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3/16/2015 Investment House Report
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Targets hit: GRUB
Buy alerts: AKAM; AVGO; CRM
Trailing stops: VIPS
Stop alerts: DIA
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- Crisp Monday after Sloppy Friday with SP500, DJ30 helping lead.
- Weak breadth (large caps led) and low volume on the upside. Again.
- Leadership helps itself out but is still below its better levels.
- 2015 economic data off to the worst start since 2000.
- Some nice setups are out there. We will look at taking some more gain ahead of the FOMC meeting, either Tuesday if stocks can rally or Wednesday. May anticipate some weakness, but need to be ready if it does not show up.
New week, and after a sloppy Friday, particularly for the NYSE large caps, new upside. Hmmm. Been there before: last Monday stocks bounced, if for just a day. Two Mondays back the indexes broke to new highs only to roll over the next session. Monday showed some great individual moves and strong percentage gains -- just like two Mondays ago -- now can they hold a move and expand upon it?
Volume again provided little comfort as NYSE and NASDAQ trade faded 6.2% and 8% respectively. Good price moves, no punch.
SP500 27.79, 1.35%
NASDAQ 57.75, 1.19%
A/D: 1.3:1 NYSE, 1.8:1 NASDAQ. Pretty atrocious breadth for such strong percentage gains. The small caps lagged at up just 0.62%, and when they are not out in front, breadth drags.
Narrow breadth Monday is not necessarily a bad thing as last week the small and midcaps rallied or at least held up well as SP500 and DJ30 sold on dollar worries. Monday the dollar was off after last week's pounding (1.0568 versus 1.0494 Friday) so stocks were at least free of that worry. For the day.
There was other news to bump stocks higher pre-market and on the session.
China's premier was out pumping stimulus hopes once more, stating China has 'the tools to intervene' if employment started to lag. Reminds me of the 1980's 'Ghostbusters' line 'We have the tools, we have the talent.'
Well there you go. All the ingredients necessary for a rally, or at least an early upside start.
Not all news was great. Industrial production and the Empire (New York) PMI were to say, disappointing.
0.1% versus 0.3% expected versus -0.3% (from 0.2%). Nice half percent downward revision.
Note the trend lower the past 12 months.
February: 78.9% versus 79.5% versus 79.1% (from 79.4%)
Again, note the trend lower the past 12 months.
Empire PMI, March: 6.9 versus 8.8 versus 7.8
New orders fell to -2.39, a 16 month low.
With a lower dollar and a 'data dependent', still patient FOMC, that gave hope that perhaps the Fed would not take more hawkish steps. I am pretty certain, and indeed most people are certain, that removing 'patient' is already a done deal, that the Fed is going to prep for the hike by dropping that language barring a massive collapse between now and Wednesday afternoon. Heck, some are even saying the Fed hikes Wednesday. Not sure if that is the case, but it is worth banking some gain on positions that are at or close to targets or have enjoyed solid runs higher?
The charts were not bad with the large caps coming back and showing the best percentage gains outside, of course, SOX and its nice move. You have to wonder, however, what happens if the dollar weakens again versus the euro?
SP500: Broke upside through both 50 day MA's as well as the 20 day EMA. It took out the November peak as well and is 12 points off the December high. A good answer to the selling though not a lot of volume.
DJ30: Recaptured the 50 day MA's and the 20 day EMA as well, just below the two December highs. Not great volume, but it works as DJ30 is not giving up.
NASDAQ: Continued its 50 day MA rebound, clearing the 20 day EMA Monday after holding that three-layer support. Volume well below average as well; disappointing yet again, but it is moving up from a nice pattern.
SP400: Excellent break higher off the Friday doji, rallying past all other peaks but the February all-time high. Quite solid again.
RUTX: Lagging significantly, managing a rather paltry 0.62% when compared to the other indices. Stalling out just below the early March all-time high. Seems to have a bit of aversion there.
SOX: Continued off the 50 day EMA test and rebound, really improving its move with a gap and run higher. Very nice action and of course we jumped on AVGO early in the session and let it work for us as SWKS surged upside as well.
