Sunday, October 15, 2017

The Daily, Part 1 of 3, 10-14-17

* * * *
10/14/2017 Investment House Daily
* * * *

Investment House Daily Subscribers:

MARKET ALERTS:

Targets hit: DATA; PLAY; SOHU; VMW
Entry alerts: None issued
Trailing stops: BLRX; INFI
Stop alerts: None issued

The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
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********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.

TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4

TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
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TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
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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

- SOX posts a solid week while the large caps trend slightly higher, small
and midcaps finish up their tests.
- Bank earnings disappoint for the most part, but don't take the financials
out of the upside picture.
- Fed inflation 'mystery' even as inflation is all around it. The solution:
tax reform, healthcare reform to get true growth and stop distorting our
labor and investment markets, not to mention killing the middle class.
- Leaders still look very good and there are plenty of stocks set up to move
higher.
- Earnings season just getting started, still looks to be time to continue
higher.

The week was one that saw SOX post some nice gains but for the rest of the
market it was mostly a series of modest gains and even more modest losses
that kept the trends higher. Some days started softer, some started upside,
but none could really yield strong gains. In the end, the trends held but
the momentum in the large cap indices definitely slowed.

SP500 2.24, 0.09%
NASDAQ 14.29, 0.22%
DJ30 30.71, 0.13%
SP400 -0.05%
RUTX -0.17%
SOX -0.67%


Many leaders, however, continued showing excellent strength as smaller
biotechs and drugs were still great, software was strong again, some retail
posted great gains, chemicals started to rally. Banks started reporting
earnings, and while the stock action was not necessarily great, they left
themselves in position to return to the upside.

Thus, while the overall momentum of the move is slowing, there is still
plenty of leadership that is moving and that continues to set up to continue
moving. Last week we discussed how stocks rallying into earnings often
continue the move during the initial phase if the results are good. The
results were not all that great from the banks, but the stock indices still
held the trends with modest net gains.

Perhaps some good earnings this week can result in some renewed upside from
the rest of the market. Even then, you still have to view this as a market
that has rallied nicely and has lost some momentum -- at least for the large
cap indices. RUTX has put in a nice 2 week test of the 10 day EMA while
SP400 midcaps moved laterally in a tight range. They are set to continue
the move from the look of their consolidation, and that makes sense: they
led the last leg higher, started to test, and the large cap indices started
upside.

Now they are rested after the large caps made their move. Perhaps time for
some rotation back to the smaller caps while the large caps take a breather.
They certainly have some very nice play setups to aide in an upside move.


NEWS/ECONOMY

The news on the week saw mostly mixed data. Actual data was not so great
while sentiment data was again strong.

It also saw the Fed confused by the 'mystery' of low inflation. Well, here
is even more of a mystery: inflation is NOT low. As discussed earlier in
the week, inflation is showing up everywhere except in price increases.
There is 'hidden' inflation everywhere, most predominant in the portions,
amounts, reduced materials, etc. We have known for years that producers and
sellers felt they could not raise prices for fear of losing market share.
So, they kept prices more or less in line while 'raising' them by the other
means cited.

It seems incomprehensible that the Federal Reserve, stacked with ivory tower
economists, would not know this. But of COURSE they do. It is a fiction.
They know they have to get rates higher, and even if 'prices' remain low via
what is charged, they are going to hike.

I really don't have a problem with that; there is inflation in other areas
as discussed. The problem is, there needs to be tax reform to get the
economy really producing and moving versus the subterfuge of pricing. The
ACA needs to be removed to eliminate the strangulation of small businesses,
the distortion of our labor market into millions more sub-29 hour per week
hourly jobs, and to actually get healthcare back to where you can get a good
policy at a decent price.

I cannot understand the fight to preserve a system that has quadrupled and
more premium prices and done the same with deductibles. The statistic of
'coverage' is a red herring: you can be covered because you are forced to
buy a policy, but then have no money left over to go to the doctor and pay
your deductible. Yes there are subsidies for the poorest, but none of the
middle class, or more rightly put, the former middle class, can qualify for
subsidies.

So, you have coverage on paper but in reality these people are basically
uninsured. It reminds me of an old joke: a boy asks his father for help on
his homework. "what is the difference between in theory and in reality?"
the son asks. The father says, "go ask your mother if she would sleep with
a man for a million dollars" and come back and tell me what she said. The
son does, and his mother says "well, it would be wrong, but we could pay off
the house, pay for you kids' college, and have a retirement. If there were
no strings attached, yes I would." The son reports her answer and the
father says "now go ask your sister the same question." The sister responds
"yes I would" without hesitation or any of the other conditions the mother
placed on the deal. The son reports her answer to the father. The father
says "So, here is the difference: in theory we have $2 million; in reality
we live with two concubines."


