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4/11/2015 Investment House Report
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Targets hit: None issued
Buy alerts: CLDX; FORM
Trailing stops: None issued
Stop alerts: None issued
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- SP500, DJ30 step up (thanks to GE) while SP400, RUTX still have new highs to hit
- Higher or lower? Pundits a bit less bullish.
- Leaders still stepping up from all strata of the market.
After all of the moves last week, the upside gains as the indices held support and bounced where they should, the large cap indices still did not answer the questions of whether this move has the right stuff.
The Right stuff or the wrong stuff?
Crew from 'Armageddon' Mercury astronauts from 'The Right Stuff'
If you watch the financial stations the pundits are split. Well, not really. When the market is moving up you typically only see those gushing about how great the market is with just a few token nonbelievers on to 'balance' the dialogue. When you review the bulls versus bears you can see the bulls waning a bit (50.4% versus 54.5%) but bears are still not moving up (holding at 14%+/-). Kind of like the market when it tests on lower volume: there are no sellers entering, it is just the buyers taking a breather.
There are those who feel the recovery in the economy is for real, in some cases they say 'great,' and thus capable of supporting more stocks gains. Others say it is all built upon a house of QE and easy money cards and that the recovery we have is a pathetic shadow of US recoveries in the past, and thus a massive stock crash has to come.
I would have to side with the latter in terms of the recovery. It IS a shell of what we usually have for many reasons. The most important, however, is the utter lack of serious small business creation, the heart of all US recoveries and indeed the heart of the US economy and its world leading status for over 60 years. The policies put forth the past six years have utterly crushed small businesses with layers of regulations and costs making it impossible for them to compete. Thus this recovery is only felt by a relatively small segment of the US. Hence a record 93.5M working age adults (out of a population of 317M total) are out of the workforce, relying on the few remaining workers to pay for their existence. They don't want that; it is a rather rational economic choice for them based upon the regulatory framework established. But I do tend to drone on . . .
As for a stock crash, I don't know. I just play the moves the market gives. If it is paying me to play upside, I play upside. If it is paying me to play downside, I play downside. Yes I have strong views about economics, politics, etc., and I freely share them. When it comes to the market I have strong views as well: take what the market gives. It doesn't care what you think. It doesn't care what the people on TV think. It doesn't care what a stock's ticker is and that it may be reviled by the world. It does what it does. Always remind yourself of that as you look at the market stock patterns. We forgot that lesson recently and watched a textbook setup in . . . HLF take off as it said it was going to do. Stupid. More than that, it cost me money in opportunity lost; 10 points on the stock and likely 200% on options. Did I say stupid?
So, this past week the market moved up and we were buying. We also took some gain on early movers in the China stocks, e.g. JD, ATHM.
Now the question is, where is the market after a week of upside?
Well, it wasn't massive upside, at least for the indices. NASDAQ had the best week as it led the move while RUTX and SP400, posting great starts to the week, just drifted higher after that initial move. DJ30 and SP500 moved up in their ranges, taking the lead on some sessions. Even the stodgy can get a second wind.
NONE of the indices, however, answered the question of where next. SP400 and RUTX are clearly in the best trends, but again they failed to take out the March all-time highs. They are snugged right up against them, but did not make the break through.
NASDAQ had the best week but it has not broken up the potential head and shoulders pattern. Indeed, it didn't even make it past the late February peak, the high prior to the March post-bear market high.
SP500 and DJ30 bounced off the lows in their recent ranges, and SP500 took out the late January peak. All they have really done, however, is bounce off support in their ranges. They are, however, still working on patterns very similar to December and January as they work upside and laterally. That does not mean, however, they don't test again in the range, just as they did in January as that pattern put in four bottoms and the current one has at best three.
As for SOX, it made a nice move, breaking through the 50 day MA Thursday, but it still has so much resistance and such an unlovely pattern that its upside move is problematic in our view.
So, upside on the week, but not a lot of answers to the bigger questions. So why the heck were we buying? Because stocks in good patterns were showing the right stuff, i.e. making good upside breaks. They setup and breakout when the market moves, they test when the market struggles, then they lead the move yet again, often moving ahead of the overall market.
FEYE, GERN, YNDX, CRIS, AMZN, JD, QIWI, ATHM, SUNE and many others sported strong moves on the week. When leaders move, it behooves us to move.
The question now is where next for the market after a week of gains ahead of earnings season. The market left itself some space to run into results. It did, but as noted it did not make any major breakouts. That is the question for this week.
SP500 10.88, 0.52%
NASDAQ 21.42, 0.43%
DJ30 98.92, 0.55%
NASDAQ: A very good week for NASDAQ in terms of price and it did show some higher volume on the upside sessions though still below average. The move took NASDAQ back to its February peak, the high prior to the March post-recovery high. That still leaves NASDAQ with a very real head and shoulders possibility. It overcame that pattern in the December to January move and we will be looking for it to do the same here either with a break higher from the Friday close or another test that puts in a higher low and then makes a new rally back upside.
