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4/25/2015 Investment House Report
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Targets hit: BBY
Buy alerts: DGLY
Trailing stops: None issued
Stop alerts: BWLD; PGNX; SN
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- NASDAQ, SP500 move to new highs rising four large cap stocks
- New highs but less than impressive action overall as smaller caps do not participate. Most stocks don't participate.
- Lack of Durable Goods orders, lack of capital investment. Still.
- Feds kill TWC/CMCSA deal, and may have again marked the top of a market and economic expansion.
- Time again for some Greece headlines and worries to dog the stock market
- New highs, but not a clear and away blastoff. Leaders still there but some are under some pressure.
- Playing the upside, with some downside, but watching for 'in your ear' as NASDAQ approaches the March 2000 all-time high.
A very mixed Friday, and frankly that is better than some of the possibilities given the run higher to this point and the crescendo of excitement over the AMZN, GOOG, MSFT, and SBUX earnings. NASDAQ and SP500 dutifully moved to new highs though NASDAQ still missed out on the March 2000 all-time high by 40 points. Good to see they avoided a gap and crash. All of the market, however, did not participate.
RUTX and SP400, the small caps and midcaps, did not participate. They started higher with gaps, but didn't have the staying power. Hey, it was a large cap session, pure and simple. The smaller caps are still trending nicely after getting the rally started, now taking a back seat. Hmmm. They kind of did this in the February move as well: broke higher first, got investors ginned up, then everything went higher.
SP500 4.76, 0.23%
NASDAQ 36.02, 0.71%
DJ30 21.45, 0.12%
VOLUME: NYSE -8.8%, fading just below average on SP500's move to a new high. Not a plunge in volume, but volume was not exactly explosive on the move higher. NASDAQ trade +2.3%. Not bad given the break to a new all-time closing high, but solidly above average again and rising over the volume on the Thursday gain.
A/D: Definitely shows the large cap nature of the move. More than that, it shows how just a few stocks orchestrated the move to new highs.
NYSE, just over 1:1. NASDAQ actually negative at -1.1:1.
It looks as if a transition, for now, has taken place with the small and midcaps leading the initial move and now the big cap stocks taking over. All, however, are holding up well as the small and midcaps are in very good trends, perhaps not leading with blasts higher, but steadily climbing.
Durable Goods Orders remain less than durable.
Durable Goods Orders, March: 4.0% versus 0.5% expected versus -1.4% prior.
Wow, how great. Not. A 112% gain in defense aircraft orders accounted for the surge.
Ex-Transports: -0.2% vs +0.4% expected versus -1.3% (from -0.6%)!!!
Non-defense capital goods ex-aircraft: -0.3% versus -2.2% (from -1.1%)!!! Seven months down.
History: this length of declines in durables and investment has equaled recession. Not good.
But, the soothsayers stand firm. From CNBC: "Business spending on capital goods has been undermined by a buoyant dollar, which has eroded profits of multinational companies." Oh, I guess that explains the weak investment FOR THE ENTIRITY OF THE 'RECOVERY' when the dollar WAS NOT strong. This kind of casual, nonsensical 'reasoning' is dangerous because most people don't think, just accept the nonsense as fact.
Heavy Hand of government kills TWC/CMCSA deal. Shades of MSFT?
Friday TWC announced the attempt to acquire CMCSA is over thanks to the DOJ informing the companies it was going to sue to block the deal based upon anti-trust grounds. Once again the government is applying yesterday's standards to the new world, failing to grasp what is happening, or perhaps simply giving favors to those who give the money. Look at the Clinton allegations. Look at the Bush allegations that are leaking out ahead of the book. It is not a flattering look at our 'leaders,' and indeed is looking criminal in nature. Democrat or Republican, it is not looking good for our nation.
Beyond that, what about the market impact? Friday was up on some big earnings but the move was very narrow. Why didn't every stock participate in the good news?
