Sunday, January 29, 2017

The Daily, Part 1 of 3, 1-28-17

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1/28/2017 Investment House Daily
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The REPORT SCHEDULE is as follows:

Market Summary Video, Plays and Play Videos, and Play Table with play
annotations will issue Wednesday, Weekend.

Monday a Market Summary video, new plays, play table annotations.

Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play table.

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

- Market ponders a President who says what he will do and does it as the
rest of the world rethinks its strategy.
- Another day of stall post-breakout, but is SOX leading already?
- Obama final GDP a barking dog.
- Breakout, test, and now will there be follow through?

In the 1980's McDonald's introduced the McDLT, a tomato and lettuce sandwich
served in a split Styrofoam container that had the burger and bun on one
side and the lettuce and tomato on the other side. That way it could "keep
the hot side hot and the cool side cool." How groundbreaking. A hamburger
with lettuce and tomato. As David Letterman noted at the time, "is America
ready for a hamburger with lettuce and tomato?" Hey, it gave Jason
Alexander his start as he danced his way down the street in a McDonald's
commercial, amazing people with, yes, a lettuce and tomato hamburger.


The 'revolutionary' McDonald's McD.L.T. And Jason Alexander WITH hair.

Well, the US and indeed the world now has a President with the audacity to
say what he wants to do and follows through with it with no subterfuge or
obfuscation. After 28 years of Presidents making promises they never
intended to keep or giving us the old bait and switch to get our votes and
then forget us and go about their agenda, the US has to survive a President
who tells you what his agenda is and then makes no apologies for doing it.
Is the US, the leader of republics and democracies for over two centuries
ready for such openness from an elected official?

Sounds like a preposterous question, but in a world where non-citizens
blocked from immigrating to the US file suit so they can enter, it is not
surprising. Yes, non-citizens, many who have never been in the US, filing
lawsuits because the President ordered a cessation of immigration while the
methods used to vet would be immigrants is reviewed. If there were ever
cases that should be tossed from the courts in a matter of seconds, these
are them. Where is the legal standing for a non-citizen to demand entry into
a country? Try making that demand to Egypt, Iran, Saudi Arabia, China or
basically any country in the world. Good luck with that.

THE POINT: After a solid rally Wednesday that saw all indices outside of
RUTX break to new highs, Thursday and Friday they waffled. The first week
of the Trump presidency saw a flurry of action I cannot recall witnessing in
any administration in the 11 I have seen in my lifetime. Some of the
actions the markets cheered. Some of the actions the markets just don't
know what to make of. The irony is that Trump is doing exactly what he said
he was going to do and the markets are having a hard time figuring out if it
is what they want or not.

Thus after a breakout Wednesday, the week ended with a mixed and overall
weak Thursday followed by the same kind of confused, spineless trade on
Friday. Not that the indices rolled over or otherwise spit out the Tuesday
advance and the Wednesday breakout, but they certainly were not powering
ahead to end the week.

SP500 -1.99, -0.09%
NASDAQ 5.6, 0.10%
DJ30 -7.13, -0.04%
SP400 -0.49%
RUTX -0.36%
SOX 1.26%

VOLUME: NYSE -11%, NASDAQ -15%. A mixed day in the indices and a fade in
volume is not a bad thing. The day was no conviction and the volume shows
that as well.

A/D: NYSE -1.3:1, NASDAQ -1.1:1.

That does not mean they won't. After six weeks moving laterally on top of
the post-election rally the indices broke higher. That is a base, one where
they refused to give up their gains, typically a good sign of continuing
underlying strength. Now they broke higher and have held the gains with a
2-day lateral test. This coming week you look for confirmation of the
breakout, i.e. another strong upside move on solid volume. That will show
the buyers are back in after a short post-breakout respite, and it gives the
move a lot more credence that the breakout holds and continues.

Remember, the offset out there is the Bullish Advisor sentiment coming in at
60+% two of the last four weeks. That has marked the top of rallies for
many, many years, with the market subsequently correcting to some degree.
Timing is not a direct correlation. The selling can happen even weeks after
the levels are hit, usually with the market starting to show signs the move
stumbling into a rollover. If for instance the current break higher is
thrown back on volume in the coming week, that is pretty strong evidence the
break didn't have the support it needed and the upside odds are scaled back
even more.

That makes this coming week important for the upside. The market needs to
confirm the break higher with another break higher on some good volume.
There are plenty of good stocks out there in position to move and that are
moving. A rally needs to keep bringing the up to the front, and with the
moves late the prior week with some early leaders and then the Tuesday and
Wednesday break higher, they were doing that. After this pause they need to
bring it on again.


NEWS/ECONOMY

Q4 GDP ends the Obama era as the first President ever to never have one year
of at least 3% GDP growth.

