* * * *
10/8/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: None issued
Entry alerts: None issued
Trailing stops: SOHU
Stop alerts: None issued
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The REPORT SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play
annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play
links in the reports.
If any market circumstances arise where we see additional plays we want to
prepare for the next session, we will of course issue those plays regardless
of the day of the week.
MARKET SUMMARY
- Jobs show the same issues, stocks treat the report the same.
- Stocks hold up, sell, then recover to cut the losses.
- Same relative index positions though SP400 is struggling.
- Stretching the move laterally helps the upside as the harsh flop fades in
intensity, gives an opportunity to recover.
Friday was about jobs but jobs didn't really change a thing. Not surprising
because the jobs report didn't change a thing except perhaps showing a loss
of full-time jobs as part-time jobs spiked. Even that, however, is not
really a change as it simply continues the trend.
The stock indices held up after the jobs release. Then they sold. Then
they recovered much of the lost ground. We laughed, we cried, and in the
end we did little because there was nothing to do on the session. The
indices held their ground as the jobs report was a net nonevent, though
SP400 and RUTX were a bit wobbly even after the market overall recovered
lost ground.
SP500 -7.03, -0.33%
NASDAQ -14.45, -0.27%
DJ30 -28.01, -0.15%
SP400 -0.67%
RUTX -0.78%
SOX -0.19%
That was pretty much what we expected though I would have gladly welcomed a
change either upside or downside. As it is the stocks indices remained the
same with the trio SOX, NASDAQ and RUTX holding nice trends while DJ30,
SP400, and SP500 struggle to recover after breaking their near term trends
on that big Friday drop 5 Fridays back.
That said, the volatility immediately following that selloff has died down
to some intraday back and forth each session but not the dramatic session to
session swings. The longer it doesn't die, the less chance of it doing so,
i.e. the more chance DJ30 and company fall in line and maybe don't lead but
at least tag along behind the leaders.
Thus even though the Fed says it is going to raise rates and bonds and gold
have sold while the dollar strengthens in apparent agreement, stocks and
stock investors appear to be sanguine with it. Could it be that investors
have adopted the very moral hazard position the Fed did not want, i.e. while
the Fed may want to raise rates because its rather dubious hiking criteria
are met, it will be faster to panic and reverse a tightening course versus
let markets fall?
Sure seems that way, and if so, then yet another attempt to sell the market
may just fizzle out. Of course the market still has to show DJ30 and the
other laggards will turn back up from their near term bearish patterns.
Friday saw SP400 and RUTX struggle and they really did not recover much of
the lost ground. They definitely require watching early in the week to see
if the Friday struggles were just a Friday thing. Overall, the longer the
laggard indices stretch out the move without rolling over, the more a
continued trend higher becomes a possibility given NASDAQ and SOX are still
working their trends.
NEWS/ECONOMY
The jobs report was a miss, but the story was the same with low pay, hourly
jobs hugely dominating the report.
156K vs 176K exp vs 167K prior (from 151K August). July revised to 252K
from 275K
3 month average: 192K/mo
Unemployment: 5.0% vs 4.9% exp vs 4.9% prior
Earnings: 0.2% vs 0.2% exp vs 0.1% prior. +2.6% year/year. Thank goodness
for the increased minimum wage -- just before the companies go full robotic.
But hey, wages will rise then right? Just as with unemployment, if you
reduce the number earning lower wages from the equation, wages rise.
Perhaps that is already happening . . .
Workweek: 34.4 vs 34.4 exp vs 34.3. A 'surge' of 0.1. It moved up to this
level four months ago. Didn't take.
Participation rate: 62.9% versus 62.8%. More moved into the workforce. The
high was 63.0% in March. That didn't take either.
Number employed: +354K
Number unemployed: +90K
Not in labor force: -207K
Same sad story with the jobs mix:
Professional & business services: +67K (Secretaries and clerical staff
35k)
Healthcare: +33K
Bar tenders, waiters: +30K
Retail: +22K (+317K over 12 mos)
Mining: 0
Manufacturing: -13K
Transportation/Warehousing: -9K
Financial activities: +6K
Over half of the jobs created were minimum wage jobs.
Manufacturing: After a historically slow rise in manufacturing jobs in the
recovery, that sector has leveled out and in 2016 is rolling over. Indeed,
a shocking 58K manufacturing jobs have been lost in 2016, a year that
supposedly continues the recovery of the US economy. Apparently that
recovery is limited to part-time, low wage jobs.
Full time jobs versus part-time jobs.