Leadership improved from Friday and last week's erosion but I would not say that all issues were washed away.
Some very good moves of course, but also a bit narrow.
Chips: AVGO, SUNE, SWKS all moving well. NXPI took a day off, but that after a huge Friday move.
Biotechs: Up and not up, i.e. mixed. BIIB, CELG look decent. CLDX moving higher again. TXMD, BDSI and others, however, struggled.
Internet-related: GOOG started to bounce off the 50 day EMA. GRUB surged to the initial target. AKAM broke higher form its four week pennant.
Software: NOW rallying nicely. CRM broke sharply higher after its gap test. FLTX taking a second day of rest. FEYE still trying to hold at the 20 day EMA.
Retail: BWLD surged off the 50 day EMA. RH was flat but is in a good move upside.
Big Names: AAPL was up off the 50 day EMA test, but it does not look that strong. It needs to show more along with other large caps that rebounded but didn't change their patterns that much. Some great volume would help, but it is not there yet.
In any event, there were some good moves that we picked up on, e.g. AVGO, CRM, AKAM. Took some gain on GRUB. Got out of some VIPS as it gapped lower; held, but it was a struggle for it.
Stats: +57.75 points (+1.19%) to close at 4929.51
Volume: 1.674B (-7.76%)
Up Volume: 1.11B (+444.13M)
Down Volume: 575.62M (-574.38M)
A/D and Hi/Lo: Advancers led 1.29 to 1
Previous Session: Decliners led 1.53 to 1
New Highs: 185 (+84)
New Lows: 73 (+9)
Stats: +27.79 points (+1.35%) to close at 2081.19
NYSE Volume: 755.8M (-6.24%)
A/D and Hi/Lo: Advancers led 1.81 to 1
Previous Session: Decliners led 2.28 to 1
New Highs: 142 (+69)
New Lows: 96 (-23)
Stats: +228.11 points (+1.29%) to close at 17977.42
VIX: 15.61; -0.39
VXN: 16.91; -0.64
VXO: 15.93; -0.95
Put/Call Ratio (CBOE): 1.02; -0.19. Seven consecutive sessions above 1.0, 8 of 11. Again, plenty of sessions here to support an upside move as tried to renew Monday.
Bulls and Bears: Broke lower as expected in the selling. Not low enough but heading in the right direction.
Bulls: 53.46% versus 58.7% versus 59.5% versus 56.6% versus 52.5% versus 49.0%
After that rapid spike from 49% to 59.5%, backing down. A bit.
Bears: 14.1% versus 14.1% versus 14.1% versus 14.1% versus 15.2% versus 16.3%
Are you kidding me? This goes beyond stuck in the mud. Chronically low bearishness is bearish.
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.
58.7% versus 59.5% versus 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.
14.1% versus 14.1% versus 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.
Bonds (10 year): 2.10% versus 2.10%.
2.12% versus 2.10% versus 2.12% versus 2.11% versus 2.13% versus 2.20% versus 2.245% versus 2.11% versus 2.12% versus 2.12% versus 2.08% versus 1.98% versus 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%
Doji below the 50 day EMA as bonds still struggle to move back up.
Oil: 43.94, -0.95. Broke below the January lows though did recover some off of the session lows.
Gold: 1153.40, +2.80. Trying to hold at the November low.
$/JPY: 121.39 versus 121.43 versus 121.28 versus 121.50 versus 121.80 versus 121.60 VERSUS 120.72 versus 120.14 versus 119.71 versus 119.74 versus 120.179 versus 119.63 versus 119.48 versus 118.86
Still looks very good to break higher after this weeklong flag test of the 10 day EMA.
Euro/$: 1.0568 versus 1.0494 versus 1.0635 versus 1.0546 versus 1.0700 versus 1.0829 versus 1.0849 versus 1.1030 versus 1.1079 versus 1.1175 versus 1.1182 versus 1.1197 versus 1.1195 versus 1.1362 versus 1.1337 versus 1.1385 versus 1.1379 versus 1.1366
Dollar sold back after a big move. Second fade in three sessions, showing the move is weakening a bit.