THE MARKET

CHARTS

SOX: Market leader last week, breaking to a series of new post-2000 highs,
indeed 10 of the last 11 sessions. Solid gains Monday, Tuesday, Wednesday,
and Friday. Okay, good moves and now up three weeks straight in a 45 degree
rise above the 10 day EMA. Perhaps a bit overbought near term as in this
series of rallies SOX typically rallies approximately 3 weeks before needing
a test.

RUTX: Excellent 2 week test back near the 10 day EMA after that mid-August
to early October surge. Amazing move, excellent test. Small caps could be
ready to move back upside next as the large cap indices take a breather.

SP400: The midcaps don't have the textbook test of the 10 day EMA a la
RUTX, but they also have rested, refusing to give up any ground in its 6
session tight lateral test. The 10 day EMA is now just below the
consolidation, and that often continues the move higher.

DJ30: Nice steady trend higher on the week with upside days and minor
downside. Climbing the 10 day EMA with good volume. Now up 5 weeks on this
move and that is extended for the Dow in these rallies. It is getting help
from the DJ20 transports as they broke to a new high Thursday. Gave it up
Friday, but right there.

SP500: Slight trend higher on the week as well, the 10 day EMA catching up
with the move. SP500 broke higher to start September, moving off the 50 day
MA, then tested in a lateral move through late September. Then a new break
higher and rally that took it through the 2007 upper trendline. Nice move,
now testing again. Not necessarily that overextended.

NASDAQ: Similar to SP500, NASDAQ came off the 50 day MA in late September
versus early that month, and it rallied into the prior Friday. Last week it
continued trending higher just over the 10 day EMA though at a much slower
pace. Trying to consolidate while holding the gains. Not sure it can, but
not as extended as DJ30.


Leadership

Software: Not as great a day Friday, but Thursday saw some good moves
upside from GLUU, CRM, VMW, MSFT and others. Looking at COUP as a new play
this week.

Biotechs/Drugs: Some great moves from INFI, IDRA, CNIT, BIIB. Decent
action from others, e.g. ARRY. Not all were great, e.g. BLRX, CNAT, but
there are some great setups we are looking at this weekend.

Semiconductors: A decent to very good week. AMD, AMAT, LRCX, ON, BRKS
showing very solid action. SMTC, SIMO, ADI, SLAB -- all solid. Lots of
strength.

China stocks: Mixed but started upside late week. They run hot and cold --
guess you call that volatile. SOHU exploded higher Friday and we banked
some strong gain. YY trended higher then broke higher Friday. BZUN finally
started upside again Friday. BIDU solid. CTRP looking decent but needs
more volume. BABA is testing the 20 day EMA on stronger volume. WUBA is
interesting.

Retail: Some great moves, e.g. TGT working well for us, WMT the cream of
the class. KORS trying to break out from a consolidation. HD in a nice 10
day EMA test. Not all are great: COST languishing after gapping lower.
JWN, M, DDS down. WSM gapped lower on results but is posting a nice
rebound.

FAANG: Decent just not inspired -- in most cases. FB up to the early
September top of its 3 month lateral range. AMZN breaking higher late week;
we will see if we can get in early week on a test. AAPL still below the 50
day MA. NFLX tested the 10 day EMA, trying to break higher again ahead of
earnings. GOOG posted a great week for us, rallying up the 10 day EMA.


Miscellaneous: Chemicals were great, e.g. CF, AGU. SQ continues a strong
move. NAK surged off the 200 day SMA.


MARKET STATS

DJ30
Stats: +30.71 points (+0.13%) to close at 22871.72

Nasdaq
Stats: +14.29 points (+0.22%) to close at 6605.80
Volume: 1.76B (-12.44%)

Up Volume: 888.95M (-32.3M)
Down Volume: 831M (-219M)

A/D and Hi/Lo: Decliners led 1.08 to 1
Previous Session: Decliners led 1.38 to 1

New Highs: 237 (+14)
New Lows: 47 (+6)

S&P
Stats: +2.24 points (+0.09%) to close at 2553.17
NYSE Volume: 768M (-2.51%)

A/D and Hi/Lo: Advancers led 1.46 to 1
Previous Session: Advancers led 1.11 to 1

New Highs: 264 (+42)
New Lows: 30 (-2)


SENTIMENT INDICATORS

VIX: 9.61; -0.30
VXN: 13.97; -0.36
VXO: 7.57; -0.48

Put/Call Ratio (CBOE): 0.85; -0.20


Bulls and Bears: Whoa, a big spike in bulls continues, moving over the 60
level with bears dropping like a rock. Getting very bullish, indeed too
bullish.

