* * * *
5/30/2015 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: SIMO
Buy alerts: EYES, KE, CLX
Trailing stops: None issued
Stop alerts: None issued
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
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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
- Stocks, sans semiconductors, sag a bit to end the month on a Russell rebalance.
- GDP slips negative as expected, but not as negative as expected.
- Chicago PMI turns to contraction, but Michigan sentiment all smiles again.
- Market continues trending higher but very choppy, very slow, very mistrusted.
- Chips and techs along with drugs/healthcare leading as they should in summer. Will that be enough?
Friday stocks sagged back a bit more from the Wednesday SOX/NASDAQ-led move, leaving SP500, DJ30 and SP400 basically where they were after the Tuesday selling. SOX, NASDAQ, and RUTX on the other hand held up quite well, leaving themselves in position for next week and the start of June. The question, of course, is whether the new month brings new money, and after that is put to work, whether the moves hold and more money follows. It is the true start of summer, and the market will need SOX and NASDAQ to continue to lead as summer is the time for techs.
SP500 -13.40, -0.63%
NASDAQ -27.95, -0.55%
DJ30 -115.44, -0.64%
SP400 -0.63%
RUTX -0.52%
SOX 0.29%
VOLUME: Surged but it was the Russell rebalance. NYSE +74%. NASDAQ +13%.
A/D: NYSE -2.2:1, NASDAQ -1.7:1. Nothing really bad.
Again SOX was the leader even though it was up just two points. The rest of the market was in pretty solid shape, recovering into midday and again coming back in the last hour from some afternoon weakness. Then the Russell rebalance took over and stocks faded while volume exploded.
The result left the NYSE indexes struggling at the early week lows and indeed DJ30 closed at a lower low below the 50 day EMA and SMA. It doesn't look great, and with DJ20 transports breaking lower on the week and closing with a lower low, DJ30 remains on thin ice. SP500 and SP400? Not bad, holding over the 50 day EMA and still looking good enough to put in higher lows and continue the trend higher. That appears to be a hated prospect by most market commentators.
NASDAQ was down but it looks good, holding the 10 day EMA on the close, coming off the January trendline touched on the low. Bumped that higher high, could not hold it, but not giving in, not yet. SOX showed a second doji. After the run off the early May low, the huge surge Wednesday, perhaps this signals SOX is ready to take a rest near term. As chips have driven the market, that takes a major upside force out of play for a bit and that would suggest the market tests.
That remains to be seen. Chips finished the week strong. SWKS, NXPI, AVGO, SIMO, FSL. Others are testing great moves, e.g. AAOI, XLNX. The new month and the last month of Q2 could see new money put to work in these winners and other techs in good position, e.g. software. We would like to use that to take some gain off the table in the chips, then see if they test. As of Friday, however, the moves looked still very strong and we preferred letting them work into early June. After all, we have banked some money on them already so we want to see if they can continue to lead into summer as techs, and chips are tech, are the boys of summer for the market, so to speak.
THE NEWS/ECONOMY
Q1 GDP Revised negative, but only to -0.7% (pre-second seasonal adjusting)
After 2.2% in Q4, negative in Q1 is no way to start a year. But, not to worry because the seasonally adjusted numbers are going to be seasonally readjusted to eliminate the purportedly built in negative bias. We had a saying when I practiced law: good facts, argue the facts. Bad facts, argue the law. Thing is, you could not change the facts. With the federal government, apparently you can.
Real final sales (sales ex-inventories): -1.1%. For comparison, in Q1 2014 final sales fell 1.0%. The decline is the largest since -3.3% in Q1 2009. That does not bode well for 2015: growth is the worst since the 2008 depression started.
Inventories: $95B versus 110.2B initially reported. That means inventories added only 0.33% versus 0.74% as initially reported. This was the largest impact on the revision. Now, without inventories GDP would be -3+%.
Personal Consumption: 1.8% versus 2% expected. In Q1 2014 it was -2.11%. Hey, improvement!
Corporate Profits: -$125.5B versus -$30.4B in Q4 2014.
This is the third large profits crash since the Depression began. Not so bad, right? Here is the issue: this crash is on the heels of a massive crash in Q1 2014. The prior was in 2011. In other words, it looks as if the profits uptrend is starting to falter.
As some put it, this was the worst quarter of economic 'growth' since the depression started.
Under the current Administration, economic growth has averaged 1.8% per quarter. 1.8%!