Full-time: -5,000
Part-time: +430,000
Unadjusted, i.e. the ACTUAL job losses and gains without the BLS coming in
and 'smoothing out' the data with its subjective revisions (the "geez,
things CAN'T be THAT bad and we better fix it before the election" data
rewrites):
Full-time: -1.2M
Part-time: +1.3M
Multiple job holders (needed because of insufficient wages): +301K to
7.863M, highest since 2008.
Stay the course . . .
But all is well. Cleveland Fed President Mester on CNBC said it was a 'solid
labor market report' because it only takes '75K to 100K' jobs to maintain
employment. But the economy supposedly produced twice the 75K amount and
unemployment is still stagnant! Oh, that is because we are at 'FULL
EMPLOYMENT' according to Mester. Okay, sorry 94+M out of the workforce; you
are at your full employment level, your highest and best use achieved. Oh,
don't forget about those full-time workers who are working at half the pay
of their prior full time job. No problem there; you have a job so shut up,
right?
Odds of November rate hike: 15% versus 30% before the number. Odds in
reality: a snowball's chance in hell. Yellen would never, ever, ever hike
rates in November in an election year. Ever. Yes, even though Mester said
the Fed was populated by apolitical technocrats. Her nose grew 5 inches in
the interview.
THE MARKET
CHARTS
NASDAQ: Gapped modestly higher, sold through the 20 day EMA, but then
recovered to a more modest loss. All week moving in a tightening range over
the 20 day EMA. Waited on the jobs report, got it, could not do much with
it. NASDAQ remains in its uptrend but is moving laterally the past two
weeks, seeking that next upside break. Perhaps earnings will lend some help
one way or the other, perhaps in the form of a pre-earnings rally.
Definitely a market leading index important for the next upside break.
SOX: Chips edged out a slight gain on the week but really it was more of a
consolidation week as SOX worked laterally after the gap higher the prior
Friday. The 10 day EMA has caught up now and SOX is in very good position
to make the next break higher.
RUTX: Still trending higher after the 50 day EMA the first half of
September, but had to recover Friday to hold the 50 day SMA and salvage a
0.78% loss. Holding the trend higher but fighting it a bit.
SP400: Started well enough Friday with a gap higher but then fell through
the 50 day EMA and then closed below the 2016 up trendline off the January
low. SP400 is having trouble getting off that trendline, having tested it
on Tuesday, bounced, then flopped back on Friday. Midcaps are struggling to
hang on and small caps are having some issues of their own.
DJ30: The Dow looked like such a dog Tuesday and the Wednesday the prior
week, but it hung in and has worked laterally along the 50 day EMA for 1.5
weeks. That has kept it in check but it has not broken it lower. Still
overall bearish, but the pattern is tightening on the lateral move. Can
still break lower as the pattern is still bearish, but it is not for now.
Many of its components, however, still sport bearish patterns and if those
break of course DJ30 would be back under pressure.
SP500: Gapped higher to just below the 50 day SMA but then could not
advance and indeed closed just below the 50 day EMA. As with DJ30, also in
a lateral range the past 1.5 weeks, bouncing off the same intraday lows, but
looked heavier Friday than DJ30.
LEADERSHIP
Financial: Excellent week as financial stocks price in some possibility of
a rate hike at some point in the future. TCBI tested late week, bouncing
sharply off the 10 day EMA Friday. C, JPM continued higher, BAC still looks
solid. GS surged Wednesday and Friday.
Big Names: AAPL moved higher on the week, modest but steady. AMZN rallied
to more higher highs but started a modest late week fade. FB still working
laterally over the 20 day EMA. NFLX enjoyed a great week upside. GOOG
spent the entire week moving laterally along the 50 day SMA on the low.
MSFT working laterally all week. EBAY tested the 50 day MA's on the Friday
low. A bit wobbly last week.
Chips: SLAB moved higher on the week, new high. XLNX gave up the prior
week's break higher. AVGO bounced off the 50 day EMA. SWKS posted a higher
rally high with a strong move for the week. LSCC moved laterally all week
along the 10 day EMA. MRVL testing its move to a higher high the prior week.
Still a solid group. NPTN looks to be setting up for another upside run
while QRVO has done a good job of setting up for a break higher.
Industrial machinery: After a great move for over a week, starting a modest
test Friday, e.g. CMI, CAT.
Tech: Took a breather and tested late week but not bad, e.g. PANW, WDC, STX.
Oil: Some of the leaders are a bit winded and taking a breather, e.g. CWEI,
APC. Others are prepping for a move higher, e.g. NE, HOS.
Retail: Some excellent moves as department stores rallied: JWN, KSS, DDS.
Biotech: A group that was again attempting to show leadership but has some
issues again. ARNA is fine, AGEN is still trending up the 10 day EMA, CRMD
putting in a good test. Others not so great, e.g. IDRA, XLRN, CELG.
