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.
- 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%
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.
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.
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.
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)
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)
Stats: -135.31 points (-0.82%) to close at 16441.35
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.
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.
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.
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.
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
4811 is the November 2014 peak (intraday)
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
2076 is the all-time high from November
2079 is the intraday all-time high from November
2111 is the December 2012 up trendline
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
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
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
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