Earnings in Need of Some Improvement

MARKET SUMMARY

- QE, apparently from anywhere, is all stocks want.
- Earnings in need of some improvement
- Stock indices pause after a strong Thursday EU QE move.
- SP400 midcaps look at becoming leaders.
- Good moves, more leaders showing up, now can the indices break up the toppy patterns?

Friday was not a great day for the market, but it was not a bad day. Thursday the ECB 'unleashed' its QE version with an extra E10B than expected. Stocks rallied nicely on solid volume. Friday was a bit of a backslide as all indices but NASDAQ finished lower though the RUTX small caps were basically flat.

SP500 -11.33, -0.55%
NASDAQ 7.48, 0.16%
DJ30 -141.38, -0.79%
SP400 -0.44%
SOX -0.28%
RUTX -0.12%

VOLUME: NYSE -12%, NASDAQ -17%

A/D: NYSE -1.2:1, NASDAQ -1.2:1

Though Friday was mostly lower, the action was not bad at all. The indices faded on lower volume to test the 4 day upside move ahead of and after the EU QE announcement. All are holding above the resistance they just broke (and the bulls hope will hold as support) and leadership branched out a bit. Last week's move didn't eliminate the near term toppy patterns SP500, DJ30, NASDAQ, RUTX continue to sport, but it shows that with the right news investors are willing to put money to work in this post-FOMC QE but new ECB QE market.

What is the big deal about European QE? It isn't going to add money to the US financial markets and further inflate those prices as US QE did. Or is it? The euro is getting slaughtered since the ECB's announcement. Heck, it was slaughtered before the announcement, likely in anticipation of the move similar to the Swiss national bank removing the peg ahead of the QE news.

Still, with the ECB willing to devalue its currency further, those storing some wealth in the euro will look elsewhere. Yes they will put money into European stocks; it may have built upon a throne of lies as Buddy the Elf told the fake Santa in 'Elf,' but prices went higher.


'You sit on a throne of lies.' Buddy the Elf in 'Elf' (2003)

Some money will look for more value and go offshore, away from euros. That will include US treasuries, pushing them higher and yields lower. Ironically, our Fed that wants out of the stimulus game, at least according to its comments and the recent litany of Fed members giving speeches and interviews, will find another Greenspan-like 'conundrum' as it tries to move rates higher but foreign money seeks US treasuries and thus keeps rates lower. Oh how history, and fate if you wish, has a sense of irony. The Fed is always trying to get one thing, yet always seems to be fighting against natural market forces.


'Fate, it seems, is not without a sense of irony.' Morpheus, 'The Matrix' (1999)

The Fed did all it could. It conjured, just as Bernanke planned, higher financial prices, not built upon economic expansion, but upon the Fed creating liquidity, pumping it into the system, and forcing it into financial assets because there was nothing else to do with the money, e.g. make capital investments. Prices indeed climbed. Record highs in many cases.

But capital investment outside of the oil and gas industry is still woefully low. Indeed, as I chronicled for the past few years, the 'new normal' capital investment is found in the three corporate investment groups: Buybacks, Acquisitions (buy it don't build it), and Dividends (to feed hungry activist investors). B.A.D.

The Fed got higher asset prices but didn't get the commensurate wealth effect Bernanke felt would follow. Basically the Fed floated enough liquidity to keep the economy from totally running aground. After enough time has passed it feels its job is done (or really that it can do nothing more), so it has to extricate itself and build up some reserves to fight the next coming crisis.

Along with getting some euros thrown our way, the hope is that EU QE will improve economic conditions and get Europeans spending, and in spending will buy more US goods. The old export economy the President turned us into . . . JUST as China and the other world economies peaked. Sucks gearing your economy, through the 2009 stimulus, to sell to others when the others don't have money to buy. Again, thank goodness for the US oil and gas industry using its technology and inventiveness to pursue the higher oil prices and thus spur enough economic activity to prevent the US from going off the cliff.

Back to the stock indices.

Well, that is a long way of getting to the point: the indices liked the EU QE, rallied in anticipation and on the news, then Friday posted a very normal, very manageable test. The key now is whether some of these stocks that have set up can move higher and strive to become new leaders. That is what will make the difference in whether the indices hit new highs and can sustain them versus faltering the rebound and rolling over. Remember, US stocks are still in the throes of hashing out stock values post-FOMC, post-Fed put. That is the old fashioned way of how a market works and quite frankly has not been the case since early 2009 when QE1 began.

Thus the money rotation, thus the volatility, thus the angst. Nothing like an unfettered financial market to strip away any notions of confidence, comfort, or serenity that a controlled environment engenders. As Hal said in 'Cliffhanger' when one of the bad guys went over the edge of the mountain, gravity is a b**ch.


'Gravity's a bitch, isn't it' Hal, 'Cliffhanger' (1993)

Earnings anyone?

What the market needs is some good earnings. Sure some companies reported excellent results, e.g. NFLX, INTC, but there are some high profile misses on the top and bottom lines that are calling Q4 generally into question in earnings and thus economic terms.

UPS was a big miss reported Friday. Of course the bald guy blamed management; any miss the past few years has had to be management. GE missed the top line, MCD missed both top and bottom, COF missed bottom line, KMB top line. Before that SNDK, FFIV, XLNX, JCI. Financial stocks beat in some cases but it was questionable accounting.

Indeed at this juncture aggregate revenues are missing expectations by 1.2% while earnings are 0.4% off expectations. The reports need to improve or Q4 could be the worst since quarter in two years.


THE MARKET

CHARTS

DJ30: Faded Friday on lower, average volume, taking a breather after 3 of 4 days upside and a strong Thursday move. Even with that Thursday break higher the Dow is still below the early January high, the early December interim high, and the late December all-time high. In short, the toppy pattern is still there. Good action last week, particularly into Thursday, but still a lot to prove.

SP500: Thursday rallied to the lower channel line from 2012, moving through the 50 day SMA. Friday a modest, below average volume fade, easily holding over the 50 day MA. As with the Dow, good action on the week, particularly Thursday and the modest Friday test, but still the same toppy pattern the Dow is showing. Still has to break that up with a move through the early January high, the early December high, and then, of course, the late December all-time high. Lots of work to accomplish, and though the Thursday action was good, the pattern just does not look good. Indeed, we are going to watch for a market rollover again, and then re-up the SPY play if SP500 fails to clear this resistance.

NASDAQ: Good week into Thursday's surge, added a bit Friday, but that was on lower, below average volume, indeed the first below average session in three weeks. NASDAQ has gyrated up and down in an 8 week range on high volume. The buyers and sellers really battling it out at these levels. NASDAQ is attempting to make the breakout over the twin peaks at 4800. While its pattern looks a bit less toppish than SP500 and DJ30, it is no daisy and has to show it can make the move. Stocks such as GOOG are not hurting its effort.


Doc Holliday, 'Tombstone' (1993)


SP400: Thursday SP400 cleared all resistance but the December all-time high. Friday it faded to test, but still held over the prior resistance it broke on the Thursday move. SP400 is a sleeper and looks as if it is about to take to some leadership.

SOX: Broke higher Wednesday from its pennant formed off the early December high. Strong move Wednesday, lagged the other indices Thursday and Friday but put in a good showing, holding the gains. Still looks best of all the indices.

RUTX: Strong Thursday move, doji for no gain Friday. RUTX sits at the top of the November/December range, but that is no great move: it is still below the July peak, the higher March peak, and the December all-time high. Working on it but needs to take the lead and show some kind of January effect. After all, January is almost in the books.


LEADERSHIP

I noted that leadership is spreading out a bit. Some good patterns are developing off of the selling, but the groups in the lead are still rather thin. More stocks participating, but the groups are not branching out quite that fast.

Chips: Still solid overall. TSEM, ENPH, ANAD are examples of chips enjoying solid gains. INTC still sports a good pattern but still has done nothing with it. BRKS jumped, SPIL had a great week. SIMO recovered nicely. Important group and the overall pattern looks good.

Internet: GOOG is providing some leadership as it continued its move off of its double bottom. Made us some good money on the week and is still working. Chinese internet was solid: VIPS, NTES, SOHU. TRLA has a nice double bottom set. Social media is back to working, in some cases, but needs to keep working, e.g. TWTR.

Gold: Testing but not enough yet to make decent entries. NG, GG.

Software is coming back: FEYE, BLKB

Retail: After testing the 50 day EMA in a quick drop many of these leaders held and are attempting to bounce: BBBY, ROST, COST, TJX. RH looks good on its 50 day EMA test.

Biotech: Still mixed but some moving well, e.g. CLDX. CRME sports an interesting breakout test/flag.

Big names: GOOG as noted continues to perform. AAPL is contributing upside as is AMZN. Maybe not the best patterns they ever built, but hanging in.


MARKET STATS

NASDAQ
Stats: +7.48 points (+0.16%) to close at 4757.88
Volume: 1.614B (-16.88%)

Up Volume: 941.86M (-618.14M)
Down Volume: 700.93M (+279.26M)

A/D and Hi/Lo: Decliners led 1.26 to 1
Previous Session: Advancers led 2.68 to 1

New Highs: 97 (+34)
New Lows: 64 (-20)

S&P
Stats: -11.33 points (-0.55%) to close at 2051.82
NYSE Volume: 784.8M (-11.86%)

A/D and Hi/Lo: Decliners led 1.24 to 1
Previous Session: Advancers led 3.56 to 1

New Highs: 268 (+29)
New Lows: 41 (+9)

DJ30
Stats: -141.38 points (-0.79%) to close at 17672.6


SENTIMENT INDICATORS

VIX: 16.66; +0.26
VXN: 17.06; -0.02
VXO: 15.89; +0.82

Put/Call Ratio (CBOE): 1.28; +0.3. Interesting action. On Thursday put activity was up sharply (covering?), and Friday with a modest loss they were very active. That suggests a lot of disbelief in the bounce. Not in its existence, but whether it can maintain the move.