'1.8 G** D*** Percent is all the GDP growth we got?' -- Bob Uecker as Harry Doyle, the Cleveland Indian's radio announcer in 'Major League' (1989)
Michigan Sentiment falls but beats the first read. At the same time, Chicago PMI turns sharply into contraction.
Michigan Sentiment fell but it rose from the preliminary reading. Still over 90; not huge, not terrible.
Contrast that with the Chicago PMI, sliding into contraction at 46.2 from 52.3 in April.
The Chicago PMI covers the Midwest and the auto making Michigan area. This underscores just how sentiment has virtually zero use in economic review except at major extremes, i.e. in the 40's or 50's when times are bad.
SUMMARY: Now all of this is spun into positives by our leaders. As announced last week, GDP will be re-revised or re-readjusted in order to raise it in Q1. Talked about this earlier: bad facts/bad law.
So how do we know what is really the answer in terms of the economy? Well, the jobs market is HUGE in terms of a tell: One-half of Americans on food stamps, over 100M working aged Americans out of the workforce altogether.
Okay, that helps put it in perspective, but let's look at social issues, those that are a tell in bad times: the crime rate or the murder rate. In bad times tempers are short, people get desperate, very bad emotional decisions are made.
Murders are exploding. NYC just reported a 15% increase in 2015. Houston +60% in 2015. Cities where social strife has occurred such as Baltimore make the NYC and the Houston numbers look tame.
Some will say, 'yes, but these are nowhere near the levels of the 1980's and 1990's.' True, but they are spiking of late when half the US is on Food Stamps and over 100M are not only out of work but out of the workforce altogether. That makes those weekly jobless claims numbers at 40 year lows rather meaningless. You have to have SOMEBODY working; you cannot fire them all.
Of course with initiatives such as the $15/hour minimum wage, there will be more layoffs and also less jobs for the high school and college kids because automation will take over. A story today discussed how several WHITE COLLAR jobs can already be performed by robots. I recall clerking in a law firm many, many years ago and one of the partners telling the fellow who ran the copy rooms that if the huge copiers they had could talk the copy room manager would be out of a job. Harsh, but the ring of truth. That irony of raising wages for jobs that were never intended to be destination 'living wage' jobs only to see that higher wage hasten the elimination of those jobs.
THE MARKET
CHARTS
NASDAQ: It is said summer is the time for techs and over the past three weeks as Memorial Day approached and arrived NASDAQ has performed well, pushing to a new closing high Wednesday. While it faded into Friday, it held the January up trendline and closed the session at the 10 day EMA. Higher low after the Tuesday selling, pushing higher, now a modest test. It is still basically a double top even after this week. That means NASDAQ still has to prove it can rally further. It has the horses to do it with chips, software, healthcare, telecom, but they have to make the move and overcome the lower volume on the highs and he lower MACD.
SOX: Led the market with that Wednesday surge and added modest gains Thursday and Friday. New long-term high with these stocks energized by the AVGO/BRCM deal, but it was more than that. These stocks were up ahead of the Wednesday move and they continued higher through Friday.
SP500: Fell to the 50 day EMA Tuesday, rebounded, then faded Friday back near the 50 day. Not a big week, indeed a down week, but still trending higher up a key support level. Of course it has to prove it can hold it -- again -- but financial stocks continue sporting solid patterns along with drug stocks, and if they continue higher then SP500 can continue higher as well. Another important test, and it has the same issues, e.g. low volume on the new high two weeks back, MACD lagging. Yet it keeps overcoming these obstacles.
RUTX: Not the prettiest pattern and had to fight off a Tuesday break of the 50 day EMA. It did, however, do just that, bouncing Wednesday and then holding the move into the weekend. Yes it sold Friday but it also recovered off the intraday low, showing some tenacity. Higher low and we will see if it can build off of that.
SP400: The midcaps show the same action as SP500, bouncing off the 50 day EMA hit Tuesday then selling back to that level Friday. Not great, but still trending higher and the midcaps are holding where they need to. Kind of the same analysis as the SP500.
DJ30: The one index that did not hold the Tuesday low, cracking through both 50 day MA. Recovered some off the low but you have to note the breach of this support. It did this in early May but recovered. Same heavy look now but it will have to show it can make that move.
LEADERSHIP
Chips, drugs, software, healthcare, financial, telecom
Chips: Again the clear leader and market driver, the semiconductors. While many stocks that rallied on the week faded Friday, many chips continued higher, showing the sector's strength. NXPI added another 1.3%. SWKS added 1.6%. FSL added 1.2%. SIMO added 3.8%. AVGO 4%. QRVO was not up as it continued testing its big two week move. Strong sector.