DJ30 and SP500: A good week as well, taking the lead on some sessions including Friday. Moved up off of the lows of the recent range and are working on the same patterns as built in January. Good action thus far, approaching the March peak and the December peak. As with NASDAQ, they can either break further upside from here or test back down, put in another low, and rebound again as in January.
SP400 and RUTX: Closed out the week just below the all-time high from late March. Great start to the week but no follow through, meandering slightly higher to Friday. Important to see these two make the break to a new high. A short test of the 20 day EMA would not be bad before making that move, but don't want to see any significant fades.
SOX: Through the 50 day MA. That is about all you can say. Did clear the December peak as well, by just a hair. Maybe it can do remedial work on its pattern and rally right back up or work laterally and then move up. We will see. Lots to show.
China: Good week, stalling some late. JD, QIWI, ATHM, QIHU, YNDX. Great moves. CMGE is setting up for us.
Biotech: Some very nice moves as well. GERN, OMER, CRIS. CNDO looks good.
Internet: Social looks good still. LNKD gapped Friday and looks good for us. TWTR is holding well.
Software: A nice leader. FEYE working well, SPLK moving upside. CYBR working well and setting up a new buy. RHT looks ready for a play.
Big Names: AMZN enjoyed a good week. CMG is starting to surge. PCLN is in a great setup. AAPL suffered two downgrades but is still in a solid pattern. NFLX announced a stock split.
Stats: +21.41 points (+0.43%) to close at 4995.98
Volume: 1.479B (-12.17%)
Up Volume: 1B (-40M)
Down Volume: 481.4M (-190.43M)
A/D and Hi/Lo: Advancers led 1.45 to 1
Previous Session: Decliners led 1.06 to 1
New Highs: 114 (+16)
New Lows: 25 (-3)
Stats: +10.88 points (+0.52%) to close at 2102.06
NYSE Volume: 671.6M (-7.39%)
A/D and Hi/Lo: Advancers led 1.5 to 1
Previous Session: Advancers led 1.02 to 1
New Highs: 109 (+10)
New Lows: 2 (-5)
Stats: +98.92 points (+0.55%) to close at 18057.65
VIX: 12.58; -0.51
VXN: 14.1; -0.6
VXO: 12.5; -1.08
Put/Call Ratio (CBOE): 0.85; -0.19
Bulls and Bears: Bulls tumble, bears still holding fast.
Bulls: 50.4% versus 54.5% versus 56.6%
Finally a solid tumble as the failure to hit higher highs took its toll a couple of weeks back.
Bears: 14.2% versus 14.2% versus
Stuck at 14% and still a chronic lack of bears.
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.
54.5% versus 55.6% versus 52.0% versus 53.6% versus 58.7% versus 59.5% versus 56.6% versus 52.5% versus 49.0% versus 53.1% versus 49.0% versus 48.0% versus 50.5% versus 56.4% versus 52.5% versus 49.5% versus 51.5% versus 53.4% versus 56.5% versus 56.4% versus 55.5% versus 54.6% versus 47.0% versus 35.3% versus 37.8% versus 45.5% versus 47.5% versus 48.0% versus 52.5% versus 57.6% versus 56.1% versus 52.5%
Background: Last undercut 35%, the threshold for bullishness, in early June 2012.
14.2% versus 14.1% versus 14.3% versus 14.1% versus 14.1% versus 14.1% versus 14.1% versus 15.2% versus 16.3% versus 16.3% versus 17.4% versus16.3% versus 15.2% versus 14.9% versus 15.8% versus 14.9% versus 14.8% versus 13.9% versus 13.8% versus 14.9% versus 14.8% versus 15.1% versus 16.3% versus 18.2% versus 17.3% versus 14.1% versus 15.1% versus 15.3% versus 15.2% versus 14.1% versus 13.3% versus 15.1% versus 16.2%
Background: Over 35% for bears is the threshold to be really be a good upside indicator. The best indication is when bears cross up through bulls as the two merge. Right now bulls are coming back down from the 60 level that has consistently marked market tops over the past two years. The rapid decline in progress is pushing the bulls/bears lines toward one another. Still far from a cross with bulls falling faster than bears are rising, but bears are warming up to the notion of market weakness.
Bonds (10 year): 1.95%
1.95% versus 1.89% versus 1.89% versus 1.90% versus 1.86% versus 1.91% versus 1.86% versus 1.93% versus 1.96% versus 1.95% versus 2.01% versus 1.92% versus 1.87% versus 1.91% versus 1.927% versus 1.97% versus 1.95% versus 2.06% versus 2.09% versus 2.10% versus 2.12% versus 2.10%
Euro/$: 1.0654. Was down to 1.05 again but the dollar weakened a bit late.
1.0654 versus 1.0782 versus 1.0819 versus 1.0939 versus 1.0950 versus 1.0872 versus 1.0759 versus 1.0752 versus 1.0833 versus 1.0898 versus 1.0890 versus 1.0973 versus 1.0925 versus 1.0946 versus 1.0811 versus 1.0648 versus 1.0874 versus 1.0590 versus 1.0568 versus 1.0494 versus 1.0635 versus 1.0546 versus 1.0700
Still very strong dollar.
