Looks Like Afternoon Short Covering on Expiration Friday

MARKET SUMMARY

- Growth takes the point as another low volume bounce rally takes a shot at more than a few days upside.
- Big names get some solid bids thrown their way.
- Plenty of off-schedule news but the non-stock story remains bonds.
- Cash piles up to two year highs as fund managers pare back. Just in time for a bounce of course.
- Trying the upside again off of the same support.

Impressive price performance for the growth indices as all indices traded higher on the session. Sloppy start but NASDAQ and its smaller growth allies took the point and led stocks to midday and then what has become a typical afternoon or post-rally test (read collapse). But, there was no meltdown this session as stocks held the test and indeed rallied in the last hour to close out at or near session highs.

Outside of growth areas the moves were up but hardly impressive as the session belonged to growth. Low volume was disappointing (what is new?) but there was plenty of upside.

SP500 7.22, 0.38%
NASDAQ 35.23, 0.86%
DJ30 20.55, 0.12%
SP400 0.57%
RUTX 1.04%
SOX 1.05%

Volume: Lowest trade of 2014 at -22% NYSE, -8.6% NASDAQ. Kind of lacking in power you could say.

A/D: 1.85:1 NYSE, 2.2:1 NASDAQ


Tons of news stories from all areas.

Geopolitics: Russia (a.k.a. Putin) says it is pulling back from the Ukraine border, begging the question didn't Russia already pull back its troops? I guess not, but not to worry, it is doing so now. Then again, US and other observers say they don't see any troop movements. Oh yea, they were already gone, right?


I looked into Putin's eyes and saw his soul. Then I peed myself.


China's PBOC says the yuan will be the reserve currency . . . at some point . . . just as it looks like China's housing market is about to go bust. If the US just had some decent old-fashioned American pro-growth policies in place we could surge ahead of all economies. As it is we are squandering a great opportunity.


When are we going to Saigon? They said we were going to Saigon for some R&R.

Of course when a government faces economic issues it diverts the attention of the masses to aggression of other countries. Thus China enters waters Vietnam claims and starts setting up drilling platforms, etc. Vietnamese citizens are outraged and burn Chinese owned factories and kill Chinese workers at those plants. Perhaps an overreaction, but obviously there is no love lost between the two. In any event, now China is massing troops and equipment at the Vietnamese border. Former ally, not in competition with China and thus an adversary. Russia better watch out who it gets into bed with.


$/yen broke support and the dollar continued to fade, leaving the ball in Japan's court to intervene again (and again) to weaken it as Abe must have.

Bonds keep dancing at key support but yields managed to bounce Monday in no doubt a relief move.


Cash is king: As noted, asset managers have the most cash on the sidelines in 2 years. How appropriate when there is Tepper, Acampora and others saying they are nervous (hey, we were in that group as well), that the market decides to rally. We saw many stocks in position to move, important stocks e.g. GOOG, PCLN, TRIP, AAPL, and we are in all of them again. They still have some important resistance ahead, but stocks showed some support last week and indeed the past few weeks at the same levels. When the big names were ready as well, they moved.


Chart shows one interesting fact: in 2008 and early 2009 cash levels hit their highs and this just as the market bottomed.


THE MARKET

CHARTS

SOX was important with a 1+% move along with RUTX. SOX moved back above its trendline after last Thursday's close below the 50 day EMA. That is the reaction the bulls want to see to such a test.

NASDAQ put in a nice break higher off a higher low, now knocking at the 50 day EMA again where it failed the last four times it came within spitting distance over the past 6 weeks. Important level ahead, but if the big boys keep moving as they were Monday, they should push through.

RUTX broke higher off of last week's lower test but intraday reversal off of that test. Running right at the 200 day SMA, its first key test in this move.

SP500 bounced off the 50 day EMA as you would expect. Lagged the other indices but that is no issue as the pattern is strong.

DJ30 showed a rather weak day of upside off the 50 day EMA, but it was not the large cap NYSE stocks' day as bids went to growth and the large caps just followed for the day.

SP400 midcaps made it to the lower trendline and the 50 day SMA. First important test of this run, but the key test is near 1370.


LEADERS

Big names: As noted, the big names on NASDAQ were on the move and they pushed NASDAQ higher. PCLN, NFLX, GOOG, AAPL, TRIP.

Energy: Starting a rebound after a couple of weeks testing, e.g. PTEN, HAL, ATHL.

Utilities: Hit pretty hard, e.g. AEP.


OTHER MARKETS

Euro/Dollar: Euro took back some of the late week gains but this is simply a nice easy flag test of the 50 day EMA.

1.3170 versus 1.3698 versus 1.3716 versus 1.3713 versus 1.3702 versus 1.3754 versus 1.3853 versus 1.3914 versus 1.3928 versus 1.3878 versus 1.3875 versus 1.3865

Dollar/Yen: Dollar dove lower to a lower low but reversed to take it all back. Okay, good shakeout at the bottom of the four month range.

102.65 versus 101.49 versus 101.52 versus 101.84 versus 102.27 versus 102.15 versus 101.73 versus 101.81 versus 101.53 versus 101.73 versus 101.68 versus 102.11


Bonds: Fell to the 10 day EMA after a strong run. Testing a bit.

10 year: 2.54% versus 2.51% versus 2.50% versus 2.54% versus 2.61% versus 2.66% versus 2.62% versus 2.60% versus 2.59% versus 2.59% versus 2.61% versus 2.59% versus 2.67% versus 2.69% versus 2.70% versus 2.67% versus 2.68% versus 2.69% versus 2.73% versus 2.71% versus 2.72% versus 2.64% versus 2.62% versus 2.64% versus 2.62% versus 2.65% versus 2.69% versus 2.68% versus 2.70% versus 2.73% versus 2.79%


Oil: 102.65, +0.64. Today several stories talked of finally getting some relief at the gas pump. This of course two weeks after oil bottomed and is bouncing back toward 105. So, there won't be much of a respite with respect to lower priced gasoline.


