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2/28/2015 Investment House Report
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MARKET ALERTS:
Targets hit: GOOG; MTSN; SPLK
Buy alerts: None issued
Trailing stops: CHUY
Stop alerts: RBCN; SIMO; SINA
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE ECONOMY OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
********************************************************************
The REPORTS SCHEDULE is as follows:
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
- Friday stocks just don't have the push.
- SP500, DJ30 testing again, NASDAQ starts to test.
- Leaders still solid, some starting to test, others still ready to move higher. Will money stay in for now and rotate or take a pause to let things cool?
- Economic data continues to show its slowdown. Well, now more than just a slowdown with the Chicago PMI.
- GDP again inflated by the forced ACA spending. And, without the massive benchmark adjustments from Q3, it is half of Q3.
- Bullish Sentiment nudges 60%.
- Now it is up to the new leaders and up and comers to step up.
Friday was something of a flop, at least in terms of a market that continues to rise post-new highs. All week the indices traded off as to who would lead, or to put it another way, who would not lead. The move was slowly higher but with no real power. Thus when Friday came, with so much talk about market tops thanks to NASDAQ approaching 5,000 (the old high is 5132 by the way), after three weeks upside the indices turned in an off session.
SP500 -6.24, -0.30%
NASDAQ -24.36, -0.49%
DJ30 -81.72, -0.45%
SP400 -0.39%
RUTX -0.46%
SOX -0.28%
VOLUME: NYSE +20%, NASDAQ +0.28%
A/D: 1.05:1 NYSE, -1.6:1 NASDAQ. Definitely a large cap move on NASDAQ the past week, e.g. GOOG, AMZN.
The week saw overall gains and NASDAQ pushed toward its March 2000 all-time high. There was no flash, no panache, however, just a half step forward, quarter step backward slog on the week. All indices participated to the upside, it was just very spotty with a very good day followed by a very mediocre day. My how spoiled we have become; every day isn't a run higher. What is this market coming to?
Leaders on the other hand were really hitting it. GOOG, SPLK (outside that Friday reversal, but we banked some excellent gain early session), MTSN, ZBRA, FSLR, LCI, CREE, QRVO, and more. An impressive list of impressive moves. Hey, someone has to make the good moves when the market is creeping higher. Not all stocks creep. You always have the leaders dragging along the dead weight. Last week was exactly that case.
The question is whether Friday was something more nefarious given it was a bigger drop than the other sessions. Our view? Lots of talk of a market top simply had some people skittish and they took some profits. A 'Friday after three weeks upside and a very slow week to top it off so better take some gain' kind of session. Those can dissipate as fast as they show up.
Not to be too cocksure of ourselves, however. As we note later, bulls are 0.5%, barely a gnat's butt away, from hitting 60%. That level has consistently resulted in market selloffs or corrections during the past three to four years. Bulls up, ominous talk of tops - - sometimes it is a self-fulfilling prophecy.
You have to counterbalance that with the facts regarding leadership. Many, many quality stocks have rallied well. Others have broken out of bases, tested, and are rallying well in that rally, pause, rally, pause cycle. Others are what we call 'turning the corner,' coming out of downturns and starting what could be long upside runs just as their predecessors, the current leaders, started with.
As long as money stays in the market and rotates to new leaders as the old leaders stop and rest, the move overall continues. More so if new money comes in.
Even in those situations, however, the market can take breathers or breaks from the upside. This market ended the week taking a breather, at least for SP500, DJ30, and SP400 as they test the 10 day EMA. The other indices paused as well, but it was a 'Friday thing' for them as they moved higher all week then gave up just a bit, and it was just a bit, of ground Friday.
I would say the market is vulnerable to a pullback here even though SP500 and DJ30 just took a three day rest a week back and SP400 has moved up from its weeklong test for just over 2 weeks. They are not extended, in other words, and thus are not precarious. NASDAQ, the clear leader, and RUTX are up without much rest at all. If they rest either the other indices step in to fill the void OR they all decide to take a breather.
Oh my, so much if/then talk with several possible routes. What to do? Execute the plan. We have bought quality patterns as they break upside, whether continuing runs already in place, breaking higher from initial breakout tests, or turning the corner with their first moves. Let them work and when they hit or get close to our logical targets, take some gain. If they continue to work, let them. If they start to struggle or are not keeping up, close them.
We did all of that last week, banking excellent gain on many positions. At the same time we had to close some that just were not performing. Indeed, some good stocks ran into trouble, and that is another indication the move is a bit winded even though some indices put in good mid-stream tests the past two weeks. If they get in trouble, bag them. If leaders start to falter and break support they have not been breaking in their move, close them.
That way you NATURALLY get leaner at the top because typically there are less opportunities at the top as patterns are not forming up as well. The caveat to that, of course, is the situation where the followers have set up and are making their moves just as the rally leaders decide it is time to correct. That still doesn't mean the end of the move UNLESS the money banked when the leaders are sold is NOT put into other areas. You know that because they fail to advance or give up breaks higher rather quickly. In that instance the test is upon us.
This week we still see many plays working higher and setting up nice, nice upside patterns. We have several such new plays on the report. At the same time we see some big movers that led this part of the market rally in the test phase: AAPL, SPLK with that reversal Friday, FEYE, LCI. How they react in their pullbacks will be instructive as will how the new comers perform. Also, don't forget the gaps, the good stocks surging on earnings, e.g. AVGO, FB, HD. How they fill or don't fill their gaps also tells the story.
Thus far most all are holding on, but the response moves to last week's action still have to be made. Like what we see, but won't be surprised if there is some pullback near term. After all, the breakouts to higher highs have really not been tested.
NEWS
What external forces are working on stocks?
Thursday you saw jobless claims bounce back over 300K as the energy sector layoffs continue. As noted that night, the rebound only continues the trend higher in jobless claims from October, the month QE officially ended.
Friday the news was rather pitiful. Sure the spin was shoveled heavily as the powers that be still try to keep the masses convinced of something that their own intuition and senses are telling them is not the case, i.e. the economy is 'great.'
Signs of greatness?
Chicago PMI, February: 45.8 versus 58.0 expected and 59.4 January
Okay, the lowest read since July of 2009, the first below 50 (contraction) reading since April 2013. Hardly a shot of confidence in numbers that, since October, have tailed off.
Every index outside of supplier deliveries contracted.
Production: 44.8 versus 64.1
New orders: 42.0 versus 61.6 January
Unfilled orders: 41.1 versus 51.9, the second decline in three months.
Employment: 49.8 from 60.1
Okay, why the crappy report? Weather, port strike. Hey, have to blame something and those are in the headlines, easy pickings, stories that the average uninformed person will nod about and think 'that makes sense.'
But does it. Remember my discussion last year in the economic aftermath of the Polar Vortex? How the weather slammed the door on GDP, driving it negative? Really? In the mid-1980's there was a horrible winter, one that impacted most of the country, not for a week but for weeks. It was so bad that icebergs floated in the Mississippi River at Baton Rouge and farther south. Pipes across the south burst, not designed for that kind of sustained cold. GDP was clobbered right? Only if clobbered means solid: 4.5% during the worst that winter could offer.
Moral: It is the economy, not the weather. Always. If our economy is so weak it cannot stand weather that is impacting just a quarter of the country, we have serious problems. Oh yeah, that is right, we DO have serious problems.
Q4 GDP 2nd read
2..2% versus 2.1% versus 2.6%. Hey, beat expectations and the whisper of a 1-handle.
Consumption: 4.2% versus 4.3%. Not bad from the look of it.
Inventories: $88B versus $113B in the first read. Ah, there is part of the problem.
All 2014: 2.4%. Still crappy, but without that 5% in Q3, ugh.
Oh yes, what about that 5% and indeed the 2.2% in Q4? What is the story behind the headlines.
Well, you already know that. After the final Q3 read and the robust consumption that drove it, we pointed out that over 2% of the move was due to forced spending on the ACA. That is right, people buying polices because they had to, or paying the fine instead. It is counted the same. Also, there were massive revisions in the estimates of savings versus spending, and that spending was written much higher, also pushing up GDP to absurdly inaccurate levels.
What about Q4? That 4.2% looks good. Obviously that 'gasoline bonus' is helping consumers spend more on creature comforts.
That is true IF forced spending on the ACA is a creature comfort. Indeed, in Q4 spending on ACA was even HIGHER. $21.4B for healthcare versus 20.4B in Q3.
$21.4B = 18% of all spending on goods and services in Q4 was for healthcare. Massive increases since the ACA has taken effect.
You should also take a look at this weekend's Investor's Business Daily article on how spending is forced and thus mandatory, but people buying the required policies are not using them because . . . as I wrote before, they CANNOT AFFORD TO PAY THE DEDUCTIBLE after they pay the premiums.
This is the biggest fraud, the biggest rip off the US citizens have suffered. By merely living in the US the Congress and Executive say you have to purchase something whether you need it, want it, or otherwise. The Supreme Court backed them by saying it was a tax, thus also opening the door to unlimited federal interference by just saying any regulation forcing you to buy something is just a tax. In order to provide voters with insurance funded by others, the government is forcing the transfer of what will be trillions of dollars from those who earn it to those who don't. Nothing new there, just the SCALE of the fleecing is staggering.
Greenspan speaks again.
Ever ready to call reality in the true sense AFTER he left the Fed , Friday Alan Greenspan stated what we all know, at least those who do the math and make even a cursory study of history: the Fed's actions, not the economy, were the main drivers in the massive price expansion in financial assets since the bottom in early 2009.
The economy, he says, is 'extraordinarily weak, tantamount to the last stages of the Great Depression.' He is concerned that a problem arises when real rates start to rise.
If Greenspan would admit that his keeping rates so low for so long contributed to the housing crisis and financial collapse, he would have SO MUCH more credibility. Saying yes we learned at that time if you kept rates artificially low the market would bubble, his current comments would turn more heads. As it is, it makes interesting, well after the fact, 'I told you so' from someone who never told it was so.
The other investment:
The buybacks and dividends were humming last week. Friday alone saw some impressive ones:
Buybacks: GPS $1B! ROST 1.4B! URBN $20M (slacker)
Dividends: GPS +5%; ROST +17.5%
THE MARKET
CHARTS
As discussed earlier, there is no real damage to the charts. They all had 'their day' last week on different days, each taking turn. Overall, however, the move slowed and by Friday some tests were ongoing. All are hold above the 10 day EMA for now, all are holding breaks higher. The key we still feel is NASDAQ and its move toward 5132 from March 2000. That is the moth to the flame right now, and the indices, though slowing, still are in good enough shape to regroup and take NASDAQ close to that level. In our view that will be the near term topping mechanism, but we cannot assume that must be the case.
MARKET STATISTICS
NASDAQ
Stats: -24.36 points (-0.49%) to close at 4963.53
Volume: 1.868B (+0.28%)
Up Volume: 751.97M (-348.03M)
Down Volume: 1.15B (+365.51M)
A/D and Hi/Lo: Decliners led 1.61 to 1
Previous Session: Advancers led 1.26 to 1
New Highs: 118 (-36)
New Lows: 33 (+8)
S&P
Stats: -6.24 points (-0.3%) to close at 2104.5
NYSE Volume: 864.7M (+20.18%)
A/D and Hi/Lo: Advancers led 1.05 to 1
Previous Session: Decliners led 1.17 to 1
New Highs: 99 (-23)
New Lows: 30 (+8)
DJ30
Stats: -81.72 points (-0.45%) to close at 18132.7
SENTIMENT INDICATORS
VIX: 13.34; -0.57
VXN: 14.62; +0.29
VXO: 13.28; -0.16
Put/Call Ratio (CBOE): 1.02; 0
Bulls and Bears:
Bulls: 59.5% versus 56.6% versus 52.5% versus 49.0%
Galloping to the 60% level that has spawned corrections in this market rally.
Bears: 14.1% versus 14.1% versus 15.2% versus 16.3% versus 16.3% versus 17.4%. Holding at the lows as bears remain absent. Too complacent and now with bulls at 59.5%, could be trouble.
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: 59.5%
56.6% versus 52.5% versus 49.0% versus 53.1% versus 49.0% versus 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: 14.1%
14.1% versus 15.2% versus 16.3% versus 16.3% versus 17.4% versus16.3% 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): 1.98%
2.04% versus 1.96% versus 1.98% versus 2.06% versus 2.09% versus 2.11% versus 2.08% versus 2.14% versus 2.03% versus 1.99% versus 1.98% versus 1.99% versus 1.95% versus 1.94% versus 1.81% versus 1.77% versus 1.78% versus 1.68% versus 1.67% versus 1.76%
Oil: 49.79, +1.50. It looks as if oil would make the break, then fell Thursday. A decent Friday recovery keeps it in the range. Now we see if it can use that as leverage.
Gold: 1213.10, +3.00.
$/JPY: 119.63 versus 119.48 versus 118.86 versus 118.95 versus 118.78 versus 119.08 versus 119.04 versus 118.70 versus 119.34 versus 118.83 versus 118.915 versus 120.26 versus119.48 versus 118.62 versus 118.987 versus 117.56 versus 117.21 versus 117.58 versus 117.52 versus 117.40 versus 118.30 versus 117.54 versus 117.88 versus 118.45
Broke higher late in the week, moving up off the 50 day EMA.
Euro/$: 1.1197 versus 1.1195 versus 1.1362 versus 1.1337 versus 1.1385 versus 1.1379 versus 1.1366 versus 1.1398 versus 1.14 versus 1.1390 versus 1.1409 versus 1.1294 versus 1.1315 versus 1.1324 versus 1.1318 versus 1.1474 versus 1.1387 versus 1.1481 versus 1.1336 versus 1.1290 versus 1.1318 versus 1.1287 versus 1.1375 versus 1.1263 versus 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
MONDAY
Jobs week and many are looking for jobs as the savior of the economic face. GDP was halved and that is generous given the reasons. Durable goods orders, jobless claims, Chicago PMI were so-so to downright crappy. The trend lower since QE ended is almost frighteningly uncanny.
There is also the DHS funding dust up and that raises the ghosts of shutdowns or budgeting disputes past. I for one and not a person who feels we need to pass a budget just to avoid a shut down. Only in government are you told that we have to spend money no matter what it is on. They could 'fund' the DHS to play pick up stix all day long and that would be fine with many of our leaders because government did not shut down. After all, if it did we just might not miss it. Cannot have that.
That is all, as the late great Leonard Nimoy playing Mr. Spock would say, 'sauce for the goose.'
Sauce for the goose, Saavik. The odds will be even. 'The Wrath of Kahn'
The real story is how the indices handle the slower upside last week and the start of the test. That will be dictated by how those leaders handle their tests. AAPL still looks good on its test, good enough to enter as it bounces. Others have enjoyed big moves and they need a breather. Some are taking it and the quality of their tests tells that tale.
It is also about those on the rise, trying to muscle into the upside. If money flows their way while the others test, the market holds its moves.
Last week was just the start of a possible test. We get more into it this week. Upside plays at the ready of the move continues or money otherwise rotates. We have banked some good gain, look to do the same again if given the opportunity, and also have good logical stop points in place (keeping things logical in honor of Nimoy). As I said earlier, play the plan either in buying, taking gain, or closing positions.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4963.53
Resistance:
5132.52 is the 3/2000 all-time high
Support:
The 10 day EMA at 4931
4815 is the December 2014 prior market peak
4811 is the November 2014 peak (intraday)
The 50 day EMA at 4781
4774 is the January high
4751 is the January 2015 lower high
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
4563 and 4567 are the January lows
4547 is the December low
The 200 day SMA at 4540
4486 is the July 2014 high
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
S&P 500: Closed at 2104.50
Resistance:
2161 is the December 2012 up trendline
Support:
2094 is the all-time high
2098 is the lower trendline from 11/2012
2079 is the intraday all-time high from November
2076 is the all-time high from November
2062 is the January 2015 lower high
The 50 day EMA at 2061
2011 is the September prior all-time high
The 200 day SMA at 1994
1991 is the July 2014 high
1972 is the December 2014 low
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 18,132.70
Resistance:
Support:
18,104 is the December all-time high
17,991 is the early December interim
17,923 is the January 2015 lower high
The 50 day EMA at 17,779
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,197
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
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.