Perhaps this is a seminal moment. JUST as NASDAQ breaks to a new all-time closing high with an assumed all-time high coming this week, the federal government announces a major stance in corporation combinations, combinations planned to help preserve the corporations in an environment rapidly changing for companies providing video to consumers. Cable is under fire from wireless streaming. This merger was an attempt to remain competitive with the rise of wireless and streaming.
Just as the federal government sued MSFT as its domination was peaking back in the 1990's, something it has not recovered from until just about now, the feds are moving to assure cable becomes obsolete. Perhaps the government wants to control it for some reason. Perhaps, as noted above, it has friends in other places (check out the number of visits GOOG officers visit the White House) and wants to make sure they are properly paid back. This block falls right into their game plan.
That peak did not only stop MSFT, it helped stop the tech innovation advance. We fell into an investment and technology recession for several years, sending hundreds of thousands of our best technology jobs permanently overseas.
Thus, even as the stock market breaks to higher highs, the move was less than well-attended by the rest of the market, suggesting that the regulatory cold water thrown onto a deal designed to at least give cable a chance to compete in the new wireless and streaming world is viewed as an attack on ANY kind of combinations ahead. THERE ALREADY IS NO INVESTMENT IN THE US, and the federal government appears to desire to keep it that way.
This move was labeled 'political' by nearly every financial news outlet. It is. Pure and simple. That won't change a thing, however, for the next 20 months. Overregulated, overtaxed, and given no options to expand.
Indeed, tax revenues as a percentage of GDP are almost at 18%. When they move past that level we get recessions. Why? Because the government has so increased taxes, fees, fines, etc. that too much money is taken from productive use to the waste of government. When that happens, recession.
Starkest recent example? The surpluses of the 1990's. We were told that the Clinton tax hikes 'had' to be passed to cover spending. What happened was the tax hikes, as they always do, as they did now, result in more tax revenues. Initially. That pushed revenues well past what was 'needed to pay for our deficits' to massive surpluses. Instead of giving that money back by lower taxes, tax increases were maintained, and the money was uselessly used to pay off our debt. What did that get us? Recession. Too much money taken from the economy and no investment was made. We turned to recession because of no money to invest.
We quite possibly are ready to go into recession again because revenues are so high and we know no capital investment in equipment, people, etc. is being made. With the feds telling the world they will block attempts to survive by merger, there is even LESS incentive to make capital investments and a recession becomes inevitable.
Greece: EU negotiators tire of Greece counterpart. Reports are they are 'hammering' him, accusing him of delaying tactics and being amateurish.
NASDAQ: Gapped to a new closing high, 32 points from an all-time high on the high. That is all it did. Gapped, closed a few points lower. SBUX, AMZN, MSFT, GOOG. That pretty much tells it. Now 40 points from the all-time high at 5132 hit March 2000. Broke out from its 9 week pattern very similar to its 10 week pattern that broke out in early February, leading to a month-long run. Perhaps it is doing the same now, rallying one more time before the summer hits and the doldrums set in. Don't forget 5132, however. Recall we discussed that as a possible top for NASDAQ back in March when NASDAQ traded over 5000. Have to watch for sharp reversals when NASDAQ tries that level this coming week. After turning back below that level on the last attempt, we doubt NASDAQ will turn back this time before hitting it. After that, the index and the rest of the market has to show it can continue with a February-like move.
SP500: New all-time closing high by 0.30 points. While just a whisper of a new high, SP500 did hold a breakout over the upper trendline of its 9 week pattern. Same length as the prior pattern that led to the February run. All of the caveats for the NASDAQ apply here, and indeed how NASDAQ reacts to the prior all-time high will impact how SP500 and the other indices play. Pretty weak volume on the breakout, and that is something of a disappointment.
SP400: Gapped higher, in new high territory (again) but could not hold it, slipping to a modest loss. Holding over the 10 day EMA and still in a very nice uptrend, but that was a very short foray to a new high, somewhat akin to RUTX' move a couple of weeks back. Again, however, an excellent trend higher remains in place, just want to see it put more distance on the prior high.