Bulls and Bears:

Bulls: 49.0% versus 48.0% versus 50.5% versus 56.4% versus 52.5%. A modest uptick after the steady decline that just missed out on the upper 50's/60 level that marked rollovers. Seems to have been enough . . .

Bears: 17.4% versus 16.3% versus 15.2% versus 14.9% versus 15.8% versus 14.9% Well now, after the prior week broke the ice, bulls are actually climbing toward the October peak.

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 low short interest as well, an indication of some complacency.

Bulls: 49.0%
48.0% versus 50.5% versus 56.4% versus 52.5% versus 49.5% versus 51.5% versus 53.4% versus 56.5% versus 56.4% versus 55.5% versus 54.6% versus 47.0% versus 35.3% versus 37.8% versus 45.5% versus 47.5% versus 48.0% versus 52.5% versus 57.6% versus 56.1% versus 52.5%

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

Bears: 17.4%
16.3% versus 15.2% versus 14.9% versus 15.8% versus 14.9% versus 14.8% versus 13.9% versus 13.8% versus 14.9% versus 14.8% versus 15.1% versus 16.3% versus 18.2% versus 17.3% versus 14.1% versus 15.1% versus 15.3% versus 15.2% versus 14.1% versus 13.3% versus 15.1% versus 16.2%

Background: Over 35% for bears is the threshold to be really be a good upside indicator. The best indication is when bears cross up through bulls as the two merge. Right now bulls are coming back down from the 60 level that has consistently marked market tops over the past two years. The rapid decline in progress is pushing the bulls/bears lines toward one another. Still far from a cross with bulls falling faster than bears are rising, but bears are warming up to the notion of market weakness.


OTHER MARKETS

Bonds (10 year): 1.80%
1.88% versus 1.86% versus 1.79% versus 1.83% versus 1.76% versus 1.84% versus 1.91% versus 1.91% versus 1.95% versus 2.02% versus 1.97% versus 1.94% versus 2.04% versus 2.12% versus 2.17% versus 2.19% versus 2.21% versus 2.25%

Taking flight again after a short Wednesday to Thursday pause.


Oil: 45.59, -0.72. Just cannot get through the 10 day EMA, turning lower from that resistance.


Gold: 1292.60, -12.60. Ready to test some of the recent run higher.


$/JPY: 117.78 versus 118.49 versus 117.80 versus 118.82 versus 117.52 versus 115.928 versus 117.33 versus 117.77 versus 118.29 versus 118.50 versus 119.69 versus 119.43 versus 118.39 versus 119.62 versus 120.50 versus 119.81 versus 119.51 versus 120.67 versus 120.31 versus 120.48 versus 120.79 versus 119.99 versus 119.49 versus 118.83 versus 118.86 versus 116.81 versus 117.61 versus 118.75 versus 119.07

After moving up to the 50 day SMA, it looks as if the yen is ready to move higher once more.


Euro/$: 1.1204 versus 1.1366 versus 1.1590 versus 1.1550 versus 1.1543 versus 1.1609 versus 1.1789 versus 1.1764 versus 1.1832 versus 1.1842 versus 1.1789 versus 1.1839 versus 1.1890 versus 1.1934 versus 1.2002 versus 1.2099 versus 1.2156 versus 1.2143 versus 1.2183 versus 1.2203 versus 1.2171 versus 1.2223 versus 1.2225 versus 1.2284 versus 1.2345 versus 1.2509 versus 1.2448 versus 1.2462 versus 1.2389 versus 1.2439 versus 1.2366 versus 1.2318 versus 1.2289 versus 1.2379 versus 1.2313 versus 1.2383 versus 1.2473 versus 1.2452 versus 1.2509 versus 1.2477 versus 1.2442 versus 1.2386 versus 1.2549 versus 1.2543 versus 1.2532

The dollar spiking higher against the euro again. No surprise there and the question now turns to whether the euro and dollar hit parity. They should; no reason not to given the sorry state of Europe.


MONDAY

ECB QE in the bank. Earnings started less than stellar but will have a lot of chances this week to change the course. Economic data in copious amounts: durable goods, consumer confidence, new home sales, FOMC rate decision Wednesday, GDP Q4, Chicago PMI.

The big news is in the bag but the US stock indices are still off their highs. They need another goose to get them up to the prior highs and, just perhaps, beyond. I have to say that while SP400 looks as if it wants to step into the lead along with SOX, the other index patterns look still near term toppish, still having to prove they can make the move and then hold it afterward.

As noted in the Leadership section, there are quite a few plays that have formed up better patterns and we have quite a few on the report. At the same time this is after 3 to 4 days upside on the indices and they are just getting formed up. The indices are testing and that is what the market needs: a test of the initial move, a hold of support, then these new patterns making the next run higher spread out even more.

Even if they do just that, test, setup, then break higher, the question still remains if they can make the breakout to higher highs out of the toppy patterns. SOX and SP400 don't have that same kind of problem as the other indices and with the chips still leading and solid patterns in the midcaps, they could pave the way for the others to follow.

If, could . . . those are confident words, right? Basically the market has to prove it can make and hold the move. There are many plays we are looking at to play near term moves, many pre-earnings runs for stocks reporting in February or early March. If earnings reports step it up, these plays could work well as the market continues to recover from a pre-earnings fade.

So, the game plan is to see if the indices can hold a modest test as on Friday, get some decent earnings, then start back upside, playing the good patterns as they bounce, playing more for near term gains. If things really improve overall, we just let them work. If the indices falter after the SP500 4-day bounce and cannot hold a modest test, we look back to the downside later in the week.



SUPPORT AND RESISTANCE

NASDAQ: Closed at 4757.88

Resistance:
4811 is the November 2014 peak (intraday)
4815 is the December 2014 market peak

Support:
4751 is the January 2015 lower high
The 50 day EMA at 4672
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
4566 is the lower gap point from late October
4547 is the December low
4545 is the 38% Fibonacci retracement
4486 is the July 2014 high
The 200 day SMA at 4453
4372 is the March 2014 high
The August low at 4321
4316 is the lower gap point from October 2014
4289 is the July 2000 recovery high
4277 is the March lower gap point
4246.55 is the January 2014 peak
4185, the May lower gap point
4131 is the March 2014 low
4104 is the lower gap point from 12/20/13


S&P 500: Closed at 2063.15

Resistance:
2066 is the lower trendline from 11/2012
2062 is the January 2015 lower high
2076 is the all-time high from November
2079 is the intraday all-time high from November
2128 is the December 2012 up trendline

Support:
The 50 day EMA at 2032
2011 is the September prior all-time high
1991 is the July 2014 high
1972 is the December 2014 low
The 200 day SMA at 1969
1905 is the August 2014 low
1902 from early May was the intraday all-time high.
1897 is the prior all-time high hit in April 2014
1883.57 is the early March high.
The December and January highs at 1848
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high


Dow: Closed at 17,813.98

Resistance:
18,104 is the December all-time high

Support:
17,991 is the early December interim
17,923 is the January 2015 lower high
The 50 day EMA at 17,578
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
The 200 day SMA at 17,026
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,736 is the penultimate all-time high from May 2014
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,341 is the May low
16,334 is the August 2014 low
16,257 is the January 2014 low
16,179 is the November 2013 peak.
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak


ECONOMIC CALENDAR

January 27 - Tuesday
Durable Orders, December (8:30): 0.5% expected, -0.9% prior (revised from -0.7%)
Durable Goods -ex tr, December (8:30): 0.7% expected, -0.7% prior (revised from -0.4%)
Case-Shiller 20-city, November (9:00): 4.3% expected, 4.5% prior
Consumer Confidence, January (10:00): 95.5 expected, 92.6 prior
New Home Sales, December (10:00): 450K expected, 438K prior

January 28 - Wednesday
MBA Mortgage Index, 01/24 (7:00): 14.2% prior
Crude Inventories, 01/24 (10:30): 10.071M prior
FOMC Rate Decision, January (14:00): 0.25% expected, 0.25% prior

January 29 - Thursday
Initial Claims, 01/24 (8:30): 301K expected, 307K prior
Continuing Claims, 01/17 (8:30): 2430K expected, 2443K prior
Pending Home Sales, December (10:00): 0.6% expected, 0.8% prior
Natural Gas Inventor, 01/24 (10:30): -216 bcf prior

January 30 - Friday
GDP-Adv., Q4 (8:30): 3.2% expected, 5.0% prior
Chain Deflator-Adv., Q4 (8:30): 1.0% expected, 1.4% prior
Employment Cost Inde, Q4 (8:30): 0.5% expected, 0.7% prior
Chicago PMI, January (9:45): 58.0 expected, 58.3 prior
Michigan Sentiment -, January (9:55): 98.2 expected, 98.2 prior

By: Jon Johnson, Editor
Copyright 2015 | 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

Indices Are Struggling Despite Friday Rally

MARKET SUMMARY

- Some things different, some things the same.
- Stocks blow a lead. Again.
- Leaders start to break down in numbers.
- Swiss bank cries 'every currency for itself!'
- Philly Fed tanks, New York rises, Jobless Claims jump.
- Oil collapse has benefits but not near term.
- Stocks breaking down good patterns, but after 5 downside days, the weekend, the uncertainty of so many things, stocks may rebound on short covering.

Stocks rallied Friday, rebounding from the five prior sessions of selling. Lower high the prior week, lower low below the early December low this week. The indices are struggling no doubt.