Gold: 1294.10, +0.80. Still a very tight lateral pattern at the 200 day SMA. Nice setup.


MARKET STATISTICS

NASDAQ
Stats: +35.23 points (+0.86%) to close at 4125.81
Volume: 1.57B (-8.67%)

Up Volume: 1.19B (+150M)
Down Volume: 394.8M (-279.72M)

A/D and Hi/Lo: Advancers led 2.23 to 1
Previous Session: Advancers led 1.56 to 1

New Highs: 38 (+27)
New Lows: 56 (-26)

S&P
Stats: +7.22 points (+0.38%) to close at 1885.08
NYSE Volume: 522M (-22.09%)

A/D and Hi/Lo: Advancers led 1.85 to 1
Previous Session: Advancers led 2.07 to 1

New Highs: 112 (+21)
New Lows: 58 (-24)

DJ30
Stats: +20.55 points (+0.12%) to close at 16511.86


SENTIMENT INDICATORS

VIX: 12.42; -0.02
VXN: 15.1; -0.15
VXO: 11.64; -0.29

Put/Call Ratio (CBOE): 0.81; -0.08


Bulls and Bears:

Bulls continue the move: 55.1% versus 55.8% versus 54.7%. A bit of a fade, but just a bit. Never hit an extreme yet.

Bears fade yet again: 19.4% versus 19.7% versus 20.6

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.




Note the extreme bullishness: it was this high in 2007 at the crash, in early 2005 as well.

Bulls: 55.1% versus 55.8 versus 54.7
51.6 versus 50.5 versus 54.6% versus 50.5 versus 54.7% 52.0% 54.6% 53.5% 46.5% 41.8% 45.9% 53.1% 57.6 56.1 60.6% 61.6% 60.0% 58.2% 57.1% 55.7% 53.6% 52.6% 55.2% 52.6 49.5 42.3% 45.4 46.4% 44.3% 42.3% 37.1% 37.1% 38.1% 43.3%.

Background: Last undercut 35%, the threshold for bullishness, in early June 2012.

Bears: 19.4% versus 19.7% versus 20.6%
21.7% versus 20.6 versus 18.6% 18.6% 17.5% 17.4% 15.1% 17.2% 17.2% 17.4% 17.4% 15.3% 15.1 15.3% 15.2% 15.2% 14.0 14.3 14.3% 14.4 15.5 15.5% 15.6% 16.5% 18.5 21.6% 20.6% 18.6% 20.6% 21.6% 22.7% 23.7% 23.8% 21.6%.

Background: Over 35% is the threshold to be really be a good upside indicator. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.


TUESDAY

Growth moved to the lead for a session but the low volume indicates there was not much participation and that the move, for now is yet again, another relief move. Not going to fret over that too much; such is the market right now and volume or not, there are some important stocks that set up moves and are now making the moves.

The big test is how these leaders and 'name' stocks that broke higher sustain their moves as they approach potential right shoulder tops in head and shoulders patterns. PCLN, NFLX, TRIP are examples. They have power and can fly, but they are going to need to show that power.

We picked up several positions on this move as they were making the bounce they set up during that back and forth of the past several weeks that found support at the prior lows. Again, now we see what kind of strength they have at those prior peaks.



SUPPORT AND RESISTANCE

NASDAQ: Closed at 4125.81

Resistance:
4131 is the March 2014 low
The 50 day EMA at 4135
4246.55 is the January 2014 peak
4277 is the March lower gap point
4289 is the July 2000 recovery high
4328 is the lower November 2012 trendline
4372 is the March 2014 high
4424 is the upper channel line for the November 2012 to present uptrend.

Support:
4104 is the lower gap point from 12/20/13
4070 is the series of highs from late November/early December
The 200 day SMA at 4005
3991 is the prior November 2013 high and the post-bear market high.
3968 is the February 2014 low
3946 is the April 2014 intraday low
3855 is the November low
3819 is the early October high
3801 is the September 2013 high.
The October low at 3750
3697 is the August high and a prior post-bear market high in the recovery.


S&P 500: Closed at 1885.08

Resistance:
1886 is the December 2012 up trendline
1883.57 is the early March high.
1897 is the all-time high hit in April 2014 and is giving way.

Support:
The 50 day EMA at 1866
The December and January highs at 1848
1837 is the lower trendline from 11/2012
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
The 200 day SMA at 1787
1775.22 is the October prior all-time high
1768 is the December 3013 low
1738 is the February 2014 low
1730 is the September 2013 peak
1710 is the August 2013 peak.
1698 to 1700 are the July and August interim highs
1687 is the May high and post-bear market high
1685 is the mid-August 2013 upper gap point
1657 is the late August upper gap point
1654 is the June 2013 peak
1646 is the October 2013 low just before the surge into early 2014


Dow: Closed at 16,510.80

Resistance:
16,589 is the December 2013 all-time high
16,632 is the April 2014 all-time high
16,848 is a lower trendline off the 11/2012 low

Support:
16,506 is the March 2014 peak
The 50 day EMA at 16,410
16,257 is the January 2014 low
16,179 is the November 2013 peak.
The 200 day SMA at 15,887
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak
15,542 is the May 2013 intraday high
15,340 is the February 2014 low
15,318 is the June closing high
15,050 from the August 2013 interim recovery high
14,888 is the April peak and prior all-time high
14,844 is the June intraday low
14,762 is the August 2013 low
14,551 is the June 2013 intraday low on the selloff (14,659 closing)


Economic Calendar

May 21 - Wednesday
MBA Mortgage Index, 05/17 (7:00): 3.6% prior
MBA Mortgage Purchas, 05/17 (7:00)
Crude Inventories, 05/17 (10:30): 0.947M prior
FOMC Minutes, 4/30 (14:00)