MARKET STATS
NASDAQ
Stats: -14.45 points (-0.27%) to close at 5292.4
Volume: 1.612B (-1.28%)
Up Volume: 584.94M (-126M)
Down Volume: 1.04B (+141.38M)
A/D and Hi/Lo: Decliners led 1.86 to 1
Previous Session: Decliners led 1.52 to 1
New Highs: 70 (-10)
New Lows: 50 (+16)
S&P
Stats: -7.03 points (-0.33%) to close at 2153.74
NYSE Volume: 900M (+10.78%)
A/D and Hi/Lo: Decliners led 2.27 to 1
Previous Session: Decliners led 1.24 to 1
New Highs: 79 (-29)
New Lows: 29 (-4)
DJ30
Stats: -28.01 points (-0.15%) to close at 18240.49
SENTIMENT INDICATORS
VIX: 13.48; +0.64
VXN: 15.66; -0.04
VXO: 14.08; +0.58
Put/Call Ratio (CBOE): 1.18; +0.18
Seventeen 1.0+ Readings in 5 weeks, 13 of the last 21 sessions over 1.0.
Still plenty of pessimism.
Bulls and Bears: With the volatility subsiding, bulls continued to recover
and bears continued to fall.
Bulls: 46.7 versus 45.2
Bears: 22.8 versus 23.1
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: 46.7 versus 45.2
45.2 versus 44.6 versus 49.0 versus 52.5 versus 55.9 versus 56.7 versus 56.2
versus 54.3 versus 52.9% versus 53.9% versus 54.4% versus 52.5% versus 47.1%
versus 41.6% versus 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%
Bears: 2.28 versus 23.1
23.1 versus 24.3 versus 22.6 versus 22.8 versus 20.6 Versus 20.2 versus 20.0
versus 20.9% versus 21.2% versus 21.6% versus 23.3% versus 24.7% versus
24.5% versus 23.8% versus 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%
OTHER MARKETS
Bonds (10 year): 1.72% versus 1.74% versus. Big doji with tail Friday at
the early September low. May want to bounce off a double bottom attempt.
Historical: 1.74% versus 1.72% versus 1.69% versus 1.622% versus 1.60%
versus 1.56% versus 1.569% versus 1.56% versus 1.584% versus 1.62% versus
1.625% versus 1.656% versus 1.693% versus 1.705% versus 1.698% versus 1.70%
versus 1.698% versus 1.718% versus 1.671% versus 1.67% versus 1.61% versus
1.53% versus 1.54% versus 1.601% versus 1.57% versus 1.58% versus 1.57%
versus 1.57% versus 1.62% versus 1.58% versus 1.56% versus 1.54% versus
1.58% versus 1.53% versus 1.55% versus 1.57% versus 1.558% versus 1.51%
EUR/USD: 1.1183 versus 1.1147. Euro sold Wednesday, rebounded Thursday,
closed out Friday just below the 200 day SMA. That leaves euro still in a
lateral move.
Historical: 1.1147 versus 1.12052 versus 1.12091 versus 1.12066 versus
1.1239 versus 1.1218 versus 1.1228 versus 1.2148 versus 1.1254 versus 1.1248
versus 1.12259 versus 1.12061 versus 1.11898 versus 1.1151 versus 1.1177
versus 1.1155 versus 1.12444 versus 1.1245 versus 1.12196 versus 1.12335
versus 1.12318 versus 1.12661 versus 1.1239 versus 1.12554 versus 1.11545
versus 1.11943 versus 1.11572 versus 1.1146 versus 1.11708 versus 1.11949
versus 1.12894 versus 1.1300 versus 1.13045 versus 1.3254 versus 1.13251
versus 1.1342 versus 1.13036 versus 1.12773 versus 1.11824 versus 1.11636
versus 1.11372 versus 1.11803 versus 1.1115 versus 1.1080 versus 1.10882
USD/JPY: 103.159 versus 103.984. Dollar surged into October, faded
Thursday (hard), then a modest Friday bounce.
Historical: 103.984 versus 103.381 versus 102.807 versus 102.035 versus
101.326 versus 101.143 versus 101.322 versus 100.55 versus 100.75 versus
101.034 versus 101.045 versus 100.386 versus 101.714 versus 101.956 versus
102.280 versus 102.086 versus 102.172 versus 102.155 versus 102.814 versus
101.57 versus 102.685 versus 102.439 versus 102.439 versus 101.698 versus
101.412 versus 103.92 versus 103.226 versus 103.269 versus 102.965 versus
102.160 versus 101.808 versus 100.485 versus 100.306 versus 100.27 versus
100.297 versus 100.21 versus 99.843
Oil: 49.81, -0.63. What a run last week and the week before, taking oil to
50+ and just below the June high at 51.50. Faded Friday but just taking a
breather from the look of it.