Friday, however, they rebounded. Oh there were all kinds of reasons given for the move as pundits played pin the tail on the reason for the rally, but to us it was pretty clear as discussed on Thursday.

First, short covering. The market is down from the late December high, falling for just over 2 weeks. It was stretched downside. Then you have the Swiss national bank and its surprise action (even surprised the IMF leader) in removing the peg to the euro, freeing the Swiss franc to rally as it wanted to do. Switzerland had to do it if QE was coming. It wiped out several hedge funds, a forex trading broker, and saddled some banks (e.g. Barclays) and some brokerages (e.g. Interactive Brokers) with massive losses. That is the problem of trading for so long with central bank support: when the safeties are removed, things can get a bit hairy.

Anyway, with surprises becoming the norm, after two weeks of selling, some short covering on Friday is normal. Throw in a 3-day weekend and you have a recipe for short covering. That was clearly driving much of the upside, and you could really see it in the last hour as stocks broke higher from a three hour consolidation and sprinted higher to the close. It was also expiration Friday. Not sure if that influenced anything other than volume, but just throwing that out there.

Second, the dollar rebounded versus the yen. The dollar/jpy pair peaked in early December, made a normal test, but then put in a lower high to end December. Sold off through the 50 day EMA Tuesday, and Friday managed to rebound back to that level. Still not out of the woods, but the dollar beating the yen has been the trade that has accompanies US stock market rallies. That 'status quo' event is getting rattled around by the world events and is another element of uncertainty added to the other uncertainties facing the stock market.

Third, well I don't know what number three should be, but you can fill in the blank if you want. Let's say it was Michigan Sentiment that surged to 98.2 from 93.6 in December. A preliminary reading, but who cares? The headline was great, right? Other December numbers are definitely showing softness, but nothing like lower gasoline prices to spark better will. Spending $45 to fill up versus $90 is kind of nice.

You can also throw in higher oil prices on the day as oil attempts to put in a bottom and actually bounce. It closed over the 10 day EMA for the first time since late September. Wow, finally breaking the weakest resistance. Anyway, it can bounce here, but it is not going to break the downtrend.

All of this, or really just part of it, led to a stock rebound. Nothing major but the indices held that next level of support so that at least gives them some credible support to attempt a rally. The leaders bounced as well, but they had a rough week. Sure they are still out there and putting together some good patterns, but the action later in the week damaged a lot of patterns and thinned leadership ranks. We do see some good patterns setting up, but there are not a plethora of leadership patterns showing bottoming as in May and December. That is an important distinction and suggests any bounce doesn't have a lot of foundation, at least to start. We can play bounces, and they may turn into a rally to higher highs, but we cannot assume that to start.

SP500 26.75, 1.34%
NASDAQ 63.56, 1.39%
DJ30 190.86, 1.10%
SP400 1.42%
RUTX 1.90%
SOX 1.12%

VOLUME: NYSE +13%, NASDAQ -0.2%. Most likely NYSE trade driven by expiration. NASDAQ trade was lower but in line with all the above average volume on the week.

A/D: NYSE 4.5:1. NASDAQ 3:1. Impressive breadth as all indices bounced. That typically is not indicative of a relief move, but recall that all of the market was selling as of Thursday. Thus they all could bounce in covering action.


THE NEWS

IEA lowers estimates for non-OPEC production, so hike taxes.

Friday the IEA forecast the 305K fewer bbl/day for the US and other non-OPEC producers. This as many of our esteemed leaders in DC call for an increase in the gasoline tax that the call euphemistically a 'user fee.' Most of the reporting says $0.12 is the size of the raise, but one senator wants $1.00. Sure, jack it right back up to what the price was before prices fell. No one will notice because with this 'great economy' no one suffers with $3+/gallon gasoline.



378,000,000 gallons per day in 2010
368,500,000 gal/day in 2013. A decline but not huge.

Current federal tax rate is $0.184/gallon for gasoline, $0.244 for diesel.

Some are proposing a 0.12/gallon hike. Senator Durbin proposes raising the tax to $1.00/gallon.

The excuse, the basis for the needed tax increase, is that the roads and bridges are crumbling all around us. I am so sick of hearing this tired excuse. They have been crumbling for 20 years; you would think they would have all collapsed by now.

In any event, consumption figures show, even with a great recession, that the tax revenues have remained extremely healthy. At the lower levels the tax still produced $67,252,000 per day in revenues or $24,546,980,000 per year. $24.5B per year! Since 1993 when the $0.185 tax began that is $515.5B. More than that, the Obama stimulus in 2008 threw HUGE amounts of dollars at our highways and bridges, those 'shovel ready' projects. So the total is MUCH more than $515B.

During this period of huge tax revenue collection we are told our infrastructure is 'crumbling.' What pray tell, happened to the $500+B? In 21 years over $500B is not enough to maintain and construct new roads, particularly with states required to put up a portion of the funds in many cases?

The problem is not lack of money but of misuse of our money. Nothing new there, unfortunately. It is the government. It simply cannot spend money well because there is no incentive to be efficient. No one is going to lose their jobs if the money is all spent on whatever special interests arise; just raise the tax rate and get more money.

The republicans say it won't happen, but you have the likes of republican Senator Corker supporting a tax increase, saying it will 'fix the problem.' Everyone who believes that is, to take the gloves off, a fool. Money to the government never fixed anything but DID guarantee more profligate spending. They should be rolling taxes back along with regulations, not even contemplating this.


CPI flips negative overall thanks to plunging gasoline prices (but not taxes).

CPI: -0.4% versus -0.4% expected versus -0.3% prior. Year/year +0.8%

Core: 0.0% versus 0.1% expected versus 0.0% November. Year/year +1.6%

Gasoline: -9.4%, the cause of the big drop in overall CPI.

Food: +0.3% for the month, and +9.1% in 2014, moving to an all-time high. Record highs for meat, fish, eggs, and chicken. At least we have lower gasoline prices to pay for the higher food prices. Great trade! Gas for food.


Layoffs reappear.

With the initial round of earnings an old nemesis returns: the layoff. SLB cans 9,000. TGT printing up 17,600 pink slips. Citi is laying off 'thousands' though no exact figure was given.

Expect more layoffs from quality jobs providers such as the energy companies. Those produced the lion's share of breadwinner jobs in the recovery, and thousands upon thousands upon thousands are going away along with a lot of the jobs created to service those with those good jobs. Thank goodness we have all of those hourly jobs that these people can slide right into and perhaps make up a fifth of their prior earnings.



THE MARKET

The indices tried to hold an upper support level and did so early week, but Thursday that broke and they slipped lower. As of the weekend they held the lower level of next support, bouncing off it Friday. Not bad but as noted, likely short covering ahead of a long weekend. They can still rally; they always can. Unlike the September and October selloff, however, the pattern is very toppy, showing head and shoulders on most of the indices. Breaches of the uptrend that has held since late 2012. Leaders taking serious hits and the ranks thinning considerably.

Yes, they can always bounce and mount new rallies. With leadership struggling and narrowing, this remains a market where the stocks have to show they are able to overcome the negatives. The Fed is not there anymore. The economy is not a lock. Something is needed and perhaps that something is earnings. Thus far, however, the earnings are not doing the trick, e.g. JPM, BAC, GS, KBH. On the other hand, LEN, TSM, INTC all reported nice results and look solid. Stocks have sold ahead of results and that provides room to bounce.

CHARTS

SP500: Bounced off a lower January low, still holding over the mid-December lows in that selloff. December was a sharp drop and knifepoint turn when a normal pullback got a bit aggressive. The current pattern used that and build on with something of a head and shoulders. In any event, it is a more volatile and more pronounced rounded top pattern. SP500 held around the 78% Fibonacci retracement on the week's lows, but it closed below it once and traded below it the last three sessions. Not a solid pattern for new highs but an oversold one that is sort of holding some support. Combined with the other indices, that action can yield a bounce but it is not one that screams new highs.

NASDAQ: A bit better defined lows than SP500 with the January lows at least matching the same support but both undercutting the 78% Fibonacci retracement. Perhaps it can morph the pattern into some kind of pennant, but even so it has to prove it can move higher with declining MACD and increasing volume downside.

DJ30: Neat clean holds at the 78% Fibonacci retracement. Note the bounces intraday off that level as DJ30 finds solid support at the September peak. Okay perhaps the Dow will lead and SP500, NASDAQ will follow. Not a bad bounce pattern at all. REMEMBER, 78% Fibonacci retracement double bottoms are viewed as REBOUNDS to test the prior peaks, typically lacking the strength to move to higher highs. That doesn't mean they won't move to higher highs, it is just that something else has to push it given the pattern has lost a lot of momentum.

RUTX: As with the Dow, a second clean bounce off a support level, this one the 200 day SMA that is roughly coincident with the 78% Fibonacci retracement level. Thus there is potential to bounce and test that old high as with the Dow, but frankly, after RUTX showed some relative strength it showing relative weakness. It has serious resistance from 1180 to 1188 and those will be a key test for any bounce upside.

SOX: SOX is the pattern NASDAQ is trying to morph into as it holds the September high as well as the lower trendline from mid-2013. Chips remain one of the more solid groups in the market. INTC is working on a good 7 week consolidation using the 50 day EMA as support. The market needs the chips to step up.


LEADERSHIP

Some stocks that broke earlier in the week recovered Friday, but typically it did not rectify the problems. Thus the leadership ranks are thinning as the index patterns are more bearish in bias than in other selloffs since the Fed quit QE. There are still some really great patterns out there, and if they show the right stuff we will put some money to work, but we also have to keep an eye on the indices and where they bounce. They can bounce for sure, but our concern is that they only bounce in relief and cannot push any higher.