15,855 is the October 2014 low
15,739 is the December 2013 low
ECONOMIC CALENDAR
February 23 - Monday
Existing Home Sales, January (10:00): 4.82M actual versus 4.95M expected, 5.07M prior (revised from 5.04M)
February 24 - Tuesday
Case-Shiller 20-city, December (9:00): 4.5% actual versus 4.3% expected, 4.3% prior
Consumer Confidence, February (10:00): 96.4 actual versus 99.6 expected, 103.8 prior (revised from 102.9)
February 25 - Wednesday
MBA Mortgage Index, 02/21 (7:00): -3.5% actual versus -13.2% prior
New Home Sales, January (10:00): 481K actual versus 470K expected, 482K prior (revised from 481K)
Crude Inventories, 02/21 (10:30): 8.427M actual versus 7.716M prior
February 26 - Thursday
Initial Claims, 02/21 (8:30): 313K actual versus 290K expected, 282K prior (revised from 283K)
Continuing Claims, 02/14 (8:30): 2401K actual versus 2400K expected, 2422K prior (revised from 2425K)
CPI, January (8:30): -0.7% actual versus -0.6% expected, -0.3% prior (revised from -0.4%)
Core CPI, January (8:30): 0.2% actual versus 0.1% expected, 0.1% prior (revised from 0.0%)
Durable Orders, January (8:30): 2.8% actual versus 1.7% expected, -3.7% prior (revised from -3.3%)
Durable Goods -ex tr, January (8:30): 0.3% actual versus 0.5% expected, -0.9% prior (revised from -0.8%)
FHFA Housing Price I, December (9:00): 0.8% actual versus 0.7% prior (revised from 0.8%)
Natural Gas Inventor, 02/21 (10:30): -219 bcf actual versus -111 bcf prior
February 27 - Friday
GDP - Second Estimate, Q4 (8:30): 2.2% actual versus 2.1% expected, 2.6% prior
GDP Deflator - Second, Q4 (8:30): 0.1% actual versus 0.0% expected, 0.0% prior
Chicago PMI, February (9:45): 45.8 actual versus 58.0 expected, 59.4 prior
Michigan Sentiment -, February (10:00): 95.4 actual versus 94.0 expected, 93.6 prior
Pending Home Sales, January (10:00): -3.7% prior
Pending Home Sales, January (10:00): 1.7% actual versus 2.4% expected, -1.5% prior (revised from -3.7%)
End part 1 of 3
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Saturday, February 28, 2015
Sunday, February 22, 2015
The Daily, Part 1 of 3, 2-21-14
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2/21/2015 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: None issued but we had a good week for taking gain.
Buy alerts: None issued
Trailing stops: None issued
Stop alerts: GMCR
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE ECONOMY OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
The REPORTS SCHEDULE is as follows:
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
- A Greece deal helps stocks end the week with a Grecian rally.
- SP500, DJ30 end their tests, surge with the Dow at an all-time high, NASDAQ that much closer to its 2000 peak
- Leadership from all areas contributes to more gains.
- Jobless claims: lower than goodness, but starting to trend higher.
- Experts fret over why consumers are not spending. Rather obvious.
- Indices at new highs. Time for a pullback? Seems logical, but maybe not.
On again, off again Europe and Greece were finally on. Greece received a 4 month emergency extension of sorts, but it was really a bad deal for Greece. After all the campaign promises, all the post-election tough rhetoric, in the end Greece caved, fearing having to go it alone sans the EU. The deal was so bad the German Kaiser of Finance quipped he would not like to be the one explaining the deal to the Greek voters. Hmm. Sounds like the same situation for the republicans after the 2014 election now that they are going to uphold absolutely none of their election promises. Ironic isn't it? The republicans are playing not to lose the 2016 election, but in so doing they are guaranteeing their defeat. They, as with so many people, will never learn from history.
Stocks started the session lower because there was no Greece deal. An EU office said there would most likely not be a deal at the meeting, understandable if he didn't feel Greece would cave like a ditch dug in mud.
Moreover, the US rig count fell again, dropping by 48 rigs to 1310 total in the US. A long way to go to get to the level T. Boone Pickens said it would take to turn prices back up. There is SO MUCH speculation about how this time things are different, how oil and gas companies are so efficient that they can 'turn it on or turn it off' as necessary. What a crock of crapola.
Boone Pickens knows the industry better than anyone alive. More than that, it is just economics: prices are way down, rigs are way down, but production is still increasing. How can that be possible the television experts query with high-pitched whiney voices? Here's how: economics. Prices are down, the producers fear they could go lower, so they are producing like crazy to make as much of their capital investment back as possible before things really hit the skids. Thus production is increasing, driving inventories higher, and of course putting downward pressure on prices. They will do it until they can't. Then the game is over and a lot of M&A starts as the companies with money buy those who need a bailout. Oh yes, and don't forget the lawsuits that will surge due to breach of contract claims, etc. Ah, the good old days of the 1980's once again for the lawyers. Heck, I might put the shingle back out and make some easy money with these cases. Been there, done that, have the experience of the cleanup after the 1980's. Money to be picked up off the ground. But, alas, I digress. And, there is NO WAY I would go back to that again. Love being in court and arguing, hate the prep work.
So stocks had no reason to be happy and they started lower. But it did not last. As we suspected, within the first hour they bottomed, specifically at the 30 minute mark with a big doji with tail. That started stocks upside and they climbed the entire session.
Thus when the announcement came that a Greece deal was in the bag, stocks didn't seem to really care. They continued higher for sure, but there was no massive new spurt. There was a last hour ramp to session highs, but that was an expiration thing. The indices broke to higher highs when many felt they would not and placed bets accordingly. As the indices did break to higher highs that meant those bets had to be rolled out or otherwise covered. The result was a last hour short squeeze that ensured DJ30's new all-time high.
SP500 12.85, 0.61%
NASDAQ 31.27, 0.63%
DJ30 154.67, 0.86%
SP400 0.76%
RUTX 0.32%
SOX 0.61%
VOLUME: NYSE +20%, NASDAQ +10%. Higher volume thanks to expiration, but even with relative large jumps it was not enough to push either exchange volume to average. A very anemic expiration week re volume.
A/D: 2.1:1 NYSE, 1.2:1 NASDAQ. Rather incredibly puny breadth given the percentage gains. Of course with DJ30 leading and NASDAQ 100 up easily more than NASDAQ overall, it was clearly a large cap day. As such weaker breadth is understandable. Not great, but understandable.
So DJ30 joined ranks with SP500, SP400, RUTX at new all-time highs. NASDAQ is not there yet but came a bit closer. SOX is nowhere near a new all-time high, but it has been a dog for a decade and thus we have to cut it some slack. Heck, that makes it one of the best plays there is, at least it has been in terms of leadership.
New highs mean some worry, others don't. Sure there will be at test. Sure there are valuations that are stretched. Sure this is built on a house of cards, a house of sticks, etc. Valuations, however, are no measure of a market run; they only matter at a market bottom. Yes there will be a test, but when the market shows it doesn't have a fear of flying, it behooves us to allow ourselves to go along for the ride. Keep an eye on leaders and on the exits if need be, but definitely go along for the ride.
THE NEWS
Jobless Claims are better overall but the trend is a bit worrisome.
Thursday saw jobless claims fall back below 300K, allowing a collective sigh of relief from the economic cheerleaders. Certainly the trend has been lower over the past year. Or has it? Overall, yes. In numbers, yes. But the last several months are worrisome.
Since October continuing claims and jobless claims are on the rise:
The drop in oil prices has hammered oil producing states:
What happened in October? QE ended. Coincidence or is there a connection? Hard to draw conclusions yet, but something we are going to watch closely. Wonder if the Fed is watching as well?
Experts puzzle as to why consumers are not increasing spending.
Sometimes you have to wonder how people with so much education say such stupid things. You wonder but you know why: they are so married to what they learned from the books that they cannot divorce their thoughts from their theories even when reality screams otherwise.
Case in point: all this week experts were on CNBC, Fox Business, and Bloomberg wondering why consumers were just not spending all of this new found money from the improved jobs market and of course the declines in energy costs.
Putting aside that a lot of the spending that is occurring is due to forced insurance outlays thanks to the ACA, the reasons are rather clear and rather simple.
First, given that many people gave up big engine vehicles in order to simply be able to drive to work with gasoline prices over $3/gallon, the savings from gasoline price drops are just not that dramatic. $10 a week saved with a smaller engine car isn't going to tip the balance of retail spending, particularly when you are forced to spend a rather huge chunk of your earnings on health insurance you may or may not want.
Second, what about that jobs market? An economy creating millions of hourly, low-wage jobs is not the same as one creating millions of well-paying fulltime jobs. So, you get a job and you are paid minimum wage or a bit more. You only get to work 29 hours a week, however, because the ACA says if you work more your employer has to provide everyone expensive insurance or pay a fine.
How on EARTH can you equate, as the experts are, a 29 hour per week low paying service job to a fulltime job someone enjoyed before the economy tanked? A person in one of these jobs, hell, even TWO of these jobs is not 'back' to where he or she was pre-crash. It is the height of absurdity to even consider this to be the case. Apparently to these experts one job is fungible with another. Yet we know that is not the case. So, we have to hear idiotic commentary from ivory tower idiots, spreading misinformation to whoever listens. Of course with the financial station's continually waning viewership, maybe that is not doing any harm. It certainly is not helping those that do watch.
THE MARKET
CHARTS
DJ30: A new all-time high as the Dow pushed past the late December prior peak. Good jump in volume though it was expiration so it doesn't mean that much. The move, however, was after a nice little 1-2-3 pullback just below the prior high. Good test, good rest, and on its way higher. Now the key is to drive it home and not just give it right back.
NASDAQ: NASDAQ has already put in a very solid breakout (gapped higher). A solid six session run since the breakout, 8 straight upside sessions all told. Looked to be slowing, but then on Friday it punched it and put in the best move in four sessions. Not a broad move but a large cap move. Not the best action and while Friday was nice, it now has to show it can sustain it versus the inevitable breakout test.
SP500: Similar to DJ30, the large caps jumped higher after a three day pause just after the initial breakout to a new high. Good price action though volume lagged, and MACD is thus far lagging. Doesn't mean it will stay that way but it is lagging the price move a bit. That, however, is not the determinative factor. Some volume would be nice to support the move.
SOX: Very similar action to SP500, i.e. breaking to a higher high, immediately moving laterally, followed by a Friday break upside. Excellent action as the chips, already a leader, continue to show their strength.
SP400: The midcaps made the first break higher to a new high. They have not slowed much since though they did test immediately upon the break. Hmmm. Who else did that? Perhaps that means SP500, SOX still have plenty of move left in them. Anyway, while not as straight up as NASDAQ, SP400 broke sharply higher Friday.
RUTX: Not blowing things away, but a steady climb up the 10 day EMA. A bit volatile Friday, reaching down to the 10 day EMA, but a nice recovery. Solid.
LEADERSHIP:
Financial: Some good action. JPM jumped sharply after a nice test of the break over the 200 day SMA. C showing similar action, jumping off the 200 day SMA test. MA surging to a new high as V jumped back up.
Drugs/Biotech: Another good day. TXMD surged for us. CELG gapped and ran higher to the January peak, moving on strong trade.
Social: Another good session on top of Thursday's run. FB added to its big move. GRUB surged upside off a test. TWTR was not as spectacular, but solid.
Chips: Some up, some down Friday, but overall a solid week. AFOP. MTSN surging. CREE enjoying a solid week and Friday.
Software: FEYE exploding higher still. SPLK continues its run.
Heavy machinery: TEX surging in a turnaround. B exploded upside.
Big Names: AMZN broke higher off a test. AAPL jumped higher to a new high as well. GOOG tested back to the 10 day EMA; still in position but needs to make this move.
MARKET STATISTICS
NASDAQ
Stats: +31.27 points (+0.63%) to close at 4955.97
Volume: 1.725B (+9.87%)
Up Volume: 1.1B (+223.7M)
Down Volume: 630.87M (-67.69M)
A/D and Hi/Lo: Advancers led 1.15 to 1
Previous Session: Advancers led 1.15 to 1
New Highs: 132 (+4)
New Lows: 30 (+4)
S&P
Stats: +12.85 points (+0.61%) to close at 2110.3
NYSE Volume: 830.6M (+19.82%)
A/D and Hi/Lo: Advancers led 2.13 to 1
Previous Session: Decliners led 1.09 to 1
New Highs: 164 (+18)
New Lows: 14 (0)
DJ30
Stats: +154.67 points (+0.86%) to close at 18140.44
SENTIMENT INDICATORS
VIX: 14.3; -0.99
VXN: 14.67; -0.77
VXO: 14.05; -0.97
Put/Call Ratio (CBOE): 0.79; -0.1
Bulls and Bears:
Bulls: 56.6% versus 52.5% versus 49.0% versus 53.1% versus 49.0%. Definite uptrend, definite surge the past two weeks from 49%. Approaching the 60%ish level that has terminated most market rallies the past few years.
Bears: 14.1% versus 15.2% versus 16.3% versus 16.3% versus 17.4% versus 16.3% versus 15.2%. Plunging back to the lows though still overall in a very narrow range. That is not a good thing, the narrow range, because there is an overall lack of bears in the market.
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: 56.6%
52.5% versus 49.0% versus 53.1% versus 49.0% versus 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: 14.1%
15.2% versus 16.3% versus 16.3% versus 17.4% versus16.3% 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): 2.09%.
2.11% versus 2.08% versus 2.14% versus 2.03% versus 1.99% versus 1.98% versus 1.99% versus 1.95% versus 1.94% versus 1.81% versus 1.77% versus 1.78% versus 1.68% versus 1.67% versus 1.76%
Holding support the past week but that is about all.
Oil: 50.82, -1.01. 51.83, -0.29. Trying to bounce off a test of the move. Nice inverted head and shoulders forming.
Gold: 1204.60, -3.00. Broke down last week, or more accurately, broke lower in its continuing downtrend.
$/JPY: 119.08 versus 119.04 versus 118.70 versus 119.34 versus 118.83 versus 118.915 versus 120.26 versus119.48 versus 118.62 versus 118.987 versus 117.56 versus 117.21 versus 117.58 versus 117.52 versus 117.40 versus 118.30 versus 117.54 versus 117.88 versus 118.45
Flat-lining along the 50 day EMA. Again, it is now over that level versus under it as in January. Now, however, the pair is in an almost three month lateral move.
Euro/$: 1.1379 versus 1.1366 versus 1.1398 versus 1.14 versus 1.1390 versus 1.1409 versus 1.1294 versus 1.1315 versus 1.1324 versus 1.1318 versus 1.1474 versus 1.1387 versus 1.1481 versus 1.1336 versus 1.1290 versus 1.1318 versus 1.1287 versus 1.1375 versus 1.1263 versus 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
Still a very nice 5-week pennant, holding the 20 day EMA the past week and in great position to move higher. Just hasn't done it.
MONDAY
New highs all around last week thanks to DJ30 making the break higher Friday. NASDAQ on a two week tear straight up. SP400 on a week-plus upside move. With all of the big moves you can get uncomfortable with the upside. The pundits are split. Some say watch out, others say the move is just getting started.
Both could be right, at least to degrees. Impressive run to higher highs and new all-time highs; these kind of breakouts typically lead to tests. But SP500 and DJ30 just put in tests and are now breaking higher. Ditto SOX. NASDAQ and SP400 are still moving higher and seem overdone near term. They are ripe for a test while SP500 and DJ30 and even SOX move higher.
Or not. They very well can continue higher. Maybe THEY take a short 2 to 3 day respite as well and then continue. Consider NASDAQ is just 180 or so points from its all-time high. That type of milepost, particularly one so discussed, so famous as the NASDAQ all-time high, can act as a magnet pulling prices to it similar to a moth drawn to a flame. Thus despite being perhaps overbought near term, there is a tremendous pull on NASDAQ toward that high.
A lot of the news is out: jobs, earnings, FOMC, Greece/Europe. There can always be stories that upset the move, but right now the market is moving in something of a sweet spot. There are always pauses, tests, and pullbacks; just saw some, right? And . . . the move overall continues.
