable to hold, fading toward next support. Sure there were respites such as Wednesday where good upside was posted, but that turned out to be a good day in the midst of a continued pullback to find stronger support.

Not surprising frankly. Five weeks upside, new highs or new post-bear market highs on all indices sans DJ30. That is a long rally leg in the long rally. With that piano on the market's back it was primed for a pullback.

Add to that the ongoing geopolitical tensions in Ukraine that dragged the US, China, and Europe into it, forcing two sharply distinct factions very similar to the old Cold War factions. Back then the only thing the USSR and China had in common was communism. Now they are teaming up to stand against the west and that is a problem for the world.


Both: How long must we shake? Yes, us shorter leaders have to stick together. Heck,
Vladamir is as short as Merkel! Well, yes, so am I . . .

So, the market has had success, it rallied 5 weeks as it continued the long upside run, it was tired and ready to test, then the geopolitical events provided the reason or excuse to sell. China's weak exports, Russia's aggression, still modest US economic data after the cold winter. Thus the indices are testing back to find the next strong support, still a bit lower for the next serious possibility. With the Fed pulling back on stimulus the question is whether the rally based upon Fed stimulus will hold the support it has held time and again on this run or give it up. That depends upon investor perception of economic growth to come. The market should provide some answers at the next support.

Friday stocks sported modest losses heading into the open, a modest positive in this market that rallies low to high or high to low depending upon which way it opens. Stocks surged early, gave it up by midmorning, then rallied right back up. Could not hold, however, and stocks sold back to basically flat ahead of the weekend. Crimea referendum, nice run still in need of a further test, investors just not wanting to get in front of that action with the market still making its fade.

SP500 -5.21, -0.28%
NASDAQ -15.02, -0.35%
DJ30 -43.22, -0.27%
SP400 0.32%
RUTX 0.40%
SOX -0.47%

Volume: Faded 7.5% on both NYSE, NASDAQ. A bit of lighter trade on some modest downside after a week of weakness.

A/D: 1.4:1 NYSE, 1.2:1 NASDAQ.

The action left the indices basically in the same position as Thursday, still fading in a test seeking stronger support, likely the same support that held the indices in past tests, e.g. the 50 day EMA or rising trendlines from late 2012. As noted, that is the test that will tell the tale of the tape, the next market leg.


THE NEWS

Further escalation in Ukraine and indeed the rest of the world.

Friday we learned that Russia has mobilized troops all across Russia and they are heading west toward the Ukraine border. Putin spoke again, saying this time Russia might have to invade East Ukraine in order to, you got it, 'defend compatriots' just as it said when it invaded Crimea. Putin is taking a page out of history in order to rebuild Russia's power: Catherine the Great conquered Crimea in the 1700's precisely to make Russia a world power via its warm water port. Putin is doing the same thing and that is why he will not, short of being physically forced out, leave Crimea. The rest of the world knows this and Putin and China know the rest of the world will not act to eject Russia.

Further, outside of a military buildup, Putin is preparing in other ways, apparently dumping Russia's holdings of US Treasuries. Friday reports show $104B worth of treasuries were dumped by the week ending 3/12/14. Russia held $138.6B and the smart money says Russia is the one doing the selling.

It is very clear Russia is in this for keeps, betting the west has no stomach to confront his expansion and aggression. Indeed the lack of a swift, cogent, AND force-based response from the west has likely emboldened him and thus his comments regarding East Ukraine. Earlier in the day Friday I likened the tit for tat between the US and Russia as the game of 'who is toughest' played by Clint Eastwood and Lee Van Cleef, two bounty hunters pursuing the same bad hombres in the spaghetti western 'For a Few Dollars More.' Given the US is not really ready for military action, however, that is not the best analogy.


Eastwood and Lee Van Cleef, bounty hunters, square off in the street in 'For a Few Dollars More.'

China's Involvement.

China's dog in this fight is interesting. China has thrown in with Russia and has threatened to unload its Treasury holdings as well.

But China is not the world power many attribute to it, and what power it has is going to be drained on domestic issues very soon. The 18+% plundering of exports, even if exacerbated by the Lunar New Year, is huge. The GDP growth is not the 7+% claimed, but is in the 3% range. Inflation is starting to surge, undercutting GDP growth and wages. China is again discussing stimulus to bolster expansion, the same expansion that has led to unoccupied rings around Beijing and several ghost cities. It apparently feels it has to build more of the same in order to keep the masses satisfied. They have had a taste of freedom and if the government cannot produce work, there will be unrest. Even more so, however, if the economy slows into a real recession, the masses will really show their unhappiness.

China is also about to be hit with massive domestic costs. Its cities are so polluted it has artificial sunrises on giant screens. Hey, no UV rays there so no skin cancer. Just throat, lung, eye and other cancers and diseases killing the working class and the next working classes (i.e., the children). China will have to spend huge chunks of its GDP to combat existing pollution and then retrofit to prevent additional pollution. It cannot afford to lose its working class to pollution related diseases.

With massive bond risk now in excess of Ireland (one of the PIIGS) and the start of bond defaults, China is going to have serious credit issues. With exports fading China is going to have trouble funding ambitious stimulus to spur the economy as it tries to keep from killing its working class. China is heading for serious trouble and ultimately, perhaps not in the next few years but eventually, the existing government will fail. That will leave the US, not because of our 'great' economic choices of the past 15 years but more by virtue of default, the main economic power on the planet once again.


China's role in the missing airliner.

One last thing. What is China hiding about the missing Malaysian airliner? Early reports queried whether a Chinese group that was threatening to grab an airplane actually did so. This was denied immediately. Then, after initial vague reports about the aircraft turning sharply west and still sending signals hours after it 'disappeared,' China releases bogus satellite images of junk; poor resolution, impossible to view. Heck, you get clearer images of your house from Google. Then today, after the evidence clearly tells the plane turned sharply west and suffered tumultuous elevation changes, China announces a 'seismic event' was recorded at the last location where the craft's transponder was working, implying either the plan exploded there or that an earthquake caused the plane to go down. Give me a break. And I suppose China believes the sun rotates around the earth. No, I believe China knows that group grabbed the plane and is covering it up. The group could not fly it and it likely splashed down in the Indian ocean on the way to India, Pakistan, or the Middle East; that was the air route they were attempting to take. We will see, but China does not have clean hands here.


THE MARKET

OTHER MARKETS

Euro/Dollar: A down week for the dollar versus the euro. Most everything else for that matter as the dollar index broke some near support.

1.3907 versus 1.3858 versus 1.3907 versus 1.3870 versus 1.3869 versus 1.3872 versus 1.3857 versus 1.3735 versus 1.3737 versus 1.3730 versus 1.3805

Dollar/Yen: Dollar fell all week against the yen including Friday. Now at a support level as the promising upside was set back at least for now.

101.29 versus 101.67 versus 102.71 versus 102.90 versus 103.24 versus 103.33 versus 103.07 versus 102.31 versus 102.19 versus 101.38 versus 101.82 versus 102.10 versus 102.38 versus 102.16 versus 102.47 versus 102.51 versus 102.35 versus 102.25 versus 102.43 versus 101.86

Bonds: Flat on the day but up big on the week, surging off of an equally sharp decline the prior week. Follow the bouncing bond.

10 year: 2.65% versus 2.65% versus 2.72% versus 2.77% versus 2.78% versus 2.79% versus 2.74% versus 2.69% versus 2.67% versus 2.60% versus 2.66% versus 2.69% versus 2.67% versus 2.70% versus 2.74% versus 2.73% versus 2.75%


Oil: 98.91, +0.65. Ugly Monday to Wednesday plunge to the 50 day SMA. Bouncing modestly Friday, but some damage was done.