Social media: FB rebounded modestly after breaching its lower trendline in the uptrend channel. Lower volume. TWTR was flat after the big Thursday dump. YELP is back at the December lows with rising MACD; it looks as if IT will take its turn at trying to bounce.

Chips: INTC has a nice pattern as noted. ENPH is setting up a roll higher in its range. ANAD remains strong but it is a smaller stock. NXPI, SIMO, BRKS, AVGO are not bad. AMCC is still struggling and FORM didn't have a great week.

Gold stocks: Surged and are not really in buy position right now, e.g. GG, NG, GOLD, NEM. A test will come and that will be the opportunity to enter.

Biotech/Drugs: Some nice setups and good moves. CLDX launched upside Friday close to 9% on huge trade. EXAS has put together a nice pattern in the market selling. CELG fought off the Thursday dips and rallied to a higher closing high. BIIB fought back as well. Overall a positive group but it had some blowups last week.


MARKET STATS

NASDAQ
Stats: +63.56 points (+1.39%) to close at 4634.38
Volume: 1.911B (-0.2%)

Up Volume: 1.51B (+1.181B)
Down Volume: 452.76M (-1.177B)

A/D and Hi/Lo: Advancers led 3.03 to 1
Previous Session: Decliners led 3.52 to 1

New Highs: 46 (+4)
New Lows: 116 (-31)

S&P
Stats: +26.75 points (+1.34%) to close at 2019.42
NYSE Volume: 1B (+13.65%)

A/D and Hi/Lo: Advancers led 4.52 to 1
Previous Session: Decliners led 1.85 to 1

New Highs: 207 (+34)
New Lows: 94 (-26)

DJ30
Stats: +190.86 points (+1.1%) to close at 17511.57


SENTIMENT INDICATORS

VIX: 20.95; -1.44
VXN: 21.22; -1.5
VXO: 19.7; -1.86

Put/Call Ratio (CBOE): 0.91; -0.12


Bulls and Bears:

Bulls: 48.0% versus 50.5% versus 56.4% versus 52.5% versus 49.5% versus 51.5% versus 53.4% versus 56.5%. Steady decline just missing out on the upper 50's/60 level that marked rollovers. Seems to have been enough . . .

Bears: 16.3% versus 15.2% versus 14.9% versus 15.8% versus 14.9% versus 14.8% versus 13.9%. Wow, a breakthrough after months of holding below 15% the bears are emerging from hibernation. Important to see them get skeptical. Hey, with the Fed out of the game, Europe doing unexpected things, and investors having to price real worth into stocks, a bit of apprehension is definitely overdue.

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 low short interest as well, an indication of some complacency.

Bulls: 48.0%
50.5% versus 56.4% versus 52.5% versus 49.5% versus 51.5% versus 53.4% versus 56.5% versus 56.4% versus 55.5% versus 54.6% versus 47.0% versus 35.3% versus 37.8% versus 45.5% versus 47.5% versus 48.0% versus 52.5% versus 57.6% versus 56.1% versus 52.5%

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

Bears: 16.3%
15.2% versus 14.9% versus 15.8% versus 14.9% versus 14.8% versus 13.9% versus 13.8% versus 14.9% versus 14.8% versus 15.1% versus 16.3% versus 18.2% versus 17.3% versus 14.1% versus 15.1% versus 15.3% versus 15.2% versus 14.1% versus 13.3% versus 15.1% versus 16.2%

Background: Over 35% for bears is the threshold to be really be a good upside indicator. The best indication is when bears cross up through bulls as the two merge. Right now bulls are coming back down from the 60 level that has consistently marked market tops over the past two years. The rapid decline in progress is pushing the bulls/bears lines toward one another. Still far from a cross with bulls falling faster than bears are rising, but bears are warming up to the notion of market weakness.


OTHER MARKETS

Bonds (10 year): 1.83%
1.76% versus 1.84% versus 1.91% versus 1.91% versus 1.95% versus 2.02% versus 1.97% versus 1.94% versus 2.04% versus 2.12% versus 2.17% versus 2.19% versus 2.21% versus 2.25% versus 2.26% versus 2.165% versus 2.17% versus 2.21% versus 2.14% versus 2.05% versus 2.11% versus 2.08% versus 2.18% versus 2.16% versus 2.22% versus 2.26% versus 2.31% versus 2.24% versus 2.29% versus 2.29% versus 2.22 versus 2.17% versus 2.21% versus 2.24% versus 2.26% versus 2.30% versus 2.31% versus 2.34% versus 2.35% versus 2.32% versus 2.34% versus 2.32% versus 2.35%

The surge had to slow and on Friday there was a rest day ahead of the three-day weekend. Still very strong but also very straight up angle of attack that cannot be sustained indefinitely.


Oil: 48.69, +2.44. Oil recovered some of what it lost Thursday. Ah, that is a rally. Seriously, it looks as if oil is going to try a bounce of sorts as it actually moved above the 10 day EMA on the close for the first time since September.


Gold: 1276.90, +12.10. After breaking the 200 day SMA gold tested it then surged to a higher rally high. Uncertainty by central banks means buy gold.


$/JPY: 117.52 versus 115.928 versus 117.33 versus 117.77 versus 118.29 versus 118.50 versus 119.69 versus 119.43 versus 118.39 versus 119.62 versus 120.50 versus 119.81 versus 119.51 versus 120.67 versus 120.31 versus 120.48 versus 120.79 versus 119.99 versus 119.49 versus 118.83 versus 118.86 versus 116.81 versus 117.61 versus 118.75 versus 119.07

After breaking the 50 day EMA on the week and selling hard Thursday, the dollar rallied back to test the 50 day EMA. The 'kiss goodbye' before more weakness or a double bottom off the mid-December low? More like the former for now.

Euro/$: 1.1543 versus 1.1609 versus 1.1789 versus 1.1764 versus 1.1832 versus 1.1842 versus 1.1789 versus 1.1839 versus 1.1890 versus 1.1934 versus 1.2002 versus 1.2099 versus 1.2156 versus 1.2143 versus 1.2183 versus 1.2203 versus 1.2171 versus 1.2223 versus 1.2225 versus 1.2284 versus 1.2345 versus 1.2509 versus 1.2448 versus 1.2462 versus 1.2389 versus 1.2439 versus 1.2366 versus 1.2318 versus 1.2289 versus 1.2379 versus 1.2313 versus 1.2383 versus 1.2473 versus 1.2452 versus 1.2509 versus 1.2477 versus 1.2442 versus 1.2386 versus 1.2549 versus 1.2543 versus 1.2532

Euro slaughtered again as the dollar breaks higher from a weeklong tight lateral consolidation over the 10 day EMA. QE anticipation as well as the Swiss pulling out.


TUESDAY

You can call Friday an upside day with cause as quite a few pundits did post-close. Oil higher, consumer confidence soaring - - the usual 'pin the tail on the rally' suspects. Seriously? Investors suddenly stepped in because consumer confidence, always the bastion of economic forecasters, jumped due to lower gasoline? YET at the same time investors also bought because oil prices rose, something if they keep doing gasoline prices will rebound and that consumer confidence goes into the dumpster again? This is the kind of mish-mash crapola that they are paying people to spew and advertisers are paying money to be associated with. Of course it makes perfect sense in a world where people don't really pay attention, just reading the headlines. But in this case, even if the headlines are internally inconsistent no one says a thing, just follow along like the Pavlovian dogs they have become.

Okay, that felt good.

No, no, no. Friday was short covering. Stocks did not shoot higher in the last 20 minutes of trade because investors, funds, etc. suddenly felt great about oil prices rising and the consumer confidence. It was classic short covering action ahead of a 3-day weekend. Two weeks lower, all kinds of uncertainties in the world as central banks either pull back stimulus or set to launch more stimulus, and funds bought because oil rose and consumers passed some gas so to speak. Good grief. Short covering and the yen giving back some of its gains versus the dollar. Market bounced. Of course most market rallies start with short covering, but that is never the entire story. Patterns, leadership, and other elements do matter.

What is causing the volatility?

So many wild swings has everyone lamenting having to once again deal with volatility. For six years the Fed plied its QE and that kept stocks relatively stable. Indeed, the ONLY instability occurred when one QE program expired and the Fed didn't have a new one to immediately roll out. Stocks bucked and sold, forcing Bernanke to launch more QE in order to keep prices high and fan the wealth effect flames. Remember all of that? Inflation financial asset prices with lots of money and everyone will feel wealthy. Except for the middle class that lost its breadwinner jobs and had them replaced with low paying food service or secretarial work. Not much wealth happiness for the majority of citizens.

Now the Fed has pulled QE. The market is on its own. It now has to do things the old fashioned way, i.e. figure out the real values for financial assets without the Fed buying all the junk there is.

Thus, as soon as the Fed pulled QE stocks sold in October. They rebounded sharply into November, sold again in December, rebounded to year end, and are now selling in January. As noted thrice has SP500 violated the 11/2012 uptrend channel that formed with that round of QE. Stocks are trying to hold up, but the Fed is not there buying anymore. It is up to the economy to provide a reason prices should not only remain at these levels but to climb higher.

With the December economic data not giving a thumbs up (e.g. retail sales reported last week), worries are creeping in as to whether the 'great economy' as the Administration calls it is really that great.

With the Fed no longer the backstop and the economic data somewhat concerning, it only makes sense that stocks are choppy. The thing that propped them up is gone, the thing that is supposed to keep them propped up is now being questioned. Investors don't know what prices should be so things are choppy. Voila, volatility.