This may just be one of those situations. The leaders keep setting up and breaking higher. Financials are coming around. Energy slowed but is still moving upside. Industrial equipment is turning the corner upside, e.g. TEX. If new leaders continue to step up, the market has the support it needs to keep making the breaks higher. Just look at SP500 and DJ30 breaking upside: industrials, financials breaking higher as well. Hand in hand.
Thus we will continue looking for plays to take advantage of a further upside moves.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4955.97
Resistance:
5132.52 is the 3/2000 all0time high
Support:
The 10 day EMA at 4864
4815 is the December 2014 prior market peak
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
The 50 day EMA at 4739
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
4563 and 4567 are the January lows
4547 is the December low
The 200 day SMA at 4518
4486 is the July 2014 high
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
S&P 500: Closed at 2110.30
Resistance:
2155 is the December 2012 up trendline
Support:
2094 is the all-time high
2091 is the lower trendline from 11/2012
2079 is the intraday all-time high from November
2076 is the all-time high from November
2062 is the January 2015 lower high
The 50 day EMA at 2050
2011 is the September prior all-time high
1991 is the July 2014 high
The 200 day SMA at 1988
1972 is the December 2014 low
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 18,140.44
Resistance:
Support:
18,104 is the December all-time high
17,991 is the early December interim
17,923 is the January 2015 lower high
The 50 day EMA at 17,691
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,158
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
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.
15,855 is the October 2014 low
15,739 is the December 2013 low
ECONOMIC CALENDAR
February 23 - Monday
Existing Home Sales, January (10:00): 4.95M expected, 5.04M prior
February 24 - Tuesday
Case-Shiller 20-city, December (9:00): 4.3% expected, 4.3% prior
Consumer Confidence, February (10:00): 99.3 expected, 102.9 prior
February 25 - Wednesday
MBA Mortgage Index, 02/21 (7:00): -13.2% prior
New Home Sales, January (10:00): 471K expected, 481K prior
Crude Inventories, 02/21 (10:30): -7.716M prior
February 26 - Thursday
Initial Claims, 02/21 (8:30): 290K expected, 283K prior
Continuing Claims, 02/14 (8:30): 2400K expected, 2425K prior
CPI, January (8:30): -0.6% expected, -0.4% prior
Core CPI, January (8:30): 0.1% expected, 0.0% prior
Durable Orders, January (8:30): 1.8% expected, -3.3% prior (revised from -3.4%)
Durable Goods -ex tr, January (8:30): 0.6% expected, -0.8% prior
FHFA Housing Price I, December (9:00): 0.8% prior
Natural Gas Inventor, 02/21 (10:30): -111 bcf prior
February 27 - Friday
GDP - Second Estimate, Q4 (8:30): 2.1% expected, 2.6% prior
GDP Deflator - Second, Q4 (8:30): 0.0% expected, 0.0% prior
Chicago PMI, February (9:45): 58.0 expected, 59.4 prior
Michigan Sentiment -, February (10:00): 93.8 expected, 93.6 prior
Pending Home Sales, January (10:00): -3.7% prior
Pending Home Sales, January (10:00): 2.2% expected, -3.7% prior
End part 1 of 3
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2/21/2015 Investment House Report
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Targets hit: None issued but we had a good week for taking gain.
Buy alerts: None issued
Trailing stops: None issued
Stop alerts: GMCR
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The REPORTS SCHEDULE is as follows:
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
- A Greece deal helps stocks end the week with a Grecian rally.
- SP500, DJ30 end their tests, surge with the Dow at an all-time high, NASDAQ that much closer to its 2000 peak
- Leadership from all areas contributes to more gains.
- Jobless claims: lower than goodness, but starting to trend higher.
- Experts fret over why consumers are not spending. Rather obvious.
- Indices at new highs. Time for a pullback? Seems logical, but maybe not.
On again, off again Europe and Greece were finally on. Greece received a 4 month emergency extension of sorts, but it was really a bad deal for Greece. After all the campaign promises, all the post-election tough rhetoric, in the end Greece caved, fearing having to go it alone sans the EU. The deal was so bad the German Kaiser of Finance quipped he would not like to be the one explaining the deal to the Greek voters. Hmm. Sounds like the same situation for the republicans after the 2014 election now that they are going to uphold absolutely none of their election promises. Ironic isn't it? The republicans are playing not to lose the 2016 election, but in so doing they are guaranteeing their defeat. They, as with so many people, will never learn from history.
Stocks started the session lower because there was no Greece deal. An EU office said there would most likely not be a deal at the meeting, understandable if he didn't feel Greece would cave like a ditch dug in mud.
Moreover, the US rig count fell again, dropping by 48 rigs to 1310 total in the US. A long way to go to get to the level T. Boone Pickens said it would take to turn prices back up. There is SO MUCH speculation about how this time things are different, how oil and gas companies are so efficient that they can 'turn it on or turn it off' as necessary. What a crock of crapola.
Boone Pickens knows the industry better than anyone alive. More than that, it is just economics: prices are way down, rigs are way down, but production is still increasing. How can that be possible the television experts query with high-pitched whiney voices? Here's how: economics. Prices are down, the producers fear they could go lower, so they are producing like crazy to make as much of their capital investment back as possible before things really hit the skids. Thus production is increasing, driving inventories higher, and of course putting downward pressure on prices. They will do it until they can't. Then the game is over and a lot of M&A starts as the companies with money buy those who need a bailout. Oh yes, and don't forget the lawsuits that will surge due to breach of contract claims, etc. Ah, the good old days of the 1980's once again for the lawyers. Heck, I might put the shingle back out and make some easy money with these cases. Been there, done that, have the experience of the cleanup after the 1980's. Money to be picked up off the ground. But, alas, I digress. And, there is NO WAY I would go back to that again. Love being in court and arguing, hate the prep work.
So stocks had no reason to be happy and they started lower. But it did not last. As we suspected, within the first hour they bottomed, specifically at the 30 minute mark with a big doji with tail. That started stocks upside and they climbed the entire session.
Thus when the announcement came that a Greece deal was in the bag, stocks didn't seem to really care. They continued higher for sure, but there was no massive new spurt. There was a last hour ramp to session highs, but that was an expiration thing. The indices broke to higher highs when many felt they would not and placed bets accordingly. As the indices did break to higher highs that meant those bets had to be rolled out or otherwise covered. The result was a last hour short squeeze that ensured DJ30's new all-time high.
SP500 12.85, 0.61%
NASDAQ 31.27, 0.63%
DJ30 154.67, 0.86%
SP400 0.76%
RUTX 0.32%
SOX 0.61%
VOLUME: NYSE +20%, NASDAQ +10%. Higher volume thanks to expiration, but even with relative large jumps it was not enough to push either exchange volume to average. A very anemic expiration week re volume.
A/D: 2.1:1 NYSE, 1.2:1 NASDAQ. Rather incredibly puny breadth given the percentage gains. Of course with DJ30 leading and NASDAQ 100 up easily more than NASDAQ overall, it was clearly a large cap day. As such weaker breadth is understandable. Not great, but understandable.
So DJ30 joined ranks with SP500, SP400, RUTX at new all-time highs. NASDAQ is not there yet but came a bit closer. SOX is nowhere near a new all-time high, but it has been a dog for a decade and thus we have to cut it some slack. Heck, that makes it one of the best plays there is, at least it has been in terms of leadership.
New highs mean some worry, others don't. Sure there will be at test. Sure there are valuations that are stretched. Sure this is built on a house of cards, a house of sticks, etc. Valuations, however, are no measure of a market run; they only matter at a market bottom. Yes there will be a test, but when the market shows it doesn't have a fear of flying, it behooves us to allow ourselves to go along for the ride. Keep an eye on leaders and on the exits if need be, but definitely go along for the ride.
THE NEWS
Jobless Claims are better overall but the trend is a bit worrisome.
Thursday saw jobless claims fall back below 300K, allowing a collective sigh of relief from the economic cheerleaders. Certainly the trend has been lower over the past year. Or has it? Overall, yes. In numbers, yes. But the last several months are worrisome.
Since October continuing claims and jobless claims are on the rise:
The drop in oil prices has hammered oil producing states:
What happened in October? QE ended. Coincidence or is there a connection? Hard to draw conclusions yet, but something we are going to watch closely. Wonder if the Fed is watching as well?
Experts puzzle as to why consumers are not increasing spending.
Sometimes you have to wonder how people with so much education say such stupid things. You wonder but you know why: they are so married to what they learned from the books that they cannot divorce their thoughts from their theories even when reality screams otherwise.
Case in point: all this week experts were on CNBC, Fox Business, and Bloomberg wondering why consumers were just not spending all of this new found money from the improved jobs market and of course the declines in energy costs.
Putting aside that a lot of the spending that is occurring is due to forced insurance outlays thanks to the ACA, the reasons are rather clear and rather simple.
First, given that many people gave up big engine vehicles in order to simply be able to drive to work with gasoline prices over $3/gallon, the savings from gasoline price drops are just not that dramatic. $10 a week saved with a smaller engine car isn't going to tip the balance of retail spending, particularly when you are forced to spend a rather huge chunk of your earnings on health insurance you may or may not want.
Second, what about that jobs market? An economy creating millions of hourly, low-wage jobs is not the same as one creating millions of well-paying fulltime jobs. So, you get a job and you are paid minimum wage or a bit more. You only get to work 29 hours a week, however, because the ACA says if you work more your employer has to provide everyone expensive insurance or pay a fine.
How on EARTH can you equate, as the experts are, a 29 hour per week low paying service job to a fulltime job someone enjoyed before the economy tanked? A person in one of these jobs, hell, even TWO of these jobs is not 'back' to where he or she was pre-crash. It is the height of absurdity to even consider this to be the case. Apparently to these experts one job is fungible with another. Yet we know that is not the case. So, we have to hear idiotic commentary from ivory tower idiots, spreading misinformation to whoever listens. Of course with the financial station's continually waning viewership, maybe that is not doing any harm. It certainly is not helping those that do watch.
THE MARKET
CHARTS
DJ30: A new all-time high as the Dow pushed past the late December prior peak. Good jump in volume though it was expiration so it doesn't mean that much. The move, however, was after a nice little 1-2-3 pullback just below the prior high. Good test, good rest, and on its way higher. Now the key is to drive it home and not just give it right back.
NASDAQ: NASDAQ has already put in a very solid breakout (gapped higher). A solid six session run since the breakout, 8 straight upside sessions all told. Looked to be slowing, but then on Friday it punched it and put in the best move in four sessions. Not a broad move but a large cap move. Not the best action and while Friday was nice, it now has to show it can sustain it versus the inevitable breakout test.
SP500: Similar to DJ30, the large caps jumped higher after a three day pause just after the initial breakout to a new high. Good price action though volume lagged, and MACD is thus far lagging. Doesn't mean it will stay that way but it is lagging the price move a bit. That, however, is not the determinative factor. Some volume would be nice to support the move.
SOX: Very similar action to SP500, i.e. breaking to a higher high, immediately moving laterally, followed by a Friday break upside. Excellent action as the chips, already a leader, continue to show their strength.
SP400: The midcaps made the first break higher to a new high. They have not slowed much since though they did test immediately upon the break. Hmmm. Who else did that? Perhaps that means SP500, SOX still have plenty of move left in them. Anyway, while not as straight up as NASDAQ, SP400 broke sharply higher Friday.
RUTX: Not blowing things away, but a steady climb up the 10 day EMA. A bit volatile Friday, reaching down to the 10 day EMA, but a nice recovery. Solid.
LEADERSHIP:
Financial: Some good action. JPM jumped sharply after a nice test of the break over the 200 day SMA. C showing similar action, jumping off the 200 day SMA test. MA surging to a new high as V jumped back up.
Drugs/Biotech: Another good day. TXMD surged for us. CELG gapped and ran higher to the January peak, moving on strong trade.
Social: Another good session on top of Thursday's run. FB added to its big move. GRUB surged upside off a test. TWTR was not as spectacular, but solid.
Chips: Some up, some down Friday, but overall a solid week. AFOP. MTSN surging. CREE enjoying a solid week and Friday.
Software: FEYE exploding higher still. SPLK continues its run.
Heavy machinery: TEX surging in a turnaround. B exploded upside.
Big Names: AMZN broke higher off a test. AAPL jumped higher to a new high as well. GOOG tested back to the 10 day EMA; still in position but needs to make this move.
MARKET STATISTICS
NASDAQ
Stats: +31.27 points (+0.63%) to close at 4955.97
Volume: 1.725B (+9.87%)
Up Volume: 1.1B (+223.7M)
Down Volume: 630.87M (-67.69M)
A/D and Hi/Lo: Advancers led 1.15 to 1
Previous Session: Advancers led 1.15 to 1
New Highs: 132 (+4)
New Lows: 30 (+4)
S&P
Stats: +12.85 points (+0.61%) to close at 2110.3
NYSE Volume: 830.6M (+19.82%)
A/D and Hi/Lo: Advancers led 2.13 to 1
Previous Session: Decliners led 1.09 to 1
New Highs: 164 (+18)
New Lows: 14 (0)
DJ30
Stats: +154.67 points (+0.86%) to close at 18140.44
SENTIMENT INDICATORS
VIX: 14.3; -0.99
VXN: 14.67; -0.77
VXO: 14.05; -0.97
Put/Call Ratio (CBOE): 0.79; -0.1
Bulls and Bears:
Bulls: 56.6% versus 52.5% versus 49.0% versus 53.1% versus 49.0%. Definite uptrend, definite surge the past two weeks from 49%. Approaching the 60%ish level that has terminated most market rallies the past few years.
Bears: 14.1% versus 15.2% versus 16.3% versus 16.3% versus 17.4% versus 16.3% versus 15.2%. Plunging back to the lows though still overall in a very narrow range. That is not a good thing, the narrow range, because there is an overall lack of bears in the market.
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: 56.6%
52.5% versus 49.0% versus 53.1% versus 49.0% versus 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: 14.1%
15.2% versus 16.3% versus 16.3% versus 17.4% versus16.3% 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): 2.09%.
2.11% versus 2.08% versus 2.14% versus 2.03% versus 1.99% versus 1.98% versus 1.99% versus 1.95% versus 1.94% versus 1.81% versus 1.77% versus 1.78% versus 1.68% versus 1.67% versus 1.76%
Holding support the past week but that is about all.
Oil: 50.82, -1.01. 51.83, -0.29. Trying to bounce off a test of the move. Nice inverted head and shoulders forming.
Gold: 1204.60, -3.00. Broke down last week, or more accurately, broke lower in its continuing downtrend.
$/JPY: 119.08 versus 119.04 versus 118.70 versus 119.34 versus 118.83 versus 118.915 versus 120.26 versus119.48 versus 118.62 versus 118.987 versus 117.56 versus 117.21 versus 117.58 versus 117.52 versus 117.40 versus 118.30 versus 117.54 versus 117.88 versus 118.45
Flat-lining along the 50 day EMA. Again, it is now over that level versus under it as in January. Now, however, the pair is in an almost three month lateral move.
Euro/$: 1.1379 versus 1.1366 versus 1.1398 versus 1.14 versus 1.1390 versus 1.1409 versus 1.1294 versus 1.1315 versus 1.1324 versus 1.1318 versus 1.1474 versus 1.1387 versus 1.1481 versus 1.1336 versus 1.1290 versus 1.1318 versus 1.1287 versus 1.1375 versus 1.1263 versus 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
Still a very nice 5-week pennant, holding the 20 day EMA the past week and in great position to move higher. Just hasn't done it.
MONDAY
New highs all around last week thanks to DJ30 making the break higher Friday. NASDAQ on a two week tear straight up. SP400 on a week-plus upside move. With all of the big moves you can get uncomfortable with the upside. The pundits are split. Some say watch out, others say the move is just getting started.
Both could be right, at least to degrees. Impressive run to higher highs and new all-time highs; these kind of breakouts typically lead to tests. But SP500 and DJ30 just put in tests and are now breaking higher. Ditto SOX. NASDAQ and SP400 are still moving higher and seem overdone near term. They are ripe for a test while SP500 and DJ30 and even SOX move higher.
Or not. They very well can continue higher. Maybe THEY take a short 2 to 3 day respite as well and then continue. Consider NASDAQ is just 180 or so points from its all-time high. That type of milepost, particularly one so discussed, so famous as the NASDAQ all-time high, can act as a magnet pulling prices to it similar to a moth drawn to a flame. Thus despite being perhaps overbought near term, there is a tremendous pull on NASDAQ toward that high.