Bulls: 60.4 versus 57.5

Bears: 15.1 versus 17.0

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: 60.4 versus 57.5
57.5 versus 54.3 versus 50.5 versus 47.1 versus 49.5 versus 49.5 versus 48.1
versus 50.5 versus 57.5 versus 60.0 versus 60.2 versus 57.8 versus 50.0
versus 52.5 versus 54.9 versus 51.5 versus 50.00 versus 55.8 versus 50.00
versus 51.9 versus 58.1 versus 58.7 versus 58.5 versus 54.7 versus 51.9
versus 56.3 versus 55.8 versus 49.5 versus 56.7 versus 53.4 versus 57.7
versus 63.1 versus 61.2 versus 61.8 versus 62.7 versus 61.8 versus 58.2
versus 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

Bears: 15.1 versus 17.0
17.0 versus 17.1 versus 19.0 versus 20.2 versus 19.1 versus 19.1 versus 18.3
versus 18.1 versus 17.0 versus 16.2 versus 16.5 versus 16.7 versus 18.6
versus 18.8 versus 18.6 versus 18.3 versus 19.2 versus 18.3 versus 17.1
versus 17.3 versus 17.9 versus 17.9 versus 18.3 versus 17.5 versus 18.3
versus 18.1 versus 17.3 versus 13.75 versus 17.3 versus 16.5 versus 17.5
versus 17.6 versus 16.7 versus 17.6 versus 17.5 versus 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


OTHER MARKETS

Bonds: 2.275% versus 2.321%. Bonds rallied all week on the economic data
and the belief the Fed may not be able to hike as it wants. TLT tested the
200 day SMA the prior week and rallied right back up to the 50 day MA as of
Friday.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.321%
versus 2.345% versus 2.345% versus 2.361% versus 2.348% versus 2.327% versus
2.326% versus 2.341% versus 2.339% versus 2.312% versus 2.307% versus 2.236%
versus 2.222% versus 2.253% versus 2.276% versus 2.273% versus 2.246% versus
2.234% versus 2.201% versus 2.186% versus 2.19% versus 2.167% versus 2.134%
versus 2.042% versus 2.105% versus 2.072% versus 2.166% versus 2.210% versus
2.136% versus 2.129% versus 2.175% versus 2.169% versus 2.189% versus 2.217%
versus 2.183% versus 2.197% versus 2.185%


EUR/USD: 1.1823 versus 1.1834. Euro recovered back to test the 50 day MA
after breaching it the last week of September.

Historical: 1.1834 versus 1.18662 versus 1.1813 versus 1.17460 versus
1.17352 versus 1.17100 versus 1.1754 versus 1.17676 versus 1.17315 versus
1.1812 versus 1.17817 versus 1.1746 versus 1.17852 versus 1.18540 versus
1.19476 versus 1.19420 versus 1.19420 versus 1.19954 versus 1.19436 versus
1.1918 versus 1.1874 versus 1.19706 versus 1.19551 versus 1.20379 versus
1.2025 versus 1.19258 versus 1.19143 versus 1.18621 versus 1.19131 versus
1.18938 versus 1.19731 versus 1.19678 versus 1.19212 versus 1.18 versus
1.17516 versus 1.1813 versus 1.17595 versus 1.17107 versus 1.17812 versus
1.17445 versus 1.17751 versus 1.18216 versus 1.17652 versus 1.17596 versus
1.17619 versus 1.17975 versus 1.1774 versus 1.18718 versus 1.18457 versus
1.18072 versus 1.18281 versus 1.18293 versus 1.1683 versus 1.17419 versus
1.1646 versus 1.1637 versus 1.16640 versus 1.16271 versus 1.15280 versus
1.15549 versus 1.14735


USD/JPY: 111.852 versus 112.25. Dollar faded toward the 200 day SMA all
week as the data suggests the Fed might not be so tough as it says it will
be.