And you do what?

So how does that play out in the coming week? As noted, the indices held support though at a lower level. That holds out the potential they can rebound in a relief move. Recall the only move we were looking at was a bounce to test toward the prior peaks, not new highs. The index patterns have eroded. SP500 has four breaches of its 11/2012 uptrend channel, all occurring in the last four months. Instead of just a fade to test support the indices have a toppish, 3-headed rounded top similar to a head and shoulders. Leadership ranks have thinned considerably. The upside has to prove that it can move to higher highs in a post-Fed QE world.

Not that we cannot make some money on that bounce. There is room to move higher after the sharp selling as the rubber band is stretched. Friday the 'just in case' bounce ahead of the weekend took some pressure off. The next very instructive move is whether that bounce released enough pent up pressure that the upside fizzles quickly. If that is the case that shows a very weak market.

We will let it show us what it will do. We still have some very good upside plays that are working, some that are holding nicely but need a bounce, and others we had to jettison last week as they broke support. We can make money on an oversold bounce, but we also have to realize that is what we are playing and pick plays and positions accordingly. Oh yes, and we have to trowel on earnings on top of that. Certainly the market is primed for a bit of an earnings bounce if it can get some good earnings reports.

Thus this weekend we have some more upside plays on stocks that are at key support and have a bounce pattern set up or that have used the selling to go about their business and set up great patterns. That is what leaders do. If the market wants to bounce in relief and they make the moves, we can play them WITH THE mindset it is for a bounce, at least until it can show otherwise.

We also have some more downside plays at the ready. We were somewhat surprised seeing the several downside setups that are not oversold after this kind of market pullback. That can speak to a weakening market that stocks are still in position to fall even after a couple of weeks of selling and not relief move. As noted above, if the market fails to hold the Friday relief move and starts selling anew, that speaks to a very weak market and the downside plays, despite the selling leading up to the current position, are in play to make us money from here.

Again we let the market show us what it wants to do near term. As for beyond that, the index patterns are not encouraging and it is up to the market to show it can do more than bounce.



SUPPORT AND RESISTANCE

NASDAQ: Closed at 4634.48

Resistance:
The 50 day EMA at 4666
4751 is the January 2015 lower high
4811 is the November 2014 peak (intraday)
4815 is the December 2014 market peak

Support:
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
4566 is the lower gap point from late October
4547 is the December low
4545 is the 38% Fibonacci retracement
4486 is the July 2014 high
The 200 day SMA at 4442
4372 is the March 2014 high
The August low at 4321
4316 is the lower gap point from October 2014
4289 is the July 2000 recovery high
4277 is the March lower gap point
4246.55 is the January 2014 peak
4185, the May lower gap point
4131 is the March 2014 low
4104 is the lower gap point from 12/20/13


S&P 500: Closed at 2019.42

Resistance:
The 50 day EMA at 2032
2062 is the lower trendline from 11/2012
2062 is the January 2015 lower high
2076 is the all-time high from November
2079 is the intraday all-time high from November
2124 is the December 2012 up trendline

Support:
2011 is the September prior all-time high
1991 is the July 2014 high
1972 is the December 2014 low
The 200 day SMA at 1967
1905 is the August 2014 low
1902 from early May was the intraday all-time high.
1897 is the prior all-time high hit in April 2014
1883.57 is the early March high.
The December and January highs at 1848
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high


Dow: Closed at 17,511.57

Resistance:
The 50 day EMA at 17,572
17,923 is the January 2015 lower high
17,991 is the early December interim
18,104 is the December all-time high

Support:
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
The 200 day SMA at 17,007
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,736 is the penultimate all-time high from May 2014
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,341 is the May low
16,334 is the August 2014 low
16,257 is the January 2014 low
16,179 is the November 2013 peak.
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak


ECONOMIC CALENDAR

January 16 - Friday
CPI, December (8:30): -0.4% actual versus -0.4% expected, -0.3% prior
Core CPI, December (8:30): 0.0% actual versus 0.1% expected, 0.1% prior
Industrial Production, December (9:15): -0.1% actual versus -0.1% expected, 1.3% prior
Capacity Utilization, December (9:15): 79.7% actual versus 79.9% expected, 80.0% prior (revised from 80.1%)
Michigan Sentiment, January (9:55): 98.2 actual versus 94.1 expected, 93.6 prior
Net Long-Term TIC Fl, November (16:00): $33.5B actual versus -$1.4B prior

January 20 - Tuesday
NAHB Housing Market Index, January (10:00): 58 expected, 57 prior

January 21 - Wednesday
MBA Mortgage Index, 01/17 (7:00): 49.1% prior
Housing Starts, December (8:30): 1040K expected, 1028K prior
Building Permits, December (8:30): 1060K expected, 1035K prior

January 22 - Thursday
Initial Claims, 01/17 (8:30): 300K expected, 316K prior
Continuing Claims, 01/10 (8:30): 2380K expected, 2424K prior
FHFA Housing Price Index, November (9:00): 0.6% prior
Natural Gas Inventories, 01/17 (10:30): -236 bcf prior
Crude Inventories, 01/17 (11:00): 5.389M prior

January 23 - Friday
Existing Home Sales, December (10:00): 5.10M expected, 4.93K prior
Leading Indicators, December (10:00): 0.4% expected, 0.6% prior

By: Jon Johnson, Editor
Copyright 2015 | 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

Stocks Cannot Hold Early Bounce

MARKET SUMMARY

- Stocks cannot hold an early jobs, Fed-speak bounce.
- Jobs more of the same as headlines show improvement but hollow improvement.
- Indices at next resistance, and next test in the recovery.

But jobs were great so why didn't the market rally?

Maybe because they were not so great? Maybe another month of rising jobs, falling unemployment that just doesn't feel like it to the majority of the country?

How about those Wholesale Inventories rising 0.8%, almost 3x expectations (0.3%)? But sales FELL 0.3%. Clear to see why inventories rose: not selling all the goods. This even as much of the goods for the country sit on ships outside Long Beach, still waiting to be unloaded because longshoremen don't want more efficient machines to phase out their jobs. It sucks to have your industry die off and your job become unneeded. Happened to me several years after college. Had to go a different route. So I did. It happens.

But, I digress.

How about Europe? After a couple of economic reports showed some tantalizing improvement, industrial production slid off the map. Germany -0.1% versus 0.4% expected. France -0.3% versus 0.3% expected. UK -0.1% versus 0.2% expected. Spain o.0% versus 0.7% expected. Spain continues to be the recent 'best in category.' High praise indeed for the EU.

The ECB didn't help either when, just two weeks before its next meeting when most expect some serious attempt at QE, we find out Draghi is still reviewing what type of QE program the ECB might initiate, including revisiting a private plan as well. No stock markets liked it. Draghi say, Draghi don't do? Again?

Futures were lower on the European news, perhaps on the French hostage situations as well. The jobs report jumped futures to positive.

Evans speaks again. I was working at my desk, the financial stations on as usual (muted of course). I looked up and saw Fed President Evans. Not a tape of his recent speech, but live on CNBC giving an interview. A current voting Fed president giving an interview on a financial station, discussing the Fed's policy. What the heck is going on? Why even bother with a statement anymore? Each statement is either undermined or bolstered by the parade of Fed presidents out on the stump, auditioning for their post-FOMC careers in front of the Wall Street powerful (not on CNBC, but those watching it).

Anyway, Evans pulled a 'republican Congress' move, you know, making statements that totally eviscerate any future plans (e.g. stating the government would never be shut down again, signaling the White House it can pretty much do as it wants). Evans was on air to further explain his comment earlier in the week that rate hikes at the wrong time would be 'a catastrophe.' Well, he explained it all right, saying the Fed should not increase rates until 2016 if things transpire as he sees them unfolding. Indeed, he said things were indeed unfolding just as he expected. So no hikes until 2016? What more could a market ask?

Apparently more because after opening higher, the stock indices peaked almost instantly. They sold into midmorning. Negative. 'Great' jobs, rates flat until 2016 and who knows how far beyond, Obama handing out free passes to community college (do green cards come with those?), the Republican Congress happy to do nothing again now that they are in power. Market nirvana, yet stocks sold.

Weak bounce into lunch, a second attempt to the last hour, then backsliding. Some great individual moves but overall the indices faded the Wednesday to Thursday jump higher, all closing lower ex-SOX.

SP500 -17.33, -0.84%
NASDAQ -32.12, -0.68%
DJ30 -170.50, -0.95%
SP400 -0.82%
RUTX -0.87%
SOX 0.13%

VOLUME: -13% NYSE, -17% NASDAQ. At least volume backed off from the higher volume Thursday.

A/D: -1.7:1 NYSE, -2:1 NASDAQ. Negative breadth but not as strong downside as it was upside Thursday. All kinds of positives.

The indices struggled, but they did manage to hold over some of the support recovered Thursday, e.g. the 50 day EMA. Lower volume, modest breadth. The Thursday move was not trashed. Not helped, but not trashed. As for 2015's start, down the first five sessions thanks to the Friday fade. Not a great start, but next week is a new week with a patient Fed, reinforced by Mr. Evans' 'wait until 2016' timetable for rate hikes. Oh, I get it; we just missed the first part of Yellen's statement: it was one year and six months after QE ends.


THE ECONOMY

All about the jobs. Of course there is more than just the number.




Stronger jobs, stronger jobs! We have recovered all lost jobs!


Really? Perhaps in numbers if you buy the seasonally/politically adjusted numbers, but if you look at most other measures in the report, only in the Administration's dreams.