Software: Some good moves on the week, some status quo. Set up very well, just needs to move. FEYE up nicely on the week though flat Friday. SPLK struggled after earnings but held support and rebounded to cut a good part of the loss and hold its range. VDSI tested the breakout at the 20 day EMA, starting to bounce. VMW tested the 50 day EMA midweek, bouncing. FFIV is still in the test at the 20 day EMA. Good, but they need to move.
Drugs/biotech: TTPH tried to break higher, faded and still in a good test. BCRX in a nice flag after breaking the 200 day SMA upside. AGIO a solid week, testing Friday. REGN testing a good move. HZNP also testing a break higher. CRIS moving well again. CLVS holding its pullback. Very up and down in biotech with drugs a better looking group.
Financial: GS testing the 10 day EMA as it holds a strong trend higher. MA holding the 20 day EMA on a test of its April to May move. BAC testing the 200 day SMA it broke through. NOAH still a nice 50 day EMA test.
Internet: GIMO testing a great move. LLNW a strong week. VIPS is getting interesting with a double bottom.
Big Names: EBAY breaking to a higher high on volume. AAPL testing the 10 day EMA after a decent two week advance. AMZN still working laterally along the 20 day EMA in its pattern. MSFT still working on a 5 week pennant, setting up nicely.
MARKET STATISTICS
NASDAQ
Stats: -27.95 points (-0.55%) to close at 5070.03
Volume: 1.893B (+13.06%)
Up Volume: 771.97M (-34.97M)
Down Volume: 1.24B (+336.15M)
A/D and Hi/Lo: Decliners led 1.65 to 1
Previous Session: Decliners led 1.14 to 1
New Highs: 85 (-6)
New Lows: 41 (-9)
S&P
Stats: -13.4 points (-0.63%) to close at 2107.39
NYSE Volume: 1.2B (+73.84%)
A/D and Hi/Lo: Decliners led 2.16 to 1
Previous Session: Decliners led 1.4 to 1
New Highs: 49 (-12)
New Lows: 59 (+2)
DJ30
Stats: -115.44 points (-0.64%) to close at 18010.68
SENTIMENT INDICATORS
VIX: 13.84; +0.53
VXN: 14.75; +0.53
VXO: 14.46; +0.86
Put/Call Ratio (CBOE): 1.16; +0.08. Now four sessions straight of 1.0+ closes. Getting a good string of negative sentiment that can help foster a new upside move.
Bulls and Bears: Bulls surge, bears fall right back down.
Bulls: 48.5% versus 50.6% versus 47.5% versus 52.5%
Bouncing up and down each week, the kind of volatility that shows indecision and that is not bad. The bulls are not so cock-sure of themselves anymore.
Bears: 14.9% versus 15.8% versus 15.8% versus 13.9%
Okay, the bears decline as the bulls decline. Bulls less bullish, bears less bearish. Still feeling the Fed is there with the Fed put? Whatever the reason, bears are still too low.
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: 40.5%
50.6% versus 47.5% versus 52.5% versus 57.4% versus 52.5% versus 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.
Bears: 14.9%
15.8% versus 13.9% versus 13.9% versus 15.2% versus 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%
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): 2.10% versus 2.137% versus 2.133%. Gapped upside on the weaker GDP and Chicago PMI data. Faded the move but holding the 1.5 week rebound off the mid-May low.
Historical: 2.137% versus 2.133% versus 2.13% versus 2.21% versus 2.19% versus 2.25% versus 2.294% versus 2.22% versus 2.15% versus 2.23% versus 2.28% versus 2.26% versus 2.283% versus 2.14% versus 2.18% versus 2.23% versus 2.17% versus 2.15% versus 2.11% versus 2.04% versus 2.05% versus 1.99% versus 1.92%
Euro/$: 1.0985 versus 1.0945. Tight doji at the 50 day SMA, testing after breaking over that level Tuesday. That capped that part of the recovery and this looks very much like a 1-2-3 test of that move, setting up a run at the March/April highs.