FOMC starts its 2-day meeting, easily the most important data point of the week, at least until the next data point that very well could be a Fed official 'explaining' what the FOMC did.
Patient or not? The US economic data in 2015 is showing, according to Bloomberg, the worst start for a year since 2000 as 90+% of the economic data is missing expectations. If the Fed is truly 'data dependent' it would have to remain patient.
It likely won't because it cannot. At least in its view. The Fed believes it needs to have ammunition in the event of another recession or crisis. Sad thing is, the next recession may be upon us. May be. The rest of the world outside of Germany is close or already there. The US has slowed but is still managing some expansion. If the oil sector continues its decline, however, maybe not.
The Fed feels it needs to hike and likely will do so by whatever means necessary. Not Wednesday of course, but perhaps April or the next meeting. What happens, however, when the Fed does hike? Perhaps not just 25BP but when they get really higher, e.g. 3%, 4%, 5% as they should in a real recovery? US debt costs shoot through the roof. This even as China continues dumping US treasuries, so much so that Japan has now tied China as the largest holder of US debt.
The day of FOMC meetings tend to be softer with a modest rise into the result. Then the market has issues. If patient stays perhaps the market itself is patient and continues the new move higher. If the Fed takes the 'we have to do it regardless' position and drops 'patient,' that may start some selling post-FOMC yet again.
Thus, we would love to see another push higher Tuesday ahead of the FOMC meeting result Wednesday. Some nice gain is built into several positions, e.g. QRVO, SUNE, NXPI, SWKS. Another good move and we will look to take some of that gain ahead of Wednesday and some possible pre- FOMC nervous and softer action.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4929.51
5008.57 is the March 2015 post-bear market high
5132.52 is the 3/2000 all-time high
The 50 day EMA at 4832
4816 is the 38% Fibonacci retracement of the February run
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
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
The 200 day SMA at 4582
4566 is the lower gap point from late October
4563 and 4567 are the January lows
4547 is the December low
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 2081.19
2094 is the December 2014 high, the prior all-time high
2114 is the lower trendline from 11/2012
2119.59 is the all-time high
2177 is the December 2012 up trendline
2079 is the intraday all-time high from November
2076 is the all-time high from November
The 50 day EMA at 2066
2062 is the January 2015 lower high
2011 is the September prior all-time high
The 200 day SMA at 2004
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 17,977.42
17,991 is the early December interim
18,104 is the December high
18,289 is the all-time high
17,923 is the January 2015 lower high
The 50 day EMA at 17,835
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,274
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
March 16 - Monday
Empire Manufacturing, March (8:30): 6.9 actual versus 8.8 expected, 7.8 prior
Industrial Productio, February (9:15): 0.1% actual versus 0.3% expected, -0.3% prior (revised from 0.2%)
Capacity Utilization, February (9:15): 78.9% actual versus 79.5% expected, 79.1% prior (revised from 79.4%)
NAHB Housing Market , March (10:00): 53 actual versus 56 expected, 55 prior
Net Long-Term TIC Fl, January (16:00): -$27.2B actual versus $39.2B prior (revised from $35.4B)
March 17 - Tuesday
Building Permits, February (8:30): 1070K expected, 1053K prior
Housing Starts, February (8:30): 1040K expected, 1065K prior
March 18 - Wednesday
MBA Mortgage Index, 03/14 (7:00): -1.3% prior
Crude Inventories, 03/14 (10:30): 4.512M prior
FOMC Rate Decision, March (14:00): 0.25% expected, 0.25% prior
March 19 - Thursday
Continuing Claims, 03/07 (8:30)
Initial Claims, 03/14 (8:30): 294K expected, 289K prior
Continuing Claims, 03/07 (8:30): 2420K expected, 2418K prior
Current Account Bala, Q4 (8:30): -$105.0B expected, -$100.3B prior
Philadelphia Fed, March (10:00): 7.2 expected, 5.2 prior
Leading Indicators, February (10:00): 0.2% expected, 0.2% prior
Natural Gas Inventor, 03/14 (10:30): -198 bcf prior
End part 1 of 3
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