Gold: 1379.20, +7.10. Upside week propelled by a big Wednesday. Friday another surge was underway though gold did fade off its high.


MARKET STATISTICS

NASDAQ
Stats: -15.02 points (-0.35%) to close at 4245.4
Volume: 2.178B (-7.67%)

Up Volume: 1.11B (+567.45M)
Down Volume: 1.07B (-750M)

A/D and Hi/Lo: Advancers led 1.22 to 1
Previous Session: Decliners led 3.09 to 1

New Highs: 82 (-4)
New Lows: 27 (-8)

S&P
Stats: -5.21 points (-0.28%) to close at 1841.13
NYSE Volume: 567M (-7.65%)

A/D and Hi/Lo: Advancers led 1.37 to 1
Previous Session: Decliners led 2.04 to 1

New Highs: 63 (-20)
New Lows: 90 (-4)

DJ30
Stats: -43.22 points (-0.27%) to close at 16065.67


THE CHARTS

As noted, little change in the indices from Thursday to Friday though the large cap indices did bleed a bit lower while the small and midcaps posted modest gains. Overall they look heavy and in need of a further pullback to more important support. The issue, as noted earlier, is whether they hold that move and continue upside. Recall the late January dive through that support, however; did that create the fissure the sellers will use?

NASDAQ: Slipped just below the upper channel line from 11/12, holding at the intraday low from early March on that invasion gap lower. Can still put in a higher low here and continue the move and solidify its strength by holding the breakout from the channel from late 2012. If not, the 50 day EMA is 37 points south, the lower trendline is about 95 points lower. I would be surprised if NASDAQ was able to fend off a further test toward that support, but if NASDAQ wants to hold here, no complaints.

SOX: Holding still at the 20 day EMA after failing to take out the middle trendline from 11/2012. SOX is at some support for sure, and if NASDAQ holds, SOX holds (likely more vice versa). Likely it tests as well toward the 50 day EMA still 15 points lower and coincident with the lower trendline from late 2012.

SP500: Slipped further after the big Thursday flop, holding at the lower support form the twin peaks spanning December and January. Likely comes back further to test the 50 day EMA and/or the trendline from late 2012 at 1822, 19 points away.

RUTX: Back and forth each session but trending down for the week even with a modest gain Friday. Managed to hold the 20 day EMA but right at the late January peak. Not bad, still solid, but also likely to test the 50 day EMA and lower trendline that have merged.

DJ30: The Dow failed to reach a new high, started to test and looked solid Wednesday, holding the trendline with a doji. Thursday was the key move, a crash through the trendline and the 50 day EMA in one move. Tried to recover the 50 day Friday, did it intraday, but then rolled over to close at the session low. Does not look well, and next support is 15,900, another 165 points lower, hardly an afternoon's conversation.


LEADERSHIP

Leadership was sloppy and sluggish, but as with the indices, no major changes with many holding next support or even nearest support.

Internet: VIPS tested the 20 day EMA on the low and bounced positive. QIHU is showing a nice doji with tail at the 20 day EMA. SFUN shows a doji at the 50 day EMA. Z surged off a midweek 200 day SMA test. Still life in this group.

Some good names are holding at the 50 day EMA: SCTY, GOOG, SWI.

Some big names are struggling, e.g. NFLX, PCLN, CRM.

Some big names jumped, e.g. GMCR

Drugs/biotechs: Some big names are really in trouble (CELG, GILD) some are just sluggish, e.g. BDSI, and some look pretty darn good, e.g. XON, NEOG, . Noteworthy is that they are not jumping upside as they did when the market last sold and investors turned defensive.

Techs: Some solid but very mixed. CRAY rallied over 3%. YY is holding over the 20 day EMA. SWI is solid at the 50 day EMA as noted.

Speaking of defensive, truly defensive names were up on Friday: CL, CLX.

Financials: It is worth noting that some financials, a group that contributed to leadership in late February, are under some pressure, e.g. GS, JPM. Others are hanging in such as WFC. Many are not that exciting to trade but they are an important aspect of the market.


SENTIMENT INDICATORS

VIX: 17.82; +1.6
VXN: 18.89; +1.42
VXO: 17.22; +1.68

Put/Call Ratio (CBOE): 0.79; -0.25

Bulls and Bears:

Bulls still moving higher though again at a slower pace: 55.1 versus 54.6 versus 53.5 from 46.5 and 41.8 before that.

Bears surging back upside: 17.4 versus 15.1 from 17.2 for two weeks and 17.4 for three weeks prior to that.

Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.




Note the extreme bullishness: it was this high in 2007 at the crash, in early 2005 as well.

Bulls: 55.1% versus 54.6%
53.5% 46.5% 41.8% 45.9% 53.1% 57.6 56.1 60.6% 61.6% 60.0%
58.2% 57.1% 55.7% 53.6% 52.6% 55.2% 52.6 49.5 42.3% 45.4 46.4% 44.3% 42.3% 37.1% 37.1% 38.1% 43.3%.

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

Bears: 17.4% versus 15.1% 17.2% 17.2% 17.4% 17.4% 15.3% 15.1 15.3% 15.2% 15.2% 14.0 14.3 14.3 14.4 15.5 15.5% 15.6% 16.5% 18.5 21.6% 20.6% 18.6% 20.6% 21.6% 22.7% 23.7% 23.8% 21.6%.

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

We will see what the weekend brings in terms of the Crimean 'join mother Russia' referendum and the west's response, whether RussPutin invades East Ukraine as well, trying to carve out a name in history for himself, e.g. Vladimir the Great or Vladimir the KGB, or Once a KGB agent always a KGB agent.

No one really knows how low the market can go if Russia moves again, this time on East Ukraine. Of course, that likely means it intends to take all of Ukraine. If the west decides to do something with forces, all bets are off. Dangerous and sadly we just don't have our best team to handle that kind of crisis.

Outside of a new invasion and a hot war the market remains a bit top-heavy, not as extended thanks to a week of pullback, but still with room to fall. There is cushion to fall and still maintain the uptrends; that is a benefit of a good run that breaks to higher highs, i.e. room to test.

Patience is still the word. We made some downside money on GILD, taking some off the table Friday. For more downside there likely needs to be a rebound that fails, so we let what we have continue while we see where this test finds support.

During that time of course the leaders need to be watched, looking at new positions setting up. The strong use downturns to setup new moves. There are stocks doing just that as noted: QIHU, IDCC, SWI, RBCN, SQM, WUBA, Z, SCTY, GOOG, SFUN, YOD, CRAY. Many. If lots of stocks are holding support, using the selling to prep for the next move, that bodes well for a new break higher once the market releases enough worry or, as they said this past week, the 'froth' is worked out of the system.



SUPPORT AND RESISTANCE

NASDAQ: Closed at 4245.40

Resistance:
4246.55 is the January 2014 peak
4257 is the upper channel line for the November 2012 to present uptrend.
4277 is the March lower gap point
4289 is the July 2000 recovery high
4372 is the March 2014 high

Support:
The 50 day EMA at 4208
4154 is the November 2012 trendline
4104 is the lower gap point from 12/20/13
4070 is the series of highs from late November/early December
3991 is the prior November 2013 high and the post-bear market high.
3967 is the October 2013 post-bear market high.
The 200 day SMA at 3858
3855 is the November low
3819 is the early October high
3801 is the September 2013 high.
The October low at 3750
3697 is the August high and a prior post-bear market high in the recovery.


S&P 500: Closed at 1841.13

Resistance:
1849.44 is the recent all-time high.