A lot of the news is out: jobs, earnings, FOMC, Greece/Europe. There can always be stories that upset the move, but right now the market is moving in something of a sweet spot. There are always pauses, tests, and pullbacks; just saw some, right? And . . . the move overall continues.
This may just be one of those situations. The leaders keep setting up and breaking higher. Financials are coming around. Energy slowed but is still moving upside. Industrial equipment is turning the corner upside, e.g. TEX. If new leaders continue to step up, the market has the support it needs to keep making the breaks higher. Just look at SP500 and DJ30 breaking upside: industrials, financials breaking higher as well. Hand in hand.
Thus we will continue looking for plays to take advantage of a further upside moves.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4955.97
Resistance:
5132.52 is the 3/2000 all0time high
Support:
The 10 day EMA at 4864
4815 is the December 2014 prior market peak
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
The 50 day EMA at 4739
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
4563 and 4567 are the January lows
4547 is the December low
The 200 day SMA at 4518
4486 is the July 2014 high
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
S&P 500: Closed at 2110.30
Resistance:
2155 is the December 2012 up trendline
Support:
2094 is the all-time high
2091 is the lower trendline from 11/2012
2079 is the intraday all-time high from November
2076 is the all-time high from November
2062 is the January 2015 lower high
The 50 day EMA at 2050
2011 is the September prior all-time high
1991 is the July 2014 high
The 200 day SMA at 1988
1972 is the December 2014 low
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 18,140.44
Resistance:
Support:
18,104 is the December all-time high
17,991 is the early December interim
17,923 is the January 2015 lower high
The 50 day EMA at 17,691
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,158
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
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.
15,855 is the October 2014 low
15,739 is the December 2013 low
ECONOMIC CALENDAR
February 23 - Monday
Existing Home Sales, January (10:00): 4.95M expected, 5.04M prior
February 24 - Tuesday
Case-Shiller 20-city, December (9:00): 4.3% expected, 4.3% prior
Consumer Confidence, February (10:00): 99.3 expected, 102.9 prior
February 25 - Wednesday
MBA Mortgage Index, 02/21 (7:00): -13.2% prior
New Home Sales, January (10:00): 471K expected, 481K prior
Crude Inventories, 02/21 (10:30): -7.716M prior
February 26 - Thursday
Initial Claims, 02/21 (8:30): 290K expected, 283K prior
Continuing Claims, 02/14 (8:30): 2400K expected, 2425K prior
CPI, January (8:30): -0.6% expected, -0.4% prior
Core CPI, January (8:30): 0.1% expected, 0.0% prior
Durable Orders, January (8:30): 1.8% expected, -3.3% prior (revised from -3.4%)
Durable Goods -ex tr, January (8:30): 0.6% expected, -0.8% prior
FHFA Housing Price I, December (9:00): 0.8% prior
Natural Gas Inventor, 02/21 (10:30): -111 bcf prior
February 27 - Friday
GDP - Second Estimate, Q4 (8:30): 2.1% expected, 2.6% prior
GDP Deflator - Second, Q4 (8:30): 0.0% expected, 0.0% prior
Chicago PMI, February (9:45): 58.0 expected, 59.4 prior
Michigan Sentiment -, February (10:00): 93.8 expected, 93.6 prior
Pending Home Sales, January (10:00): -3.7% prior
Pending Home Sales, January (10:00): 2.2% expected, -3.7% prior
End part 1 of 3
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Saturday, February 14, 2015
The Daily, Part 1 of 3, 2-14-15
* * * *
2/14/2015 Investment House Report
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NOTE: Part 3 will be sent Sunday. Jon Johnson is traveling and inclement weather has delayed him for a day. Thank you.
MARKET ALERTS:
Targets hit: FEYE; MTSN
Buy alerts: GRUB
Trailing stops: None issued
Stop alerts: None issued
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The REPORTS SCHEDULE is as follows:
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
- New highs, almost all the way around.
- Investors not afraid of a long weekend.
- Solid moves from many sectors.
- If we can survive to 2017 and play our cards right, we could see the 1980's again.
- FOMC members out in force against an audit, tout the benefits of the Fed's 100 years. Benefits? Look at the dollar.
- Lots of fast talk explaining why retail sales are weak and people don't feel the effects of the recovery. Maybe, just maybe because the recovery is not benefitting a large group.
- VIX is still a concern.
- Okay, the market made new highs. As Ben Franklin said of the new government, now can they hold it?
It wasn't a lock, but they pulled it off.
Futures were up but not surging. The issues of the week once again appeared to be resolved. Europe and Russia had a Ukraine cease-fire. It wasn't in effect and they were fighting still, but the ceasefire hasn't gone into effect, so get your shots in while you can, right?
Greece and the EU were on again after the reports of a 'agreement in principle' Thursday fell apart. Greece officials were saying at the Monday meeting with EU finance ministers it had to do 'whatever it can' to get a deal. Apparently there is only so much liquidity in Greece, and the reality of comments such as the country could get money from Russia, China, the US or whoever to fund its ongoing overspending started to hit home (i.e. no way that could happen).
With that 'positive' backdrop, futures were up. Not surging, but they were up on top of the week's prior gains. The question we posed in the pre-market was whether modest gains early in the session would hold with a 3-day weekend on top of a nice stock market rally for the week.
It turns out investors (that is the term we are almost euphemistically using to describe current market participants) were not phased at all by the holiday weekend on top of the week's rally. It wasn't all cake, and stocks turned negative in the early afternoon session. They came back, however, and the fact they came back after selling negative is a testament in itself as to the buy side's tenacity.
Not only did the bids return after midday weakness, they were on a mission. A mission to drive the indices to new highs. They did so across the board . . . sans DJ30. Oh it wasn't a blastoff to massive new highs; volume was lower and breadth quite mediocre in contrast to the Thursday move. Still, when NASDAQ made the key move to that higher high Thursday, it had the volume. Key moves accompanies by volume are what you want to see, and at least NASDAQ showed it Thursday.
SP500 8.51, 0.41%
NASDAQ 36.23, 0.75%
DJ30 46.97, 0.26%
SP400 0.53%
RUTX 0.56%
SOX 0.70%
VOLUME: NYSE -5%, NASDAQ -6%
A/D: NYSE 1.7:1, NASDAQ 1.8:1
NASDAQ and SOX again led the gains as on Friday. That is fitting to see growth again taking the lead on new highs. RUTX and SP400 lagged somewhat, but their gains were better than the large cap NYSE. Definitely a growth-led move, and that is always a good thing.
Of course now the questions come. Can stocks hold the move? What about VIX falling to a level that triggered other bouts of selling over the past few months? Perhaps, however, with the indices breaking out the correlation breaks down? Further, what about VIX remaining overall elevated, even though it fell last week, as the market hits higher highs? Valuations are as extreme as 2007, indeed worse by some calculations.
These contrast others who say this is just the start of major move higher.
Short term there likely is testing of this move. Recall SP400 breaking to a higher high 1.5 weeks back. It immediately came back to test. Of course the rest of the market was not following it so it had to test, but it is not unusual to test breaks to new highs, particularly when there is a correlation set up between VIX and stock prices in a range. Yes the indices are breaking out of that range, but they are not blowing it away just yet, not in all cases. Again, breaks higher or breaks lower typically are tested either quickly or a week or so down the road. Doesn't mean the move is over, not at all. The tell, of course, is in how the test unfolds.
In any event, the move Friday on top of a week of gains ahead of a long weekend was somewhat impressive in its audacity if not in its internals.
THE NEWS
The future could be great, IF . . .
In listening to all the back and forth on the week regarding the significance of this move to the highs in the range vis- -vis consumers still not spending as much (see January retail sales miss Thursday), earnings great in some instances, so-so in most others, continuing M&A, dividend payments, and stock buybacks in lieu of real capital investment, and the downturn in US economic activity in December and January, a thought occurred to me.
If the US can make it through 2016 without layering on ever more regulation, taxation, and intrusion in markets and businesses (something hardly answered at this point given just this past week the FEC's proposed rules taking over the internet with a 1930's telecom law), things could be very interesting.
We could see a 1980's-style boom in capital investment given the trillions of dollars that are not being invested because of the regulatory burdens and punitive tax schemes for businesses and individuals thanks to the ACA and the hundreds of thousands of other regulations enacted the past 6 years.
Just as sure as money was squirreled away in tax shelters in the 1970's, where the game was to avoid losing money versus making money and the country plodded its way through a malaise, money is not being put to work building, developing, creating as it typically is in the US. Stock buybacks, dividend payments, M&A (buy it, don't build it) are the 'new normal' forms of investment, along with money held overseas, awaiting a more favorable climate to start investing, building, researching, developing.
Ronald Reagan's son once asked him why he only made one movie a year given he made so much off of that movie. The not-quite-40th-President yet told his son that if he made a second movie, 90% of the profits would be taxed away, leaving just 10% to reward the movie studio, actors, etc. If the film was a flop, the risk of loss was huge. If it was a success, the reward was miniscule. Better not to invest in that second film, but wait until next year and do one then as well.
The same logic applies today. If the next President is smart, he or she will roll back regulations promulgated the past six years as fast as possible, energize Congress to reform the tax code, and provide incentives to invest and build in the US. Not the idiotic 'shovel ready' infrastructure that every socialist and communist country touts as the great jobs creator, but letting the private sector determine where the money should go, providing tax incentives to invest WHEREVER a person or business sees opportunity.
If that is done, trillions of dollars will come flying into the economy, growth will surge, revenues will explode, and, if we don't get stupid (as we always do) and spend $1.50 or more for every tax dollar that comes in, we could correct our deficit problem in no time. Moreover, others would pay up to invest in the US and its strength because the dollar would be so strong everyone would want dollar-based assets. I would love to be the next President. A few simple steps and in economic terms you would go down in history as a great.
FOMC takes to the airwaves to defeat being audited.
Speaking of meddling as referenced above, we have the Fed. This past week many of the twelve (a direct reference to 'The Nine' witch kings from 'The Lord of the Rings') spread out across the land (for them that means the financial stations) to strike back against the congressional bill calling for audits of the Fed to see just where our money is being used. A good question since there are many well-sourced stories out about the Fed using our money to prop up banks, corporations, and countries around the world. We should know why we have 0% interest rates, why our seniors cannot save but have to risk everything in financial markets.
But that would be foolish the smooth talking, indeed smug, FOMC governors instruct us. My goodness, Congress cannot even pass a budget as required by the Constitution and it wants to oversee the Fed? Preposterous of course as it would only be used for political gain and thus the independence of the Fed would be destroyed along with its credibility.
No one can argue that Congress knows damn little about how to run anything. Nor the executive. Nor congressional or executive appointees. Government cannot run anything and, alas, the Fed is a governmental body created by the Congress.
All we want to know is where the money is going. The Fed says it is transparent, but only in discussing interest rates and the concept of QE. It says nothing about WHERE it sends the money, where it makes those purchases, what countries, governments, groups, companies, individuals, etc. get the money or its benefit.
But we are told that the Fed has been around for 100 years and look how great the US is. The Fed is obviously doing the right thing and should be free from this kind of oversight into its inner workings and dealings. Even governor Fisher was dripping smugness when he said the same on Wednesday.
Credibility? The Fed cannot even admit that keeping rates at 0% during the Greenspan era fostered the housing bust. Or that loading the economy with liquidity ahead of Y2K surged NASDAQ 75% only to send it plummeting from 5000 to 1100 when it pulled all liquidity at once and jacked up interest rates in early 2000. How it was too tight at the threshold of the Great Recession with Mr. Bernanke saying the housing market was stable and was in no danger. How now Ms. Yellen cites the falling unemployment rate, that everyone knows is falling due to lack of participation, is a solid indicator of economic recovery.
What about those 100 years? Yes the economy has climbed higher and higher, but what has happened to our buying power? In those 100 years the dollar is been shredded, losing value steadily against gold that used to back it. Gold buys the same amount of goods or services it always has. A dollar, on the other hand, has lost over 90% of its value in that time.
Looked at another way:
Yes, an independent Federal Reserve has been so good to the US citizens. We certainly should not meddle in its affairs; we might find we could have a more valuable currency.
Retail Sales are not low, they just are not tracking the real spending. Yeah, right.
All week, before and after the putrid January Retail Sales figures Thursday (-0.8% versus -0.4% versus -0.9% prior), speculation raged about why consumers were not spending money when jobs were better, the economy was better, and they had the 'gasoline tax cut.'
As is often the case, those wanting to put forth a particular agenda came up with something completely off the wall to explain it: consumers ARE spending, but not on retail goods. They are going out and obtaining services such as massages, facials, lawn care, meals. After all, we are a service economy, right?
Makes so much sense. Until you ask the people in the service industry how their business is. Golly gee, it is as bad as the retail business, at least for the smaller players in the economy.
Maybe not even the small players. Seen PNRA's chart of late? How about CMG? It is not bad all over, but it is not exactly Mai Thais and Yahtzee (from 'Con Air', 1997).
Nicholas Cage, 'Con Air'
That is the way it has been since 2008 and the stimulus package: at that point the federal government made it clear who were the chosen. The large corporations received most of the funds, and those that were left over went to pay some political favors. Regulations at the rate of tens of thousands per year were promulgated that benefitted the large versus the small. The ACA was passed so we could see what was in it. We knew what it was and now we see what it is doing: driving small businesses out of business as, despite the recovery, the US is still killing more small businesses than creating. How healthy!
Perhaps the argument is correct, but misplaced. Yes, perhaps consumers ARE spending more on services. BUT, it is not discretionary services is it? No. It is mandated service acquisition in the form of higher costs of healthcare thanks to the ACA. People MUST spend to acquire insurance or be fined. Either way they are spending, right?
Mr. Liesman on CNBC dismissed the notion the services being purchased were mandated healthcare, saying 'his' group's research showed that spending was lower and thus was not the services where money is being spent.
The fallacy with his position: Liesman looks at average spending and says it is lower. Indeed, that is what the Administration looks at as well in concluding costs are lower.
Remember my discussion of how the costs vary, how a subsidized person can spend $4/month for the same insurance the person who does not qualify for a subsidy spends $4000 to $4800? The person spending the higher amount has seen his or her insurance continue to spike higher. Many saw 30%+ increases last year and are seeing at least the same this year. The AVERAGE cost, however, thanks to the new people put in the system with insanely low costs, is lower. Thus is LOOKS as if the average cost is lower, but we who are in the system KNOW the costs are higher because we are paying higher rates to cover generally higher priced policies as well as those who pay virtually nothing.
Talk about a regulatory burden. A small business that just meets the criteria is suddenly slammed with expenses it cannot afford to pay or pass along to employees because THEY cannot afford to pay it. Thus they have horrible choices. Lay people off and watch their business shrink instead of have a chance to grow, hire more people and cut everyone's hours below the minimum and thus risk losing good workers, or pay the freight and run out of money. The only way to make it work is to suddenly quadruple in size to get some economy of scale. In this economy, however, we know that just isn't going to happen.
THE MARKET
CHARTS
NASDAQ: Only one more high to top, and that is 5133 from March 2000. 15 years ago less a month. Could NASDAQ be there in a month (closed at 4893.84 Friday)? The week saw NASDAQ start at the 10 day EMA just below the November and December peaks. It bounced, hit those highs, then Thursday gapped through them. Friday the same story. Good volume Thursday, lower but decent volume Friday. It showed the volume when it needed and it looks strong now. After a big breakout, it like will test in the near future, but it made the move and it made it with some strength as it came off the January low, showing volume and leadership.
SOX: A week of gains here as well took SOX just past the December peaks. A strong 2 weeks that got dicey Monday and the prior Friday. It held the line and rallied well, following NASDAQ. As with NASDAQ it will test the move before too long, but it will take its cue from that index.
SP400: Similar to NASDAQ, the midcaps rallied to the December peak last week, tested, then Thursday took off. Gapped upside and rallied to the close. Gapped and rallied Friday as well. Excellent upside break. SP400 took to the lead in late December, faded, then took the lead again the last week of January. It is still leading and that is very positive for the market overall.