Historical: 112.25 versus 112.413 versus 112.41 versus 112.700 versus
112.653 versus 112.818 versus 112.79 versus 112.667 versus 112.716 versus
112.442 versus 112.86 versus 112.289 versus 111.649 versus 1.12125 versus
111.995 versus 112.454 versus 111.559 versus 111.435 versus 110.846 versus
110.01 versus 110.62 versus 110.216 versus 109.434 versus 107.847 versus
108.444 versus 109.132 versus 108.747 versus 110.254 versus 110.049 versus
110.289 versus 109.652 versus 108.04 versus 109.160 versus 109.573 versus
109.195 versus 109.648 versus 109.173 versus 109.205 versus 109.333 versus
109.842 versus 110.6621 versus 109.927 versus 109.183 versus 109.177 versus
110.03 versus 109.09 versus 110.09 versus 110.757 versus 110.689 versus
109.963 versus 110.717 versus 110.368 versus 110.28 versus 110.704 versus
111.07 versus 111.166 versus 111.897 versus 111.176


Oil: 51.45, +0.85. Oil held the 200 day SMA test and rebounded Tuesday and
again Friday. Still looks as if this higher low could break it out of its
range.


Gold: 1304.60, +8.10. Gold rallied on the week and then broke back up
through the 50 day MA on Friday. It too doubts the Fed.


MONDAY

Earnings are taking over the headlines as the banks started the show and now
the floodgates open. The initial response was not great as the banks
faded -- for the most part. The question is whether the market has room for
more upside on some good earnings after the gains in DJ30, SOX and to a
lesser extent, NASDAQ and SP500.

As noted before the real question is whether RUTX and SP400, after their
tests, are ready to take up leadership again and move back upside, getting
money pushed their way, as the large cap indices take a break after their
move up that started as RUTX and SP400 started to take a breather.

We think that could be the case. There are plenty of setups in the group,
and they could provide another good leg higher over the next couple of weeks
even if the market decides to cap out the move at that point. That is what
I discussed last week: the continued rally at the first weeks of earnings
that then stalls. With the patterns we see there are still very good setups
to play that move and still make money before a stall.

Thus, we still believe the move could top out once the earnings saturation
comes, typically 2 or so weeks in once the big names start announcing, but
there are also great setups to play during that time as well as letting
positions work and banking gain as it comes. We did a lot of that last
week, particularly with the October expiration coming up this week.

Therefore, we intend to play good moves upside because there are so many
good stocks making good moves and in prime position to continue or start a
move. Yes, as noted last week some can get left at the altar when the move
runs out of steam, but the scenario we are playing allows for some more
upside before that occurs.

Have a great weekend!



SUPPORT AND RESISTANCE

NASDAQ: Closed at 6605.80

Resistance:
More new highs

Support:
6477 is the September intraday high
6461 is the July 2017 prior all-time high
6450 is the early September high
The 50 day EMA at 6433
The 2016 trendline at 6366
6341.70 is the all-time high from early June.
6300 is the mid-June interim high
6205 is the late May all-time high
The 200 day SMA at 6079
5996 is the recent May 2017 low
5937 is the all-time high from April
5915 is the tops of the March to April 2017 range
5910 is the lower gap point from mid-April
5800 from the February consolidation lows
5661 is the late January upper gap point
5601 is the January lower gap point


S&P 500: Closed at 2553.17

Resistance:
New highs again

Support:
2519 is the upper channel line from the March 2009 uptrend channel
The 50 day EMA at 2498
2491 is the August all-time high
2480 the late August and early August highs
2453.46 is the June prior all-time closing high
2409 is the July 2017 closing low
2406 is the all-time high from May 2017
The 200 day SMA at 2403
2401 is the March 2017 all-time high
2352 is the recent May 2017 low
2348 is the April 2017 lower gap point
2329 is the March and April twin lows
2322 is the March 2017 low
2301 is the late January 2017 high
2298 is the late January 2017 high
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high


Dow: Closed at 22,871.72

Resistance:

Support:
The 10 day EMA at 22,740
22,420 is the September high
The 50 day EMA at 22,241
22,179 is the August 2017 all-time high
22,086 is the mid-August lower high
21,681is the July prior all-time high
21,638 is the July 2017 closing high
21,529 is the June 2017 high
The 200 day SMA at 21,170
21,169 is the March 2017 all-time high
20,547 is the lower gap point from late April 2017
20,412 is the March 2017 low
20,400 is the mid-April 2017 low.
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
19,732 is the January 2017 low
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
18,351 is the prior all-time high from May 2015

End part 1 of 3
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Sunday, October 08, 2017

The Daily, Part 1 of 3, 10-7-17

* * * *
10/7/2017 Investment House Daily
* * * *

Investment House Daily Subscribers:

MARKET ALERTS:

Targets hit: None issued
Entry alerts: CNAT
Trailing stops: None issued
Stop alerts: None issued