Historical: 1.0945 versus 1.0904 versus 1.0878 versus 1.1012 versus 1.1111 versus 1.1093 versus 1.1149 versus 1.1314 versus 1.1449 versus 1.1408 versus 1.1311 versus 1.1207 versus 1.1152 versus 1.1207 versus 1.1266 versus 1.1349 versus 1.1189 versus 1.1147 versus 1.1215 versus 1.1220 versus 1.119 versus 1.0982 versus 1.0885 versus 1.0862 versus 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
Oil: 60.26, +2.57. After a week testing down to the 50 day EMA on the Thursday intraday low (and showing a nice doji with tail), oil surged back upside to the top portion of the May range. Strong rebound as the rig count resumed its decline.
Gold: 1190.10, +1.90. After the Tuesday crash through the 50 day MA, a modest 1-2-3 bounce to test that move, tapping at the 50 day SMA on the Friday high, fading to a doji. Gold rallied but failed.
$/JPY: 124.10 versus 123.85 versus 124.12. After the Thursday stall, bounced back upside Friday, but the dollar looks a bit winded near term after its big breakout and run the past two weeks. A pause would be normal, but after any test it is still in a good trend higher.
Historical: 123.85 versus 124.12 versus 124.15 versus 123.11 versus 121.53 versus 121.09 versus 121.35 versus 120.71 versus 119.99 versus 119.33 versus 119.18 versus 119.11 versus 119.93 versus 120.13 versus 119.75 versus 119.75 versus 119.43 versus 119.85 versus 120.12
NEXT WEEK
Friday we picked up some EYES highlighted in the Thursday report along with KE and some CLX puts. That is the summer bifurcation: medical and techs move higher, consumer moves lower. Banked some gain on SIMO as it continued higher above our initial target; maybe should have waited, but we wanted to bank part of the gain on a strong 16+% move on the week.
Again, we now see what the new month, the last of the quarter and the start of summer, brings to the move. Ever since the rally off the October Ebola low stocks have moved higher, but slowly, slowly, unable to hold moves to higher highs, but also not giving up the moves. Threatened to, but found leadership, the last move from midcaps then chips and techs.
Now the next test. Overall the action seems heavy, unable to hold higher highs. Perhaps the market is eroding its support with the slow, somewhat volatile climb. That is what experience says, and thus we will look at taking some more gain off the table as new money is put to work for June. After that, we see how the market holds, and most importantly, how the current leaders hold their patterns and whether new leaders can enter. They set up to do so but then got some cold feet. Some great setups, but they are, as we know, just pretty pictures until they make their moves.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5070.03
Resistance:
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
Support:
5044 is the January to April pattern trendline
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
The 50 day EMA at 4996
4912 the mid-April China dip
The March lows at 4843 and 4825
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 4743
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 2107.39
Resistance:
2115 is the late March lower high
2119.59 is the February intraday prior all-time high
2126 was the April prior all-time high
2135 is the May 2015 all-time high
Support:
The 50 day EMA at 2101
2094 is the December 2014 high, the prior all-time high
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 2042
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 18,010.68
Resistance:
The 50 day EMA at 18,044
18,104 is the December high
18,206 is the late March lower high
18,289 is the March 2015 high, the prior all-time high
18,351 is the May 2015 all-time high
Support:
17,991 is the early December interim
The January trendline at 17,979
17,923 is the January 2015 lower high
17,748 is the mid-April China margin selloff
The March low at 17,620
The 200 day SMA at 17,578
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
ECONOMIC CALENDAR
May 29 - Friday
GDP - Second Estimate, Q1 (8:30): -0.7% actual versus -0.7% expected, 0.2% prior
GDP Deflator - Second, Q1 (8:30): -0.1% actual versus -0.1% expected, -0.1% prior
Chicago PMI, May (9:45): 46.2 actual versus 53.0 expected, 52.3 prior
Michigan Sentiment - Final, May (10:00): 90.7 actual versus 89.0 expected, 88.6 preliminary
June 1 - Monday
Personal Income, April (8:30): 0.3% expected, 0.0% prior
Personal Spending, April (8:30): 0.2% expected, 0.4% prior
PCE Prices - Core, April (8:30): 0.2% expected, 0.1% prior
ISM Index, May (10:00): 51.9 expected, 51.5 prior
Construction Spendin, April (10:00): 0.8% expected, -0.6% prior
June 2 - Tuesday
Factory Orders, April (10:00): 0.0% expected, 2.1% prior
Auto Sales, May (17:00): 5.3M prior
Truck Sales, May (17:00): 7.9M prior
June 3 - Wednesday