RUTX: Coming to life, from laggard to co-leader, though still kind of following the other growth indices. Cannot argue with the move, however, rallying form late January, testing into early this week, then surging higher, taking out the summertime peaks then the late December peak Friday.
SP500: New high by the skin of its teeth, but a new high. Kind of a follower with volume lower and below average all week. This one suggests that VIX may be ready to push stocks into a test sooner than later.
DJ30: No new high for you. At 18,104, the prior high is just 86 points away, an easy day's work if the Dow gets it going. It likely could have been there with the other indices but for AXP sinking the index Thursday and Friday. As it is, DJ30 is at a double top and may make the prior high just as the market overall tests the breakouts following the nice two week advance off the bottom of the trading range.
LEADERHIP
Chips: SOX hitting a new high and chips from many different areas and sizes contributing to the move. We have our plays making us money, e.g. ANAD, ENPH, NXPI, MTSN. Others don't stink, e.g. SWKS, BRCM, NVDA.
Internet related: GOOG is still surging up to the 200 day SMA. TRIP rallied again after its gap on earnings. TWTR is still solid after its upside gap. GRUB surged back up off its test that filled the gap.
Software: SPLK jumped yet again after its nice breakout test. FEYE is blasting off, hitting our initial target Friday.
Energy: Still working higher after that pause, no doubt aided by a recovery in oil prices. APC gapped higher again. PTEN jumped on strong volume. SLB gapped upside to a higher high on this rally.
Retail: Still strong but some toppy looks, e.g. ROST, possibly TJX, BBBY. EVLV still looks quite good with a solid Friday move.
China: NOAH is still solid with a good move. JD is in a great pattern. SINA still moving up. Others slammed recently look better or are trying to rebound, e.g. SOHU, BIDU.
MARKET STATISTICS
NASDAQ
Stats: +36.22 points (+0.75%) to close at 4893.84
Volume: 1.878B (-6.44%)
Up Volume: 1.29B (-200M)
Down Volume: 629.36M (+69.5M)
A/D and Hi/Lo: Advancers led 1.75 to 1
Previous Session: Advancers led 2.39 to 1
New Highs: 136 (+3)
New Lows: 30 (+4)
S&P
Stats: +8.51 points (+0.41%) to close at 2096.99
NYSE Volume: 760M (-5.32%)
A/D and Hi/Lo: Advancers led 1.66 to 1
Previous Session: Advancers led 3.35 to 1
New Highs: 176 (+13)
New Lows: 7 (-4)
DJ30
Stats: +46.97 points (+0.26%) to close at 18019.35
SENTIMENT INDICATORS
VIX: 14.69; -0.65
VXN: 15.15; -0.95
VXO: 14.48; -0.46
Put/Call Ratio (CBOE): 0.97; +0.1
Bulls and Bears:
Bulls: 52.5% versus 49.0% versus 53.1% versus 49.0%. As expected, bulls rose with the market gains. Working in the same lateral range since November after rallying off that dip in October that was the lowest reading
Bears: 15.2% versus 16.3% versus 16.3% versus 17.4% versus 16.3% versus 15.2%. So much for holding steady as bears flop back to the lows. But, even this 'flop' is part of a very long, flat lateral move of virtually no bears, or no change in bearishness.
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: 52.5%
49.0% versus 53.1% versus 49.0% versus 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: 15.2%
16.3% versus 16.3% versus 17.4% versus16.3% 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): 2.03%.
1.99% versus 1.98% versus 1.99% versus 1.95% versus 1.94% versus 1.81% versus 1.77% versus 1.78% versus 1.68% versus 1.67% versus 1.76% versus 1.73% versus 1.81% versus 1.82% VERSUS 1.80% versus 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%
Breaking below the 50 day EMA for the first time since September 2014. That big surge was the near term top as Rick Santelli called just over two weeks back.
Oil: 52.67, +1.48. Wednesday oil looked weak but it bounced Thursday, and then Friday moved up through the 50 day SMA. It is not dead on this move yet, and with MACD surging and a short inverted head and shoulders pattern in place, anticipate a beak up to the 50 day EMA at 54 soon. It likely takes it out but there is a lot of resistance at 55 to deal with.
Gold: 1227.00, +6.70. Trying to bounce after breaking the 50 day SMA Wednesday, but a pretty tepid move.
$/JPY: 118.83 versus 118.915 versus 120.26 versus119.48 versus 118.62 versus 118.987 versus 117.56 versus 117.21 versus 117.58 versus 117.52 versus 117.40 versus 118.30 versus 117.54 versus 117.88 versus 118.45
Holding at the 20 day EMA after the Thursday flop. Market would like to see it hold.
Euro/$: 1.1390 versus 1.1409 versus 1.1294 versus 1.1315 versus 1.1324 versus 1.1318 versus 1.1474 versus 1.1387 versus 1.1481 versus 1.1336 versus 1.1290 versus 1.1318 versus 1.1287 versus 1.1375 versus 1.1263 versus 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
Doji at the 20 day EMA where the DXY0 has held on this entire move. Thus an important test.
TUESDAY
Recall we did not think this move off the low of the range would not make it to new highs back when it started. That premise remained even as the move continued. We prepped some downside plays, entered some. Some worked e.g. GMCR, others started to but have struggled. Indeed, it is interesting several are STILL in position to sell off even as the indices hit new highs.
But I digress. Though we operated under the premise the indices would not make new highs, we have a lot of upside plays. Why? Because the market was primed to bounce, we played the bounce, and lo, stocks are still moving higher. When NASDAQ made that higher low at the 50 day SMA early in the week, our we started to warm to the idea there may be breakouts, particularly given SP400 already made the move.
The beauty of it is, as we said a few times on the way up, if stocks kept moving higher we would make money because we don't try to think we are smarter than the market, we just stick with good plays until they don't work. Obviously with the moves the market made, they are working.
There are good things happening in the market. New highs are showing up all over the place. The A/D lines have turned up. New highs in indices, new highs in stocks, new leaders turning up, old leaders still leading.
Now that the indices are at new highs suddenly everyone looks at the market again. Sometimes new highs begat more new highs as money rushes in to chase the move. That pushes our positions higher and creates opportunity to take gain in that regard as well as new upside plays.
It also means be a bit careful. After the rush of money the move is typically done near term and needs a rest. Thus, on a further rush higher next week, be prepared to bank some more gain. It is expiration week as well so you can bet more gains will be met with some selling, But it also will mean some volume as MANY felt the market would not make new highs, and if the indices hold the new highs they will be forced to roll out positions and otherwise cover. Again, that leads to some upside pressure.
You know that typically after new highs the market tests those highs at some point. A rush higher in expiration week is tailor made to take some gain and then anticipate some pullback. It may come, it may not, but if positions hit or tickle the targets or are up many days in a row, banking some gain ins prudent. If things pull back you look like a genius. And things will pull back at some point in the near future after this kind of move and given the breakouts.
So, we use the move to our advantage, as always. That does not mean we here are not going to look at other upside. To the contrary, while many stocks are up, we are looking around for others to play. Not all stocks rise at the same time. Further, even in a pullback good stocks will hold their patterns, and we want to be ready. Also, just because we think a pullback is due, doesn't mean it will happen anymore than it meant the indices would not make higher highs.
So, we look for up and coming areas, and if the market continues and they make the moves from good risk/reward levels, we participate in those moves. I always say a stock or an index can run farther, upside or downside, than we rationally think possible. Moreover, market advances move in waves. Early leaders rally first, then the next wave, then the next, etc. Consider that the indices just broke from a 3.5 month lateral consolidation/trading range. That is a pretty solid basing process and this is the first move. It behooves us to play stocks that are in good position to move higher and start higher given the indices are just making the break.
As always, look for good risk/reward and don't chase extended stocks, particularly after two weeks of upside. If a good stock broke out and we didn't get it, just wait. It will give you a second chance, e.g. GRUB, SPLK. Be patient, let them setup, then move in when they move. Take gain at logical points. If a play doesn't work, cut it and move on; there are many out there working just fine. And always, take partial profits then let the rest run higher. In these kind of moves exercising that kind of patience often turns a good gain into a really great gain.
Have a great Valentine's Day!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4893.84
Resistance:
Support:
4815 is the December 2014 market peak
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
The 50 day EMA at 4708
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
4563 and 4567 are the January lows
4547 is the December low
The 200 day SMA at 4501
4486 is the July 2014 high
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
S&P 500: Closed at 2096.99
Resistance:
2150 is the December 2012 up trendline
Support:
2094 is the all-time high
2087 is the lower trendline from 11/2012
2079 is the intraday all-time high from November
2076 is the all-time high from November
2062 is the January 2015 lower high
The 50 day EMA at 2041
2011 is the September prior all-time high
1991 is the July 2014 high
The 200 day SMA at 1984
1972 is the December 2014 low
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 18,019.35
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 17,628
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
The 200 day SMA at 17,127
17,068 is the early July 2014 peak
17067 is the December 2014 low
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.
15,855 is the October 2014 low
15,739 is the December 2013 low
ECONOMIC CALENDAR
February 10 - Tuesday
Wholesale Inventories, December (10:00): 0.1% actual versus 0.2% expected, 0.8% prior
JOLTS - Job Openings, December (10:00): 5.028M actual versus 4.847M prior (revised from 4.972M)
February 11 - Wednesday
MBA Mortgage Index, 02/07 (7:00): -9.0% actual versus 1.3% prior
Crude Inventories, 02/07 (10:30): 4.868M actual versus 6.333M prior
Treasury Budget, January (14:00): -17.5B actual versus -$19.0B expected, -$10.3B prior
February 12 - Thursday
Initial Claims, 02/07 (8:30): 304K actual versus 285K expected, 279K prior (revised from 278K)
Continuing Claims, 1/31 (8:30): 2354K actual versus 2395K expected, 2405K prior (revised from 2400K)
Retail Sales, January (8:30): -0.8% actual versus -0.4% expected, -0.9% prior
Retail Sales ex-auto, January (8:30): -0.9% actual versus -0.4% expected, -0.9% prior (revised from -1.0%)
Business Inventories, December (10:00): 0.1% actual versus 0.2% expected, 0.2% prior
Natural Gas Inventor, 02/07 (10:30): -160 bcf actual versus -115 bcf prior
February 13 - Friday
Export Prices ex-ag., January (8:30): -1.0% actual versus -1.0% prior (revised from -1.2%)
Import Prices ex-oil, January (8:30): -0.7% actual versus -0.1% prior
Mich Sentiment, February (10:00): 93.6 actual versus 98.3 expected, 98.1 prior
February 17 - Tuesday
Empire Manufacturing, February (8:30): 9.0 expected, 9.9 prior
NAHB Housing Market , February (10:00): 58 expected, 57 prior
Net Long-Term TIC Fl, December (16:00): $33.5B prior
February 18 - Wednesday
MBA Mortgage Index, 02/14 (7:00): -9.0% prior
Housing Starts, January (8:30): 1070K expected, 1089K prior
Building Permits, January (8:30): 1065K expected, 1032K prior
PPI, January (8:30): -0.4% expected, -0.3% prior
Core PPI, January (8:30): 0.1% expected, 0.3% prior
Industrial Productio, January (9:15): 0.4% expected, -0.1% prior
Capacity Utilization, January (9:15): 79.9% expected, 79.7% prior
FOMC Minutes, 1/28 (14:00)
February 19 - Thursday
Initial Claims, 02/14 (8:30): 295K expected, 304K prior
Continuing Claims, 02/7 (8:30): 2398K expected, 2354K prior
Philadelphia Fed, February (10:00): 9.8 expected, 6.3 prior
Leading Indicators, January (10:00): 0.3% expected, 0.5% prior
Natural Gas Inventor, 02/14 (10:30): -160 bcf prior
Crude Inventories, 02/14 (11:00): 4.868M prior
End part 1 of 3
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2/14/2015 Investment House Report
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NOTE: Part 3 will be sent Sunday. Jon Johnson is traveling and inclement weather has delayed him for a day. Thank you.
MARKET ALERTS:
Targets hit: FEYE; MTSN
Buy alerts: GRUB
Trailing stops: None issued
Stop alerts: None issued
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http://www.investmenthouse.com/alertdaily.html
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The REPORTS SCHEDULE is as follows:
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
- New highs, almost all the way around.
- Investors not afraid of a long weekend.
- Solid moves from many sectors.
- If we can survive to 2017 and play our cards right, we could see the 1980's again.
- FOMC members out in force against an audit, tout the benefits of the Fed's 100 years. Benefits? Look at the dollar.
- Lots of fast talk explaining why retail sales are weak and people don't feel the effects of the recovery. Maybe, just maybe because the recovery is not benefitting a large group.
- VIX is still a concern.
- Okay, the market made new highs. As Ben Franklin said of the new government, now can they hold it?
It wasn't a lock, but they pulled it off.
Futures were up but not surging. The issues of the week once again appeared to be resolved. Europe and Russia had a Ukraine cease-fire. It wasn't in effect and they were fighting still, but the ceasefire hasn't gone into effect, so get your shots in while you can, right?
Greece and the EU were on again after the reports of a 'agreement in principle' Thursday fell apart. Greece officials were saying at the Monday meeting with EU finance ministers it had to do 'whatever it can' to get a deal. Apparently there is only so much liquidity in Greece, and the reality of comments such as the country could get money from Russia, China, the US or whoever to fund its ongoing overspending started to hit home (i.e. no way that could happen).
With that 'positive' backdrop, futures were up. Not surging, but they were up on top of the week's prior gains. The question we posed in the pre-market was whether modest gains early in the session would hold with a 3-day weekend on top of a nice stock market rally for the week.
It turns out investors (that is the term we are almost euphemistically using to describe current market participants) were not phased at all by the holiday weekend on top of the week's rally. It wasn't all cake, and stocks turned negative in the early afternoon session. They came back, however, and the fact they came back after selling negative is a testament in itself as to the buy side's tenacity.
Not only did the bids return after midday weakness, they were on a mission. A mission to drive the indices to new highs. They did so across the board . . . sans DJ30. Oh it wasn't a blastoff to massive new highs; volume was lower and breadth quite mediocre in contrast to the Thursday move. Still, when NASDAQ made the key move to that higher high Thursday, it had the volume. Key moves accompanies by volume are what you want to see, and at least NASDAQ showed it Thursday.
SP500 8.51, 0.41%
NASDAQ 36.23, 0.75%
DJ30 46.97, 0.26%
SP400 0.53%
RUTX 0.56%
SOX 0.70%
VOLUME: NYSE -5%, NASDAQ -6%
A/D: NYSE 1.7:1, NASDAQ 1.8:1
NASDAQ and SOX again led the gains as on Friday. That is fitting to see growth again taking the lead on new highs. RUTX and SP400 lagged somewhat, but their gains were better than the large cap NYSE. Definitely a growth-led move, and that is always a good thing.
Of course now the questions come. Can stocks hold the move? What about VIX falling to a level that triggered other bouts of selling over the past few months? Perhaps, however, with the indices breaking out the correlation breaks down? Further, what about VIX remaining overall elevated, even though it fell last week, as the market hits higher highs? Valuations are as extreme as 2007, indeed worse by some calculations.
These contrast others who say this is just the start of major move higher.
Short term there likely is testing of this move. Recall SP400 breaking to a higher high 1.5 weeks back. It immediately came back to test. Of course the rest of the market was not following it so it had to test, but it is not unusual to test breaks to new highs, particularly when there is a correlation set up between VIX and stock prices in a range. Yes the indices are breaking out of that range, but they are not blowing it away just yet, not in all cases. Again, breaks higher or breaks lower typically are tested either quickly or a week or so down the road. Doesn't mean the move is over, not at all. The tell, of course, is in how the test unfolds.
In any event, the move Friday on top of a week of gains ahead of a long weekend was somewhat impressive in its audacity if not in its internals.
THE NEWS
The future could be great, IF . . .
In listening to all the back and forth on the week regarding the significance of this move to the highs in the range vis- -vis consumers still not spending as much (see January retail sales miss Thursday), earnings great in some instances, so-so in most others, continuing M&A, dividend payments, and stock buybacks in lieu of real capital investment, and the downturn in US economic activity in December and January, a thought occurred to me.