Support:
The 50 day EMA at 1831
1821 is the December 2012 up trendline
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high
1768 is the December 3013 low
The 200 day SMA at 1737
1730 is the September 2013 peak
1710 is the August 2013 peak.
1698 to 1700 are the July and August interim highs
1687 is the May high and post-bear market high
1685 is the mid-August 2013 upper gap point
1657 is the late August upper gap point
1654 is the June 2013 peak
1646 is the October 2013 low just before the surge into early 2014
1627 is the August 2013 low


Dow: Closed at 16,065.67

Resistance:
16,589 is the December 2013 all-time high
16,296 is a lower trendline off the 11/2012 low
16,257 is the January 2014 low
16,179 is the November 2013 peak.
The 50 day EMA at 16,127

Support:
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak
The 200 day SMA at 15,620
15,542 is the May 2013 intraday high
15,318 is the June closing high
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)
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

March 14 - Friday
PPI, February (8:30): -0.1% actual versus 0.2% expected, 0.2% prior
Core PPI, February (8:30): -0.2% actual versus 0.1% expected, 0.2% prior
Michigan Sentiment, March Preliminary: 79.9 actual versus 82.0 expected, 81.6 prior

March 17 - Monday
Empire Manufacturing, March (8:30): 5.4 expected, 4.5 prior
Net Long-Term TIC Fl, January (9:00): -$45.9B prior
Capacity Utilization, February (9:15): 78.5% prior
Industrial Production, February (9:15): 0.1% expected, -0.3% prior
Capacity Utilization, February (9:15): 78.5% expected, 78.5% prior
NAHB Housing Market , March (10:00): 50 expected, 46 prior

March 18 - Tuesday
Housing Starts, February (8:30): 915K expected, 880K prior
Building Permits, February (8:30): 955K expected, 937K prior
CPI, February (8:30): 0.2% expected, 0.1% prior
Core CPI, February (8:30): 0.1% expected, 0.1% prior

March 19 - Wednesday
MBA Mortgage Index, 03/15 (7:00): -2.1% prior
Current Account Bala, Q4 (8:30): -$87.6B expected, -$94.8B prior
Crude Inventories, 03/15 (10:30): 6.180M prior
FOMC Rate Decision, March (14:00): 0.25% expected, 0.25% prior

March 20 - Thursday
Initial Claims, 03/15 (8:30): 330K expected, 315K prior
Continuing Claims, 03/08 (8:30): 2883K expected, 2855K prior
Existing Home Sales, February (10:00): 4.60M expected, 4.62M prior
Philadelphia Fed, March (10:00): 2.0 expected, -6.3 prior
Leading Indicators, February (10:00): 0.3% expected, 0.3% prior
Natural Gas Inventor, 03/15 (10:30): -195 bcf prior


By: Jon Johnson, Editor
Copyright 2014 | All Rights Reserved

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

Technorati tags:

Monday, March 10, 2014

Jobs Report Beats, Spurs Market Advance

MARKET SUMMARY

- Jobs report beats, spurs market advance, but reality hollows out the move.
- Stocks rallying in anticipation of 'great' jobs report? As always the monthly report glosses the erosion of the US employee class.
- Ukraine situation getting worse not better.
- Leadership is still solid but some cracks are showing up and most quality areas are overextended after the last run.

Jobs report beat bounces stocks but they cannot hold the move as Ukraine situation intensifies.

Futures were totally flat ahead of the Friday jobs report. Not bad given the headlines from Europe revealing the Ukraine/Russia conflict is devolving, something we noted as a market issue on Thursday night.

Russia remains in Crimea. Russia is conducting new, some say massive, air exercises just off the Ukraine border. Russia closed the Crimean broadcast center leaving Russia the only news source (how Soviet-like). A third ship was scuttled in order to block Crimean ports from attack. Russia seemingly continually threatens counters to any sanctions imposed, suggesting they would 'boomerang' on the US and Europe. Gazprom, the natural gas supplier from Russia, is threatening to cut off Ukraine as in 2009, claiming that payment for gas is due right now or else.

China is again joining with Russia stating that China disapproves of the 'easy use' of sanctions and the 'threat' of sanctions against other nations.

Ironic, is it not? China takes the moral high ground against sanctions but it is okay for Russia to invade Crimea for the sole purpose of ensuring Russia's access to a warm water port, claiming of all things, it is protecting the human rights of Crimean citizens. Or how about Gazprom using threats to cut off energy supplies in winter under the guise of contract law? What would be the better choices, sanctions or just say to hell with it and go in and kick Russia out just as we should have done back in the 1940's when the USSR slapped up a makeshift wall in the middle of Berlin? We should have just bulldozed the damn thing down right then and there and the Soviets would have backed off or we would have kicked their butts right then and there. Instead we did nothing and thousands upon thousands died or lived in oppression and squalor for the next 40 years because nothing was done. Maybe we should just go in and dust it up. But we won't. We are no longer the supreme power in the air and on the sea according to our Defense Secretary.

Of course, I digress.

So futures jumped nicely and stocks jumped nicely at the open, rallying for . . . a few minutes. They spent the morning giving back gains and flipping into negative territory. Each session to the upside is met with selling. To the contrary, each slow open leads to gains. With the Russian 'situation' worsening, the half-life of better than expected, though frankly lackluster jobs growth, was about the time it took the opening bell to finish ringing.

Stocks did bottom midmorning and rallied off of that low, but 'rally' is an overstatement. They slowly crawled up off the lows but that is all they could manage. The large cap NYSE indices scratched out a small gain, but at best the action was again sluggish. The market was sluggish heading into the number, it tried to pick up afterward, but there was simply not enough good news to drive stocks in the face of the uncertainties.

SP500 1.01, 0.05%
NASDAQ -15.91, -0.37%
DJ30 30.83, 0.19%
SP400 0.17%
RUTX -0.10%
SOX -0.11%

Volume: Up on NYSE (8.5%), modestly higher on NASDAQ (1.75%). Some churn on the NYSE indices as they really could not advance but volume did. Similar on NASDAQ as it lost some ground on rising, above average volume. Not great action but not massively negative.

A/D: Pretty tame as you would expect given the index reads: -1.3:1 NYSE, -1.1:1 NASDAQ.


In the end the indices went nowhere and sit on top of a 5 week rally that has cracked some resistance but has not buried it. A test is not a bad thing at this point. The concern, of course, is whether the Russian/Ukraine situations devolves further and that is the biggest risk to stocks, at these levels, is that conflict.

Leadership is still good overall though a bit extended in some cases similar to the indices. In others there is ongoing rotation, e.g. large biotechs such as CELG, BIIB, GILD lose ground while financials gain as interest rates climb. Some rotation is healthy for the market, though as noted Thursday, financials typically do not provide great trading opportunities.



THE NEWS

Jobs Report tops expectations, credited with the reason stocks have rallied.

You would think 175K jobs created in February was 350,000 jobs given the gush that ensued the data release. Is this where we have come, i.e. a 175K job month, 12K above a lowly 163K expected, is the stuff great economic expansions are made of? If so, we have succeeded in remaking our economy to that of an EU member.



On CNBC I heard the comment 'this is why stocks have been rallying.' New highs in the indices based on a measly 175K jobs? This is some evidence that the recovery, now on five years, is 'awesome?' Looking at the 110+M unemployed and out of the workforce, 46M on food stamps, the complete obliteration of the middle class, and we conclude thisis a great report? As Belushi said in 'Animal House,'


'What the **** happened to the Delta I used to know?' Except in this case, it is what happened to the American economy I used to know? This is more like a Japanese style prolonged depression with the high end reaping the reward, the low end reaping the handouts, the middle section footing the bill and watching their standard of living decline.

Is it now time for that wholly futile and stupid gesture be done on somebody's part as Otter suggested?