Oil: 51.64, +0.83. Nice test of the break through the 50 day EMA, holding that level on the lows.
Gold: 1204.70, +10.90.
120.64 versus 120.15 versus 120.32 versus 119.48 versus 119.73 versus 119.72 versus 119.94 versus 120.11 versus 119.086 versus 119.167 versus 119.405 versus 119.72 versus 119.705 versus 120.02 versus 120.855 versus 120.04 versus 121.34 versus 121.39 versus 121.43 versus 121.28 versus 121.50 versus 121.80 versus 121.60
Holding a bounce off of a double bottom below the 50 day EMA.
As discussed in the Market Summary, the indices moved to critical points, particularly in terms of NASDAQ, SP400, and RUTX. Many solid stocks moved higher last week, rallying in good patterns. We bought several, took some gain, pared some positions with trailing stops that were not that great.
Though the indices are approaching important resistance there are many quality stocks still in great position. We are looking at many on this report. Stocks that have rallied well setting up for new moves, e.g. RHT, LNKD, CYBR. Stocks that are turning the corner in good patterns after long declines, e.g. CMGE, DDD, MOBI. The market continues to produce stocks from all strata that are contributing to the upside moves. That more than anything is the key to continued upside runs.
That does not mean there won't be setbacks. The indices have moved up and are facing resistance. They could fade to test and the move remains perfectly intact. Of course we have to avoid assuming anything, assuming that upside has to be the path. The indices need to break up some toppy patterns in some instances, and if they cannot it can be surprising how fast the selling comes around.
So, we continue to see good patterns developing and are playing them as they are ready to buy. At the same time we are aware of earnings, the run to earnings, the index resistance. Thus you will see many of our play targets account for this as we look at totally doable shorter term targets. Take what the market gives, right?
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4995.98
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 post-bear market high
5132.52 is the 3/2000 all-time high
The 50 day EMA at 4887
The March lows at 4843 and 4825
4816 is the 38% Fibonacci retracement of the February run
4815 is the December 2014 prior market peak
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
The 200 day SMA at 4639
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
4566 is the lower gap point from late October
4563 and 4567 are the January lows
4547 is the December low
4486 is the July 2014 high
4372 is the March 2014 high
The August low at 4321
4316 is the lower gap point from October 2014
4289 is the July 2000 recovery high
4277 is the March lower gap point
4246.55 is the January 2014 peak
S&P 500: Closed at 2102.06
2115 is the late March lower high
2119.59 is the all-time high
2138 is the lower trendline from 11/2012
2094 is the December 2014 high, the prior all-time high
2079 is the intraday all-time high from November
2076 is the all-time high from November
The 50 day EMA at 2074
2062 is the January 2015 lower high
The 200 day SMA at 2017
2011 is the September prior all-time high
1991 is the July 2014 high
1972 is the December 2014 low
1905 is the August 2014 low
1902 from early May was the intraday all-time high.
1897 is the prior all-time high hit in April 2014
1883.57 is the early March high.
The December and January highs at 1848
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high
Dow: Closed at 18,057.65
18,104 is the December high
18,206 is the late March lower high
18,289 is the all-time high
17,991 is the early December interim
17,923 is the January 2015 lower high
The 50 day EMA at 17,865
The March low at 17,620
The 200 day SMA at 17,370
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,736 is the penultimate all-time high from May 2014
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,341 is the May low
16,334 is the August 2014 low
16,257 is the January 2014 low
16,179 is the November 2013 peak.
15,855 is the October 2014 low
15,739 is the December 2013 low
April 14 - Tuesday
Retail Sales, March (8:30): -0.6% prior
Retail Sales ex-auto, March (8:30): -0.1% prior
PPI, March (8:30): -0.5% prior
Core PPI, March (8:30): -0.5% prior
Business Inventories, February (10:00): 0.0% prior
April 15 - Wednesday
MBA Mortgage Index, 04/11 (7:00)
Empire Manufacturing, April (8:30): 6.9 prior
Industrial Production, March (9:15): 0.1% prior
Capacity Utilization, March (9:15): 78.9% prior
NAHB Housing Market , April (10:00): 53 prior
Crude Inventories, 04/11 (10:30)
Net Long-Term TIC Fl, February (16:00): -$27.2B prior
April 16 - Thursday
Initial Claims, 04/11 (8:30)
Continuing Claims, 04/11 (8:30)
Housing Starts, March (8:30): 897K prior
Building Permits, March (8:30): 1092K prior
Philadelphia Fed, April (10:00): 5.0 prior
Natural Gas Inventor, 04/11 (10:30)
April 17 - Friday
CPI, March (8:30): 0.2% prior
Core CPI, March (8:30): 0.2% prior
Michigan Sentiment, April (10:00): 93.0 prior
Leading Indicators, March (10:00): 0.2% prior
End part 1 of 3
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