If the US can make it through 2016 without layering on ever more regulation, taxation, and intrusion in markets and businesses (something hardly answered at this point given just this past week the FEC's proposed rules taking over the internet with a 1930's telecom law), things could be very interesting.
We could see a 1980's-style boom in capital investment given the trillions of dollars that are not being invested because of the regulatory burdens and punitive tax schemes for businesses and individuals thanks to the ACA and the hundreds of thousands of other regulations enacted the past 6 years.
Just as sure as money was squirreled away in tax shelters in the 1970's, where the game was to avoid losing money versus making money and the country plodded its way through a malaise, money is not being put to work building, developing, creating as it typically is in the US. Stock buybacks, dividend payments, M&A (buy it, don't build it) are the 'new normal' forms of investment, along with money held overseas, awaiting a more favorable climate to start investing, building, researching, developing.
Ronald Reagan's son once asked him why he only made one movie a year given he made so much off of that movie. The not-quite-40th-President yet told his son that if he made a second movie, 90% of the profits would be taxed away, leaving just 10% to reward the movie studio, actors, etc. If the film was a flop, the risk of loss was huge. If it was a success, the reward was miniscule. Better not to invest in that second film, but wait until next year and do one then as well.
The same logic applies today. If the next President is smart, he or she will roll back regulations promulgated the past six years as fast as possible, energize Congress to reform the tax code, and provide incentives to invest and build in the US. Not the idiotic 'shovel ready' infrastructure that every socialist and communist country touts as the great jobs creator, but letting the private sector determine where the money should go, providing tax incentives to invest WHEREVER a person or business sees opportunity.
If that is done, trillions of dollars will come flying into the economy, growth will surge, revenues will explode, and, if we don't get stupid (as we always do) and spend $1.50 or more for every tax dollar that comes in, we could correct our deficit problem in no time. Moreover, others would pay up to invest in the US and its strength because the dollar would be so strong everyone would want dollar-based assets. I would love to be the next President. A few simple steps and in economic terms you would go down in history as a great.
FOMC takes to the airwaves to defeat being audited.
Speaking of meddling as referenced above, we have the Fed. This past week many of the twelve (a direct reference to 'The Nine' witch kings from 'The Lord of the Rings') spread out across the land (for them that means the financial stations) to strike back against the congressional bill calling for audits of the Fed to see just where our money is being used. A good question since there are many well-sourced stories out about the Fed using our money to prop up banks, corporations, and countries around the world. We should know why we have 0% interest rates, why our seniors cannot save but have to risk everything in financial markets.
But that would be foolish the smooth talking, indeed smug, FOMC governors instruct us. My goodness, Congress cannot even pass a budget as required by the Constitution and it wants to oversee the Fed? Preposterous of course as it would only be used for political gain and thus the independence of the Fed would be destroyed along with its credibility.
No one can argue that Congress knows damn little about how to run anything. Nor the executive. Nor congressional or executive appointees. Government cannot run anything and, alas, the Fed is a governmental body created by the Congress.
All we want to know is where the money is going. The Fed says it is transparent, but only in discussing interest rates and the concept of QE. It says nothing about WHERE it sends the money, where it makes those purchases, what countries, governments, groups, companies, individuals, etc. get the money or its benefit.
But we are told that the Fed has been around for 100 years and look how great the US is. The Fed is obviously doing the right thing and should be free from this kind of oversight into its inner workings and dealings. Even governor Fisher was dripping smugness when he said the same on Wednesday.
Credibility? The Fed cannot even admit that keeping rates at 0% during the Greenspan era fostered the housing bust. Or that loading the economy with liquidity ahead of Y2K surged NASDAQ 75% only to send it plummeting from 5000 to 1100 when it pulled all liquidity at once and jacked up interest rates in early 2000. How it was too tight at the threshold of the Great Recession with Mr. Bernanke saying the housing market was stable and was in no danger. How now Ms. Yellen cites the falling unemployment rate, that everyone knows is falling due to lack of participation, is a solid indicator of economic recovery.
What about those 100 years? Yes the economy has climbed higher and higher, but what has happened to our buying power? In those 100 years the dollar is been shredded, losing value steadily against gold that used to back it. Gold buys the same amount of goods or services it always has. A dollar, on the other hand, has lost over 90% of its value in that time.
Looked at another way:
Yes, an independent Federal Reserve has been so good to the US citizens. We certainly should not meddle in its affairs; we might find we could have a more valuable currency.
Retail Sales are not low, they just are not tracking the real spending. Yeah, right.
All week, before and after the putrid January Retail Sales figures Thursday (-0.8% versus -0.4% versus -0.9% prior), speculation raged about why consumers were not spending money when jobs were better, the economy was better, and they had the 'gasoline tax cut.'
As is often the case, those wanting to put forth a particular agenda came up with something completely off the wall to explain it: consumers ARE spending, but not on retail goods. They are going out and obtaining services such as massages, facials, lawn care, meals. After all, we are a service economy, right?
Makes so much sense. Until you ask the people in the service industry how their business is. Golly gee, it is as bad as the retail business, at least for the smaller players in the economy.
Maybe not even the small players. Seen PNRA's chart of late? How about CMG? It is not bad all over, but it is not exactly Mai Thais and Yahtzee (from 'Con Air', 1997).
Nicholas Cage, 'Con Air'
That is the way it has been since 2008 and the stimulus package: at that point the federal government made it clear who were the chosen. The large corporations received most of the funds, and those that were left over went to pay some political favors. Regulations at the rate of tens of thousands per year were promulgated that benefitted the large versus the small. The ACA was passed so we could see what was in it. We knew what it was and now we see what it is doing: driving small businesses out of business as, despite the recovery, the US is still killing more small businesses than creating. How healthy!
Perhaps the argument is correct, but misplaced. Yes, perhaps consumers ARE spending more on services. BUT, it is not discretionary services is it? No. It is mandated service acquisition in the form of higher costs of healthcare thanks to the ACA. People MUST spend to acquire insurance or be fined. Either way they are spending, right?
Mr. Liesman on CNBC dismissed the notion the services being purchased were mandated healthcare, saying 'his' group's research showed that spending was lower and thus was not the services where money is being spent.
The fallacy with his position: Liesman looks at average spending and says it is lower. Indeed, that is what the Administration looks at as well in concluding costs are lower.
Remember my discussion of how the costs vary, how a subsidized person can spend $4/month for the same insurance the person who does not qualify for a subsidy spends $4000 to $4800? The person spending the higher amount has seen his or her insurance continue to spike higher. Many saw 30%+ increases last year and are seeing at least the same this year. The AVERAGE cost, however, thanks to the new people put in the system with insanely low costs, is lower. Thus is LOOKS as if the average cost is lower, but we who are in the system KNOW the costs are higher because we are paying higher rates to cover generally higher priced policies as well as those who pay virtually nothing.
Talk about a regulatory burden. A small business that just meets the criteria is suddenly slammed with expenses it cannot afford to pay or pass along to employees because THEY cannot afford to pay it. Thus they have horrible choices. Lay people off and watch their business shrink instead of have a chance to grow, hire more people and cut everyone's hours below the minimum and thus risk losing good workers, or pay the freight and run out of money. The only way to make it work is to suddenly quadruple in size to get some economy of scale. In this economy, however, we know that just isn't going to happen.
THE MARKET
CHARTS
NASDAQ: Only one more high to top, and that is 5133 from March 2000. 15 years ago less a month. Could NASDAQ be there in a month (closed at 4893.84 Friday)? The week saw NASDAQ start at the 10 day EMA just below the November and December peaks. It bounced, hit those highs, then Thursday gapped through them. Friday the same story. Good volume Thursday, lower but decent volume Friday. It showed the volume when it needed and it looks strong now. After a big breakout, it like will test in the near future, but it made the move and it made it with some strength as it came off the January low, showing volume and leadership.
SOX: A week of gains here as well took SOX just past the December peaks. A strong 2 weeks that got dicey Monday and the prior Friday. It held the line and rallied well, following NASDAQ. As with NASDAQ it will test the move before too long, but it will take its cue from that index.
SP400: Similar to NASDAQ, the midcaps rallied to the December peak last week, tested, then Thursday took off. Gapped upside and rallied to the close. Gapped and rallied Friday as well. Excellent upside break. SP400 took to the lead in late December, faded, then took the lead again the last week of January. It is still leading and that is very positive for the market overall.
RUTX: Coming to life, from laggard to co-leader, though still kind of following the other growth indices. Cannot argue with the move, however, rallying form late January, testing into early this week, then surging higher, taking out the summertime peaks then the late December peak Friday.
SP500: New high by the skin of its teeth, but a new high. Kind of a follower with volume lower and below average all week. This one suggests that VIX may be ready to push stocks into a test sooner than later.
DJ30: No new high for you. At 18,104, the prior high is just 86 points away, an easy day's work if the Dow gets it going. It likely could have been there with the other indices but for AXP sinking the index Thursday and Friday. As it is, DJ30 is at a double top and may make the prior high just as the market overall tests the breakouts following the nice two week advance off the bottom of the trading range.
LEADERHIP
Chips: SOX hitting a new high and chips from many different areas and sizes contributing to the move. We have our plays making us money, e.g. ANAD, ENPH, NXPI, MTSN. Others don't stink, e.g. SWKS, BRCM, NVDA.
Internet related: GOOG is still surging up to the 200 day SMA. TRIP rallied again after its gap on earnings. TWTR is still solid after its upside gap. GRUB surged back up off its test that filled the gap.
Software: SPLK jumped yet again after its nice breakout test. FEYE is blasting off, hitting our initial target Friday.
Energy: Still working higher after that pause, no doubt aided by a recovery in oil prices. APC gapped higher again. PTEN jumped on strong volume. SLB gapped upside to a higher high on this rally.
Retail: Still strong but some toppy looks, e.g. ROST, possibly TJX, BBBY. EVLV still looks quite good with a solid Friday move.
China: NOAH is still solid with a good move. JD is in a great pattern. SINA still moving up. Others slammed recently look better or are trying to rebound, e.g. SOHU, BIDU.
MARKET STATISTICS
NASDAQ
Stats: +36.22 points (+0.75%) to close at 4893.84
Volume: 1.878B (-6.44%)
Up Volume: 1.29B (-200M)
Down Volume: 629.36M (+69.5M)
A/D and Hi/Lo: Advancers led 1.75 to 1
Previous Session: Advancers led 2.39 to 1
New Highs: 136 (+3)
New Lows: 30 (+4)
S&P
Stats: +8.51 points (+0.41%) to close at 2096.99
NYSE Volume: 760M (-5.32%)
A/D and Hi/Lo: Advancers led 1.66 to 1
Previous Session: Advancers led 3.35 to 1
New Highs: 176 (+13)
New Lows: 7 (-4)
DJ30
Stats: +46.97 points (+0.26%) to close at 18019.35
SENTIMENT INDICATORS
VIX: 14.69; -0.65
VXN: 15.15; -0.95
VXO: 14.48; -0.46
Put/Call Ratio (CBOE): 0.97; +0.1
Bulls and Bears:
Bulls: 52.5% versus 49.0% versus 53.1% versus 49.0%. As expected, bulls rose with the market gains. Working in the same lateral range since November after rallying off that dip in October that was the lowest reading
Bears: 15.2% versus 16.3% versus 16.3% versus 17.4% versus 16.3% versus 15.2%. So much for holding steady as bears flop back to the lows. But, even this 'flop' is part of a very long, flat lateral move of virtually no bears, or no change in bearishness.
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: 52.5%
49.0% versus 53.1% versus 49.0% versus 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: 15.2%
16.3% versus 16.3% versus 17.4% versus16.3% 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): 2.03%.
1.99% versus 1.98% versus 1.99% versus 1.95% versus 1.94% versus 1.81% versus 1.77% versus 1.78% versus 1.68% versus 1.67% versus 1.76% versus 1.73% versus 1.81% versus 1.82% VERSUS 1.80% versus 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%
Breaking below the 50 day EMA for the first time since September 2014. That big surge was the near term top as Rick Santelli called just over two weeks back.
Oil: 52.67, +1.48. Wednesday oil looked weak but it bounced Thursday, and then Friday moved up through the 50 day SMA. It is not dead on this move yet, and with MACD surging and a short inverted head and shoulders pattern in place, anticipate a beak up to the 50 day EMA at 54 soon. It likely takes it out but there is a lot of resistance at 55 to deal with.
Gold: 1227.00, +6.70. Trying to bounce after breaking the 50 day SMA Wednesday, but a pretty tepid move.
$/JPY: 118.83 versus 118.915 versus 120.26 versus119.48 versus 118.62 versus 118.987 versus 117.56 versus 117.21 versus 117.58 versus 117.52 versus 117.40 versus 118.30 versus 117.54 versus 117.88 versus 118.45
Holding at the 20 day EMA after the Thursday flop. Market would like to see it hold.
Euro/$: 1.1390 versus 1.1409 versus 1.1294 versus 1.1315 versus 1.1324 versus 1.1318 versus 1.1474 versus 1.1387 versus 1.1481 versus 1.1336 versus 1.1290 versus 1.1318 versus 1.1287 versus 1.1375 versus 1.1263 versus 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
Doji at the 20 day EMA where the DXY0 has held on this entire move. Thus an important test.
TUESDAY
Recall we did not think this move off the low of the range would not make it to new highs back when it started. That premise remained even as the move continued. We prepped some downside plays, entered some. Some worked e.g. GMCR, others started to but have struggled. Indeed, it is interesting several are STILL in position to sell off even as the indices hit new highs.
But I digress. Though we operated under the premise the indices would not make new highs, we have a lot of upside plays. Why? Because the market was primed to bounce, we played the bounce, and lo, stocks are still moving higher. When NASDAQ made that higher low at the 50 day SMA early in the week, our we started to warm to the idea there may be breakouts, particularly given SP400 already made the move.
The beauty of it is, as we said a few times on the way up, if stocks kept moving higher we would make money because we don't try to think we are smarter than the market, we just stick with good plays until they don't work. Obviously with the moves the market made, they are working.
There are good things happening in the market. New highs are showing up all over the place. The A/D lines have turned up. New highs in indices, new highs in stocks, new leaders turning up, old leaders still leading.
Now that the indices are at new highs suddenly everyone looks at the market again. Sometimes new highs begat more new highs as money rushes in to chase the move. That pushes our positions higher and creates opportunity to take gain in that regard as well as new upside plays.
It also means be a bit careful. After the rush of money the move is typically done near term and needs a rest. Thus, on a further rush higher next week, be prepared to bank some more gain. It is expiration week as well so you can bet more gains will be met with some selling, But it also will mean some volume as MANY felt the market would not make new highs, and if the indices hold the new highs they will be forced to roll out positions and otherwise cover. Again, that leads to some upside pressure.
You know that typically after new highs the market tests those highs at some point. A rush higher in expiration week is tailor made to take some gain and then anticipate some pullback. It may come, it may not, but if positions hit or tickle the targets or are up many days in a row, banking some gain ins prudent. If things pull back you look like a genius. And things will pull back at some point in the near future after this kind of move and given the breakouts.
So, we use the move to our advantage, as always. That does not mean we here are not going to look at other upside. To the contrary, while many stocks are up, we are looking around for others to play. Not all stocks rise at the same time. Further, even in a pullback good stocks will hold their patterns, and we want to be ready. Also, just because we think a pullback is due, doesn't mean it will happen anymore than it meant the indices would not make higher highs.
So, we look for up and coming areas, and if the market continues and they make the moves from good risk/reward levels, we participate in those moves. I always say a stock or an index can run farther, upside or downside, than we rationally think possible. Moreover, market advances move in waves. Early leaders rally first, then the next wave, then the next, etc. Consider that the indices just broke from a 3.5 month lateral consolidation/trading range. That is a pretty solid basing process and this is the first move. It behooves us to play stocks that are in good position to move higher and start higher given the indices are just making the break.
As always, look for good risk/reward and don't chase extended stocks, particularly after two weeks of upside. If a good stock broke out and we didn't get it, just wait. It will give you a second chance, e.g. GRUB, SPLK. Be patient, let them setup, then move in when they move. Take gain at logical points. If a play doesn't work, cut it and move on; there are many out there working just fine. And always, take partial profits then let the rest run higher. In these kind of moves exercising that kind of patience often turns a good gain into a really great gain.
