Saturday, July 02, 2016

The Daily, Part 1 of 3, 7-2-16

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7/2/2016 Investment House Daily
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Happy Independence day!!

NOTE: I went to bed fine, woke up with a fading voice. Sadly, no Market
Summary recording. The plays, yes.


Targets hit: None issued
Entry alerts: GRAM; HMY; SCHN
Trailing stops: None issued
Stop alerts: NFLX

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- Just about all indices are back to Prexit levels.
- Central banks remains the focus post-Brexit as everyone can now use Brexit
as an excuse to do anything just as 9-11 was an excuse for police to do
- Some solid leadership groups are moving well, others are setting up to

After three days the market took a breather, at least in terms of not
putting in quite as large a gain. Two sessions down hard on the Brexit,
four sessions upside on the Brelief move, and the indices are still below
the Prexit highs (the highs just before the vote).

SP500 4.09, 0.19%
NASDAQ 19.90, 0.41%
DJ30 19J.38, 0.11%
SP400 0.25%
RUTX 0.42%
SOX -0.96%

VOLUME: NYSE -39%, NASDAQ -20%. Friday ahead of the Independence Day

A/D: 1.8:1 NYSE, 1.7:1 NASDAQ. Calmed down but you would expect that given
the volume.

Of course SP500 and DJ30 are just off of those Prexit highs, effectively
having recovered the move. So, after the dive, a rebound has the indices
back in their ranges. All normal? For now the recovery has succeeded,
Brexit just a bump in the road.

Okay, with the indices back where they started from all is on track for
higher highs, right? Well, with that big 21 month top in place that is
problematic, but, to borrow from 'Facing the Giants,' what's not possible
for the markets with the Fed? Nothing coach.

Indeed, that is what one CNBC commentator Friday said when he predicted new
highs for the stock indices, and frankly, if the world's central banks are
on board as they were in February, we know that markets can levitate
considerably, even when in a massive selloff and facing a breakdown.

That sets an interesting stage in the weeks to come as the 21 month top and
the world central banks joust.

And there you have it. Central banks ready to act and indeed acting,
attempting to prop up markets, using Brexit as the reason. Despite the
economic data.

What do I mean? I have talked about the weak economic activity in the US
and elsewhere. BUT, if you look at the official reports minted by the
various governments, things are great and only getting better (per the
1980's song, the future's so bright, better break out the shades). Friday
the world PMI's all improved from India to the UK to the EU -- well, except
for China. It's PMI fell to 48.6 from 49.2, missing expectations. The
$500B paper tiger in the room.

Thus, in the 'never let any crisis go to waste' mindset of governments,
Brexit is the perfect excuse to continue policies that benefit those in
power (the TIP) and the FOTIP (Friends Of Those In Power). Never mind the
massive bifurcation it is causing in the socioeconomic spectrum and the
complete destruction of the middle classes/middle income groups; it is all a
money grab before things really go downhill. But, not to worry, Fed Vice
Chairman Fischer said Friday on CNBC that the Fed has "no plans to move into
negative [rate] territory and we will try to avoid getting to that position"
though he also place the Brexit caveat in play, saying how it impacts the
world and US depends upon how the central banks handle the situation. There
you go, Brexit is there to use as an excuse if needed.

On that light note, Happy Independence Day! That may mean something new for
many nations, as it looks to be for the UK now, including the US.

In any event, the central banks are active and of course the stock market
likes that. As does the bond market as it surges to record levels in the US
and elsewhere. Gold too. Cannot forget gold.



To view charts, click on link or paste URL into browser.

In a holding pattern Friday, holding the 3 prior days of Brelief move off
the Friday and Monday selloff.

The index charts show most all indices effectively back into the Prexit
range. SOX is still well off its high but it also sprinted into Brexit and
suffered accordingly. That now means, however, they have to go back to
working on that long 21 month topping range and try to move higher once more
to challenge the summer 2015 highs. Again, with the central banks in the
mix, all things upside are possible. It does not cure the problems; it just
inflates asset values in the hope everything else catches up. As 6+ years
shows, however, they don't catch up because the free money horribly skews
investment decisions in favor of further paper gains (buybacks, dividends,
no loans, no capital investment) and thus undermines any real recovery
attempts from investment, creation, innovation, and new jobs. That will not
change until the central banks relent AND the fiscal, regulatory, and tax
policies change as well.