Gold: 1251.90, -1.10. Bombed lower Tuesday, sold below the 200 day SMA
Thursday, could not hold a bounce attempt Friday. Massive break lower
wholly suggesting rates go higher.
MONDAY
Jobs report is out and now the market looks to matters of real import,
earnings. The forecast is for a sixth straight quarter of declining
profits. Sure they can beat the expectations, but expectations keep getting
pushed lower and lower, kind of like second half GDP forecasts.
Be that as it may, the Fed is still there and has not hiked and won't hike
until December if then. A lot of time until December and the economy,
despite the headlines, is not ramping up, particularly based upon our
surveys with small businesses. Many saw things slow starting in July and
then really falling off in August and September. That does not sound like a
second half you are all excited to get to.
The indices are hanging in and perhaps the large cap NYSE looked better, at
least DJ30, to end the week. Still, there are some massive drops taking
place even as some sectors continue to rally and support great leaders.
HON, TSN, PPG all bombed lower Friday. Not all is well as evidenced by some
of these stocks, and we will know more this coming week as some warnings
could be coming even as earnings start rolling in.
Thus far the indices are hanging on, refusing to go ahead and break, e.g.
DJ30, SP500, SP400. With the stretch laterally we are looking at some
choice upside plays this week, but there are also some stocks that are
struggling and more than a few Dow stocks have the look of weakness, setting
up near term double tops and other bearish looks.
Still looking for the trends to merge, and if those weaker index patterns
don't break rather soon the odds of doing so drop considerably unless the
stronger indices start to falter. RUTX is not a bouquet of roses after its
Friday move, and both it and RUTX charts will be at the top of one of our
screens as we watch how they trade, if they can find buyers tou bounce them
back.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5292.40
Resistance:
5340 is the recent all-time closing high.
Support:
5287.61 is the all-time high from September 2016
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
The 50 day EMA at 5215
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
The 200 day SMA at 4896
4894 is the September 2015 closing high
4836 is the March 2016 peak
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
S&P 500: Closed at 2153.74
Resistance:
The 50 day SMA at 2167
2175 is the June 2016 high
2194 is the August 2016 all-time high
Support:
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
The 200 day SMA at 2067
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
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
Dow: Closed at 18,240.49
Resistance:
18,247 is the August 2016 low
18,262 is the upper gap point from the Monday gap lower.
18,288 from March 2015
18,351 is the prior all-time high from May 2015
The 50 day SMA at 18,373
18,595 is the July 2016 peak
18,669 is the August 2016 all-time high
Support:
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,978 is the November 2015 peak
The 200 day SMA at 17,629
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
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
ECONOMIC CALENDAR
October 7 - Friday
Nonfarm Payrolls, September (8:30): 156K actual versus 176K expected, 167K
prior (revised from 151K)
Nonfarm Private Payr, September (8:30): 167K actual versus 171K expected,
144K prior (revised from 126K)
Unemployment Rate, September (8:30): 5.0% actual versus 4.9% expected, 4.9%
prior (no revisions)
Hourly Earnings, September (8:30): 0.2% actual versus 0.2% expected, 0.1%
prior (no revisions)
Average Workweek, September (8:30): 34.4 actual versus 34.4 expected, 34.3
prior (no revisions)
Wholesale Inventorie, August (10:00): -0.2% actual versus -0.1%
expected, -0.1% prior (revised from 0.0%)
Consumer Credit, August (15:00): $25.8B actual versus $18.0B expected,
$17.8B prior (revised from $17.7B)
October 12 - Wednesday
MBA Mortgage Index, 10/08 (7:00): 2.9% prior
Crude Inventories, 10/08 (10:30): -2.976M prior
FOMC Minutes, September 21 (14:00)
October 13 - Thursday
Initial Claims, 10/08 (8:30): 255K expected, 249K prior
Continuing Claims, 10/01 (8:30): 2058K prior
Export Prices ex-ag., September (8:30): -0.4% prior
Import Prices ex-oil, September (8:30): 0.0% prior
Natural Gas Inventor, 10/08 (10:30): 80 bcf prior
Treasury Budget, September (14:00): $90.9B prior
October 14 - Friday
PPI, September (8:30): 0.2% expected, 0.0% prior
Core PPI, September (8:30): 0.1% expected, 0.1% prior
Retail Sales, September (8:30): 0.6% expected, -0.3% prior
Retail Sales ex-auto, September (8:30): 0.5% expected, -0.1% prior
Business Inventories, August (10:00): 0.1% expected, 0.0% prior
Mich Sentiment, October (10:00): 92.4 expected, 91.2 prior
End part 1 of 3
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