Q4, GDP: 1.9% versus 2.2% expected versus 3.5% Q3.

2016 annual: 1.6% GDP growth. Nice showing for another year of recovery --
European style.

What can you say about this? The worst stretch of GDP growth since the
Great Depression. The first 10-year stretch without a year of 3% average
growth. I know there are those who say that the depth of the financial
crisis was such that we should not have anticipated strong growth. That
belies history. We have had depressions outside of the Great Depression
(that was only 'great' because it was so long) that recovered in a year.

It is the policies implemented to recover that determine the recovery
period. The Great Depression and the 1970's should have taught us that
excessive government intervention and regulation post-economic upheaval
leads to longer, anemic recovery periods. Why? Because instead of going
where it is called for by the economic forces, government officials
substitute their beliefs (often political) as to where the money should go.
The result is an inefficient allocation of money and thus an inefficient and
unnecessarily slower recovery, just as this has been. You can go back in
history and review the periods of slow recoveries and tie them all back to
too much managing the recovery versus a market-driven recovery. The seminal
study and book on the Great Depression clearly details this.

History lesson taught yet again, but the lesson is never really learned or
by the time we get to the next crisis, forgotten.


MARKET

A second day of pausing after a break higher Tuesday and then new highs
Wednesday on all but RUTX. Nice price break higher but volume was still
relatively anemic and breadth rather pitiful. But, there are good stocks
moving well . . .

CHARTS

NASDAQ: Led the move early on, led the indices in the new move, hitting its
new high on Tuesday, paving the way for the others on Wednesday. Decent
volume Thursday; not blowout but decent. At a new high, holding the move as
it takes what should be a quick nap if the move is going to continue.

RUTX: The only index that did not hit a new high on the week, RUTX had a
farther way to go as it undercut its 6 week range on the low. Backed off to
test the 10 day EMA on the Friday low, bounced to cut some of the loss. In
good position to make a run at the prior high after this test to mid-range
in the 6 week lateral move.

DJ30: Solid Tuesday/Wednesday move, added some Thursday. Good break to a
higher high Wednesday and Thursday, tight finish Friday. Nice break from
the range on better volume, holding the move, looking for a follow through
this week.

SOX: Unlike the other indices, SOX pushed higher Friday to a new high.
Very solid action as the semis continue as a market leader overall.

SP500: Broke to a higher closing high Wednesday, added a nice big gain
Thursday to a clear new high, closed out the week with a lateral move. Nice
break but weak volume, majorly lagging MACD.

SP400: Gapped higher Wednesday to a new high, faded to fill the gap and
test the 10 day EMA Friday. Not bad getting the gap out of the way and
holding the breakout as well. Nice break, nice test, ready to move again.


LEADERSHIP

Semiconductors: Some big moves the past two weeks. SWKS gapped and rallied
into Wednesday. MLNX, QRVO, AVGO surged on the week. XLNX has issues
Thursday on earnings but found its footing Friday. MRVL, SMTC solid weeks.
MU up on Friday and we picked up some.

FAANG: Some nice moves, e.g. FB Monday to Thursday. AAPL put in a new
recovery high into Wednesday. AMZN rallied as well, moving to the October
high Thursday. NFLX broke higher again after a modest lateral test. GOOG
announced less than great results for GOOG and it fell, but still easily
held over the 10 day EMA.

China: NTES broke higher, tested to end the week but still solid. BABA
gapped on results and rallied into Wednesday, testing Thursday and Friday.
ATHM is solid with a steady move higher up the 10 day EMA. YNDX posted a
big move into Wednesday, did a good job of holding it. SINA in a great
1-2-3 test, looking good for an entry.

Industrial Machinery: Some nice breaks higher last week, e.g. CMI, CAT. TEX
solid as well.

Oil: Holding up, some good patterns still waiting to make a move. HOS
looks good, DNR still in a good pullback.

Software: Some earnings starting to move stocks, e.g. VMW. BLKB looks
pretty good coming in toward its results. CALD looks pretty good.

Materials/Construction: MDR testing a good initial break higher. USG
testing a strong move higher. CX in a modest test of a strong surge.


