Sunday, February 22, 2015

The Daily, Part 1 of 3, 2-21-14

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

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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.


- 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.


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.



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.


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.


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)

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)

Stats: +154.67 points (+0.86%) to close at 18140.44


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.


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.


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!


NASDAQ: Closed at 4955.97

5132.52 is the 3/2000 all0time high

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

2155 is the December 2012 up trendline

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


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


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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