May 22 - Thursday
Initial Claims, 05/17 (8:30): 305K expected, 297K prior
Continuing Claims, 05/12 (8:30): 2700K expected, 2667K prior
Existing Home Sales, April (10:00): 4.66M expected, 4.59M prior
Leading Indicators, April (10:00): 0.5% expected, 0.8% prior
Natural Gas Inventor, 05/17 (10:30): 105 bcf prior

May 23 - Friday
New Home Sales, April (10:00): 415K expected, 384K prior

May 24 - Saturday
Durable Goods -ex tr, April (8:30)

By: Jon Johnson, Editor
Copyright 2014 | All Rights Reserved

Jon Johnson is the Editor of The Daily at InvestmentHouse.com

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

A Tale of Two Markets

MARKET SUMMARY

- DJ30 posts a new closing high, RUTX hits a new selloff low. A tale of two markets.
- Volatility remains but near term the growth sectors finally look a bit sold out.
- March Wholesale Inventories spike, raise hope for a positive Q1 GDP revision, though history shows it likely pulls from Q2.
- JOLTS: confirms the 'issues' with the monthly jobs report, indicate non-farm numbers to fall and a possible 'jobs' recession.
- Looking at the indices, sectors, stocks, the market looks as if it wants to try a bounce.

Volatility calms down, just a bit, for a session as indices close Friday mostly positive.

Not as dramatic an intraday swing, but once again stocks were heading in one direction (lower) and reversed field to close higher. No big intraday gyrations though the morning was again up and down and back and forth before stocks pulled into an upside trend. Even then the afternoon was a bit shaky as NASDAQ swung 20 points from the high to the mid-afternoon low.

Still, it was a comparatively quiet session to end the week. The market covered a lot of ground but really didn't go anywhere on the week. It needed a rest. It took it. Boring session, but boring can be good as it appears RUTX and NASDAQ may be a bit sold out for the near term.

SP500 2.85, 0.15%
NASDAQ 20.37, 0.50%
DJ30 32.37, 0.20%
SP400 0.24%
RUTX 0.89%
SOX -0.32%

Volume faded on the upside: 583M (-7.1%); 1.953B (-18.3%)

A/D: 1.3:1 NYSE, 1.7:1 NASDAQ. Yes, somewhat quiet but as with boring, quiet can be good.

The action left the indices little changed from Thursday and most of them down for the week, but the work may be done for now. By 'work' I mean putting in a short term bottom.

NASDAQ tested the lows from three weeks back and is showing improved MACD. Its overall pattern still makes you queasy, but near term it looks as if it wants to try a bounce. RUTX is similar. It put in a new selloff low on Friday's open but it recovered to hold its lows form the past 5 weeks. If NASDAQ wants to bounce, RUTX likely goes with it. Ringing endorsement that is not; RUTX still looks like warmed over road kill but it is at the February and November lows and if there is an inkling to bounce, then it is at least at a point where there is some footing.

I would not anticipate anything spectacular, but a relief/recovery bounce by the growth indices may give SP500 and DJ30 the push to make new highs. Indeed DJ30 pushed to a new closing high Friday even as RUTX gapped to a new low on the selling. A split market for certain, but if the laggards bounce, the leaders might make some hay out of that, at least for the short term.


ECONOMICS

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

Wholesale Inventories, March: 1.1% vs 1.0% vs 0.7% (0.5%)

With the jump in inventories, hope for Q1 GDP jumped as well. The surge will add 0.3% or so back onto GDP and at first blush that is good news. Beats downward revisions into negative territory as GS and JPM predicted early last week.

But WHY the jump? Because things slowed so much that inventories piled up. Businesses could not sell them and in some cases had a hard time getting inventory delivered if they wanted it.

So, inventories grew (read piled up) and somewhat artificially pumped back up GDP. What has happened every time inventories jumped one month in the past several years, however, is a commensurate decline the following month. Thus what Inventories gave in March they likely take away in April.


JOLTS: Job openings, hires versus fires.

April: 4.014M vs 4.125M prior (from 4.173M)

Job openings are a leading indicator of the payroll numbers. If they fade, jobs fade. If they rise, jobs rise. Makes sense. There is a six month lag between the openings report and then the result showing up in the non-farm payrolls. Jobs openings posted a miss, and data from several sources shows they have already started to lag the non-farms monthly readings. If it continues . . . non-farms have likely peaked on this cycle.

Hires versus 12 month change in payrolls: Hires are lagging the move in payrolls as well, recovering to just half of the prior cycle high.

Bloomberg reports gap between job openings and reported jobs looks just the same as it did 6 months ahead of the 2007 recession. Remember, openings lead non-farm payrolls by . . . 6 months.

Manufacturing openings from JOLTS: April makes 4 straight months of declines, the longest negative stretch in this recovery cycle. The last time this occurred back in 2007, the economy entered a recession that very month.



The Point: There is a divergence between the JOLTS data showing openings and net hires/fires and the non-farm jobs being reported. That divergence will show up in the non-farms numbers. The manufacturing quad decline indicates recession levels. The non-farms payrolls, just as they were touted creating 288K jobs, are just about to turn lower. We could be facing a jobs led recession in the summer.


THE MARKET

THE CHARTS

SP500: Flat on the day again as SP500 continues its lateral walk over the 50 day EMA and below the all-time high. MACD has improved but lags. The index is now 10 weeks in this lateral move, holding up while NASDAQ, RUTX and growth in general sells off. The rotation to SP500 stocks has allowed it to hold its ground, but there is no breakout yet. That says a lot, but if NASDAQ and company decide to bounce, SP500 might be pushed higher as well. Some money might leave to support the move in growth stocks, but likely not enough to keep it from a general rise with them.