MARKET STATS

DJ30
Stats: -7.13 points (-0.04%) to close at 20093.78

Nasdaq
Stats: +5.61 points (+0.1%) to close at 5660.78
Volume: 1.522B (-15.46%)

Up Volume: 897.23M (+42.56M)
Down Volume: 715.6M (-232.4M)

A/D and Hi/Lo: Decliners led 1.13 to 1
Previous Session: Decliners led 1.55 to 1

New Highs: 147 (-77)
New Lows: 34 (+5)

S&P
Stats: -1.99 points (-0.09%) to close at 2294.69
NYSE Volume: 738.4M (-10.95%)

A/D and Hi/Lo: Decliners led 1.33 to 1
Previous Session: Decliners led 1.08 to 1

New Highs: 142 (-125)
New Lows: 22 (+9)


SENTIMENT INDICATORS

VIX: 10.58; -0.05
VXN: 12.3; -0.34
VXO: 9.87; +0.48

Put/Call Ratio (CBOE): 1; +0.13. Back up to 1 Friday on a bit of
protection buying after a week that saw the ratio dip into the 70's, the
lowest it has been in quite some time. Suggested not as much worry on the
week after weeks of elevated put buying.


Bulls and Bears: Bulls fell back below 60, making it 2 and 2 for the past
four weeks. It has logged the 60% level, however, and that typically
signals a move is working on its last leg before a larger correction.

Bulls: 58.2 versus 60.60

Bears: 17.5 versus 17.3

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: 58.2 versus 60.6
60.6 versus 58.6 versus 60.2 versus 59.8 versus 59.8 versus 59.6 versus 58.8
versus 56.3 versus 55.6 versus 51.0 versus 42.9 versus 41.7 versus 47.1
versus 42.9 versus 46.1 versus 46.7 versus 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

Bears: 17.5 versus 17.3
17.3 versus 18.3 versus 18.4 versus 19.6 versus 19.6 versus 19.2 versus 19.6
versus 22.3 versus 21.6 versus 23.5 versus 25.7 versus 24.3 versus 23.1
versus 23.8 versus 23.1 versus 22.8 versus 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%


OTHER MARKETS

Bonds (10 year): 2.48% versus 2.512%. Gapped upside to the 50 day MA after
selling hard Wednesday.

Historical: 2.512% versus 2.52% versus 2.467% versus 2.40% versus 2.47%
versus 2.468% versus 2.422% versus 2.372% versus 2.393% versus 2.358% versus
2.365% versus 2.38% versus 2.962% versus 2.42% versus 2.357% versus 2.45%
versus 2.448% versus 2.42% versus 2.48% versus 2.51% versus 2.56% versus
2.54% versus 2.55% versus 2.54% versus 2.564% versus 2.544% versus 2.59%
versus 2.59% versus 2.52% versus 2.473% versus 2.475% versus 2.471% versus
2.40% versus 2.349% versus 2.39% versus 2.396% versus 2.394% versus 2.454%
versus 2.388% versus 2.30% versus 2.31%. versus 2.36% versus 2.355% versus
2.317% versus 2.30% versus 2.34% versus 2.297% versus 2.219% versus 2.22%
versus 2.23% versus 2.14% versus 2.077% versus 1.867% versus 1.83% versus
1.778%


EUR/USD: 1.06957 versus 1.06843. Euro testing the 50 day MA on a four week
run.

Historical: 1.06843 versus 1.0683 versus 1.0756 versus 1.07274 versus 1.0761
versus 1.07027 versus 1.06394 versus 1.06381 versus 1.07114 versus 1.06450
versus 1.0624 versus 1.05982 versus 1.0555 versus 1.0585 versus 1.05346
versus 105837 versus 1.0525 versus 1.03914 versus 1.05289 versus 1.05155
versus 1.04357 versus 1.04636 versus 1.0451 versus 1.04368 versus 1.04412
versus 1.0392 versus 1.0407 versus 1.0459 versus 1.0415 versus 1.05094
versus 1.0636 versus 1.06326 versus 1.05586 versus 1.06140 versus 1.07745
versus 1.07194 versus 1.07614 versus 1.06638 versus 1.06631 versus 1.0601
versus 1.0649 versus 1.05699 versus 1.066 versus 1.05910


USD/JPY: 115.094 versus 114.469

Historical: 114.469 versus 113.362 versus 113.850 versus 112.736 versus
114.39 versus 114.686 versus 114.538 versus 112.774 versus 114.473 versus
114.57 versus 114.70 versus 115.811 versus 116.023 versus 116.923 versus
115.93 versus 116.46 versus 117.983 versus 116.739 versus 116.456 versus
116.793 versus 117.41 versus 117.413 versus 117.32 versus 117.537 versus
117.544 versus 117.835 versus 117.453 versus 117.941 versus 118.257 versus
117.397 versus 115.038 versus 115.058 versus 115.20 versus 114.23 versus
113.325 versus 113.993 versus 113.601 versus 113.52 versus 113.945 versus
114.19 versus 112.685 versus 112.44 versus 111.835 versus 113.14 versus
112.445 versus 111.129 versus 110.809


Oil: 53.17, -0.61. Still, still cannot get away from the breakout point
over the 2016 highs.


Gold: 1188.40, -1.40. Excellent doji test of the 50 day SMA sets gold in
position to resume the run that started in mid-December.