I heard some idiot in Austin the other day on the radio spluttering about
how if the current policies are changed, meaning a Trump or libertarian (or
other third party candidate) won election, that the policies they would
invoke would lead to disincentives to invest, take chances, create,
innovate. I had to ask just what world was he living in where this was
occurring right now? The lack of investment, risk-taking, creation and
innovation is what we are experiencing now as a result of 0% money, the ACA,
massive new regulation, and oppressive tax increases. But, that is the way
points are 'argued' today: take positions that you want to take because it
suits your mindset then shout anyone down who disagrees. Facts? They are
for the weak. Hey, they are at least practicing the old adage we know in
the law: when you have good facts, argue the facts; when you have bad facts,
argue the law. A slight change in the procedure for today: when you have
bad facts, ignore logic and scream down your opponent.

SP500, DJ30, SP400 and RUTX are all pretty decent in their return to where
they were Prexit: in the range of the past 3+ months, trying to consolidate
the recovery and set up a break higher from the range. Fed/central bank
activity of course welcome.

NASDAQ and SOX are not as positive. NASDAQ is just below the Prexit level,
but it had to run a long way to get there, and its pattern Prexit was a
double top. It was trying to break higher when Brexit hit, but it was still
a weak overall pattern. Now it has rallied 288 points in four sessions and
is still below the Prexit levels. You would think at a minimum it would
need to rest a bit.

SOX made it to the Brexit initial gap point and stalled. It is just over
the April highs; yea Very choppy, has left itself a lot of overhead
resistance. The market depends a lot upon SOX and its movements, so this
week how SOX works on that gap from the prior Friday will be key for the


Leadership recovered well enough with the indices, but we note that some of
the defensive groups continue to perform well, e.g. utilities (PCG, EQT,
AEP). Those are not groups that herald a prosperous bull run, but it is
also still early and the Brexit really shook up investment allocations in a
very short time period.

Metals: Back in the game nicely. SID jumped 9.8% for us Friday, breaking to
a higher rally high, higher than Prexit. AKS is running again. SCHN is
breaking higher. CENX is jumping again and giving a new entry. Precious
metals are jumping again and we picked up some HMY.

Industrials: Recovered back to the Prexit levels for the most part, but the
patterns are not that inspiring just yet. HON, UTX, TMO.

Retail: SBUX poured a nice move on the week. WWW moved up well. ROST
surged though Friday reversed the early upside. KSS, DDS, M, JWN and other
department stores are in the process of 2 month bottoming patterns such as
double bottoms and triangles after some aggressive March to May selloffs.
These could provide some entries ahead.

Biotechs: Being talked up on the post-market shows, but there needs to be
some pattern development overall. There are some strong movers, e.g. EXAS.

Software: A Prexit leader, now struggling Brexit. RHT struggling. BLKB
has recovered but needs to set up better. CYBR struggling, FFIV as well.

Oil: Struggled Brexit after holding up well into it. Didn't tank as did
other groups, but likewise has not rebounded sharply as have other groups.
UNT rebounded Friday, PTEN enjoyed a good week along with SPN.

Chips: Rebounded, but struggling with their patterns. XLNX, SLAB, NXPI,
AVGO. Others are looking better, e.g. MLNX, ARMH. QRVO might be able to
straighten out its pattern.


Stats: +19.89 points (+0.41%) to close at 4862.57
Volume: 1.732B (-19.46%)

Up Volume: 1.05B (-680M)
Down Volume: 669.86M (+251.26M)

A/D and Hi/Lo: Advancers led 1.68 to 1
Previous Session: Advancers led 2.44 to 1

New Highs: 139 (+29)
New Lows: 20 (-11)

Stats: +4.09 points (+0.19%) to close at 2102.95
NYSE Volume: 855.5M (-38.89%)

A/D and Hi/Lo: Advancers led 1.75 to 1
Previous Session: Advancers led 3.73 to 1

New Highs: 351 (+28)
New Lows: 10 (-8)

Stats: +19.38 points (+0.11%) to close at 17949.37


VIX: 14.77; -0.86
VXN: 16.83; -0.75
VXO: 13.9; -0.87

Put/Call Ratio (CBOE): 0.92; -0.31. Only the second session below 1.0 in
14 sessions. It did drop on the start of a new quarter after topping 1.0
even as the market rallied to end June. That makes the jump in puts look
more like rolling out of positions than downside speculation.

12 of 14 over 1.0.
12 of the last 26 below 1.0. 32 of 46 over 1.0. Still a LOT of put
activity, historically a more bullish indication.

Bulls and Bears: Massive drop in bulls, but of course that was immediately
countered by the recovery, so this reading is all in flux right now.

Bulls: 41.6 versus 47.5

Bears: 23.8 versus 23.2

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.