DJ30: New closing high Friday, but just semantics really as volume was low and DJ30 sports the same pattern as SP500. Same pattern, same issues, same positives.

NASDAQ: As noted above, NASDAQ looks still hideous in a head and shoulders top spanning December 2013 to present, but it also looks as if it is trying to bounce here. That may be a total head fake, but a lot of beaten down stocks act as if they want to bounce near term, and of course a majority of those are in residence at NASDAQ. Thus a near term bounce toward 4150ish is possible

RUTX: Similar to NASDAQ, hitting a new selloff low on the Friday open but rebounding to positive, holding a series of lows back to November 2013. A bit oversold and note that MACD put in a higher low as the stock put in a lower low Friday.

SOX: Hugging the 50 day EMA and lower trendline . . . still. Looks heavy, stumbling ever since hitting that recovery high in early April. Heavy but not giving up ground, holding the trend. Many chips look good, many are not so good. Thus the test, and if NASDAQ bounces SOX will find some support and bounce.


LEADERSHIP:

Big Names: How the mighty have fallen. AMZN, EBAY, GOOG, NFLX, PCLN. At least GOOG looks as if it wants to bounce off support and AAPL has put in a nice test of its gap and run. Outside of those, the big names in NASDAQ look bad. They can bounce given how oversold they are, but they look bad.

Energy: Continued to struggle to end the week. Good run, taking a breather.

Personal products: Still a sign of the defensive attitude of the market as CL and PG scored gains Friday, resuming their upside moves this past week.

Utilities: two days of struggling to end the week. AEP, EDN.

With the beat down in the growth areas, we are seeing some stocks prepping to bounce in relief. TRIP, Z (continues a good though volatile pattern), AAPL, MBT, NBIX. Many that were roughed up are now in position for a decent upside move.


OTHER MARKETS

Euro/Dollar: Dollar exploded higher versus the Euro, trying to break through the 50 day EMA. Tested the low in the range and found support thanks to Draghi promising action in June.

1.3754 versus 1.3853 versus 1.3914 versus 1.3928 versus 1.3878 versus 1.3875 versus 1.3865 versus 1.3868 versus 1.3814 versus 1.3851 versus 1.3839 versus 1.3831 versus 1.3817 versus 1.3805 versus 1.3794 versus 1.3815 versus 1.3815 versus 1.3814 versus 1.3820 versus 1.3883 versus 1.3886 euro

Dollar/Yen: Dollar started to bounce off the 200 day SMA versus yen.

101.81 versus 101.53 versus 101.73 versus 101.68 versus 102.11 versus 102.24 versus 102.30 versus 102.22 versus 102.62 versus 102.49 versus 102.13 versus 102.32 versus 102.44 versus 102.61 versus 102.62 versus 102.44 versus 102.27 versus 101.80 versus 101.72 versus 101.43 versus 102.00 versus 101.70 versus 102.59 versus 103.10 versus 103.24 versus 103.92 versus 103.76 versus 103.68 versus 103.21 versus 102.81 versus 101.24


Bonds: Tested on the week, fading to the 20 day EMA after a big move. Normal test.

10 year: 2.62% versus 2.60% versus 2.59% versus 2.59% versus 2.61% versus 2.59% versus 2.67% versus 2.69% versus 2.70% versus 2.67% versus 2.68% versus 2.69% versus 2.73% versus 2.71% versus 2.72% versus 2.64% versus 2.62% versus 2.64% versus 2.62% versus 2.65% versus 2.69% versus 2.68% versus 2.70% versus 2.73% versus 2.79%


Oil: 100.02, -0.22 Bounced to the 200 day SMA on the week, but is stalling there, turning down Friday. Very important point for oil. If it falls it likely takes out 97 where it held on the last pullback.


Gold: 1287.60, -0.40. Stumbling around the 200 day SMA the past four weeks as gold continues to test the recovery rally to the mid-March peak.


MARKET STATISTICS

NASDAQ
Stats: +20.37 points (+0.5%) to close at 4071.87
Volume: 1.953B (-18.39%)

Up Volume: 1.1B (+186.64M)
Down Volume: 726.1M (-713.9M)

A/D and Hi/Lo: Advancers led 1.74 to 1
Previous Session: Decliners led 2.14 to 1

New Highs: 19 (-34)
New Lows: 136 (-5)

S&P
Stats: +2.85 points (+0.15%) to close at 1878.48
NYSE Volume: 583M (-7.17%)

A/D and Hi/Lo: Advancers led 1.29 to 1
Previous Session: Decliners led 1.38 to 1

New Highs: 85 (-84)
New Lows: 105 (+12)

DJ30
Stats: +32.37 points (+0.2%) to close at 16583.34


SENTIMENT INDICATORS

VIX: 12.92; -0.51
VXN: 16.52; -0.9
VXO: 11.6; -1

Put/Call Ratio (CBOE): 0.94; 0


Bulls and Bears:

Bulls continue the move: 55.8% versus 54.7%. Higher high on this move, working toward the 60+ from January.

Bears fade again: 19.7% versus 20.6

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.




Note the extreme bullishness: it was this high in 2007 at the crash, in early 2005 as well.

Bulls: 55.8 versus 54.7
51.6 versus 50.5 versus 54.6% versus 50.5 versus 54.7% 52.0% 54.6% 53.5% 46.5% 41.8% 45.9% 53.1% 57.6 56.1 60.6% 61.6% 60.0% 58.2% 57.1% 55.7% 53.6% 52.6% 55.2% 52.6 49.5 42.3% 45.4 46.4% 44.3% 42.3% 37.1% 37.1% 38.1% 43.3%.

Background: Last undercut 35%, the threshold for bullishness, in early June 2012.