MONDAY

Okay, the break higher, the test, now can the indices follow through on the
move and give another solid buy signal? Lots of activity from the Trump
administration probably keeps up its pace this week as earnings continue
flying. We can prognosticate one way or the other, but that is all just
talk. The market made a good move, is testing it, and it will show if it
can continue.

After the break higher naturally you look at plays that play a continuation
of the breakout as that is the dominant pattern.

Have a great weekend!



SUPPORT AND RESISTANCE

NASDAQ: Closed at 5660.78

Resistance:

Support:
5601 is the January lower gap point
The 2016 trendline at 5500
The 50 day EMA at 5462
The 50 day SMA at 5450
The November prior all-time high at 5404
5340 is the September and October 2016 twin peaks
5287.61 is the September 2016 high
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
5170 is the October intraday low.
5162 is the early November peak, 5176 is the December intraday peak
The 200 day SMA at 5158
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
4894 is the September 2015 closing high


S&P 500: Closed at 2294.69

Resistance:
2277.53 is the December 2016 high

Support:
2282 - 2280 from January 2017
The 2016 trendline at 2272
The 50 day EMA at 2245
The 50 day SMA at 2245
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
The 200 day SMA at 2156
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 September 2016 low; 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
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 20,093.78

Resistance:

Support:
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
The 50 day SMA at 19,628
The 50 day EMA at 19,583
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
The 200 day SMA at 18,502
18,351 is the prior all-time high from May 2015
18,288 from March 2015
18,262 is the upper gap point from the Monday gap lower.
18,247 is the August 2016 low
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
17,992 is the early September low
17,978 is the November 2015 peak
17,960 is the October intraday low
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.


ECONOMIC CALENDAR

January 27 - Friday
GDP Deflator, Q4 (8:30): 2.1% actual versus 2.1% expected, 1.4% prior
GDP-Adv., Q4 (8:30): 1.9% actual versus 2.2% expected, 3.5% prior
Durable Orders, December (8:30): -0.4% actual versus 3.0% expected, -4.8%
prior (revised from -4.6%)
Durable Goods -ex tr, December (8:30): 0.5% actual versus 0.5% expected,
1.0% prior (revised from 0.5%)
Michigan Sentiment -, January (10:00): 98.5 actual versus 98.0 expected,
98.1 prior (no revisions)

January 30 - Monday
Personal Income, December (8:30): 0.4% expected, 0.0% prior
Personal Spending, December (8:30): 0.4% expected, 0.2% prior
PCE Prices - Core, December (8:30): 0.2% expected, 0.0% prior
Pending Home Sales, December (10:00): 1.3% expected, -2.5% prior

January 31 - Tuesday
Employment Cost Index, Q4 (8:30): 0.6% expected, 0.6% prior
S&P Case Shiller Homes, November (9:00): 5.0% expected, 5.1% prior
Chicago PMI, January (9:45): 55.0 expected, 54.6 prior
Consumer Confidence, January (10:00): 112.5 expected, 113.7 prior

February 1 - Wednesday
MBA Mortgage Applica, 01/28 (7:00): 4.0% prior
MBA Mortgage Purchas, 01/28 (7:00): 4.0% prior
ADP Employment Change, January (8:15): 165K expected, 153K prior
ISM Index, January (10:00): 55.0 expected, 54.7 prior
Construction Spending, December (10:00): 0.2% expected, 0.9% prior
Crude Inventories, 01/28 (10:30): +2.840M prior
FOMC Rate Decision, February (14:00): 0.625% expected, 0.625% prior
Auto Sales, January (14:00): 5.30M prior
Truck Sales, January (14:00): 9.25M prior

February 2 - Thursday
Challenger Job Cuts, January (7:30): 42.4% prior
Initial Claims, 01/28 (8:30): 250K expected, 259K prior
Continuing Claims, 01/28 (8:30): 2100K prior
Productivity-Prel, Q4 (8:30): 1.0% expected, 3.1% prior
Unit Labor Costs, Q4 (8:30): 1.9% expected, 0.7% prior
Natural Gas Inventor, 01/28 (10:30): -119 bcf prior

February 3 - Friday
Nonfarm Payrolls, January (8:30): 170K expected, 156K prior
Nonfarm Private Payr, January (8:30): 175K expected, 144K prior
Unemployment Rate, January (8:30): 4.7% expected, 4.7% prior
Avg. Hourly Earnings, January (8:30): 0.3% expected, 0.4% prior
Average Workweek, January (8:30): 34.3 expected, 34.3 prior
Factory Orders, December (10:00): 1.4% expected, -2.4% prior
ISM Services, January (10:00): 57.0 expected, 57.2 prior

End part 1 of 3
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