Wages: The inverse of the non-farm jobs chart. There is no recovery at all for most of America as the wages they earn from the jobs that replaced the jobs they lost as the crisis started just don't pay worth a flip. Gasoline tax cut? Gasoline will have to go negative about $15/gallon for it to make up for the difference in hourly earnings pre-collapse.


Jobs Quality: Again the low-paying sectors were right at the top of job creation. Food Service/Drinking Establishments up 43.6K, education and health 48K, leisure and hospitality +36K. Professional and Business services (secretaries) up 37.3K. Retail plummeted, rising just 7.7K versus 56K in November.

Construction jumped to 48K. The only area of serious jobs that grew significantly. Yet, bartenders are still moving in on manufacturing.



And how about that workforce?

Participation Rate: 62.7%, back to a 38 year low.

Out of workforce: 92.9M with 451K leaving the workforce.

Thanks to those 451K taking it for the team and leaving the workforce, the unemployment rate fell to 5.6%. The INSANE aspect of this is that MANY on the financial stations, so gung hopeful for the year were saying this was just excellent news. As if a low unemployment rate is the end in itself. Just like the jobs: doesn't matter if they are quality, just give us numbers. Doesn't matter that 92.9M working aged people out of 317M total US population (edging closer to one-third total population) are completely out of the work force because, damn it, the unemployment rate is lower that it was pre-crisis.


Mission Accomplished!
How about that age gap? Still there? You betcha!




Indeed, those 55+ in the workforce hit an all-time high! 39.2M, +1.3M year/year. Impressive sir. Especially as they put in an all-time high in November as well!

Note the 'everything else' category, ages 16 to 54: the red line remained flat after dropping in November's 'big month.' Again the younger group NNA for jobs. Millions with diplomas, huge tuition debts, more coming with 'free' community college, living at mom and dad's with no job prospects.


7 years of college down the drain . . . --Bluto, 'Animal House' (1977)

Oh yes, and for those keeping score from last month's rundown of Presidents and 300+K job months, there are STILL just 2 months of 300K jobs during this President's 6 year reign.

So many inconsistencies.

2.9M jobs claimed created in 2014. Unemployment falls to 5.6%.

At the same time:
252K jobs created yet 451K people leave the workforce.

2.9M jobs created but those out of the work force rise to 92.9M, an all-time record. So the most jobs created in a year in decades but also the most people out of the workforce, ever.

Wages fall 0.2% while November's surge that supposedly marked a new recovery era of jumping wages was written down to 0.2% from 0.4%. How are wages FALLING when unemployment is at pre-Recession lows and the most jobs since 2009 were created?

Not even addressing the jobs type or quality. There are serious problems in the US economy in the type of jobs created and the warping of the workforce. Why work at a menial, low pay job when you can just not work and get pretty much the same without the hassle?

Quit, get the benefits, work some cash jobs you don't pay taxes on, avoid Obamacare expenses for insurance policies you couldn't even use anyway because you cannot afford the deductible (but are mandated to buy), and come out better or as well than if you did what the Administration wants and work one or two or three menial jobs.


THE MARKET

CHARTS

SP500: After surging through the 50 day EMA and the lower trendline to the long uptrend channel, Friday SP500 gave back part of the move. Held above the 50 day EMA but closed below the channel. Three channel breaches in three months. Kind of important to SP500 that Friday was just a pause after two strong moves. If not, it has set up something of a head and shoulders. Have that SPY play still in the hopper.

NASDAQ: Fared a bit better in terms of the day though the pattern is still worrisome. After gapping through the 50 day EMA Thursday NASDAQ faded to test, tapping at the 50 day EMA on the low, rebounding a bit to hold the 10 day EMA on the close. Lower trade on the test, a positive. As with SP500, needs to hold and continue higher from here.

DJ30: As with the other large cap indices, faded Friday after two solid moves and touching near the early December high. Holding at the 10 day EMA but a very important test to hold and break through the 18K level. If not, well there is the DIA to short for a move near 17K.

RUTX: Thursday a gap over the November/December trading range then a test here as well. More or less at the top of that range, and if there is going to be a January Effect, at some point, it should hold around here and rally.

SP400: After rallying to the November high Thursday, the midcaps faded to the 20 day EMA. As with RUTX, they need to hold here and start back up.

SOX: Doji Friday after a big gap higher Thursday through the 50 day EMA. Double bottom at the July and September highs with the bounce starting Wednesday. Not bad action, indeed positive on the Friday session, but with the look of the other indices it is all 'what have you done for me lately.'


LEADERHIP:

Electronics/Chips: Fitting as they were positive on a weak market session. TSEM broke higher on solid volume. VIMC hit our initial target in less than a week, surging Thursday and Friday. SPIL. RBCN looks ready to turn.

Social Media/Internet: TWTR turned nicely higher. FB tested, but put in a good upside break for the week. PLNR continued its bounce off the breakout test. YELP gapped upside off the 5 week lateral move that could be the bottom.

Biotech/Drugs: ACAD broke nicely higher Friday. TGTX faded Friday, but lower volume, still in good shape. XLRN enjoyed a good week though closed flat Friday after gapping higher.


MARKET STATS

NASDAQ
Stats: -32.12 points (-0.68%) to close at 4704.07
Volume: 1.666B (-17.69%)

Up Volume: 634.31M (-1.066B)
Down Volume: 1.06B (+674.04M)

A/D and Hi/Lo: Decliners led 1.95 to 1
Previous Session: Advancers led 2.9 to 1

New Highs: 83 (-12)
New Lows: 52 (+11)

S&P
Stats: -17.33 points (-0.84%) to close at 2044.81
NYSE Volume: 732.1M (-13.69%)

A/D and Hi/Lo: Decliners led 1.7 to 1
Previous Session: Advancers led 3.32 to 1

New Highs: 152 (-47)
New Lows: 63 (+30)

DJ30
Stats: -170.5 points (-0.95%) to close at 17737.37


SENTIMENT INDICATORS

VIX: 17.55; +0.54
VXN: 18.4; +0.25
VXO: 16.27; +1.16

Put/Call Ratio (CBOE): 0.99; +0.14


Bulls and Bears:

Bulls: 50.5% versus 56.4% versus 52.5% versus 49.5% versus 51.5% versus 53.4% versus 56.5%. Right back down with a big drop after touching 56% again. Not punching through and that is a decent indication that investors are not totally gung ho.

Bears: 15.2% versus 14.9% versus 15.8% versus 14.9% versus 14.8% versus 13.9% versus 13.8% versus 14.9%. Starting to skew just a bit to the slightly more bearish side. Still, a stubbornly low number of bears, and that is an important indication that while bulls capped out at lower levels, there are still just not many bears.

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: 50.5%
56.4% versus 52.5% versus 49.5% versus 51.5% versus 53.4% versus 56.5% versus 56.4% versus 55.5% versus 54.6% versus 47.0% versus 35.3% versus 37.8% versus 45.5% versus 47.5% versus 48.0% versus 52.5% versus 57.6% versus 56.1% versus 52.5%

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

Bears: 15.2%
14.9% versus 15.8% versus 14.9% versus 14.8% versus 13.9% versus 13.8% versus 14.9% versus 14.8% versus 15.1% versus 16.3% versus 18.2% versus 17.3% versus 14.1% versus 15.1% versus 15.3% versus 15.2% versus 14.1% versus 13.3% versus 15.1% versus 16.2%

Background: Over 35% for bears is the threshold to be really be a good upside indicator. The best indication is when bears cross up through bulls as the two merge. Right now bulls are coming back down from the 60 level that has consistently marked market tops over the past two years. The rapid decline in progress is pushing the bulls/bears lines toward one another. Still far from a cross with bulls falling faster than bears are rising, but bears are warming up to the notion of market weakness.


OTHER MARKETS

Bonds (10 year): 1.95%
2.02% versus 1.97% versus 1.94% versus 2.04% versus 2.12% versus 2.17% versus 2.19% versus 2.21% versus 2.25% versus 2.26% versus 2.165% versus 2.17% versus 2.21% versus 2.14% versus 2.05% versus 2.11% versus 2.08% versus 2.18% versus 2.16% versus 2.22% versus 2.26% versus 2.31% versus 2.24% versus 2.29% versus 2.29% versus 2.22 versus 2.17% versus 2.21% versus 2.24% versus 2.26% versus 2.30% versus 2.31% versus 2.34% versus 2.35% versus 2.32% versus 2.34% versus 2.32% versus 2.35%

Bouncing right back up off the 10 day EMA test.


Oil: 48.36, -0.43. Worked laterally Wednesday to Friday, again trying to form a shelf to test the 10 day EMA.


Gold: 1216.10, +15.60. Starting to bounce after testing the break through the 50 day EMA.


$/JPY: 118.50 versus 119.69 versus 119.43 versus 118.39 versus 119.62 versus 120.50 versus 119.81 versus 119.51 versus 120.67 versus 120.31 versus 120.48 versus 120.79 versus 119.99 versus 119.49 versus 118.83 versus 118.86 versus 116.81 versus 117.61 versus 118.75 versus 119.07 versus 118.12 versus 119.76 versus 120.55 versus 121.42 versus 119.78 versus 119.81 versus 119.21 versus 118.36 versus 118.63 versus 117.58 versus 117.93 versus 118.27 versus 117.73 versus 117.96 versus 118.00 versus 116.98 versus 116.47 versus 116.29 versus 115.74

After moving up modestly on the week, the dollar sold hard versus the yen Friday, and that played as much a role in the market selling as anything.