Bears: 19.7% versus 20.6%
21.7% versus 20.6 versus 18.6% 18.6% 17.5% 17.4% 15.1% 17.2% 17.2% 17.4% 17.4% 15.3% 15.1 15.3% 15.2% 15.2% 14.0 14.3 14.3% 14.4 15.5 15.5% 15.6% 16.5% 18.5 21.6% 20.6% 18.6% 20.6% 21.6% 22.7% 23.7% 23.8% 21.6%.

Background: Over 35% is the threshold to be really be a good upside indicator. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.


MONDAY

On the day we did little, closing a position or so that was not performing. There were some moves on potential buys that were pretty good, but after this kind of volatility and heading into the weekend, pretty good was not good enough.

As noted earlier in the week, the indices could work through this volatility and come out on the other side looking great as patterns have time to set up, new leaders can appear, etc. There is some tenacity in the unwillingness to roll over. There is money rotating around, and not necessarily leaving the market. They may be moving to more staid, boring areas, but it is not going down.

With NASDAQ and RUTX patterns suggesting they want to put in an oversold bounce off support, perhaps the process will be complete. Something in the action does not suggest that is the case, and even if NASDAQ and RUTX bounce and help life the NYSE large cap indices, unless something changes in the growth areas I don't believe any move upside ultimately holds.

Frankly, I would prefer down as that is fast money, a lot of money, and leads to setting up new upside moves all the faster. Okay, I know; the market doesn't give a flip about our preferences. So, this weekend we will look at some upside where the money is rotating and where it looks as if some very tradable bounces are set. There are some stocks in sectors that were sold that nonetheless held up very nice patterns or have used this recent lateral action to set up at least an interim bounce. We look to take advantage of those, and then after the bounce there should be a lot of downside setups if the bounce runs out of gas.


SUPPORT AND RESISTANCE

NASDAQ: Closed at 4071.87

Resistance:
4070 is the series of highs from late November/early December
4104 is the lower gap point from 12/20/13
4131 is the March 2014 low
The 50 day EMA at 4142
4246.55 is the January 2014 peak
4277 is the March lower gap point
4289 is the July 2000 recovery high
4304 is the lower November 2012 trendline
4372 is the March 2014 high
4404 is the upper channel line for the November 2012 to present uptrend.

Support:
3991 is the prior November 2013 high and the post-bear market high.
The 200 day SMA at 3990
3968 is the February 2014 low
3946 is the April 2014 intraday low
3855 is the November low
3819 is the early October high
3801 is the September 2013 high.
The October low at 3750
3697 is the August high and a prior post-bear market high in the recovery.


S&P 500: Closed at 1878.48

Resistance:
1883.57 is the early March high.
1897 is the all-time high hit in April 2014

Support:
1879 is the December 2012 up trendline
The 50 day EMA at 1861
The December and January highs at 1848
1829 is the lower trendline from 11/2012
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
The 200 day SMA at 1782
1775.22 is the October prior all-time high
1768 is the December 3013 low
1738 is the February 2014 low
1730 is the September 2013 peak
1710 is the August 2013 peak.
1698 to 1700 are the July and August interim highs
1687 is the May high and post-bear market high
1685 is the mid-August 2013 upper gap point
1657 is the late August upper gap point
1654 is the June 2013 peak
1646 is the October 2013 low just before the surge into early 2014


Dow: Closed at 16,583.34

Resistance:
16,589 is the December 2013 all-time high
16,632 is the April 2014 all-time high
16,770 is a lower trendline off the 11/2012 low

Support:
16,506 is the March 2014 peak
The 50 day EMA at 16,366
16,257 is the January 2014 low
16,179 is the November 2013 peak.
The 200 day SMA at 15,856
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak
15,542 is the May 2013 intraday high
15,340 is the February 2014 low
15,318 is the June closing high
15,050 from the August 2013 interim recovery high
14,888 is the April peak and prior all-time high
14,844 is the June intraday low
14,762 is the August 2013 low
14,551 is the June 2013 intraday low on the selloff (14,659 closing)


Economic Calendar

May 9 - Friday
Wholesale Inventories, March (10:00): 1.1% actual versus 1.0% expected, 0.7% prior (revised from 0.5%)
JOLTS - Job Openings, March (10:00): 4.014M actual versus 4.125M prior (revised from 4.173M)

May 12 - Monday
Treasury Budget, April (14:00): +$114.0B expected, +$112.9B prior

May 13 - Tuesday
Retail Sales, April (8:30): 0.3% expected, 1.2% prior (revised from 1.1%)
Retail Sales ex-auto, April (8:30): 0.6% expected, 0.7% prior
Export Prices ex-ag., April (8:30): 0.5% prior
Import Prices ex-oil, April (8:30): 0.3% prior
Business Inventories, March (10:00): 0.4% expected, 0.4% prior

May 14 - Wednesday
MBA Mortgage Index, 05/10 (7:00): 5.3% prior
PPI, April (8:30): 0.2% expected, 0.5% prior
Core PPI, April (8:30): 0.2% expected, 0.6% prior
Crude Inventories, 05/10 (10:30): -1.781M prior

May 15 - Thursday
Initial Claims, 05/10 (8:30): 325K expected, 319K prior
Continuing Claims, 05/03 (8:30): 2700K expected, 2685K prior
CPI, April (8:30): 0.3% expected, 0.2% prior
Core CPI, April (8:30): 0.2% expected, 0.2% prior
Empire Manufacturing, May (8:30): 4.8 expected, 1.3 prior
Net Long-Term TIC Fl, March (9:00): $85.7B prior
Industrial Production, April (9:15): 0.1% expected, 0.7% prior
Capacity Utilization, April (9:15): 79.2% expected, 79.2% prior
Philadelphia Fed, May (10:00): 9.1 expected, 16.6 prior
NAHB Housing Market , May (10:00): 48 expected, 47 prior
Natural Gas Inventor, 05/10 (10:30): 74 bcf prior

May 16 - Friday
Housing Starts, April (8:30): 975K expected, 946K prior
Building Permits, April (8:30): 1000K expected, 990K prior
Michigan Sentiment, May (9:55): 84.5 expected, 84.1 prior

By: Jon Johnson, Editor
Copyright 2014 | All Rights Reserved

Jon Johnson is the Editor of The Daily at InvestmentHouse.com

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

Jobs Headlines Trumpeted, Reality Still Harsh

MARKET SUMMARY

- Jobs headlines trumpeted, reality still harsh, stocks and bonds not buying it.
- Looks like a few make up jobs as participation crumbles, 1M added out to the out of workforce category, wages still stink.
- Since the bottom of the recession, as many have left the workforce as jobs created (or saved?).
- Underwhelming response from stocks leaves indices in the same place, and that is not necessarily good.