Bulls: 41.6%
47.5% versus 45.9% versus 47.3% versus 45.4% versus 35.4% versus 40.2 versus
39.2 versus 40.2% versus 44.3% versus 47.4% versus 41.2% versus 45.4% versus
43.3% versus 47.4% versus 44.4% versus 39.4% versus 36.4% versus 34.7%
versus 26.5% versus 24.7% 34.0% versus 29.2% versus 26.8% versus 28.6%
versus 34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus

Bears: 23.8%
23.2% versus 23.5% versus 23.8% versus 23.7% versus 24.0% versus 21.7%
versus 21.6% versus 21.7 versus 20.6% versus 21.7% versus 27.8% versus 27.8%
versus 28.9% versus 27.8% versus 30.3% versus 35.4% versus 34.3% versus
35.7% versus 39.8% versus 39.2% versus 38.1% versus 35.4% versus 36.1%
versus 35.7% versus 31.6% versus 29.6%


Bonds (10 year): 1.44% versus 1.475%. Gapped to a new all-time high Friday
as bond yields around the world continue to fall.

Historical: 1.475% versus 1.51% versus 1.468% versus 1.46% versus 1.57%
versus 1.74% versus 1.68% versus 1.70% versus 1.67% versus 1.61% versus
1.57% versus 1.58% versus 1.62% versus 1.61% versus 1.64% versus 1.68%
versus 1.70% versus 1.72% versus 1.73% versus 1.70% versus 1.80% versus
1.84% versus 1.85% versus 1.85% versus 1.83% versus 1.87% versus 1.86%
versus 1.83% versus 1.85% versus 1.85% versus 1.85% versus 1.76%

EUR/USD: 1.11396 versus 1.1106 versus. Continued a weeklong recovery, but
one that no way matches the sharp selloff on Brexit.

Historical: 1.1106 versus 1.11256 versus 1.10736 versus 1.10226 versus
1.1101 versus 1.14070 versus 1.13324 versus 1.1251 versus 1.13131 versus
1.13749 versus 1.12778 versus 1.12554 versus 1.12731 versus 1.2104 versus
1.1297 versus 1.12526 versus 1.13149 versus 1.1412 versus 1.13570

USD/JPY: 102.497 versus 103.128. After a modest bounce to the 10 day EMA
on the week. turning lower Friday at the lowest resistance level. Not a good
indication for the dollar versus yen. Might force Japan's hand to intervene
if the yen rebounds next week.

Historical: 103.128 versus 102.912 versus 102.60 versus 101.93 versus
102.32 versus 106.73 versus 104.87 versus 104.788 versus 103.98 versus
104.58 versus 104.12 versus 104.68 versus 105.62 versus 106.085 versus
106.019 versus 106.933 versus 106.966 versus 106.66 versus 107.347 versus
107.72 versus 106.55 versus 106.66 versus 108.86 versus 109.99 versus
111.285 versus 110.233 versus 109.70 versus 109.72 versus 109.99 versus
109.25 versus 110.165 versus 109.985 versus 110.187

Oil: 49.28, +0.95. Down then up on the week. Back near Prexit levels but
still bouncing all around the pat three weeks.

Gold: 1333.90, +20.20. Surging to a new closing high for the rally from


The real first of the quarter will show up and with the central banks
stating they will stand by the markets, one would presume the indices will
continue higher though perhaps after a rest given the violence of the move
lower and the move back up. After a bit of shakeout then we see if the move

Remember, just because the indices are back to, more or less, Prexit levels,
that does not mean they have beaten the prior highs. No, they still very
much have to deal with them. This time, however, they will get help from
central banks. That does help US stocks as it gives the rest of the world a
backstop, but it is not the same game changer that the Fed turning soft
would have. Thus, even though the BOE pledges stimulus over the summer and
Draghi is ready to expand QE, the US Fed has not really spoken as to what it
will do post-Brexit though there will be some minutes released this week. My
will those be dated given they were way Prexit.

We see good patterns moving higher or ready to do so. We also see patterns
that rebounded but don't look that comforting to buy. Others look ready to
fall. Again there will be upside and downside on the report; the market has
rebounded, but it has not made the next definitive break higher. Thus don't
assume it has to move higher. Play leaders that are in good patterns that
break higher but don't forget to look at stocks breaking lower. Not only do
they tell part of the market story, they can also make you money even if the
market tries to rally farther.

Have a great Fourth!