Euro/$: 1.1842 versus 1.1789 versus 1.1839 versus 1.1890 versus 1.1934 versus 1.2002 versus 1.2099 versus 1.2156 versus 1.2143 versus 1.2183 versus 1.2203 versus 1.2171 versus 1.2223 versus 1.2225 versus 1.2284 versus 1.2345 versus 1.2509 versus 1.2448 versus 1.2462 versus 1.2389 versus 1.2439 versus 1.2366 versus 1.2318 versus 1.2289 versus 1.2379 versus 1.2313 versus 1.2383 versus 1.2473 versus 1.2452 versus 1.2509 versus 1.2477 versus 1.2442 versus 1.2386 versus 1.2549 versus 1.2543 versus 1.2532

Despite the ECB's indecisiveness regarding what kind of QE to use at such a late date, the euro rallied. Oh yeah; if no QE, no diluting the euro so that makes sense.


MONDAY

The market appears to want it all: strong economic data yet 0% interest rates as well. The December data has not been that strong; not shriveling, but not as strong as wanted if this economy is supposedly taking off. Jobs apparently didn't do the job, and the prospect that 0% rates were here for another year (as confirmed by Evans) was not enough by itself. Man, hard to please. You print several trillion dollars, the Administration raises the debt by almost $8T in 6 years and the market acts PO'ed? Ingrates.

So, with the Friday action as less than thrilling post-jobs (raising the question again if jobs were any good despite the gains), the indices are left in a vulnerable position. There is some leadership though not a wide swath in many sectors across the market. With the mediocre leadership (in numbers, not quality), the index patterns are worrisome as they test levels that will either roll over and form a head and shoulders, or they will continue the Thursday strength and break higher. Critical point.

Thus we are still looking at some solid upside plays to go along with the solid plays we entered on the week. They are certainly out there. Of course, given the index patterns you also need to consider downside if the Wednesday and Thursday move stalls out. SPY, BRCM are on and we are considering some DIA and some individual downside play as well to keep BRCM company.

Evans says don't worry until 2016. Jobs were supposedly more than good enough. The economic data in December is not great but not tanking. Seems like enough to keep stocks going. I guess Europe is an issue with the ECB still trying to figure out how to spell QE. There is also earnings season just ahead, and don't forget the yen. It started to rise Friday after trying to consolidate for a week.

Again, an important juncture as the indices tested a good rebound right at some resistance. Enough leadership but not dominating; it still needs to grow and improve. We anticipate more upside and are letting our positions run, but don't assume the market has to go up without a further test. The index patterns are not reassuring, and the response to Evans and the jobs report just were not that inspiring.



SUPPORT AND RESISTANCE

NASDAQ: Closed at 4704.07

Resistance:
4811 is the November 2014 peak (intraday)

Support:
The 50 day EMA at 4673
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
4566 is the lower gap point from late October
4547 is the December low
4545 is the 38% Fibonacci retracement
4486 is the July 2014 high
The 200 day SMA at 4431
4372 is the March 2014 high
The August low at 4321
4316 is the lower gap point from October 2014
4289 is the July 2000 recovery high
4277 is the March lower gap point
4246.55 is the January 2014 peak
4185, the May lower gap point
4131 is the March 2014 low
4104 is the lower gap point from 12/20/13


S&P 500: Closed at 2044.81

Resistance:
2055 is the lower trendline from 11/2012
2076 is the all-time high from November
2079 is the intraday all-time high from November
2118 is the December 2012 up trendline

Support:
The 50 day EMA at 2035
2011 is the September prior all-time high
1991 is the July 2014 high
1972 is the December 2014 low
The 200 day SMA at 1963
1905 is the August 2014 low
1902 from early May was the intraday all-time high.
1897 is the prior all-time high hit in April 2014
1883.57 is the early March high.
The December and January highs at 1848
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high


Dow: Closed at 17,742.19

Resistance:
17,991 is the early December all-time high

Support:
The 50 day EMA at 17,588
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
The 200 day SMA at 16,981
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,736 is the penultimate all-time high from May 2014
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,341 is the May low
16,334 is the August 2014 low
16,257 is the January 2014 low
16,179 is the November 2013 peak.
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak


ECONOMIC CALENDAR

January 5 - Monday
Auto Sales, December (14:00): 6.1M prior
Truck Sales, December (14:00): 7.9M prior

January 6 - TUESDAY
Factory Orders, November (10:00): -0.7% actual versus -0.4% expected, -0.7% prior
ISM Services, December (10:00): 56.2 actual versus 58.5 expected, 59.3 prior

January 7 - WEDNESDAY
MBA Mortgage Index, 01/03 (7:00): 11.1% actual versus -18.2% prior
ADP Employment Change, December (8:15): 241K actual versus 230K expected, 227K prior (revised from 208K)
Trade Balance, November (8:30): -$39.0B actual versus -$41.8B expected, -$42.2B prior (revised from -$43.4B)
Crude Inventories, 01/03 (10:30): -3.062M actual versus -1.754M prior
FOMC Minutes, 12/17 (14:00): Fed is patient, won't raise before April meeting, rest of the world is something to worry about.

January 8 - THURSDAY
Challenger Job Cuts, December (7:30): 6.6% actual versus -20.7% prior
Continuing Claims, 12/27 (8:30): 2452K actual versus 2365K expected, 2351K prior (revised from 2353K)
Initial Claims, 01/03 (8:30): 294K actual versus 290K expected, 298K prior
Continuing Claims, 12/27 (8:30): 2452K actual versus 2365K expected, 2351K prior (revised from 2353K)
Natural Gas Inventor, 01/03 (10:30): -131 bcf actual versus -26 bcf prior
Consumer Credit, November (14:00): $15.0B expected, $13.2B prior
Consumer Credit, November (15:00): $14.1B actual versus $15.0B expected, $16.0B prior (revised from $13.2B)

January 9 - FRIDAY
Nonfarm Payrolls, December (8:30): 252K actual versus 245K expected, 353K prior (revised from 321K)
Nonfarm Private Payrolls, December (8:30): 240K actual versus 235K expected, 345K prior (revised from 314K)
Unemployment Rate, December (8:30): 5.6% actual versus 5.7% expected, 5.8% prior
Hourly Earnings, December (8:30): -0.2% actual versus 0.2% expected, 0.2% prior (revised from 0.4%)
Average Workweek, December (8:30): 34.6 actual versus 34.6 expected, 34.6 prior
Wholesale Inventories, November (10:00): 0.8% actual versus 0.3% expected, 0.6% prior (revised from 0.4%)

By: Jon Johnson, Editor
Copyright 2015 | 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

Pre-Election Years, Years Ending in 5, All Positives for 2015

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

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

Access to all current videos will remain assessable each day using the play links in the reports.

If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.

MARKET SUMMARY

- Stocks start 2015 uninspired, but the index patterns are not that bad.
- Some good stock patterns hold out promise for the start of 2015.
- Years ending in 5, pre-election years, and the fourth year following three good years. All positives for 2015.

There is not a lot you can say about Friday. Yes it was the first day of the new year, but coming at the end of a holiday week it is hard to make the argument it represents how the market trades next week and the rest of January. Thus I am not going to belabor the moves on the session, but will point out some important indications in the indices and in individual stocks. Oh yes, and throw in some stats on the upcoming year.

Friday saw the first day of the new year sporting some solid pre-market gains and it looked as if some new money was getting put to work. It certainly was. Problem is, the new money was all in after the first five minutes. At that point the indices peaked and sold off, coughing up all the gains and flipping negative by midmorning. A token bounce and then the indices found lower lows midday. Nothing great for the upside, but SPY formed an intraday inverted head and shoulders from midmorning to the start of the last hour. That launched a nice last hour run. Even that had a hard time holding as stocks slid back in the last 15 minutes of trade. The upside, again, just could not stick a move.

SP500 -0.70, -0.03%
NASDAQ -9.24, -0.20%
DJ30 9.92, 0.06%
SP400 -0.08%
RUTX -0.49%
SOX -0.02%

VOLUME: NYSE +17%, NASDAQ +26%.

A/D: -2:1 NYSE, -1.8:1 NASDAQ

Not great action as the closing prices suggest, but it was not bad action either.

Specifically, the indices did rally somewhat off session lows to close, leaving halfway decent patterns that suggest the recent test is reaching its end. Perhaps they are simply continuation doji to the downside, but they are definitely interesting. With some good individual stock patterns setting up during the past week's pullback, they may produce that bounce off support that continues the rally onto new index highs.

THE MARKET

CHARTS

SP500: Showing a nice tight doji at the lower trendline in its long uptrend channel out of 11/2012. This is one of the indices that suggests a bounce off a key support level following the test.

NASDAQ: Reached lower to the session low on the mid-December gap upside, held, rebounded to cut the losses on the session. A decent test and recovery, but NASDAQ still has to prove it can hold and rebound to take out the twin peaks formed from the December and January highs.

DJ30: Very tight trading range Friday, holding fast just over the 20 day EMA after the Wednesday flop to that level. Perhaps just a false bottom and the selling continues, but as with SP500 this action can suggest the pullback testing the last move higher is over and setting up the rebound.

RUTX: Reached all the way to the 20 day EMA on the low then rebounded, closing near the 10 day EMA and over the highs in the November trading range. Solid action with a sharp bounce off the session low and near support. This action shows some buyers stepping in after the 20 day EMA test, and that is a positive for a bounce attempt. At the minimum is tells you to be ready.

SOX: Undercut the 20 day EMA on the low then reversed for a nice hold at that support. The move tested into the mid-December upside gap zone and it immediately rebounded. Good action after a weeklong pullback to test the bounce from the 50 day EMA.

SP400: Similar action to RUTX, testing down near the 20 day EMA, undercutting it, then rebounding to hold the break over the three peaks spanning July, September, and November. Good test of the break over resistance, leaving SP400 in very good shape to continue upside.