You would think that with 288K jobs and an unemployment rate tumbling to 6.3% from 6.6% that a stock market that has seen the worst economic recovery in US history, Great Depression included, would be loaded for bear, ready to scream out of the starting gate (as I mix my metaphors). SP500 and DJ30 are both within spitting distance of new highs and surely this news would blast them off to new runs and new heights.

It didn't. The large cap indices were negative, the smaller caps were barely positive. Status quo Thursday was the status quo Friday even with a reportedly barnburner of a jobs report.

SP500 -2.54, -0.13%
NASDAQ -3.55, -0.09%
DJ30 -45.98, -0.28%
SP400 0.22%
RUTX 0.25%
SOX -0.28%

Volume lower: NYSE -3%, NASDAQ -10%.

A/D: 1.3:1 NYSE, flat NASDAQ


Jobs touted as great but the report shows the decay in the US employment market.

As I have said before, pseudo-quoting John Belushi in 'Animal House,' what the **** happened to the American economy I used to know? 288K jobs 'great?' 6.3% unemployment great? The trend seems right, but we are 5 years into a recovery and there are as many asterisks besides the numbers as jobs purportedly created. Perhaps THAT is why the market went nowhere on such a 'great' report.

The company line was Russia made the market do it. Fear of Russian/Ukraine escalating conflict supposedly kept investors at bay, jacking up bond prices. Sure, that was it. Then WHY did futures initially jump on the jobs report headlines and then quickly dissipate that bounce when the details were read?

Many said the rise to 288K (210K expected) was simply catch-up from Q1 and its bad weather. Jobs that would have been filled were delayed until the weather improved. Somewhat plausible. If that IS the case, then the jobs market is STILL TERRIBLE; the 288K is the aggregate of jobs not filled during the polar vortex as well as jobs for April? As Jed Clampett would say on 'The Beverly Hillbillies,' pitiful.

The details were downright discouraging.

The 6.3% unemployment was achieved by 988,000 people leaving the workforce altogether. Some said the unemployment rate 'tumbled.' If anything tumbled it was the participation rate, falling to 62.8% from 63.2%, tied with the all-time low. That shows the March bounce was the outrider when participation moved above 63%.

Further, the unadjusted numbers show the number of jobs actually FELL 73,000. Huge birth/death adjustment upside, increasing jobs reported.

Average Hourly Wage: 0.0% versus -0.1% March. Simply no traction, but that will be used by the Administration to push for a higher minimum wage. Cannot create well paying jobs so raise the salary of those working traditionally part-time, stepping stone, learn how to work jobs. Of course that money is just pulled out of the air. Sure.

Who gets the jobs? Again it goes to the 55 and over crowd, the new jobs swingers. The 54 to 16 worker demographics LOST net jobs yet again. While the Administration says we are just a few thousand jobs below recovering every job lost in the Depression, the 24 to 54 group, the workers in their prime, are STILL 2.8M JOBS BELOW PRE-RECESSION LEVELS.

Kicker: Since February 2010, the bottom of the depression, an average 172K jobs/month have been created. During that same time, 175K workers/month LEFT the workforce. Jobs created matched by people leaving the workforce. No wonder there remain 92M people not in the labor force. Holy crap.


1970's parallels.

I used to write about how this recovery or lack thereof paralleled the 1970's with the regulations, the lack of jobs, etc. It is now in many cases much worse because in 1980 we had the sense to change course and go back to pro-growth.

You may not remember or were not even born yet, but in the 1970's many said that the US experiment had a nice run but it was over. Capitalism just collapsed on its own accord as a society grew to a certain size. Our economic prowess was questioned thanks to an extended recession, exploding interest and inflation rates, no jobs . . . stagflation.

Our military might was questioned as we lost Viet Nam despite winning every battle. We simply did not have the will, and perhaps we should not have, to do what was necessary to win that war. It, however, cost us tens of thousands of lives, perhaps tragically because we would not do what was necessary to win.

In any event, the US was questioned on all fronts. It was over. No it wasn't. We just had the wrong policies. We were trying to dance with someone other than who brought us, i.e. capitalism, free markets, and individual liberty. When the restraints were removed, when regulations were rolled back, taxes cut, individual restrictions removed, the US economy went back to doing what capitalism and freedom do best: created new ideas, technologies, jobs, and increased our standard of living yet again.

Recently a Frenchman, no not the one from 'The Matrix Reloaded,' had a book published that says, again, capitalism cannot work, that you ultimately must raise taxes and have a big government as the inevitable path.

Well, perhaps he is correct in a way. Government WILL grow out of control if it is unrestrained. And for the past 60 years we have let our government grow unrestrained, turning over education, retirement, charity, etc. to the feds versus doing what he had done for our entire history, i.e. letting the locals handle local issues, letting DC handle defense and major infrastructure.

But, here is the rub. The REASON we have the troubles we have today, again a view our military is weakened, a certainty that our economy is weak, is because AGAIN we are letting government grow and take over every aspect of our lives. There is now even a bill that would allow the government to scan ALL of our communications looking for 'hate speech', whatever that is. The thought police from '1984' are here.