The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html

********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.

TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4

TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4

TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************

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

- Headline jobs report bad but some internals are not viewed as that bad
though they have their issues as well.
- Stocks pause on the week after the large caps took the leadership while
small and midcaps rest
- Plenty of leadership still in great position, others trying to rise as new
money aids virtuous rotation.
- Higher minimum wages, ACA taking out mid-market San Fran restaurants
- President may strike deal for short-term healthcare action, talks trash to
NK again

Stocks started soft but started to bounce back upside early in the session.
That move was chop-blocked, however, and stocks fell into midday as North
Korea talked of some other test this weekend. That gave reason to think a
bit more about the Trump version of the line from the movie '2010' -- 'You
see, something's going to happen,' says the being that was formerly Dave
Bowman. 'What? What's going to happen' asks Dr. Floyd (Roy Shieder).
'Something wonderful' responds the former Dave Bowman. Trump's version
after a dinner meeting with top military brass isn't so hope filled: 'this
is the calm before the storm.' When a reporter asked what he meant, Trump
responded 'you will see.' With that backdrop, when NK talked of tests and
launches, stocks fell.


You see, something wonderful is going to happen What? What is
going to happen?

Something wonderful.

The indices fell to the early afternoon, but then recovered lost ground into
the last hour. That flipped NASDAQ to positive as the NASDAQ 100 again led
it higher while SOX was already showing very good action all session. The
rest, well, they just limped home flat, happy to get to the weekend after a
week of new highs was followed with a day off from the large cap indices and
a good lateral test by the small caps and midcaps.

SP500 -2.74, -0.11%
NASDAQ 4.82, 0.07%
DJ30 -1.72, -0.01%
SP400 -0.08%
RUTX -0.12%
SOX 0.45%
NASDAQ 100 0.12%

VOLUME: NYSE -7%, NASDAQ -8%. Modest fade in trade on a weak session. That
fits the overall solid price/volume action seen in the rally of late. There
is a lot of complaining about this rally as being overdone, preceding a
sharp drop, etc., but the price/volume action is good and of course there is
good leadership.

ADVANCE/DECLINE: NYSE -1.8:1, NASDAQ -1.1:1. With the small and midcaps
the loss leaders (after leading higher for over a month), breadth was a bit
more negative.

Stocks were already soft pre-market ahead of the jobs report with SP500
lower while DJ30 and NASDAQ traded slightly positive. Then the September
negative jobs report hit and stocks slid to negative. Not a sharp selloff,
they just lost the already Jello-like bids the morning showed.

The jobs report, despite turning in -33K jobs the first negative tally since
sometime back in the financial crisis (2010), actually showed some
ostensibly internal positives. Wages were higher and participation jumped
two tenths. New full-time jobs rose 935K, the fourth highest level every
reported. Further, 1.5M people HAD a job but just could not get to work
because of the storms.

There is some controversy regarding wages. The headline at 0.5% was solid
and the 2.9% year/year was a nice jump from 2.5%. BUT . . . 1) the Food &
Beverage sector (read waiters, busboys), one of the lowest wage sectors,
lost 105,000 jobs. Take out those low wage jobs and you skew the average
wage higher; 2) then you had companies needing workers but could not get
them because they were taking care of their homes, etc. Shortage of workers,
wages go up; 3) Finally, the BLS simply bungled (putting the best light on
it) the data reporting, substituting the preliminary August weekly earnings
in the July revised (final) weekly earnings, making July lower than the
'final' read previously reported and making the rise look greater than it
was, and by a long shot.

Still, the headline negative number was easily explained and there is some
substance in arguing the internals were better. Given that, we thought
stocks would recover off a lower open. They were indeed doing that until
NKorea started flapping its jaws again. Stocks sold and then had to recover
yet again, and on this Friday ahead of Columbus Day (NOT a market holiday
anymore) that was a bridge just too far.

Even so there were some solid moves. NFLX continued upside along with GOOG,
both breakouts from cup with handle bases. AMZN added more upside HTHT took
off upside once more. INFI of the small biotechs still solid. CNAT surged
then faded, catching us in between. AMAT started upside again. There were
some very good moves as noted, but mostly modest gains to flat action.
After the rally on the week, not bad.

Thus, stocks made it to the weekend holding gains on the week, avoided a
potential blowup on the jobs report, and face next week with the same
situation if once again the world avoids any serious pitfalls. Of course
Monday is the Catalonian meeting regarding the independence vote, the market
is significantly overbought, bulls are higher, magazines covers depict bulls
in every market, and the algorithms are still out there. Kind of business
as usual.