LEADERSHIP

Social Media: Continues to look pretty solid, e.g. YELP, FB. Even TWTR has some positives in attempting to put in a bottom.

Electronics/Chips: Some interesting looks. ANAD, almost hate to say it, looks ready to bounce (again). ATML has a nice flag in place. AMCC looks very interesting. SIMO took off upside. PLNR has a super 1-2-3 test of its breakout five sessions back.

Biotech: Still look good, still waiting for the moves, e.g. TGTX, INSY.

Big Names: Not a banner session. GOOG faded further from the 50 day EMA test (from below). AAPL may just be putting in a second bottom in its test, but it will have to prove it as it broke the 50 day MA. AMZN turned down from its 50 day EMA test from below.

Financial: Not bad at all, testing lower intraday then rebounding to cut the losses or even finish positive, e.g. BAC, JPM, C.

MARKET STATS

NASDAQ
Stats: -33.52 points (+0.8%) to close at 4143.07
Volume: 1.727B (+26.89%)

Up Volume: 719.44M (-198.64M)
Down Volume: 996.33M (+566.73M)

A/D and Hi/Lo: Decliners led 1.79 to 1
Previous Session: Advancers led 1.38 to 1

New Highs: 108 (-113)
New Lows: 11 (-9)

S&P
Stats: -16.38 points (-0.89%) to close at 1831.98
NYSE Volume: 543M (+17.28%)

A/D and Hi/Lo: Decliners led 1.98 to 1
Previous Session: Advancers led 1.86 to 1

New Highs: 91 (-173)
New Lows: 85 (+7)

DJ30
Stats: -135.31 points (-0.82%) to close at 16441.35


SENTIMENT INDICATORS

VIX: 14.23; +0.51
VXN: 15.88; +0.44
VXO: 12.59; +0.34

Put/Call Ratio (CBOE): 0.82; +0.16


Bulls and Bears:

Bulls: 56.4% versus 52.5% versus 49.5% versus 51.5% versus 53.4% versus 56.5%. As you can see, a round trip on bullishness over the past 6 weeks.

Bears: 14.9% versus 15.8% versus 14.9% versus 14.8% versus 13.9% versus 13.8% versus 14.9%. Right back down after the prior week's jump. A round trip for bearishness the past six weeks.

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: 56.4%
52.5% versus 49.5% versus 51.5% versus 53.4% versus 56.5% versus 56.4% versus 55.5% versus 54.6% versus 47.0% versus 35.3% versus 37.8% versus 45.5% versus 47.5% versus 48.0% versus 52.5% versus 57.6% versus 56.1% versus 52.5%

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

Bears: 14.9%
15.8% versus 14.9% versus 14.8% versus 13.9% versus 13.8% versus 14.9% versus 14.8% versus 15.1% versus 16.3% versus 18.2% versus 17.3% versus 14.1% versus 15.1% versus 15.3% versus 15.2% versus 14.1% versus 13.3% versus 15.1% versus 16.2%

Background: Over 35% for bears is the threshold to be really be a good upside indicator. The best indication is when bears cross up through bulls as the two merge. Right now bulls are coming back down from the 60 level that has consistently marked market tops over the past two years. The rapid decline in progress is pushing the bulls/bears lines toward one another. Still far from a cross with bulls falling faster than bears are rising, but bears are warming up to the notion of market weakness.


OTHER MARKETS

Bonds (10 year): 2.12%
2.17% versus 2.19% versus 2.21% versus 2.25% versus 2.26% versus 2.165% versus 2.17% versus 2.21% versus 2.14% versus 2.05% versus 2.11% versus 2.08% versus 2.18% versus 2.16% versus 2.22% versus 2.26% versus 2.31% versus 2.24% versus 2.29% versus 2.29% versus 2.22 versus 2.17% versus 2.21% versus 2.24% versus 2.26% versus 2.30% versus 2.31% versus 2.34% versus 2.35% versus 2.32% versus 2.34% versus 2.32% versus 2.35%


Oil: 52.69, -0.58. Divining lower, still sliding down below the 10 day EMA.


Gold: 1186.20, +2.10. Plummeted then reversed for a modest gain.


$/JPY: 120.50 versus 119.81 versus 119.51 versus 120.67 versus 120.31 versus 120.48 versus 120.79 versus 119.99 versus 119.49 versus 118.83 versus 118.86 versus 116.81 versus 117.61 versus 118.75 versus 119.07 versus 118.12 versus 119.76 versus 120.55 versus 121.42 versus 119.78 versus 119.81 versus 119.21 versus 118.36 versus 118.63 versus 117.58 versus 117.93 versus 118.27 versus 117.73 versus 117.96 versus 118.00 versus 116.98 versus 116.47 versus 116.29 versus 115.74


Euro/$: 1.2002 versus 1.2099 versus 1.2156 versus 1.2143 versus 1.2183 versus 1.2203 versus 1.2171 versus 1.2223 versus 1.2225 versus 1.2284 versus 1.2345 versus 1.2509 versus 1.2448 versus 1.2462 versus 1.2389 versus 1.2439 versus 1.2366 versus 1.2318 versus 1.2289 versus 1.2379 versus 1.2313 versus 1.2383 versus 1.2473 versus 1.2452 versus 1.2509 versus 1.2477 versus 1.2442 versus 1.2386 versus 1.2549 versus 1.2543 versus 1.2532

The dollar exploded higher out of a 1.5 week lateral consolidation. The dollar index is leaving the other 25 currencies behind. That is good. People want to put money into stronger currencies and countries with stronger currencies.


NEXT WEEK

Some decent action though of course stocks blew an early advance and had to rally back from selling in order to give an semblance of positive action. Yes it was the first of the year and there is new money to be put into play, but it was also Friday of a holiday week and thus not a great litmus test of things to come.

Thus we played things a bit close to the vest, preferring to wait to next week to see if stocks can actually stick and hold a lead. We did pick up some SIMO, but for others we wanted to wait for the week to come given some volatile intraday action. Indeed, we closed out the EXAS, BLKB and AAPL positions due to that kind of action.

There are some great stocks that are in position to make upside moves, and if the money comes in for the real start of the new year this coming week, we will have some good buys.

That is the short term. What about 2015? You know that we, particularly me, think prognosticating anything more than the next market move is a waste of time. If SP500 goes to 2400, it goes to 2400, and we will benefit nicely from that. It is not guesswork, it is simply playing stocks when they are in position to move, then letting them work. The rest takes care of itself.

That said, there are some very interesting stats relating to 2015. They may seem strange, but the numbers are the numbers.

One is pre-election year years. Over the past 75 years, the year preceding a presidential election year finishes higher. Nicely higher.

Another is years that end in 5. They are simply good years. Been that way since 1885.

And finally, when you have three consecutive strong upside years, you get a fourth very strong year. Don't fear heights, right?

Typically in a year ending in 5 you get your low early in the year, in the first quarter. That makes sense given you get your low and then you have a good year that follows.

Sometimes the years are up just modestly, but many times they are up big, particularly if the '3 consecutive years upside' scenario is in play as well. Thus, 2015 is in good company for being a good year upside.


SUPPORT AND RESISTANCE

NASDAQ: Closed at 4726.81

Resistance:
4811 is the November 2014 peak (intraday)

Support:
The 50 day EMA at 4675
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
4566 is the lower gap point from late October
4545 is the 38% Fibonacci retracement
4486 is the July 2014 high
The 200 day SMA at 4421
4372 is the March 2014 high
The August low at 4321
4316 is the lower gap point from October 2014
4289 is the July 2000 recovery high
4277 is the March lower gap point
4246.55 is the January 2014 peak
4185, the May lower gap point
4131 is the March 2014 low
4104 is the lower gap point from 12/20/13
4070 is the series of highs from late November/early December


S&P 500: Closed at 2058.20

Resistance:
2076 is the all-time high from November
2079 is the intraday all-time high from November
2111 is the December 2012 up trendline

Support:
2049 is the lower trendline from 11/2012
The 50 day EMA at 2036
2011 is the September prior all-time high
1991 is the July 2014 high
The 200 day SMA at 1958
1905 is the August 2014 low
1902 from early May was the intraday all-time high.
1897 is the prior all-time high hit in April 2014
1883.57 is the early March high.
The December and January highs at 1848
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high


Dow: Closed at 17,832.99

Resistance:

Support:
The 20 day EMA at 17,789
17,991 is the early December all-time high
The 50 day EMA at 17,579
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
The 200 day SMA at 16,948
16,736 is the penultimate all-time high from May 2014
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,341 is the May low
16,334 is the August 2014 low
16,257 is the January 2014 low
16,179 is the November 2013 peak.
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak


ECONOMIC CALENDAR

December 30 - Tuesday
Case-Shiller 20-City Index, October (9:00): 4.5% actual, 4.4% expected versus 4.8% (revised from 4.9% prior)
Consumer Confidence, December (10:00): 92.6 actual versus 94.2 expected, 91.0 prior (revised from 88.7)

December 31 - Wednesday
MBA Mortgage Index: 0.9% prior
Initial Jobless Claims (8:30): 298K actual versus 290K expected, 281K prior
Chicago PMI (9:45): 58.3 actual versus 60.0 expected, 60.8 prior
Pending Home Sales, November (10:00): 0.8% actual versus 1.0% versus -1.2% prior (from -1.1%)

January 2 - Friday
ISM Index, December (10:00): 55.5 actual versus 57.5 expected, 58.7 prior
Construction Spending, November (10:00): -0.3% actual versus 0.1% expected, 1.2% prior (revised from 1.1%)

By: Jon Johnson, Editor
Copyright 2015 | 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