And we're just the guys to do it. Let's DO IT!!!

Perhaps, just this week we heard the Administration's budget and stimulus proposal. Sounds pretty much like a wholly futile and stupid gesture, i.e. doing the same thing again and hoping for a different result.

The details of the report, in addition to pathetic headline numbers, show just how weak the jobs picture is for the vast majority of Americans.

Older workers again getting all the jobs.

In an economy with over 110M eligible and able workers not working either because they cannot find a job or have given up looking, you would surmise that what jobs that are out there don't pay a whole hell of a lot. That is true. In that environment the employer has the choice of picking those with the most experience, those that bring the most impact to the table and pay them the same amount as they would someone younger with less experience.

Despite Seinfeld episodes about older workers petering out in the afternoon (Elaine held late afternoon meetings to drive off Jerry's father from the company she worked at), older workers have the experience and the know how to make things happen with minimal training costs. Thus they are the choice of the employers and it shows up in the division of who gets the few jobs that are available.



The result? The 55+ demographic is +4.9M jobs from 12/07 to February 2014. All other demographics are -3.1M jobs from 12/2007 levels.


Wages are not what the jobs report tries to suggest.

Average hourly earnings jumped 0.37% month/month in February and 2.18% year/year according to Friday's report. Heralded as a very good sign for the American worker, you have to ask how could wages be rising when there are so darn few jobs out there and so many unemployed? Damn good question.

Hours worked were lower (33.3 versus 33.5 in January and 33.8 year/year), surely weather related. That may have had something to do with fewer hours worked and earnings still paid to some who could not work through no fault of their own. That makes the 0.4% increase somewhat suspect, but even if you take that at face value, US wages are horribly lagging.

In addition to the average hourly earnings, the BLS reports average weekly earnings. They rose .078% month/month, 1.29% year/year, a far cry from hourly earnings. Definite difference: weekly earnings are not dependent upon the hours worked versus what is paid as in the average hourly earnings. This is your take home pay regardless of hours worked, not worked and paid, etc.

What that means becomes clear when you see it graphically:



Despite a 1.29% gain year/year, weekly earnings show that regardless of the number of hours worked, US citizens are earning less and less as the 'recovery' continues. Indeed, we just hit a 4+ year low, the lowest since the 'recovery' in 2009.

Depression-like numbers.

As the recovery continues, we earn less and less. This is CLASSIC depression data: an early spike when the liquidity is forced into the system, lifting the overall economy, then a slow, steady, inexorable decline as the economy fails to recover in the historical manner for the US. A chronic lack of investment due to overregulation, uncertainty as to the future, and a general hostility to free enterprise. In short, we are not dancing with who brung us as legendary coach Daryl Royal would say.

I believe there can be no doubt that regulation such as the ACA is impacting the economic activity and the reported numbers. Weekly earnings are declining year/year as we deleverage from full time jobs into part-time jobs. That creates some new jobs but it also reduces the take home pay, hence lower and lower weekly earnings growth.

In short, there IS NO widespread economic growth, just pockets of stronger areas such as oil and gas. Most jobs created are in the service industry because our economy simply does not have the investment to create the next new technologies that drive the new breadwinner jobs that raise our standard of living. Technology may replace some jobs but it creates new ones. Just look at the PC revolution. Just look at all of the Ebay companies that employ thousands in their own businesses.

Thus even as the longer term data shows lower and lower lows, those in the media and the experts that should know better focus only on the month to month changes. Thus they call 175K jobs 'really good' and the 'reason stocks have been rallying,' using rather pathetic data to proclaim the 'recovery is awesome.' Perhaps if you are a southern European country, but not the US. Again, what the **** happened to the US economy I used to know?



THE MARKET

OTHER MARKETS

Euro/Dollar: Weaker again versus the euro.

1.3872 versus 1.3857 versus 1.3735 versus 1.3737 versus 1.3730 versus 1.3805 versus 1.3709 versus 1.3687 versus 1.3743 versus 1.3733 versus 1.3746 versus 1.3720 versus 1.3738 versus 1.3758 versus 1.3698 versus 1.3681 versus 1.3591 versus 1.3625 versus 1.3645 versus 1.3633 versus 1.3588 versus 1.3537 versus 1.3514 versus 1.3529

Dollar/Yen: Dollar moves higher still though well off intraday high. After flirting with that 101 level twice in February, the dollar bounced off a double bottom.

103.33 versus 103.07 versus 102.31 versus 102.19 versus 101.38 versus 101.82 versus 102.10 versus 102.38 versus 102.16 versus 102.47 versus 102.51 versus 102.35 versus 102.25 versus 102.43 versus 101.86 versus 102.14 versus 102.41 versus 102.41 versus 102.21 versus 102.33 versus 102.10 versus 101.37 versus 101.62 versus 101.37 versus 101.40 versus 102.30 versus 102.72 versus 102.11 versus 102.89 versus 102.64.


Bonds: Diving still, gapping through the 50 day EMA.

10 year: 2.79% versus 2.74% versus 2.69% versus 2.67% versus 2.60% versus 2.66% versus 2.69% versus 2.67% versus 2.70% versus 2.74% versus 2.73% versus 2.75% versus 2.73% versus 2.71% versus 2.75% versus 2.73% versus 2.76% versus 2.72% versus 2.67% versus 2.68% versus 2.70% versus 2.67% versus 2.62% versus 2.60% versus 2.67% versus 2.70% versus 2.68% versus 2.75% versus 2.76% versus 2.73% versus 2.77% versus 2.86%


Oil: 102.54, +1.00. Bouncing again off the Thursday 200 day SMA test, holding support where it had to, right on top of the late December 'hump' in the double bottom.

Gold: 1337.80, -13.90. Back and forth all week, up one day big, down the next. Strong move higher, stalling out some this week, but still trending up the 10 day EMA.


MARKET STATISTICS

NASDAQ
Stats: -15.9 points (+0.37%) to close at 4336.22
Volume: 2.15B (+1.75%)

Up Volume: 985.05M (+32.88M)
Down Volume: 1.15B (-20M)

A/D and Hi/Lo: Decliners led 1.04 to 1
Previous Session: Advancers led 1.07 to 1

New Highs: 171 (-59)
New Lows: 9 (-1)

S&P
Stats: +1.01 points (+0.05%) to close at 1878.04
NYSE Volume: 632M (+8.4%)

A/D and Hi/Lo: Decliners led 1.36 to 1
Previous Session: Advancers led 1.32 to 1

New Highs: 210 (-51)
New Lows: 65 (+3)

DJ30
Stats: +30.83 points (+0.19%) to close at 16452.72


THE CHARTS

Good run for five weeks, still trending higher with some key upside breaks on the week. Nice moves, the uptrend continues. On the counter, still close to recent resistance and could slip. Long moves leaves the indices vulnerable to selling if the European situation worsens. Those are, however, the problems of a good upside run. The indices could come back and test and be on their way again.

There is some rotation ongoing and there is also a lot of very bullish sentiment. It could be a bit bumpy with rotation and the Ukraine issue worsening, but unless that really gets ugly the market likely doesn't suffer a really sharp decline as a result.

NASDAQ: Faded to the 10 day EMA after a big upside gap Tuesday on the Russian relief rebound. Still trending higher, still holding the new post-bear market highs with ease. The only issue for it is length of time to the upside. They all eventually end.

SOX: Great week with a gap to a new post-bear market high and a continued run into Thursday, pushing the break above the November trendline. Friday SOX gapped higher but then gave up the move. A bit tired but looking very good.

RUTX: Big break higher Tuesday to a new high took RUTX to the mid-2013 trendline and over the long, long term trendline from 1997 to the early 2000's. Nice 1-2-3 test into Friday.