NASDAQ: Closed at 4862.57

4894 is the September 2015 closing high
4899 - 4902 from the September 2015 peak, July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4960 is the September 2015 intraday high, an important reversal point for
4969 is the April 2016 recovery high
4980 is the June 2016 peak
4999 is the October upper gap point
5007 is the 12/31 upper gap point from that big gap lower
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high
5100 from the April peak and early May peak
5162 is the early November peak, 5176 is the December intraday peak

4836 is the March 2016 peak
The 50 day SMA at 4827
The 200 day SMA at 4818
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
4684 is the May 2016 test low
4637 is the February intraday high
4620 is the February 1 closing high
4615 from September 2014 highs, October 2014 upper gap point, late August
2015 low.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
4471 is the January 2016 closing low
4425 is the late February intraday low
4363 is the February upper gap point
4352 is the March 2014 peak
4313 is the January 2016 intraday low
4292 is the August 2015 low
4212 is the February intraday low

S&P 500: Closed at 2102.95

2104 is the December 2015 high
2111 is the April 2016 recovery high
2116 is the November 2015 high
2119 is the February 2015 intraday high
2120 is the June 2016 peak
2126 was the April prior all-time high
2130 is the June 2015 peak
2135 is the May 2015 all-time high

2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
The 50 day SMA at 2071
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
The 200 day SMA at 2023
2020 is the September 2015 intraday high
2011 is the September prior all-time high
1995 is the September 2015 recovery peak
1991 is the July 2014 high
1972 is the December 2014 low
1947 is the February 2016 intraday high, the late February peak
1940 is the January 2016 recovery bounce peak closing high
1913 is the early September 2015 closing low testing the bounce from the
August selling
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
1891 is last week's intraday low prior to the miraculous reversal.
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
1859 is the January 2016 closing low
1820 is the October 2014 intraday low
1815 is the April 2014 low
1812 is the January 2016 intraday low
1772 are the Q4 2013 highs and lows

Dow: Closed at 17,949.37

17,978 is the November 2015 peak
18,016 is the June 2016 peak
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,168 is the April 2016 recovery high
18,288 from March 2015
18,351 is the all-time high from May 2015

The 50 day SMA at 17,754
The 50 day EMA at 17,692
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
17,265 is a December 2015 closing low
The 200 day SMA at 17,264
17,245 is the November 2015 closing low
17,152 is the mid-July 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery intraday peak
16,740 is the mid-September peak and potential apex for a right shoulder to
a head and shoulders pattern
16,736 is a prior all-time high from May 2014
16,670 is the December 2014 peak and the recent August 2015 relief bounce
16,665 is the late August 2015 closing high
16,632 is the April 2014 peak
16,621 is the late February 2016 peak
16,589 is the December 2013 former all-time high
16,526 is the early January resistance
16,511 is the January 2016 intraday high
16,506 is the March 2014 peak
16,466 is the January 2016 recovery closing peak.
16,368 is the August 2014 low
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
15,855 is the October 2014 intraday low
15,766 is the January closing low
15,666 is the August 2015 closing low
15,450 is the January 2016 intraday low
15,372 is the February 2014 low
15,370 is the August 2015 low


July 1 - Friday
ISM Index, June (10:00): 53.2 actual versus 51.4 expected, 51.3 prior (no
Construction Spending, May (10:00): -0.8% actual versus 0.5% expected, -2.0%
prior (revised from -1.8%)
Auto Sales, June (14:00): 4.95M actual versus 5.16M prior
Truck Sales, June (14:00): 8.24M actual versus 8.55M prior

July 5 - Tuesday
Factory Orders, May (10:00): -0.9% expected, 1.9% prior

July 6 - Wednesday
MBA Mortgage Index, 07/02 (7:00): -2.6% prior
Trade Balance, May (8:30): -$40.0B expected, -$37.4B prior
ISM Services, June (10:00): 53.3 expected, 52.9 prior
Crude Inventories, 07/02 (10:30)
FOMC Minutes, June 15 (14:00)

July 7 - Thursday
Challenger Job Cuts, June (7:30): -26.5% prior
ADP Employment Chang, June (8:15): 152K expected, 173K prior
Initial Claims, 07/02 (8:30): 268K expected, 268K prior
Continuing Claims, 06/25 (8:30): 2120K prior
Natural Gas Inventor, 07/02 (10:30): 37 bcf prior
Crude Inventories, 07/02 (11:00): -4.053M prior

July 8 - Friday
Nonfarm Payrolls, June (8:30): 175K expected, 38K prior
Nonfarm Private Payr, June (8:30): 170K expected, 25K prior
Unemployment Rate, June (8:30): 4.8% expected, 4.7% prior
Hourly Earnings, June (8:30): 0.2% expected, 0.2% prior
Average Workweek, June (8:30): 34.4 expected, 34.4 prior
Consumer Credit, May (15:00): $15.3B expected, $13.4B prior

End part 1 of 3
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