Business as usual and thus far none of that has stopped the advance. We let
positions work higher whether that meant watching them make good moves as
noted above or just testing/resting after very good moves. New weeks are
always approached with some apprehension as you wonder if this is the week
the algos hit. Well, I can tell you, if there is a test on NFLX, GOOG, HTHT
or other good movers to start the week, they will be quite tempting to pick
up a few more positions.


THE MARKET

CHARTS

SOX: Leader on Friday after slowing its rally Tuesday to Thursday. Punched
out another post-2000 high after a pause though a Friday move on lighter
trade is not a confirmation of a new move upside.

NASDAQ moved higher as well, overcoming a gap lower to post a very modest
gain. Excellent week, however, continuing the rally to higher hand higher
highs off the 50 day MA test. Big help from FAANG stocks late in the week,
e.g. GOOG, NFLX.

RUTX: So important to the market with its incredible recovery off the
mid-August low, RUTX spent Tuesday to Friday working laterally in a very
tight range after blasting off to a new high yet again on Monday. The rally
put it in an overbought condition and it is trying to work it off while
holding onto all the gains with that tight lateral move. Typically it waits
for or fades a bit to meet the rising 10 day EMA, and that is what gives the
move its rest and support for another break higher, all things remaining
equal.

SP400: The midcaps show similar action, a big Monday move then drifting
upside and sideways into the weekend. Strong move, got a bit over its skis,
now waiting for the 10 day EMA to catch up to the move.

DJ30: Flat Friday after a week that saw DJ30 break higher Monday and resume
the flurry of new highs after 2 weeks of rest. Excellent action.

SP500: Also took Friday off after a strong week that scored four new
all-time highs. Similar to DJ30, SP500 broke higher out of a 2.5 week
lateral consolidation, really aided by strength in financial stocks.


LEADERSHIP

FAANG: NFLX, GOOG led again, joined by AMZN and its move through the 50 day
MA. FB was up but uninspiring while AAPL continues below the 50 day MA.

Software: A solid week again. MSFT broke higher off the 50 day MA. FEYE up
nicely along with RHT. CRM is trying to make its move. PANW is trying to
move higher as well. Still a solid group.

Biotechs: Definitely mixed as some smaller names sold (PACB, IMMU) while
others surged (INFI, IDRA). Big names were mixed as BIIB gapped upside,
AMGN held steady, CELG faded. Overall still very interesting.

China stocks: Faded early week as they ran well already, then rallied late.
SOHU surged Friday along with HTHT. YY in a nice doji test of the 10 day
EMA. BABA, BIDU moving laterally at near support. BZUN tested more than we
wanted but showing doji at the 50 day MA.

Financial: Nice week, taking a breather Friday after trending higher then
breaking upside Thursday. C, BAC, JPM, GS all showing this action.

Semiconductors: Some great tests on the week after good moves, some
starting upside Friday, e.g. AMAT. ON continued marching higher. LRCX in a
great test. HIMX trying to break higher and SIMO heading upside. MU
setting up a nice flag test of the 10 day EMA.

Oil: Continues to intrigue and we picked up some DO on the week. Still
looking at ESV, APC and this weekend CRZO to see if there are some breaks
higher from promising patterns even as oil backs off resistance.

Retail: After good moves mostly testing. DLTR added some upside on the
week. GPS, KORS, CONN testing. ROST trended higher all week. COST sales
were disappointing and it gapped sharply lower Friday.

Metals: Interesting action in some of the group. ZEUS in a nice flag test
of a breakout. Some industrial metals are setting up.


MARKET STATS

DJ30
Stats: -1.72 points (-0.01%) to close at 22773.67

Nasdaq
Stats: +4.82 points (+0.07%) to close at 6590.18
Volume: 1.75B (-7.41%)

Up Volume: 954.54M (-225.46M)
Down Volume: 763.67M (+96.53M)

A/D and Hi/Lo: Decliners led 1.11 to 1
Previous Session: Advancers led 1.63 to 1

New Highs: 193 (-102)
New Lows: 18 (-5)

S&P
Stats: -2.74 points (-0.11%) to close at 2549.33
NYSE Volume: 693.967M (-6.95%)

A/D and Hi/Lo: Decliners led 1.75 to 1
Previous Session: Advancers led 1.58 to 1

New Highs: 172 (-77)
New Lows: 19 (+11)


SENTIMENT INDICATORS

VIX: 9.65; +0.46
VXN: 13.33; +0.45
VXO: 7.85; +0.22

Put/Call Ratio (CBOE): 0.87; +0.03


Bulls and Bears: After dipping as the market started a new spike higher, of
course the bears are back up, pushing into the rarified air near 60 that is
the top of the typical range. Bears held pretty much steady.