Indeed, if history shows ANYTHING, it is that the socialism and communism touted in the book (as it has been since its inception), have NEVER worked. They fail, or have a populace so beaten down that they accept the servitude. China had to loosen up and turn more capitalist or lose control of its citizens. I say that China's government is ultimately doomed as even now it is fighting a battle to keep the economy going to keep the populace happy. If it fails and there is a massive bubble pop, China could lose its grip.

This theme of 'capitalism is an aberration' comes up every 50 years or so. The sad thing is, capitalism BECAME the aberration because governments hemmed it in. Ancient Greece and many other societies were thrived on capitalism. It was the oppressive states that forced monarchies and emperors on others and stifled liberty and free enterprise.

That book is garbage, a rehash of the same old theories that history clearly shows do not work. Even if you can get communist, socialist, totalitarian, or other societies to work, you have to ask yourself is that the kind of system you want to live in? Most people today who are claiming they want to turn socialist, etc. would not like it one bit if we truly were that. I guess that is another negative effect of a federally run education system: a populace that does not really know what kind of government it has or should have.


THE MARKET

THE CHARTS

As noted, there was no change in the index charts. SP500, DJ30 still just below the prior all-time highs. the intraday action was not good but it was not terrible. Stalled on lower volume.

NASDAQ: Still below the 50 day EMA, still a weak pattern very much looking like a head and shoulders.

SP400: Midcaps again surged through the 50 day SMA and again gave it up, sporting a large candlestick doji. That leaves SP400 still weak, similar to the other

RUTX: Rallied to the 20 day EMA then reversed to close below the 10 day EMA. At the 200 day SMA, in position to bounce, but still mired at that level.

SOX: Still hugging the 50 day SMA and the trendline, but in position to make a break higher showing a nice tight doji.


Leadership:

Materials were not bad: LPX (lumber), CX (cement) were up.

Metals still looking good: AKS, MTL, FCX (copper).

Energy: Still solid, e.g. HAL, AXAS, GPOR

Still more defensive as growth continues to lag though electronics remain strong (MXWL, OVTI).


What we did.

We did pick up some basic stocks, e.g. AKS (steel) and AOS (water heaters, etc.). Pretty standard stuff but showing good patterns.


OTHER MARKETS

Euro/Dollar:

1.3875 versus 1.3865 versus 1.3868 versus 1.3814 versus 1.3851 versus 1.3839 versus 1.3831 versus 1.3817 versus 1.3805 versus 1.3794 versus 1.3815 versus 1.3815 versus 1.3814 versus 1.3820 versus 1.3883 versus 1.3886 euro versus 1.3855 versus 1.3797 versus 1.3742 versus 1.3701 versus 1.3712 versus 1.3760 versus 1.3794 versus 1.3779 versus 1.3752 versus 1.3748 versus 1.3788 versus 1.3823 versus 1.3842 versus 1.3794

Dollar/Yen:

102.24 versus 102.30 versus 102.22 versus 102.62 versus 102.49 versus 102.13 versus 102.32 versus 102.44 versus 102.61 versus 102.62 versus 102.44 versus 102.27 versus 101.80 versus 101.72 versus 101.43 versus 102.00 versus 101.70 versus 102.59 versus 103.10 versus 103.24 versus 103.92 versus 103.76 versus 103.68 versus 103.21 versus 102.81 versus 101.24 versus 101.99 versus 102.26 versus 102.25 versus 102.25


Bonds: Initially sold on jobs report, then surged.

10 year: 2.59% versus 2.67% versus 2.69% versus 2.70% versus 2.67% versus 2.68% versus 2.69% versus 2.73% versus 2.71% versus 2.72% versus 2.64% versus 2.62% versus 2.64% versus 2.62% versus 2.65% versus 2.69% versus 2.68% versus 2.70% versus 2.73% versus 2.79% versus 2.80% versus 2.75% versus 2.73% versus 2.71% versus 2.68% versus 2.70% versus 2.75% versus 2.73% versus 2.77%


Oil: 99.81, +0.33.


Gold: 1302.90, +20.30.


MARKET STATISTICS

NASDAQ
Stats: -3.55 points (-0.09%) to close at 4123.9
Volume: 1.821B (-10.25%)

Up Volume: 842.2M (-307.8M)
Down Volume: 970.11M (+113.25M)

A/D and Hi/Lo: Advancers led 1.03 to 1
Previous Session: Decliners led 1.12 to 1

New Highs: 44 (-19)
New Lows: 63 (-12)

S&P
Stats: -2.54 points (-0.13%) to close at 1881.14
NYSE Volume: 603M (-2.74%)

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

New Highs: 141 (-1)
New Lows: 64 (-19)

DJ30
Stats: -45.98 points (-0.28%) to close at 16512.89


SENTIMENT INDICATORS

VIX: 12.91; -0.34
VXN: 17.03; -0.12
VXO: 11.82; -0.57

Put/Call Ratio (CBOE): 0.95; +0.14

Bulls and Bears:

Bulls are leaping upside. Leaping. At 54.7% they top the recent high and are covering upside ground fast the past three weeks.

Bears fade a point: 20.6 versus 21.6 versus 20.6 versus 18.6.

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.




Note the extreme bullishness: it was this high in 2007 at the crash, in early 2005 as well.

Bulls: 54.7 versus 51.6 versus 50.5
54.6% versus 50.5 versus 54.7% 52.0% 54.6% 53.5% 46.5% 41.8% 45.9% 53.1% 57.6 56.1 60.6% 61.6% 60.0% 58.2% 57.1% 55.7% 53.6% 52.6% 55.2% 52.6 49.5 42.3% 45.4 46.4% 44.3% 42.3% 37.1% 37.1% 38.1% 43.3%.

Background: Last undercut 35%, the threshold for bullishness, in early June 2012.