SP400: Broke over the November 2012 upper channel line Tuesday, tested in a tight lateral move Wednesday to Friday. Big run but looks very solid in this test of the break through the upper channel.

DJ30: Broke higher and continued upside into Friday. Now just 130 points off the December peak. Following along and that is okay for now, but concerned when the Dow hits the prior peak.



LEADERSHIP

Telecom: CAMP, IDCC remain solid. Some interesting and surprising improvement from the likes of BBRY (yes Blackberry) and other such as PNTR.

Financial: Steady (and slow) rise continues, e.g. JPM, WFC

Electronics: Overall very good as KLAC, ALTI, IMOS, OVT remain in solid shape, but some are cracking, e.g. AEIS, possibly SCTY.

Drugs: Continue showing some outward rotation: GILD, BIIB. May just be a test as stocks such as VRX test the 50 day EMA and bounce. Others are testing the 50 day and not bouncing as much, e.g. KERX. INO is heavy but holding. Other smaller issues are doing decently, e.g. RMTI, TKMR, the same ones performing all week while the bigger brothers struggled.

Big Names: AAPL, GOOG, PCLN still trending higher but very sluggish on the week.


SENTIMENT INDICATORS

Bulls are rapidly approaching the recent highs where the market suffered the January selloff. In addition, there is a disproportionate amount (a.k.a. a bu**load) of bulls and bullish commentary on the financial stations. Today CNBC was a veritable cornucopia of bulls from the early comments on the jobs report, the gushing about how companies are so wonderful, and later how the bulls are throwing in the towel, capitulating to the upside. Perhaps they are, and that is what keeps a bull run running: as more give in the money is dragged into the market, pushing it higher.

At some point, however, the money is all in. That is why the bulls/bears read remains quite relevant and important to watch as the market moves. It is not the determinative indicator, but it is a flag, a signal, to watch for possible deterioration and breakdowns in the market. There are some breaks in the drug stocks as bulls approach the December levels. Could be just rotation to other areas or it could be a sign of leaders starting to crack. Definitely deserves our attention.


VIX: 14.11; -0.1
VXN: 15.23; +0.29
VXO: 12.97; -0.01

Put/Call Ratio (CBOE): 0.82; -0.01


Bulls and Bears:

Bulls continue upside though at a slower pace: 54.6 versus 53.5 from 46.5 and 41.8 before that.

Bears dropped sharply: 15.1 from 17.2 for two weeks and 17.4 for three weeks prior to that.

Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.




Note the extreme bullishness: it was this high in 2007 at the crash, in early 2005 as well.

Bulls: 54.6% versus 53.5% versus 46.5% versus 41.8% versus 45.9% versus 53.1% versus 57.6 versus 56.1 versus 60.6% versus 61.6% versus 60.0 versus 58.2 versus 57.1 versus 55.7 versus 53.6 versus 52.6 versus 55.2% versus 52.6 versus 49.5 versus 42.3% versus 45.4 versus 46.4% versus 44.3% versus 42.3% versus 37.1% versus 37.1% versus 38.1% versus 43.3%. Getting even more extreme . . .

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

Bears: 15.1% versus 17.2% versus 17.2% versus 17.4% versus 17.4% versus 15.3% versus 15.1 versus 15.3% versus 15.2% versus 15.2% versus 14.0 versus 14.3 versus 14.3 versus 14.4 versus 15.5 versus 15.5% versus 15.6% versus 16.5% versus 18.5 versus 21.6% versus 20.6% versus 18.6% versus 20.6% versus 21.6% versus 22.7% versus 23.7% versus 23.8% versus 21.6%.

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

First order of business is getting through the weekend. Unlike last weekend when it seems our leaders were caught flatfooted by the Russian incursion into Ukraine (though you were not; heck you were taking some nice gain in anticipation of the invasion), this weekend there is anxious worry about what further problems may develop given all the rhetoric hurled Thursday and Friday.

Growth lagged to end the week after leading the run to the new highs. Possible rotation starting to favor S&P stocks, e.g. financials as they perked up on the week. Definitely don't want to see growth drop off the lead, however, because it is the best indicator of continued upside: if growth stocks are moving up, it is in anticipation of economic activity moving higher as well.

Difficult to factor in geopolitical issues into your buys and sells, but it works into the market through the patterns stocks show. After a five week move higher and the last upside spurt many of the leading areas are extended near term, particularly the 'names' that you and most everyone knows. There are, however, stocks showing up in good patterns or showing pullbacks to support that set them for a new move higher. With stocks continuing to work into position to rally and support the move upside, that bodes well for the move. The breaks in some leaders, e.g. big biotechs, demand our attention and we will see if others come in to take their place.

We found some stocks in position to move, but they are not major themes of new stocks ready to take off. Many of those have already made the moves, e.g. internets as discussed. They are going to need a test and the key is if new groups move up. Again, this weekend we see some nice plays, but not groups setting up moves. That makes it a bit more difficult and just means we need to be patient after banking a lot of gain on internet and other plays of late, letting the plays set up and come to us.


SUPPORT AND RESISTANCE

NASDAQ: Closed at 4336.22

Resistance:

Support:
4289 is the July 2000 recovery high
4277 is the March lower gap point
4246.55 is the January 2014 peak
4237 is the upper channel line for the November 2012 to present uptrend.
The 50 day EMA at 4190
4131 is the November 2012 trendline
4104 is the lower gap point from 12/20/13
4070 is the series of highs from late November/early December
3991 is the prior November 2013 high and the post-bear market high.
3967 is the October 2013 post-bear market high.
3855 is the November low
The 200 day SMA at 3838
3819 is the early October high
3801 is the September 2013 high.
The October low at 3750
3697 is the August high and a prior post-bear market high in the recovery.


S&P 500: Closed at 1878.04

Resistance:

Support:
1849.44 is the recent all-time high.
The 50 day EMA at 1825
1815 is the December 2012 up trendline
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high
1768 is the December 3013 low
The 200 day SMA at 1732
1730 is the September 2013 peak
1710 is the August 2013 peak.
1698 to 1700 are the July and August interim highs
1687 is the May high and post-bear market high
1685 is the mid-August 2013 upper gap point
1657 is the late August upper gap point
1654 is the June 2013 peak
1646 is the October 2013 low just before the surge into early 2014
1627 is the August 2013 low


Dow: Closed at 16,452.72

Resistance:
16,589 is the December 2013 all-time high

Support:
16,257 is the January 2014 low
16,242 is a lower trendline off the 11/2012 low
16,179 is the November 2013 peak.
The 50 day EMA at 16,100
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak
The 200 day SMA at 15,596
15,542 is the May 2013 intraday high
15,318 is the June closing high
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)
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

March 7 - Friday
Nonfarm Payrolls, February (8:30): 163K expected, 113K prior
Nonfarm Private Payrolls, February (8:30): 170K expected, 142K prior
Unemployment Rate, February (8:30): 6.6% expected, 6.6% prior
Hourly Earnings, February (8:30): 0.2% expected, 0.2% prior
Average Workweek, February (8:30): 34.4 expected, 34.4 prior
Trade Balance, January (8:30): -$37.3B expected, -$38.7B prior
Consumer Credit, January (15:00): $11.8B expected, $18.8B prior

March 11 - Tuesday
Wholesale Inventories, January (10:00): 0.4% expected, 0.3% prior
JOLTS - Job Openings, January (10:00): 3.990M prior

March 12 - Wednesday
MBA Mortgage Index, 03/08 (7:00): 9.4% prior
Crude Inventories, 03/08 (10:30): 1.429M prior
Treasury Budget, February (14:00): -$203.5B prior