Bulls: 57.5 versus 54.3

Bears: 17.0 versus 17.1

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: 57.5 versus 54.3
54.3 versus 50.5 versus 47.1 versus 49.5 versus 49.5 versus 48.1 versus 50.5
versus 57.5 versus 60.0 versus 60.2 versus 57.8 versus 50.0 versus 52.5
versus 54.9 versus 51.5 versus 50.00 versus 55.8 versus 50.00 versus 51.9
versus 58.1 versus 58.7 versus 58.5 versus 54.7 versus 51.9 versus 56.3
versus 55.8 versus 49.5 versus 56.7 versus 53.4 versus 57.7 versus 63.1
versus 61.2 versus 61.8 versus 62.7 versus 61.8 versus 58.2 versus 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

Bears: 17.0 versus 17.1
17.1 versus 19.0 versus 20.2 versus 19.1 versus 19.1 versus 18.3 versus 18.1
versus 17.0 versus 16.2 versus 16.5 versus 16.7 versus 18.6 versus 18.8
versus 18.6 versus 18.3 versus 19.2 versus 18.3 versus 17.1 versus 17.3
versus 17.9 versus 17.9 versus 18.3 versus 17.5 versus 18.3 versus 18.1
versus 17.3 versus 13.75 versus 17.3 versus 16.5 versus 17.5 versus 17.6
versus 16.7 versus 17.6 versus 17.5 versus 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


OTHER MARKETS

Bonds: 2.361% versus 2.348%

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.348%
versus 2.327% versus 2.326% versus 2.341% versus 2.339% versus 2.312% versus
2.307% versus 2.236% versus 2.222% versus 2.253% versus 2.276% versus 2.273%
versus 2.246% versus 2.234% versus 2.201% versus 2.186% versus 2.19% versus
2.167% versus 2.134% versus 2.042% versus 2.105% versus 2.072% versus 2.166%
versus 2.210% versus 2.136% versus 2.129% versus 2.175% versus 2.169% versus
2.189% versus 2.217% versus 2.183% versus 2.197% versus 2.185%


EUR/USD: 1.17352 versus 1.17100. Still holding the same lows the past two
weeks after breaking below the 50 day MA.

Historical: 1.17100 versus 1.1754 versus 1.17676 versus 1.17315 versus
1.1812 versus 1.17817 versus 1.1746 versus 1.17852 versus 1.18540 versus
1.19476 versus 1.19420 versus 1.19420 versus 1.19954 versus 1.19436 versus
1.1918 versus 1.1874 versus 1.19706 versus 1.19551 versus 1.20379 versus
1.2025 versus 1.19258 versus 1.19143 versus 1.18621 versus 1.19131 versus
1.18938 versus 1.19731 versus 1.19678 versus 1.19212 versus 1.18 versus
1.17516 versus 1.1813 versus 1.17595 versus 1.17107 versus 1.17812 versus
1.17445 versus 1.17751 versus 1.18216 versus 1.17652 versus 1.17596 versus
1.17619 versus 1.17975 versus 1.1774 versus 1.18718 versus 1.18457 versus
1.18072 versus 1.18281 versus 1.18293 versus 1.1683 versus 1.17419 versus
1.1646 versus 1.1637 versus 1.16640 versus 1.16271 versus 1.15280 versus
1.15549 versus 1.14735


USD/JPY: 112.643 versus 112.818. Still in the 1.5 week lateral move along
the 10 day EMA and just below the July and May peaks.

Historical: 112.818 versus 112.79 versus 112.667 versus 112.716 versus
112.442 versus 112.86 versus 112.289 versus 111.649 versus 1.12125 versus
111.995 versus 112.454 versus 111.559 versus 111.435 versus 110.846 versus
110.01 versus 110.62 versus 110.216 versus 109.434 versus 107.847 versus
108.444 versus 109.132 versus 108.747 versus 110.254 versus 110.049 versus
110.289 versus 109.652 versus 108.04 versus 109.160 versus 109.573 versus
109.195 versus 109.648 versus 109.173 versus 109.205 versus 109.333 versus
109.842 versus 110.6621 versus 109.927 versus 109.183 versus 109.177 versus
110.03 versus 109.09 versus 110.09 versus 110.757 versus 110.689 versus
109.963 versus 110.717 versus 110.368 versus 110.28 versus 110.704 versus
111.07 versus 111.166 versus 111.897 versus 111.176


Oil: 49.29, -1.50. Oil faded through the 200 day SMA and held the 50 day
MA. Hit near the top of the trading range and fell again. Very important
test to see if oil can put in a higher low and move back up to challenge the
top of the range. A stronger dollar hampers that effort.