Have a great Valentine's Day!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4893.84
Resistance:
Support:
4815 is the December 2014 market peak
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
The 50 day EMA at 4708
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
4563 and 4567 are the January lows
4547 is the December low
The 200 day SMA at 4501
4486 is the July 2014 high
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
S&P 500: Closed at 2096.99
Resistance:
2150 is the December 2012 up trendline
Support:
2094 is the all-time high
2087 is the lower trendline from 11/2012
2079 is the intraday all-time high from November
2076 is the all-time high from November
2062 is the January 2015 lower high
The 50 day EMA at 2041
2011 is the September prior all-time high
1991 is the July 2014 high
The 200 day SMA at 1984
1972 is the December 2014 low
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 18,019.35
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 17,628
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
The 200 day SMA at 17,127
17,068 is the early July 2014 peak
17067 is the December 2014 low
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.
15,855 is the October 2014 low
15,739 is the December 2013 low
ECONOMIC CALENDAR
February 10 - Tuesday
Wholesale Inventories, December (10:00): 0.1% actual versus 0.2% expected, 0.8% prior
JOLTS - Job Openings, December (10:00): 5.028M actual versus 4.847M prior (revised from 4.972M)
February 11 - Wednesday
MBA Mortgage Index, 02/07 (7:00): -9.0% actual versus 1.3% prior
Crude Inventories, 02/07 (10:30): 4.868M actual versus 6.333M prior
Treasury Budget, January (14:00): -17.5B actual versus -$19.0B expected, -$10.3B prior
February 12 - Thursday
Initial Claims, 02/07 (8:30): 304K actual versus 285K expected, 279K prior (revised from 278K)
Continuing Claims, 1/31 (8:30): 2354K actual versus 2395K expected, 2405K prior (revised from 2400K)
Retail Sales, January (8:30): -0.8% actual versus -0.4% expected, -0.9% prior
Retail Sales ex-auto, January (8:30): -0.9% actual versus -0.4% expected, -0.9% prior (revised from -1.0%)
Business Inventories, December (10:00): 0.1% actual versus 0.2% expected, 0.2% prior
Natural Gas Inventor, 02/07 (10:30): -160 bcf actual versus -115 bcf prior
February 13 - Friday
Export Prices ex-ag., January (8:30): -1.0% actual versus -1.0% prior (revised from -1.2%)
Import Prices ex-oil, January (8:30): -0.7% actual versus -0.1% prior
Mich Sentiment, February (10:00): 93.6 actual versus 98.3 expected, 98.1 prior
February 17 - Tuesday
Empire Manufacturing, February (8:30): 9.0 expected, 9.9 prior
NAHB Housing Market , February (10:00): 58 expected, 57 prior
Net Long-Term TIC Fl, December (16:00): $33.5B prior
February 18 - Wednesday
MBA Mortgage Index, 02/14 (7:00): -9.0% prior
Housing Starts, January (8:30): 1070K expected, 1089K prior
Building Permits, January (8:30): 1065K expected, 1032K prior
PPI, January (8:30): -0.4% expected, -0.3% prior
Core PPI, January (8:30): 0.1% expected, 0.3% prior
Industrial Productio, January (9:15): 0.4% expected, -0.1% prior
Capacity Utilization, January (9:15): 79.9% expected, 79.7% prior
FOMC Minutes, 1/28 (14:00)
February 19 - Thursday
Initial Claims, 02/14 (8:30): 295K expected, 304K prior
Continuing Claims, 02/7 (8:30): 2398K expected, 2354K prior
Philadelphia Fed, February (10:00): 9.8 expected, 6.3 prior
Leading Indicators, January (10:00): 0.3% expected, 0.5% prior
Natural Gas Inventor, 02/14 (10:30): -160 bcf prior
Crude Inventories, 02/14 (11:00): 4.868M prior
End part 1 of 3
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Tuesday, February 10, 2015
The Daily, Part 1 of 3, 2-9-15
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2/9/2015 Investment House Report
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The REPORTS SCHEDULE is as follows:
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
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If any market circumstances arise where we see additional plays we want to
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MARKET SUMMARY
- Second day of testing is good enough with low volume over support.
- News is bad enough to credit it with the loss.
- China exports and imports tank.
- Greece, Germany, and the EU continue to fight like relatives.
- US banks now crying about the stronger dollar. Banks, multinationals all
benefitted from the Fed and Federal government policies, now it is time to
at least let the middle class benefit from a stronger dollar.
- Getting close to the bounce point if there is one.
Down all session, never making it positive, even in the pre-market. Stocks
did bounce from the lower open into midday, posting a decent recovery. Of
course the mood is consolidation right now and the indices could not hold
the recovery. A selloff to the last hour, then a modest rebound to the
close. Down across the board, but not necessarily carnage. Not really
carnage at all, just a continuation of the Friday fade that is testing the
rally off the trading range lows to the upper third if the channel.
SP500 -8.73, -0.42%
NASDAQ -18.39, -0.39%
DJ30 -95.08, -0.53%
SP400 -0.50%
RUTX -0.80%
SOX -1.09%
VOLUME: NYSE -14%, NASDAQ -19%. No dumping on the downside, and that is
not bad.
A/D: -1.4:1 NYSE, -1.7:1 NASDAQ.
THE NEWS
There was plenty to start the week and it was not the best news for world
economies and the US economy in particular. Thus there were plenty of
reasons to sell, plenty of excuses to pin the tail on the reason for the
loss. As noted over the weekend and last week, often there are stories
whose theme coincides with the market action. It is easy for the headline
readers on the financial stations to parrot those as 'causes' for the market
moves.
Sometimes they are; sometimes serious news truly trumps any market
attribute, technical or fundamental. Most other times, the news is simply
imbued with market-moving powers when it is really just the technical
pattern at work. Thus you see what you would think are positive stories used
as selling fodder when the market is simply negative and views every story
as negative.
Monday was a situation where negative stories were credited with the selling
but the selling was on light volume and coincided with a rather normal
pullback to test a good bounce off the range lows.
China Economic Woes: Imports down, Exports down.
Exports: -3.3% versus 6.9% expected versus 9.7% prior (year/year)
Imports: -19.9% versus -3.0% versus -2.4% prior (year/year)
No wonder China has started stimulus over the past few months: the numbers,
even fudged to look better, are trending lower and lower. Makes you wonder
why China pegs the yuan to the dollar: if the dollar rises it could export
more goods as Chinese goods are cheaper to the US. Oh well; China is not
looking good even though its market chart does not look all that bad,
testing the 50 day EMA after a strong November to January surge.
Greece and Germany: The G's don't like each other.
Ever since the Greece election and the anti-bailout candidate formed a
coalition government, the EU and ECB have gone after Greece, attempting to
convince the Greek populace that, regardless of what the Greek PM is telling
them, things would not go well for the nation if it decides to 'GreExit'
from the EU.
Monday they were at it again, Germany telling Greece that there is 'no way
out' of the bailout requirements. To get the money Greece must submit to
the will of the ECB. Makes perfect sense: you want the money to bail you
out, you need to do what the lenders require. Pretty basic.
But that assumes people are rational, something that is not that common on
the Continent. Greece wants its bailout and it wants to eat it as well. If
you can do it, why not?
But Greece does not control the bailout funds. So in response the Greeks
shot back that the ECB has 'lost control of monetary policy' with its foray
into QE.
Who is right? Both are. If you want a bailout you need to abide by the
terms, that is unless you are a US bank and then you can say you will, take
the money, make billions, then never pay any price, at least with your
money.
This was, however, given as a reason for the down market.
Russia and Ukraine, Russia and US, Russia and Cyprus . . .
All kinds of activity here. Cyprus offered Russia a military base that will
be less than 90 miles from the Cyprus NATO base. Now they know how we felt
with Cuba.
France is said to be edging closer to Russia. It was France who still aided
Russia with its naval ships.
Germany is supposedly telling the US to back off arming Ukraine. Later in
the day after Ms. Merkel and Mr. Obama met they both announced that military
action against Russia was out of the questions. Some were saying Europe
doesn't want to stomach another war in Europe. I think it is safe to say
the US doesn't want another war in Europe either.
Shipping
Baltic Dry Index: We held off reporting on this until it was a record. Now
it is at an all-time low. This index measures shipping costs in the world.
That they are at record lows tells the story of woe in China, Asia, Europe,
and Brazil. The dive in oil prices and thus gasoline prices makes Brazil's
sugar-based ethanol worth a lot less.
India shines
Bright spot: India GDP 7.5% versus 5.5% expected, 5.3% prior
Dollar strength = more US companies belly aching.
The din of outcry from those bemoaning the rise in the dollar's relative
value comes with every new economic twist.
Monday US banks got their turn, screaming about a higher US dollar placing
them at a competitive disadvantage. This is the latest after weeks and
weeks of
the big multinational companies blubbering about lower exports and how bad
that is for the US.
Okay, time for some reality. Time to give the average US citizen a break.
Shafted in the stimulus package, shafted in the ensuing recovery, isn't it
time to consider those paying the bills?
First, who cares if some huge companies don't make as much because the
dollar is stronger? They benefitted HUGELY when it was low, and now that is
up a bit and profits drop, they complain.
But why is the dollar stronger? It is because other countries' economies
are terrible and money is fleeing them to the safety of US treasuries and
dollar-based assets. That makes dollars more valuable of course. Yet, with
these other economies so weak, they are going to consume less US goods IN
ANY EVENT. Thus the complaints would be there even if they got the dollar
undermined by further purposeful monetary weakening.
Second, the stimulus of 2009 gave close to 100% of the benefits to the big
corporations. The push to 'green' projects went to the big companies the
government could control. GE's CEO was seen with Obama so many times he was
called the White Shadow. GE benefitted HUGELY from the green contracts it
was rewarded and we saw thousands of GE commercials telling us how great it
was . . . yes, using our tax dollars to fund its stimulus receipts.
Third, after the banking crisis what banks really paid the price? Oh, yes;
the small banks strangled by Dodd/Frank. Sure the big banks had to pay some
fines, but they paid it with other people's money, not the CEO or officer
pay. All show, no substance.
Finally, finally there is a stronger dollar. That makes the US even more
desirable as the strength builds upon the strength. More money comes it for
investment, more investment is made, the economy grows, and this time
EVERYONE benefits, not just the friends of the Administration.
Further, with a stronger dollar, oil prices are lower as well (less dollars
to buy a barrel of foreign oil). Other goods, foreign goods, are cheaper to
US citizens, something the vast middle of the US needs given wages have
stagnated for 10 years. JUST WHEN they are catching a break and seeing
their buying power increase, not by wages but by currency appreciation,
those that made all the money want to take even this away from the
beleaguered US middle class.
Count your damn blessings. Big businesses prospered in the collapse because
of free money. The US is still destroying more small businesses than
creating. Let them get back on their feet with a stronger dollar (as they
certainly are not getting any regulatory or tax help) so they have a chance
to survive. In other words, shut the hell up already.
THE MARKET
CHARTS
Not bad action at all as the patterns and the internals show.
DJ30: Closed near the low, but holding over the 50 day SMA and the upper
trendline in its pennant. Volume lower, well below average. Thus far a
very normal, positive test.
SP500: Almost a carbon of the Dow, stepping back a second day to the 50 day
SMA and upper trendline in the pennant. Lower, below average volume means
no dumping.
NASDAQ: Not bad, showing a doji just over the 50 day SMA. Perhaps a higher
low setting up in the trading range as discussed last week? That is one
signal you look for as stocks test inside a range.
SP400: No longer a new high, but a nice test of that move, fading toward
and still over the 10 day EMA in what could be the start of a new uptrend
channel formed basically at the end of 2014.
SOX: As you can see, SOX was the issue. Down over 1%, looking a bit
heavier than the rest of the market. Not a bad pattern, just not leadership
caliber. The market tends to take SOX' lead, and thus if it breaks the
market test may turn into just more downside. Some great moves in smaller
chips not represented on the index, e.g. ANAD, ENPH, ONNN. Others look good
to go, e.g. NXPI, SLAB. Definitely not a lost cause.
LEADERSHIP
Big names: Some still look good, e.g. GOOG, setting up for a new move.
AMZN, UTX, MMM, just taking a breather. AAPL still looks toppish, but up on
the session in a down market. Perhaps it just breaks out. Some still look
weak but did not break lower in the action, e.g. MSFT.
China: Very mixed. NTES, SOHU dive. JD holds its ground. NOAH up over 4%.
Energy: Still taking a breather from its recent move. Not a bad test at
all, e.g. PTEN, APC, SLB.
Financial: Taking a breather after a big move Friday, e.g. BAC, C.
MARKET STATISTICS
NASDAQ
Stats: -18.39 points (-0.39%) to close at 4726.01
Volume: 1.607B (-18.64%)
Up Volume: 683.29M (-233.29M)
Down Volume: 942.8M (-147.2M)
A/D and Hi/Lo: Decliners led 1.7 to 1
Previous Session: Decliners led 1.16 to 1
New Highs: 48 (-59)
New Lows: 29 (-6)
S&P
Stats: -8.73 points (-0.42%) to close at 2046.74
NYSE Volume: 776M (-13.78%)
A/D and Hi/Lo: Decliners led 1.42 to 1
Previous Session: Decliners led 1.67 to 1
New Highs: 50 (-82)
New Lows: 22 (+7)
Dow/NYSE
Stats: -95.08 points (-0.53%) to close at 17729.21
SENTIMENT INDICATORS
VIX: 18.55; +1.26
VXN: 19.12; +0.71
VXO: 17.41; +0.14
Put/Call Ratio (CBOE): 1.07; +0.05
Bulls and Bears:
Bulls: 49.0% versus 53.1% versus 49.0% versus 48.0% versus 50.5% versus
56.4% versus 52.5%. Sold on the market selling. Next week it will rise on
the market gains. As volatile as the market itself.
Bears: 16.3% versus 16.3% versus 17.4% versus 16.3% versus 15.2% versus
14.9% versus 15.8% versus 14.9%. Back to the game of holding steady with
bears underrepresented in the market.
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: 49.0%
53.1% versus 49.0% versus 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: 16.3%
16.3% versus 17.4% versus16.3% 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): 1.95%. Fading modestly after gapping higher, but still
holding the big gap lower from Friday post-Jobs.
1.94% versus 1.81% versus 1.77% versus 1.78% versus 1.68% versus 1.67%
versus 1.76% versus 1.73% versus 1.81% versus 1.82% VERSUS 1.80% versus
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%
Oil: 52.99, +1.32. Moved up for a third day, tapping at the 50 day SMA on
the high. Backed off to close, but holding a gain. Key test for oil after
finally breaking through the 20 day EMA.
Gold: 1241.50, +6.90. Moved back up through the 50 day EMA. A rather
modest bounce after the $28 plunge Friday.
$/JPY: 118.62 versus 118.987 versus 117.56 versus 117.21 versus 117.58
versus 117.52 versus 117.40 versus 118.30 versus 117.54 versus 117.88 versus
118.45 versus 117.78 versus 118.49 versus 117.80 versus 118.82 versus 117.52
versus 115.928 versus 117.33 versus 117.77 versus 118.29 versus 118.50
versus 119.69
A second day of testing that big surge Thursday through the 50 day SMA.
Euro/$: 1.1324 versus 1.1318 versus 1.1474 versus 1.1387 versus 1.1481
versus 1.1336 versus 1.1290 versus 1.1318 versus 1.1287 versus 1.1375 versus
1.1263 versus 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
Doji at the Friday peak. Stalling a day after surging off the 20 day EMA.
Hasn't changed: still back and forth each session as it was last week.
TUESDAY
Testing for day number two after rallying to the upper third of the trading
range (or in the case of SP400, to a new high). Lower volume, breadth tame
enough. NASDAQ could put in a higher low in its range. So far a test that
works.