March 13 - Thursday
Initial Claims, 03/08 (8:30): 329K expected, 323K prior
Continuing Claims, 03/01 (8:30): 2925K expected, 2907K prior
Retail Sales, February (8:30): 0.2% expected, -0.4% prior
Retail Sales ex-auto, February (8:30): 0.2% expected, 0.0% prior
Export Prices ex-ag., February (8:30): 0.2% prior
Import Prices ex-oil, February (8:30): 0.3% prior
Business Inventories, January (10:00): 0.3% expected, 0.5% prior
Natural Gas Inventor, 03/08 (10:30): -152 bcf prior

March 14 - Friday
PPI, February (8:30): 0.2% expected, 0.2% prior
Core PPI, February (8:30): 0.1% expected, 0.2% prior
Michigan Sentiment, Preliminary March (9:55): 82.0 expected, 81.6 prior


By: Jon Johnson, Editor
Copyright 2014 | All Rights Reserved

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

Technorati tags:

Monday, March 03, 2014

Oil, the Forgotten Economic Drag

MARKET SUMMARY

- Stocks cruising to new highs when Russia decides to start invasion early.
- Weaker GDP countered by Chicago PMI, Michigan Sentiment.
- Housing in 2014 is a concern as another metric falls year/year.
- Oil, the forgotten economic drag.
- Indices mixed: some break resistance, others still fighting it, all holding gains.
- Leadership stalls on Friday except for energy.
- Will RussPutin interrupt the stock drift higher? Depends upon how much of Ukraine Putin wants for now.

Putin wants to save some of the weekend for relaxation, starts Ukraine incursion early.

Stocks showed the successful low to high action that began most successful upside sessions during this rally. Futures were lower, started to build toward the open, then stocks jumped at the open. Midday saw stocks at highs with the indices punching higher highs as well. SP500 had already broken the December/January peaks and was adding to the gains. NASDAQ extended its break over the July 2000 peak. SP400 broke through the upper channel line from Q4 2012. RUTX continued its move toward its upper channel line having cleared the January peak. Individual stocks were surging as well. VIPS, CLVS, BDSI, QIHU, YY added to good moves. Stocks were overall rocking along with the continued upside drift that was catching a bit of traction. Quite nice.

We used the morning session rally to play our plan and bank some gain on some of our March option positions, the thinking being the indices were sitting on a good rally, the first week of the March expiration ended, and the weekend could see Russia and Putin (RussPutin) invade Ukraine in some form or another. The 'mysterious' heavily armed men in camouflage that took airports in Crimea Thursday night were the clear tipoff as we noted in the Thursday report.

Glad we did and wish we had taken more. Putin apparently has some plans for the weekend, perhaps riding horseback bare-chested, wrestling with a tiger, or overseeing a few thousand Russians sent to Siberia after the issues at the Olympics (no water, then bad water, then no hot water, then cameras watching you shower, his and her side by side toilets, constant hacking of all computers and phones, the lack of snow that hampered all outdoor sports) . . . the basic weekend of a former KGB agent turned Russian ruler who has more power than any Soviet Premier ever had.


Arm wrestle for Crimea? Best grouping for Kiev?

In any event, just after lunch East Coast, word hit that 2,000 Russian troops landed at the Crimean airports taken on Thursday and military jets were using those two airports. Stocks dove. NASDAQ gave up over 60 points, DJ30 175 points in the course of an hour.

That is what happens to melts higher. Stocks in an uptrend continue to trend with the trend even with modest bids if there are no sellers willing to get out in front of the move. Then bad news hits and it doesn't take much to cancel the bids, and then just a few sellers can turn the market.

To be fair, the stock market weathered less than great news for the past two weeks, economic, foreign, you name it, and still worked higher. Slow, and more volatile the past week, but still working higher. Nonetheless, when the right news comes along a market moving on the lack of sellers versus the presence of buyers will take a hit.

Stocks did recover in the last hour, rather nicely. NASDAQ recovered 33 points off the afternoon low, just over half of what was lost, and managed to hold the July 2000 peak. DJ30 regained 100 points off its low, managing to hold a higher high on this move.

SP500 5.16, 0.28%
NASDAQ -10.81, -0.25%
DJ30 49.06, 0.30%
SP400 0.24%
RUTX -0.41%
SOX -0.07%

Volume surged thanks to the day's geopolitical events as well as the end of the month trade: +13% NYSE, +22% NASDAQ

A/D mixed: +3:2 on NYSE, -1.1:1 NASDAQ

The ability to recover a significant amount of lost ground off of the uncertainty of the news of RussPutin spreading its oligarchy back to Ukraine (and thus showing his plan to 'reunite' the old USSR), is a pretty good indication for the stock market. As noted, stocks have overcome a lot of obstacles, domestic and foreign, in keeping this rally moving, and the ability to bounce back ahead of the weekend shows buyers are not surrendering.

Some of the same issues remain, however. SOX is butting the same trendline; ditto SP400. On the other hand, SP500 is over resistance, NASDAQ is hanging onto gains, DJ30 is holding over some interim resistance, and RUTX is just over the January high. Split ticket.

Without RussPutin's actions the market likely continues its melt higher. Now, however, the market has some hard news to chew on over the weekend. NATO has no contingency plan for Russia invading Crimean region even though Russia covets that area (and all of Ukraine) for its warm water sea port. Hell, Russia is part of NATO now; what a crock. RussPutin won't turn back even though our President said 'pull back or suffer costs.' A threat without any teeth as we just admitted we cannot be the police for freedom anymore. Why we had to make that statement at all is beyond intelligent thought, but we did. You can see those words, still hanging in the air, and Putin looking right at them as he moves the troops. Whatever the 'costs,' RussPutin covets its warm water port more.

Many stocks faded; it was the thing to do. Many stocks held support, some rebounded, some didn't. We closed some we didn't like the look of, RussPutin or not. VIPS held the move well and indeed rallied into the close and we banked some nice partial profits there; again, who knows what the weekend would bring.

That said, The weekend events will tell how the market opens Monday. Total invasion? Just taking Crimea and not the rest of Ukraine? How brazen will Putin be in ignoring Obama's statement to withdraw? Perhaps the middle ground is just taking Crimea to ensure the warm water port. RussPutin can then work on a more subtle taking of Ukraine in the future, along with the other former Soviet states. In any event, a 'repatriation' of Crimea, whose residents we hear are mostly supporters of Russia versus Ukraine, would likely be palatable to our markets here in the US.


THE NEWS

Q4 GDP second read reverts to the norm . . . of the 'recovery.'

2.4% versus 2.6% expected versus 3.2% first read versus 4.1% Q3


Personal Consumption: 2.6% versus 2.9% expected, 3.3% in first read

Inventories: Led to the big Q3 build. Not so much in Q4 revision 2.
0.14% versus 0.42% added to GDP versus adding 1.73% in Q3

Capital Investment: Improved, adding 0.58% versus 0.14% in the first read.

As with the other 4% GDP readings in this 5 year recovery (sadly the high end of the GDP growth scale), the hope that a new period of growth was starting got rocked. A 25% drop from the first reported number is not good, and it is likely to be revised even lower in the final read for Q4. Q1 2014 is running much lower than Q4, with estimates of 1% or sub-1%. Bully.



Disappointing but expected. The hope of a 'self-sustaining' recovery is a pipe dream. Oil consistently over $100/bbl and $3/gallon gasoline. Policies that produce part-time jobs and versus breadwinner jobs and retard job creation overall. Regulations hemming in businesses and individuals as to what they can do in their businesses and with their property is resulting in some businesses just closing down and individuals doing nothing, locking up our great consumption and investment power that always propels growth. Things were slow again before the weather.