Gold: 1274.90, +1.70. 4.5 week pullback showing a doji that tapped near
the 200 da and rebounded Friday. Gold is acting as if the Fed is going to
hike and reduce its balance sheet.


MONDAY

PPI, CPI, Retail Sales, Michigan sentiment October preliminary. A bit of
data to chew on, but after the jobs report, even with the headline jobs
miss, the Fed will use the higher wages as its cue to continue with its rate
hiking bias with December said to be the next hike. Of course higher wages
are not inflationary if they are higher because there is plenty of work due
to a solid economy. Supply prevents bottlenecks.

It is interesting that San Francisco is finding out that the higher minimum
wage and the high cost of ACA compliance with restaurants is causing some of
the middle market favorites to go out of business. How shocking: in a
low-margin business, forced higher wage costs and forced higher insurance
costs are causing companies to go out of business. For every dollar
increase in the minimum wage, Kevin Alexander has found a $20K reduction in
independent restaurant profits (roughly 10% for the size of restaurants
being tracked). San Fran had a $5/hour hike. Carnage. The ACA added
another $72K of annual expenses (in 2015, and prices have risen since -- a
lot). That takes off another 30% of profits for these businesses. That is
50%? Who can survive that?

Late today it is reported that the President met with Schumer and another
deal of sorts was struck to put in place executive orders re rolling back
some parts of the ACA to make it easier to group together through
"association health plans" and the like, making a year or two deal that
ultimately leads to block grants to the states. We will see.

At the same time Trump tweets of implied war with N. Korea, nothing that
Presidents have talked to NK for 25 years but it has not worked; 'sorry, but
only one thing will work' he tweeted.

Okay, some positives, some not so positive. Status quo I suppose.

Lots of talk about an overdone market with Way too low volatility that
surely must lead to a selloff it is said. Again, a selloff will come, but
look at how the indices have acted of late: RUTX, SP400 on big runs and are
now resting. SP500, DJ30, NASDAQ had rested but then last week they started
back upside with nice rallies.

Put another way, there is virtuous rotation ongoing as an area rallies to
gains, then rests in place or with modest tests while other parts of the
market rally. That means some new money still coming into stocks because if
not, money would be pulled from one area and put into another, with the
former falling while the latter rises.

For now the action in the indices is very good and the action in leadership
is very good. They are moving up, resting, then moving up again. The
algorithms are still out there but thus far the new highs have not been
sold. Can still happen, but we also see a lot of really solid setups --
still -- and we are looking at more upside this week given the action still
shows plenty of leadership with money moving into the market to drive areas
higher.

Have a great weekend!


SUPPORT AND RESISTANCE

NASDAQ: Closed at 6590.18

Resistance:
Another new high Friday.

Support:
6477 is the September intraday high
6461 is the July 2017 prior all-time high
6450 is the early September high
The 50 day EMA at 6397
The 2016 trendline at 6342
6341.70 is the all-time high from early June.
6300 is the mid-June interim high
6205 is the late May all-time high
The 200 day SMA at 6051
5996 is the recent May 2017 low
5937 is the all-time high from April
5915 is the tops of the March to April 2017 range
5910 is the lower gap point from mid-April
5800 from the February consolidation lows
5661 is the late January upper gap point
5601 is the January lower gap point


S&P 500: Closed at 2519.36

Resistance:
New high Friday.

Support:
2515 is the upper channel line from the March 2009 uptrend channel
2491 is the August all-time high
The 50 day EMA at 2486
2480 the late August and early August highs
2453.46 is the June prior all-time closing high
2409 is the July 2017 closing low
2406 is the all-time high from May 2017
2401 is the March 2017 all-time high
The 200 day SMA at 2396
2352 is the recent May 2017 low
2348 is the April 2017 lower gap point
2329 is the March and April twin lows
2322 is the March 2017 low
2301 is the late January 2017 high
2298 is the late January 2017 high
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high


Dow: Closed at 22,773.67

Resistance:

Support:
22,420 is the September high
The 10 day EMA at 22,562
22,179 is the August 2017 all-time high
The 50 day EMA at 22,109
22,086 is the mid-August lower high
21,681is the July prior all-time high
21,638 is the July 2017 closing high
21,529 is the June 2017 high
21,169 is the March 2017 all-time high
The 200 day SMA at 21,097
20,547 is the lower gap point from late April 2017
20,412 is the March 2017 low
20,400 is the mid-April 2017 low.
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
19,732 is the January 2017 low
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
18,351 is the prior all-time high from May 2015

End part 1 of 3
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