Bears: 20.6% versus 21.7% versus 20.6
18.6% 18.6% 17.5% 17.4% 15.1% 17.2% 17.2% 17.4% 17.4% 15.3% 15.1 15.3% 15.2% 15.2% 14.0 14.3 14.3% 14.4 15.5 15.5% 15.6% 16.5% 18.5 21.6% 20.6% 18.6% 20.6% 21.6% 22.7% 23.7% 23.8% 21.6%.

Background: Over 35% is the threshold to be really be a good upside indicator. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.


NEXT WEEK

Perhaps it was the Russia/Ukraine issues as new violence sprang up. Perhaps the issues with the jobs report prevented any rally attempt; stocks did bounce but then gave up the bounce when all of the details were released and read. So, with Russia out there and Ukraine's actions the very thing Putin drew his red line for, then the likelihood of an engagement over the weekend is possible. Just as it was last weekend, right? I am, however, somewhat sadly more confident that Putin will act upon his red lines versus the US President.

In any event, stocks enter the weekend holding their relative position held all week, but that is not necessarily a positive as they have little traction and could do nothing in the wake of the jobs report. With the volatility seen the past two months and the lack of leadership, that again makes for an interesting week ahead given much of the economic news was released this week.

We are looking at pretty much and equal split of upside and downside. The market is still trying to work through increased volatility in the face of the FOMC taper announcement, taper commencement, and taper continuation. Pricing equities in a reduced stimulus environment and still questionable economic conditions is a process and a volatile one as we have seen. It is still in the process and the outcome is yet to be decided. Growth is lagging, large cap NYSE are at their highs but uncertain. Thus we will play good patterns as they present, but pare back gain expectations overall though we sure see some great individual returns, upside and downside.



SUPPORT AND RESISTANCE

NASDAQ: Closed at 4123.90

Resistance:
4131 is the March 2014 low
The 50 day EMA at 4155
4246.55 is the January 2014 peak
4280 is the lower November 2012 trendline
4277 is the March lower gap point
4289 is the July 2000 recovery high
4372 is the March 2014 high
4381 is the upper channel line for the November 2012 to present uptrend.

Support:
4104 is the lower gap point from 12/20/13
4070 is the series of highs from late November/early December
3991 is the prior November 2013 high and the post-bear market high.
The 200 day SMA at 3978
3968 is the February 2014 low
3855 is the November low
3819 is the early October high
3801 is the September 2013 high.
The October low at 3750
3697 is the August high and a prior post-bear market high in the recovery.


S&P 500: Closed at 1881.14

Resistance:
1883.57 is the prior all-time high hit in early March.
1897 is the all-time high hit in April 2014

Support:
1870 is the December 2012 up trendline
The 50 day EMA at 1857
The December and January highs at 1848
1822 is the lower trendline from 11/2012
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
The 200 day SMA at 1777
1775.22 is the October prior all-time high
1768 is the December 3013 low
1738 is the February 2014 low
1730 is the September 2013 peak
1710 is the August 2013 peak.
1698 to 1700 are the July and August interim highs
1687 is the May high and post-bear market high
1685 is the mid-August 2013 upper gap point
1657 is the late August upper gap point
1654 is the June 2013 peak
1646 is the October 2013 low just before the surge into early 2014
1627 is the August 2013 low


Dow: Closed at 16,512.89

Resistance:
16,589 is the December 2013 all-time high
16,632 is the April 2014 all-time high
16,724 is a lower trendline off the 11/2012 low

Support:
16,506 is the March 2014 peak
The 50 day EMA at 16,332
16,257 is the January 2014 low
16,179 is the November 2013 peak.
The 200 day SMA at 15,832
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak
15,542 is the May 2013 intraday high
15,340 is the February 2014 low
15,318 is the June closing high
15,050 from the August 2013 interim recovery high
14,888 is the April peak and prior all-time high
14,844 is the June intraday low
14,762 is the August 2013 low
14,551 is the June 2013 intraday low on the selloff (14,659 closing)


Economic Calendar

May 2 - Friday
Nonfarm Payrolls, April (8:30): 288K actual versus 210K expected, 203K prior (revised from 192K)
Nonfarm Private Payr, April (8:30): 273K actual versus 205K expected, 202K prior (revised from 192K)
Unemployment Rate, April (8:30): 6.3% actual versus 6.6% expected, 6.7% prior
Hourly Earnings, April (8:30): 0.0% actual versus 0.2% expected, 0.1% prior (revised from 0.0%)
Average Workweek, April (8:30): 34.5 actual versus 34.5 expected, 34.5 prior
Factory Orders, March (10:00): 1.1% actual versus 1.6% expected, 1.5% prior (revised from 1.6%)

May 5 - Monday
ISM Services, April (10:00): 54.0 expected, 53.1 prior

May 6 - Tuesday
Trade Balance, March (8:30): -$42.5B expected, -$42.3B prior

May 7 - Wednesday
MBA Mortgage Index, 05/03 (7:00)
Productivity-Prel, Q1 (8:30): -1.2% expected, 1.8% prior
Unit Labor Costs, Q1 (8:30): 2.5% expected, -0.1% prior
Crude Inventories, 05/03 (10:30): 1.698M prior
Consumer Credit, March (15:00): $16.1B expected, $16.5B prior

May 8 - Thursday
Initial Claims, 05/03 (8:30): 325K expected, 344K prior
Continuing Claims, 04/26 (8:30): 2750K expected, 2771K prior
Natural Gas Inventor, 05/03 (10:30): 82 bcf prior

May 9 - Friday
Wholesale Inventorie, March (10:00): 1.0% expected, 0.5% prior
JOLTS - Job Openings, March (10:00): 4.173M prior

By: Jon Johnson, Editor
Copyright 2014 | All Rights Reserved

Jon Johnson is the Editor of The Daily at InvestmentHouse.com

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com