SOX: A key index and move. After defying the pattern and riding the back of LRCX and BRCM upside through some pretty stiff resistance, SOX gapped lower Thursday on the TXN earnings plunge, but managed to hold the 50 day MA. Friday it did nothing of the sort, collapsing through the 50 day EMA and the mid-April lows. This could be an epic failure, rolling over just as NASDAQ and SP500 reach for new highs. SOX is an important index for the market. Its breakout from a decade-plus trading range in January 2014 and its successful test in October of that year was a major boost for the overall market. If SOX rolls over, NASDAQ could indeed have an issue after it makes its prior all-time high and nudges it aside for the record books.
RUTX: Backed off from the Thursday gain similar to SP400, also holding the 10 day EMA on the close. Still a very good uptrend in place, but note it did not run right back up to that level after the prior Friday flop. It would appear there was some rotation out of the small caps after that event as the large cap NYSE and NASDAQ indexes break to higher highs.
DJ30: Impressively weak session given the hoopla re MSFT earnings. Indeed, without MSFT's gain, DJ30 was red on the day. Still no breakout from the pattern. No attempt at it even after the higher low from the Tuesday low. Nice pattern, but as we say, just a pretty picture until it makes its move, and it has not made its move.
Of course the large cap 'names' posting earnings investors found pleasing led the move upside. Thanks to them the market was positive. Without them, narrow breadth, weakness in small caps, midcaps, chips, and 'old economy' Dow stocks would have the overall market lower.
Big Names: Others moving as well. AAPL modestly higher. PCLN gapped higher, continuing its move. EBAY held its upside gap from Thursday. CSCO up modestly.
Chips: Even the good movers from early in the week struggled. BRCM has almost fully filled its big upside gap. LRCX has faded off its earnings gap, but is showing a nice doji at the 200 day MA. AVGO posted a good move Wednesday, but that was all; Friday it blew out the 50 day MA to the downside. NXPI did the same and ALTR warned. SUNE, a very impressive chip with a great uptrend, is threatening that trend. The chips are down right now.
Software: A so-so day, but that is not bad after the moves. SPLK showed a hangman doji after a great Monday to Thursday break higher. CYBR was flat after a huge week has it near the mid-February peak. FEYE jumped higher but fizzled to flat. CRM gapped upside after a good Thursday move but could not hold it just yet.
Metals: SID, after a big Wednesday and Thursday, gapped to a hangman doji. A really solid 2 weeks with a breakout, test, and a renewed surge. FCX gapped back upside after its earnings took it to the 50 day MA. AKS gapped to a doji after a good Thursday bounce. These look good.
Energy: Did a good job of testing on the week, setting up the next move. Thursday it looked as if some moves started, e.g. APC. A bit of a fade Friday by that stock and others, e.g. HAL, PTEN, GPOR. HNR, KEG look great to break higher.
Telecom: With the TWC/CMCSA deal withdrawn, telecom was seen as a beneficiary. MOBI surged 8.8%. Others such as S, VZ were up the last part of the week on this speculation.
China: Some good moves yet again, but some not. NTES surged. JD up again along with NOAH. SOHU surging. VIPS, however, struggled Friday and looks heavy in its trend, flopping hard at the 20 day EMA.
Financial: JPM, C, STT are testing fairly nicely after good moves.
Miscellaneous: DDD warned and gapped hard to next support. FB still looked weak. TWTR is feeling some of that effect. MNST is breaking higher again after its flat gap test. QRVO sold hard to support.
Stats: +36.02 points (+0.71%) to close at 5092.08
Volume: 1.848B (+2.31%)
Up Volume: 901.72M (-178.28M)
Down Volume: 975.53M (+217.94M)
A/D and Hi/Lo: Decliners led 1.14 to 1
Previous Session: Advancers led 1.55 to 1
New Highs: 131 (-8)
New Lows: 34 (-9)
Stats: +4.76 points (+0.23%) to close at 2117.69
NYSE Volume: 767.4M (-3.79%)
A/D and Hi/Lo: Advancers led 1.03 to 1
Previous Session: Advancers led 2.08 to 1
New Highs: 97 (-16)
New Lows: 8 (-3)
Stats: +21.45 points (+0.12%) to close at 18080.14
VIX: 12.29; -0.19
VXN: 14.2; -0.02
VXO: 12.5; -0.18
Put/Call Ratio (CBOE): 0.76; -0.27
Bulls and Bears: Bulls tumble, bears still holding fast.