Chicago PMI produces a nice bounce. What about the weather?

February Chicago: 59.8 versus 56.0 expected, 59.6 January.



What about the Polar Vortex?

University of Michigan very credible all things considered.

February Final: 81.6 versus 81.5 expected versus 81.21 first read versus 82.5 December final.



The trend continues in the right direction. Sentiment is kind of important, but more so at extremes, not in the mush middle.


Pending Home sales improve month/month, not year/year

Pending Home Sales, January: +0.1% versus +0.8% expected versus -5.8% prior (from -8.7%).

Year/Year: -9%.

Northeast: +2.1%. South +3.2%. West -4.8%
As with the Chicago PMI, where is the weather effect? It would appear the weather is in the eye of the beholder, say Janet Yellen.


Oil: The forgotten economic drag.

The weather is the in vogue economic issue. Regulations, executive orders, the ACA are also well-discussed as to their adverse economic impacts.

What about oil? Since late 2011, oil has ranged from $85/bbl to 110/bbl, averaging right at $100/bbl. Gasoline the past two years has averaged $3.50/gallon nationwide.

We have come accept higher prices. That doesn't mean they don't have an impact. Beatings are still beatings. They still inflict the same damage even if the subject becomes somewhat mentally disassociated with the physical abuse.



It still takes that money away from disposable income, from purchases other than what goes into the tank in order to get to work to make the money to burn in the tank. Not to mention the cost to get to a store to spend what little money US citizens have left from their part-time job paychecks. I know a lot of people who think twice about making runs to stores that are not close by; what if they don't have what you need? It is a costly process to drive from store to store to get what you need.

With the kind of time backlog at higher prices, the drain on the economy is huge. The Administration thinks it has pulled it off. It wanted higher prices, it has higher prices. The economy managed to avoid the abyss, thanks to trillions of Fed dollars. It has not, however, posted anywhere near the typical growth the US economy enjoys emerging from recessions. Usually the deeper the recession, the more robust the recovery. This administration, however, has managed to mute the economic recovery and barely produce a recovery (just three 4% GDP quarters scattered over 5 years). Regulations, oppressive laws, federal agencies attacking citizens and businesses, and all the while the constant drain of high gasoline prices.


THE MARKET

OTHER MARKETS

Euro/Dollar: Dollar weaker again.

1.3805 versus 1.3709 versus 1.3687 versus 1.3743 versus 1.3733 versus 1.3746 versus 1.3720 versus 1.3738 versus 1.3758 versus 1.3698 versus 1.3681 versus 1.3591 versus 1.3625 versus 1.3645 versus 1.3633 versus 1.3588 versus 1.3537 versus 1.3514 versus 1.3529

Dollar/Yen: Dollar down here again as well, but still looks as if it can make a new break higher.

101.82 versus 102.10 versus 102.38 versus 102.16 versus 102.47 versus 102.51 versus 102.35 versus 102.25 versus 102.43 versus 101.86 versus 102.14 versus 102.41 versus 102.41 versus 102.21 versus 102.33 versus 102.10 versus 101.37 versus 101.62 versus 101.37 versus 101.40 versus 102.30 versus 102.72 versus 102.11 versus 102.89 versus 102.64.


Bonds: Surging upside Tuesday to Friday, prepping to challenge the late January high.

10 year: 2.66% versus 2.69% versus 2.67% versus 2.70% versus 2.74% versus 2.73% versus 2.75% versus 2.73% versus 2.71% versus 2.75% versus 2.73% versus 2.76% versus 2.72% versus 2.67% versus 2.68% versus 2.70% versus 2.67% versus 2.62% versus 2.60% versus 2.67% versus 2.70% versus 2.68% versus 2.75% versus 2.76% versus 2.73% versus 2.77% versus 2.86%


Oil: 102.58, +0.20. Lateral move for two weeks, building a nice handle and prepping for a big break higher. 106 here we come.

Gold: 1321.40, -10.4. Closed lower though rallied when RussPutin started its entry into Ukraine. Still in very good shape to move higher.


MARKET STATISTICS

NASDAQ
Stats: -10.81 points (+0.25%) to close at 4308.12
Volume: 2.475B (+22.1%)

Up Volume: 1.03B (-240M)
Down Volume: 1.51B (+750.09M)

A/D and Hi/Lo: Decliners led 1.16 to 1
Previous Session: Advancers led 1.8 to 1

New Highs: 211 (+60)
New Lows: 16 (+12)

S&P
Stats: +5.16 points (+0.28%) to close at 1859.45
NYSE Volume: 703M (+13.2%)

A/D and Hi/Lo: Advancers led 1.5 to 1
Previous Session: Advancers led 2.12 to 1

New Highs: 240 (+86)
New Lows: 79 (+5)

DJ30
Stats: +49.06 points (+0.3%) to close at 16321.71


THE CHARTS

Indices were extending their move higher, looking actually pretty good at putting some legs on what was a drift higher. Then the news hit and things changed. Changed but did not collapse, indeed coming back from the sharp afternoon session selloff.

SP500: Continued the move through the December and January peaks and held some of the move, giving back 8 points at the close.

NASDAQ: Extended the move past the July 2000 peak and then had to fight to hold it, bouncing off the 10 day EMA on the low. All in all, not a bad pattern, just moving higher over the 10 day EMA. Has drifted upside and wasn't willing to give it up Friday even on some pretty bad news.

RUTX: Moved to a new high then lost it on the close. Still holding just over the January high after four weeks straight up. In position to make a short test but thus far not willing to fade.

SOX: Moved laterally all week, holding over the 10 day EMA, tapping it on the lows and rebounding to the close. Not a bad test at all, holding the gains, sliding along the up trendline. SOX is trying to pull off the lateral consolidation, something this market has not done in a long while. Not counting on it, but it does look pretty strong.

SP400: Rallied through the upper channel line then faded for a more modest gain. Right at the trendline but that does not mean an automatic test. In October and November it slid up this channel line for five weeks before testing. In December and January, almost four weeks of this action before fading.

DJ30: Gain, but as with the other indices, gave up a chunk off the intraday high. Still working higher over the November peak and now bumping the January range formed at the peak.


LEADERSHP

There were some great moves, e.g. CLVS, VIPS. Few held. VIPS did. Those that faded basically faded to near support after good moves upside.

Energy held up the best given the problems with Russia: NBL, PXD, SYRG, HAL, GPOR, etc.


SENTIMENT INDICATORS

VIX: 14; -0.04
VXN: 15.01; +0.22
VXO: 12.93; +0.38

Put/Call Ratio (CBOE): 0.82; -0.07


Bulls and Bears:

Bulls blast higher to 53.5 from 46.5 and 41.8 before that.

Bears remain pensive at 17.2 for the second week after 17.4 three weeks back.

Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.




Note the extreme bullishness: it was this high in 2007 at the crash, in early 2005 as well.

Bulls: 53.5% versus 46.5% versus 41.8% versus 45.9% versus 53.1% versus 57.6 versus 56.1 versus 60.6% versus 61.6% versus 60.0 versus 58.2 versus 57.1 versus 55.7 versus 53.6 versus 52.6 versus 55.2% versus 52.6 versus 49.5 versus 42.3% versus 45.4 versus 46.4% versus 44.3% versus 42.3% versus 37.1% versus 37.1% versus 38.1% versus 43.3%. Getting even more extreme . . .

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

Bears: 17.2% versus 17.2% versus 17.4% versus 17.4% versus 15.3% versus 15.1 versus 15.3% versus 15.2% versus 15.2% versus 14.0 versus 14.3 versus 14.3 versus 14.4 versus 15.5 versus 15.5% versus 15.6% versus 16.5% versus 18.5 versus 21.6% versus 20.6% versus 18.6% versus 20.6% versus 21.6% versus 22.7% versus 23.7% versus 23.8% versus 21.6%.