So, a decent pullback in progress, but still has to show it is just a test,
that near support holds, and that the bids return to launch stocks on their
next leg. We will keep looking at good upside possibilities but also, as
today, pick up some downside if good stocks need to take a break and retrace
and base, e.g. IDCC that we picked up today.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4726.01
Resistance:
4751 is the January 2015 lower high
4774 is the January high
4811 is the November 2014 peak (intraday)
4815 is the December 2014 market peak
Support:
The 50 day EMA at 4685
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
4563 and 4567 are the January lows
4547 is the December low
The 200 day SMA at 4487
4486 is the July 2014 high
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 2046.74
Resistance:
2079 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
2145 is the December 2012 up trendline
Support:
The 50 day EMA at 2034
2011 is the September prior all-time high
1991 is the July 2014 high
The 200 day SMA at 1980
1972 is the December 2014 low
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 17,729.21
Resistance:
17,923 is the January 2015 lower high
17,991 is the early December interim
18,104 is the December all-time high
Support:
The 50 day EMA at 17,575
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
The 200 day SMA at 17,098
17,068 is the early July 2014 peak
17067 is the December 2014 low
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.
15,855 is the October 2014 low
15,739 is the December 2013 low
ECONOMIC CALENDAR
February 10 - Tuesday
Wholesale Inventories, December (10:00): 0.2% expected, 0.8% prior
JOLTS - Job Openings, December (10:00): 4.972M prior
February 11 - Wednesday
MBA Mortgage Index, 02/07 (7:00): 1.3% prior
Crude Inventories, 02/07 (10:30): 6.333M prior
Treasury Budget, January (14:00): -$10.3B prior
February 12 - Thursday
Initial Claims, 02/07 (8:30): 285K expected, 278K prior
Continuing Claims, 1/31 (8:30): 2405K expected, 2400K prior
Retail Sales, January (8:30): -0.5% expected, -0.9% prior
Retail Sales ex-auto, January (8:30): -0.5% expected, -1.0% prior
Business Inventories, December (10:00): 0.2% expected, 0.2% prior
Natural Gas Inventor, 02/07 (10:30): -115 bcf prior
February 13 - Friday
Export Prices ex-ag., January (8:30): -1.2% prior
Import Prices ex-oil, January (8:30): -0.1% prior
Mich Sentiment, February (10:00): 98.5 expected, 98.1 prior
End part 1 of 3
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MARKET ALERTS:
Targets hit: None issued
Buy alerts: IDCC; LCI
Trailing stops: NTES
Stop alerts: NTES; SOHU
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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.
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MARKET SUMMARY
- Second day of testing is good enough with low volume over support.
- News is bad enough to credit it with the loss.
- China exports and imports tank.
- Greece, Germany, and the EU continue to fight like relatives.
- US banks now crying about the stronger dollar. Banks, multinationals all
benefitted from the Fed and Federal government policies, now it is time to
at least let the middle class benefit from a stronger dollar.
- Getting close to the bounce point if there is one.
Down all session, never making it positive, even in the pre-market. Stocks
did bounce from the lower open into midday, posting a decent recovery. Of
course the mood is consolidation right now and the indices could not hold
the recovery. A selloff to the last hour, then a modest rebound to the
close. Down across the board, but not necessarily carnage. Not really
carnage at all, just a continuation of the Friday fade that is testing the
rally off the trading range lows to the upper third if the channel.
SP500 -8.73, -0.42%
NASDAQ -18.39, -0.39%
DJ30 -95.08, -0.53%
SP400 -0.50%
RUTX -0.80%
SOX -1.09%
VOLUME: NYSE -14%, NASDAQ -19%. No dumping on the downside, and that is
not bad.
A/D: -1.4:1 NYSE, -1.7:1 NASDAQ.
THE NEWS
There was plenty to start the week and it was not the best news for world
economies and the US economy in particular. Thus there were plenty of
reasons to sell, plenty of excuses to pin the tail on the reason for the
loss. As noted over the weekend and last week, often there are stories
whose theme coincides with the market action. It is easy for the headline
readers on the financial stations to parrot those as 'causes' for the market
moves.
Sometimes they are; sometimes serious news truly trumps any market
attribute, technical or fundamental. Most other times, the news is simply
imbued with market-moving powers when it is really just the technical
pattern at work. Thus you see what you would think are positive stories used
as selling fodder when the market is simply negative and views every story
as negative.
Monday was a situation where negative stories were credited with the selling
but the selling was on light volume and coincided with a rather normal
pullback to test a good bounce off the range lows.
China Economic Woes: Imports down, Exports down.
Exports: -3.3% versus 6.9% expected versus 9.7% prior (year/year)
Imports: -19.9% versus -3.0% versus -2.4% prior (year/year)
No wonder China has started stimulus over the past few months: the numbers,
even fudged to look better, are trending lower and lower. Makes you wonder
why China pegs the yuan to the dollar: if the dollar rises it could export
more goods as Chinese goods are cheaper to the US. Oh well; China is not
looking good even though its market chart does not look all that bad,
testing the 50 day EMA after a strong November to January surge.
Greece and Germany: The G's don't like each other.
Ever since the Greece election and the anti-bailout candidate formed a
coalition government, the EU and ECB have gone after Greece, attempting to
convince the Greek populace that, regardless of what the Greek PM is telling
them, things would not go well for the nation if it decides to 'GreExit'
from the EU.
Monday they were at it again, Germany telling Greece that there is 'no way
out' of the bailout requirements. To get the money Greece must submit to
the will of the ECB. Makes perfect sense: you want the money to bail you
out, you need to do what the lenders require. Pretty basic.
But that assumes people are rational, something that is not that common on
the Continent. Greece wants its bailout and it wants to eat it as well. If
you can do it, why not?
But Greece does not control the bailout funds. So in response the Greeks
shot back that the ECB has 'lost control of monetary policy' with its foray
into QE.
Who is right? Both are. If you want a bailout you need to abide by the
terms, that is unless you are a US bank and then you can say you will, take
the money, make billions, then never pay any price, at least with your
money.
This was, however, given as a reason for the down market.
Russia and Ukraine, Russia and US, Russia and Cyprus . . .
All kinds of activity here. Cyprus offered Russia a military base that will
be less than 90 miles from the Cyprus NATO base. Now they know how we felt
with Cuba.
France is said to be edging closer to Russia. It was France who still aided
Russia with its naval ships.
Germany is supposedly telling the US to back off arming Ukraine. Later in
the day after Ms. Merkel and Mr. Obama met they both announced that military
action against Russia was out of the questions. Some were saying Europe
doesn't want to stomach another war in Europe. I think it is safe to say
the US doesn't want another war in Europe either.
Shipping
Baltic Dry Index: We held off reporting on this until it was a record. Now
it is at an all-time low. This index measures shipping costs in the world.
That they are at record lows tells the story of woe in China, Asia, Europe,
and Brazil. The dive in oil prices and thus gasoline prices makes Brazil's
sugar-based ethanol worth a lot less.
India shines
Bright spot: India GDP 7.5% versus 5.5% expected, 5.3% prior
Dollar strength = more US companies belly aching.
The din of outcry from those bemoaning the rise in the dollar's relative
value comes with every new economic twist.
Monday US banks got their turn, screaming about a higher US dollar placing
them at a competitive disadvantage. This is the latest after weeks and
weeks of
the big multinational companies blubbering about lower exports and how bad
that is for the US.
Okay, time for some reality. Time to give the average US citizen a break.
Shafted in the stimulus package, shafted in the ensuing recovery, isn't it
time to consider those paying the bills?
First, who cares if some huge companies don't make as much because the
dollar is stronger? They benefitted HUGELY when it was low, and now that is
up a bit and profits drop, they complain.
But why is the dollar stronger? It is because other countries' economies
are terrible and money is fleeing them to the safety of US treasuries and
dollar-based assets. That makes dollars more valuable of course. Yet, with
these other economies so weak, they are going to consume less US goods IN
ANY EVENT. Thus the complaints would be there even if they got the dollar
undermined by further purposeful monetary weakening.
Second, the stimulus of 2009 gave close to 100% of the benefits to the big
corporations. The push to 'green' projects went to the big companies the
government could control. GE's CEO was seen with Obama so many times he was
called the White Shadow. GE benefitted HUGELY from the green contracts it
was rewarded and we saw thousands of GE commercials telling us how great it
was . . . yes, using our tax dollars to fund its stimulus receipts.
Third, after the banking crisis what banks really paid the price? Oh, yes;
the small banks strangled by Dodd/Frank. Sure the big banks had to pay some
fines, but they paid it with other people's money, not the CEO or officer
pay. All show, no substance.
Finally, finally there is a stronger dollar. That makes the US even more
desirable as the strength builds upon the strength. More money comes it for
investment, more investment is made, the economy grows, and this time
EVERYONE benefits, not just the friends of the Administration.
Further, with a stronger dollar, oil prices are lower as well (less dollars
to buy a barrel of foreign oil). Other goods, foreign goods, are cheaper to
US citizens, something the vast middle of the US needs given wages have
stagnated for 10 years. JUST WHEN they are catching a break and seeing
their buying power increase, not by wages but by currency appreciation,
those that made all the money want to take even this away from the
beleaguered US middle class.
Count your damn blessings. Big businesses prospered in the collapse because
of free money. The US is still destroying more small businesses than
creating. Let them get back on their feet with a stronger dollar (as they
certainly are not getting any regulatory or tax help) so they have a chance
to survive. In other words, shut the hell up already.
THE MARKET
CHARTS
Not bad action at all as the patterns and the internals show.
DJ30: Closed near the low, but holding over the 50 day SMA and the upper
trendline in its pennant. Volume lower, well below average. Thus far a
very normal, positive test.
SP500: Almost a carbon of the Dow, stepping back a second day to the 50 day
SMA and upper trendline in the pennant. Lower, below average volume means
no dumping.
NASDAQ: Not bad, showing a doji just over the 50 day SMA. Perhaps a higher
low setting up in the trading range as discussed last week? That is one
signal you look for as stocks test inside a range.
SP400: No longer a new high, but a nice test of that move, fading toward
and still over the 10 day EMA in what could be the start of a new uptrend
channel formed basically at the end of 2014.
SOX: As you can see, SOX was the issue. Down over 1%, looking a bit
heavier than the rest of the market. Not a bad pattern, just not leadership
caliber. The market tends to take SOX' lead, and thus if it breaks the
market test may turn into just more downside. Some great moves in smaller
chips not represented on the index, e.g. ANAD, ENPH, ONNN. Others look good
to go, e.g. NXPI, SLAB. Definitely not a lost cause.
LEADERSHIP
Big names: Some still look good, e.g. GOOG, setting up for a new move.
AMZN, UTX, MMM, just taking a breather. AAPL still looks toppish, but up on
the session in a down market. Perhaps it just breaks out. Some still look
weak but did not break lower in the action, e.g. MSFT.
China: Very mixed. NTES, SOHU dive. JD holds its ground. NOAH up over 4%.
Energy: Still taking a breather from its recent move. Not a bad test at
all, e.g. PTEN, APC, SLB.
Financial: Taking a breather after a big move Friday, e.g. BAC, C.
MARKET STATISTICS
NASDAQ
Stats: -18.39 points (-0.39%) to close at 4726.01
Volume: 1.607B (-18.64%)
Up Volume: 683.29M (-233.29M)
Down Volume: 942.8M (-147.2M)
A/D and Hi/Lo: Decliners led 1.7 to 1
Previous Session: Decliners led 1.16 to 1
New Highs: 48 (-59)
New Lows: 29 (-6)
S&P
Stats: -8.73 points (-0.42%) to close at 2046.74
NYSE Volume: 776M (-13.78%)
A/D and Hi/Lo: Decliners led 1.42 to 1
Previous Session: Decliners led 1.67 to 1
New Highs: 50 (-82)
New Lows: 22 (+7)
Dow/NYSE
Stats: -95.08 points (-0.53%) to close at 17729.21
SENTIMENT INDICATORS
VIX: 18.55; +1.26
VXN: 19.12; +0.71
VXO: 17.41; +0.14
Put/Call Ratio (CBOE): 1.07; +0.05
Bulls and Bears:
Bulls: 49.0% versus 53.1% versus 49.0% versus 48.0% versus 50.5% versus
56.4% versus 52.5%. Sold on the market selling. Next week it will rise on
the market gains. As volatile as the market itself.
Bears: 16.3% versus 16.3% versus 17.4% versus 16.3% versus 15.2% versus
14.9% versus 15.8% versus 14.9%. Back to the game of holding steady with
bears underrepresented in the market.
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: 49.0%
53.1% versus 49.0% versus 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: 16.3%
16.3% versus 17.4% versus16.3% 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): 1.95%. Fading modestly after gapping higher, but still
holding the big gap lower from Friday post-Jobs.
1.94% versus 1.81% versus 1.77% versus 1.78% versus 1.68% versus 1.67%
versus 1.76% versus 1.73% versus 1.81% versus 1.82% VERSUS 1.80% versus
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%
Oil: 52.99, +1.32. Moved up for a third day, tapping at the 50 day SMA on
the high. Backed off to close, but holding a gain. Key test for oil after
finally breaking through the 20 day EMA.
Gold: 1241.50, +6.90. Moved back up through the 50 day EMA. A rather
modest bounce after the $28 plunge Friday.
$/JPY: 118.62 versus 118.987 versus 117.56 versus 117.21 versus 117.58
versus 117.52 versus 117.40 versus 118.30 versus 117.54 versus 117.88 versus
118.45 versus 117.78 versus 118.49 versus 117.80 versus 118.82 versus 117.52
versus 115.928 versus 117.33 versus 117.77 versus 118.29 versus 118.50
versus 119.69
A second day of testing that big surge Thursday through the 50 day SMA.
Euro/$: 1.1324 versus 1.1318 versus 1.1474 versus 1.1387 versus 1.1481
versus 1.1336 versus 1.1290 versus 1.1318 versus 1.1287 versus 1.1375 versus
1.1263 versus 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
Doji at the Friday peak. Stalling a day after surging off the 20 day EMA.
Hasn't changed: still back and forth each session as it was last week.
TUESDAY
Testing for day number two after rallying to the upper third of the trading
range (or in the case of SP400, to a new high). Lower volume, breadth tame
enough. NASDAQ could put in a higher low in its range. So far a test that
works.
So, a decent pullback in progress, but still has to show it is just a test,
that near support holds, and that the bids return to launch stocks on their
next leg. We will keep looking at good upside possibilities but also, as
today, pick up some downside if good stocks need to take a break and retrace
and base, e.g. IDCC that we picked up today.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4726.01
Resistance:
4751 is the January 2015 lower high
4774 is the January high
4811 is the November 2014 peak (intraday)
4815 is the December 2014 market peak
Support:
The 50 day EMA at 4685
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
4563 and 4567 are the January lows
4547 is the December low
The 200 day SMA at 4487
4486 is the July 2014 high
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 2046.74
Resistance:
2079 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
2145 is the December 2012 up trendline
Support:
The 50 day EMA at 2034
2011 is the September prior all-time high
1991 is the July 2014 high
The 200 day SMA at 1980
1972 is the December 2014 low
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 17,729.21
Resistance:
17,923 is the January 2015 lower high
17,991 is the early December interim
18,104 is the December all-time high
Support:
The 50 day EMA at 17,575
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
The 200 day SMA at 17,098
17,068 is the early July 2014 peak
17067 is the December 2014 low
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.
15,855 is the October 2014 low
15,739 is the December 2013 low
ECONOMIC CALENDAR
February 10 - Tuesday
Wholesale Inventories, December (10:00): 0.2% expected, 0.8% prior
JOLTS - Job Openings, December (10:00): 4.972M prior
February 11 - Wednesday
MBA Mortgage Index, 02/07 (7:00): 1.3% prior
Crude Inventories, 02/07 (10:30): 6.333M prior
Treasury Budget, January (14:00): -$10.3B prior
February 12 - Thursday
Initial Claims, 02/07 (8:30): 285K expected, 278K prior
Continuing Claims, 1/31 (8:30): 2405K expected, 2400K prior
Retail Sales, January (8:30): -0.5% expected, -0.9% prior
Retail Sales ex-auto, January (8:30): -0.5% expected, -1.0% prior
Business Inventories, December (10:00): 0.2% expected, 0.2% prior
Natural Gas Inventor, 02/07 (10:30): -115 bcf prior
February 13 - Friday
Export Prices ex-ag., January (8:30): -1.2% prior
Import Prices ex-oil, January (8:30): -0.1% prior
Mich Sentiment, February (10:00): 98.5 expected, 98.1 prior
End part 1 of 3
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