Bulls: 52.5% versus 50.5% versus 50.4% versus 54.5% versus 56.6%
Bouncing back up after a couple of weeks of flat line. Still not enough of a drop, but with stocks running, typically that won't happen.
Bears: 15.2% versus 13.9% versus 14.2% versus 14.2% versus
Wow, has the dam finally broken with a 'massive' move to 15+%?
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.
50.5% versus 50.4% versus 54.5% versus 55.6% versus 52.0% versus 53.6% versus 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% versus53.4% versus 56.5%
Background: Last undercut 35%, the threshold for bullishness, in early June 2012.
13.9% versus 14.2% versus 14.2% versus 14.1% versus 14.3% versus 14.1% versus 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): 1.92% versus 1.94%. Rebounding after the Wednesday crash lower. Bear flag looking.
1.94% versus 1.98% versus 1.91% versus 1.86% versus 1.86% versus 1.89% versus 1.88% versus 1.90% versus 1.93% versus 1.95% versus 1.95% versus 1.89% versus 1.89% versus 1.90% versus 1.86% versus 1.91% versus 1.86% versus 1.93% versus 1.96% versus 1.95% versus 2.01% versus 1.92% versus 1.87% versus 1.91% versus 1.927% versus 1.97% versus 1.95% versus 2.06% versus 2.09% versus 2.10% versus 2.12%
Euro/$: 1.0862. Breaking lower through the 50 day MA . . . but likely not a major break lower.
1.0824 versus 1.0722 versus 1.0733 versus 1.0738 versus 1.0801 versus 1.0768% versus 1.0681 versus 1.0655 versus 1.0570 versus 1.0654 versus 1.0782 versus 1.0819 versus 1.0939 versus 1.0950 versus 1.0872 versus 1.0759 versus 1.0752 versus 1.0833 versus 1.0898 versus 1.0890 versus 1.0973 versus 1.0925 versus 1.0946 versus 1.0811 versus 1.0648 versus 1.0874 versus 1.0590 versus 1.0568 versus 1.0494 versus 1.0635 versus 1.0546 versus 1.0700
Oil: 57.18, -0.48. Working laterally in a weeklong consolidation of its last move. Still looks solid.
Gold: 1175.30, -19.10. Quite the plunge, taking out even the early April low. Heading back down to the 1143 support.
$/JPY: 118.91. Flopped back to the 50 day EMA, but still in the 6 week lateral trading range, right at midlevel.
119.53 versus 119.90 versus 119.66 versus 119.26 versus 119.12 versus 119.03 versus 119.18 versus 119.39 versus 120.12 versus 120.20 versus 120.64 versus 120.15 versus 120.32 versus 119.48 versus 119.73 versus 119.72 versus 119.94 versus 120.11 versus 119.086 versus 119.167 versus 119.405 versus 119.72 versus 119.705 versus 120.02 versus 120.855 versus 120.04 versus 121.34 versus 121.39 versus 121.43 versus 121.28 versus 121.50 versus 121.80 versus 121.60
The coming week could be very interesting. NASDAQ pressing toward a true all-time high; will it be the dog that caught the car, the comment we made as RUTX hit its new high right before the Friday flop?
Greece will move more into the spotlight as it runs out of options. Saw some of that emerge Friday as the EU officials called out the Greek Finance minister for 'delaying tactics' and chided him as an 'amateur.' This could be a problem.
Then there are earnings. With the treatment of AMZN, GOOG, MSFT and SBUX on what in some cases were at best so-so earnings, has all of the good earnings news been baked in? It happens. Look at how BRCM sold quickly off after a tremendous upside gap on its results. We will watch how other gappers hold their earnings gaps. It may be we get some downside plays.