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

As noted earlier, the weekend events will tell how the US stock market reacts this week. Full invasion, just taking Crimea and not the rest of Ukraine, or a 'just kidding guys' withdrawal? How brazen will Putin be in ignoring Obama's statement regarding the 'costs' of meddling in Ukraine? Again, perhaps the middle ground is just taking Crimea to ensure the warm water port and no doubt that will not cross any 'red line' the President may fancy drawing.

Friday many pretty good moves were scuttled as many stocks faded from early highs. It was the move of the day. Many stocks held support, some rebounded, some did not. We closed a few we didn't like the look of, RussPutin or not. VIPS held the move well and indeed rallied into the close and we banked some nice partial profits there; again, who knows what the weekend would bring, and with the initial target in hand we took some along with the March option gain we banked earlier in the session.

Maybe this Russian thing ends this leg of the move. The last hour action suggests perhaps not. There are many other items next week warranting investor attention with the February Jobs Report closing out the week. Once again investors will be more or less drawn to the flame awaiting the result. With Q4 GDP less than hoped and Q1 data even worse than Q4, the odds of disappointment rise.

Of course with disappointment there is Ms. Yellen. She really wants to blame the weather, but even so, she wants the market to remain high. Has to. As Bernanke knew, the Fed has to keep the top 5% or so making money in the markets and thus buy them off by keeping them happy enough to pay for the 100+ million working aged US citizens who are not working either because they cannot find a job or have given up and left the working population.

Ultimately this has to stop. The Fed knows it has to stop. That is why it is withdrawing the QE even with the softening economic numbers. Has to get out of the game, trying to get out of the game, but the question is whether the economy, burdened by higher taxes, more regulations, policies stymieing investment and job creation, and a all but vanished middle class, will let it. Maybe the market knows that and thus it continues to hold the trend higher EVEN AS the Fed pulls the stimulus.


SUPPORT AND RESISTANCE

NASDAQ: Closed at 4308.12

Resistance:

Support:
4289 is the July 2000 recovery high
4246.55 is the January 2014 peak
4218 is the upper channel line for the November 2012 to present uptrend.
The 50 day EMA at 4157
4116 is the November 2012 trendline
4104 is the lower gap point from 12/20/13
4070 is the series of highs from late November/early December
3991 is the prior November 2013 high and the post-bear market high.
3967 is the October 2013 post-bear market high.
3855 is the November low
3819 is the early October high
The 200 day SMA at 3817
3801 is the September 2013 high.
The October low at 3750
3697 is the August high and a prior post-bear market high in the recovery.


S&P 500: Closed at 1859.45

Resistance:

Support:
1849.44 is the recent all-time high.
The 50 day EMA at 1815
1808 is the November and December 2013 twin peaks
1808 is the December 2012 up trendline
1775.22 is the October prior all-time high
1768 is the December 3013 low
1730 is the September 2013 peak
The 200 day SMA at 1727
1710 is the August 2013 peak.
1698 to 1700 are the July and August interim highs
1687 is the May high and post-bear market high
1685 is the mid-August 2013 upper gap point
1657 is the late August upper gap point
1654 is the June 2013 peak
1646 is the October 2013 low just before the surge into early 2014
1627 is the August 2013 low


Dow: Closed at 16,321.71

Resistance:
16,589 is the December 2013 all-time high

Support:
16,257 is the January 2014 low
16,179 is the November 2013 peak.
16,183 is a lower trendline off the 11/2012 low
The 50 day EMA at 16,042
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak
The 200 day SMA at 15,570
15,542 is the May 2013 intraday high
15,318 is the June closing high
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)
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

February 25 - Tuesday
Case-Shiller 20-city, December (9:00): 13.4% actual versus 13.6% expected, 13.7% prior
FHFA Housing Price I, December (9:00): 0.8% actual versus -0.1% prior (revised from 0.1%)
Consumer Confidence, February (10:00): 78.1 actual versus 80.8 expected, 79.4 prior (revised from 80.7)

February 26 - Wednesday
MBA Mortgage Index, 02/22 (7:00): -8.5% actual versus -4.1% prior
New Home Sales, January (10:00): 468K actual versus 400K expected, 427K prior (revised from 414K)
Crude Inventories, 02/22 (10:30): 0.068M actual versus 0.973M prior

February 27 - Thursday
Initial Claims, 02/22 (8:30): 348K actual versus 335K expected, 334K prior (revised from 336K)
Continuing Claims, 02/15 (8:30): 2964K actual versus 2975K expected, 2956K prior (revised from 2981K)
Durable Orders, January (8:30): -1.0% actual versus -1.1% expected, -5.3% prior (revised from -4.2%)
Durable Goods -ex tr, January (8:30): 1.1% actual versus -0.3% expected, -1.9% prior (revised from -1.3%)
Natural Gas Inventor, 02/22 (10:30): -95 bcf actual versus -250 bcf prior

February 28 - Friday
GDP - Second Estimate, Q4 (8:30): 2.4% actual versus 2.6% expected, 3.2% prior
GDP Deflator - Second, Q4 (8:30): 1.6% actual versus 1.3% expected, 1.3% prior
Chicago PMI, February (9:45): 59.8 actual versus 56.0 expected, 59.6 prior
Michigan Sentiment - Final, February (9:55): 81.6 actual versus 81.5 expected, 81.2 prior
Pending Home Sales, January (10:00): 0.1% actual versus 0.8 expected, -5.8% prior (revised from -8.7%)

March 3 - Monday
Personal Income, January (8:30): 0.3% expected, 0.0% prior
Personal Spending, January (8:30): 0.1% expected, 0.4% prior
PCE Prices - Core, January (8:30): 0.1% expected, 0.1% prior
ISM Index, February (10:00): 51.6 expected, 51.3 prior
Construction Spending, January (10:00): -0.1% expected, 0.1% prior
Auto Sales, February (14:00): 5.1M prior
Truck Sales, February (14:00): 7.0M prior

March 5 - Wednesday
MBA Mortgage Index, 03/01 (7:00): -8.5% prior
ADP Employment Change, February (8:15): 150K expected, 175K prior
ISM Services, February (10:00): 53.5 expected, 54.0 prior
Crude Inventories, 03/01 (10:30): 0.068M prior

March 6 - Thursday
Challenger Job Cuts, February (7:30): 47.3% prior
Initial Claims, 03/01 (8:30): 338K expected, 348K prior
Continuing Claims, 02/22 (8:30): 2973K expected, 2964K prior
Productivity-Rev., Q4 (8:30): 2.5% expected, 3.2% prior
Unit Labor Costs - Rev., Q4 (8:30): -0.7% expected, -1.6% prior
Factory Orders, January (10:00): -0.5% expected, -1.5% prior
Natural Gas Inventor, 03/01 (10:30): -95 bcf prior

March 7 - Friday
Nonfarm Payrolls, February (8:30): 163K expected, 113K prior
Nonfarm Private Payrolls, February (8:30): 170K expected, 142K prior
Unemployment Rate, February (8:30): 6.6% expected, 6.6% prior
Hourly Earnings, February (8:30): 0.2% expected, 0.2% prior
Average Workweek, February (8:30): 34.4 expected, 34.4 prior
Trade Balance, January (8:30): -$37.3B expected, -$38.7B prior
Consumer Credit, January (15:00): $11.8B expected, $18.8B prior


By: Jon Johnson, Editor
Copyright 2014 | All Rights Reserved

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

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