I don't want to sound as if I am totally turning off this market move. Thus far it has done basically exactly what we thought it would while many had their doubts. If the leaders keep leading and new ones step up to fill in for those that falter, certainly the move continues, perhaps in the vein of February and the money we made then.
Way back in March we said, however, that NASDAQ hitting 5132 could be its top. A lot has intervened in the interim, namely a fade and a new base and now a new breakout. That is very good versus one run to the peak that uses all the ammo. The indices have good bases behind them and that suggests they are just now starting a new, solid move.
Just don't get too certain a February repeat has to happen. Let the plays work, let the leaders lead. If they do, great. If we see some breakdowns we need to be cautious. Some stocks are struggling or looking heavy: FB, TWTR, SUNE, VIPS, UA. Not a ton and nothing new about leaders having to take a breather. Moreover, LOTS of stocks still look good. Thus we let our positions work, and if we see new solid ones come up, we put them to work. Just don't lose sight that no move is guaranteed, i.e. watch, as Shoeless Joe Jackson told rookie Moonlight Graham, for in your ear.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5092.08
5132.52 is the 3/2000 all-time high
5042 is the March 2015 post-bear market high
The 10 day EMA at 5017
5008.57 is the early March 2015 post-bear market high
The 50 day EMA at 4929
4921 is the January to April pattern trendline
4912 the mid-April China dip
The March lows at 4843 and 4825
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
The 200 day SMA at 4668
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
S&P 500: Closed at 2117.69
2119.59 is the February intraday prior all-time high
2151 is the lower trendline from 11/2012
2115 is the late March lower high
2112 breaks from the current 8 week pattern
2094 is the December 2014 high, the prior all-time high
The 50 day EMA at 2083
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 200 day SMA at 2023
2011 is the September prior all-time high
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 18,080.14
18,104 is the December high
18,206 is the late March lower high
18,289 is the all-time high
17,991 is the early December interim
17,923 is the January 2015 lower high
The 50 day EMA at 17,917
17,779 is the lower trendline from January to April
17,748 is the mid-April China margin selloff
The March low at 17,620
The 200 day SMA at 17,424
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
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
April 24 - Friday
Durable Orders, March (8:30): 4.0% actual versus 0.5% expected, -1.4% prior
Durable Goods -ex tr, March (8:30): -0.2% actual versus 0.4% expected, -1.3% prior (revised from -0.6%)
April 28 - Tuesday
Case-Shiller 20-city, February (9:00): 4.7% expected, 4.6% prior
Consumer Confidence, April (10:00): 102.2 expected, 101.3 prior
April 29 - Wednesday
MBA Mortgage Index, 04/25 (7:00): 2.3% prior
GDP-Adv., Q1 (8:30): 1.1% expected, 2.2% prior
Chain Deflator-Adv., Q1 (8:30): 0.5% expected, 0.1% prior
Pending Home Sales, March (10:00): 1.6% expected, 3.1% prior
Crude Inventories, 04/25 (10:30): 5.315M prior
FOMC Rate Decision, April (14:00): 0.25% expected, 0.25% prior
April 30 - Thursday
Initial Claims, 04/25 (8:30): 290K expected, 295K prior
Continuing Claims, 04/18 (8:30): 2318K expected, 2325K prior
Personal Income, March (8:30): 0.2% expected, 0.4% prior
Personal Spending, March (8:30): 0.5% expected, 0.1% prior
PCE Prices - Core, March (8:30): 0.2% expected, 0.1% prior
Employment Cost Inde, Q1 (8:30): 0.6% expected, 0.6% prior
Chicago PMI, April (9:45): 50.0 expected, 46.3 prior
Natural Gas Inventor, 04/25 (10:30): 90 bcf prior
May 1 - Friday
ISM Index, April (10:00): 52.0 expected, 51.5 prior
Construction Spending, March (10:00): 0.4% expected, -0.1% prior
Michigan Sentiment - Final, April (10:00): 96.0 expected, 95.9 prior
Auto Sales, April (17:00): 5.4M prior
Truck Sales, April (17:00): 8.2M prior
End part 1 of 3
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