MBA Mortgage Index, 05/30 (7:00): -1.6% prior
ADP Employment Chang, May (8:15): 200K expected, 169K prior
Trade Balance, April (8:30): -$44.0B expected, -$51.4B prior
ISM Services, May (10:00): 57.1 expected, 57.8 prior
Crude Inventories, 05/30 (10:30): -2.802M prior
June 4 - Thursday
Challenger Job Cuts, May (7:30): 52.8% prior
Initial Claims, 05/30 (8:30): 280K expected, 282K prior
Continuing Claims, 05/23 (8:30): 2215K expected, 2222K prior
Productivity-Rev., Q1 (8:30): -2.9% expected, -1.9% prior
Unit Labor Costs - R, Q1 (8:30): 5.9% expected, 5.0% prior
Natural Gas Inventor, 05/30 (10:30): 112 bcf prior
June 5 - Friday
Nonfarm Payrolls, May (8:30): 225K expected, 223K prior
Nonfarm Private Payr, May (8:30): 225K expected, 213K prior
Unemployment Rate, May (8:30): 5.4% expected, 5.4% prior
Hourly Earnings, May (8:30): 0.2% expected, 0.1% prior
Average Workweek, May (8:30): 34.5 expected, 34.5 prior
Consumer Credit, April (14:00): $17.0B expected, $20.5B prior
End part 1 of 3
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Saturday, May 30, 2015
Saturday, May 23, 2015
The Daily, Part 1 of 3, 5-23-15
* * * *
5/23/2015 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: LLNW; QRVO; SWKS
Buy alerts: None issued
Trailing stops: None issued
Stop alerts: None issued
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 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
- More of the same: no index movement but the leaders are surging or ready to surge.
- Yellen says a rate hike is coming this year, rehashing her prior statement, trying to get to an early holiday weekend.
- CPI core jumps thanks to the ACA finally taking effect after pushing back the start.
- So much distrust of this move yet so many good looking stocks.
Friday the stock indices didn't do much of a thing. SOX posted a gain, but it was the lone ranger in that regard. After a solid Monday and Thursday move, Friday fit the pattern: a strong move then a day or two of nothing.
SP500: -4.76, -0.22%
NASDAQ -1.43, -0.03%
DJ30 -53.72, -0.29%
SP400 -0.08%
RUTX -0.36%
SOX 0.24%
VOLUME: Holiday light. NYSE -12%, NASDAQ -8%
A/D: NYSE -1.7:1, NASDAQ -1.3:1.
Nothing for the indexes. Leaders performed Friday as they have been doing since the stock indexes saved themselves from collapse in early May. Solid leaders stepped up and took the point. QRVO gapped upside, SPLK gapped, etc. They have kept it up since, posting nice gains, testing, surging again. Others that led early are set up to lead again. Some that lead early, e.g. QRVO, are surging already. Leadership is moving in waves and that is the sign of a healthy market.
The thing is, on any given day while there are leaders moving well the majority of stocks are doing little. Some days they put it together and everything is up. On the 'in between' days, those days were stocks pause after rallies, some of the leaders are moving, just not enough to push the entire market.
That keeps this current market, in our opinion, misunderstood or at least under appreciated. As with February, if you are in the stocks that are moving, you are doing well. If you are in an SP500 or other ETF, you are likely a bit frustrated with the action.
Thus a lot of commentary about a not so great market even though higher highs are logged on some indexes. As I have said, we here are not that wild about the overall market action and the indicators. MACD is not following the indexes to highs, breadth has turned weak, and volume lags.
Of course there are many quality stocks that set up patterns to move higher and are doing so. Others set up behind them and are moving, and still others are currently in great position to move higher and pitch in their support as well. QRVO, BABA, SWKS, FEYE, VDSI, NXPI, AAOI are a few moving well. CLVS, FFIV, QIWI, SCHN, SOHU, STMP and others are set up to break higher once again.
Out of the confusion stocks rise?
These moves are occurring in the midst of almost mind-blowing economic, political, and geopolitical turmoil.
The Fed is going to go about restating how it adjusts GDP because it feels Q1 GDP has been too low too many times. Maybe that is just the new normal for our economy that is nowhere near performing or acting as it used to.
CPI is viewed as tame as the core annual remains at 1.8%. Yet the month over month rose 0.3%, the most since March 2006. The driver? Medical costs surging 0.7% in April, the biggest move since January 2007. Moreover, expenses are almost at a 21 year high!
What happened? The ACA is not so affordable. Anyone who looked at the law realized expenses would explode, but the key implementation was pushed back time and again for political convenience, i.e. give waivers, etc. until after the last election. Now there is no way things can be pushed out further, and the prices are spiking. We are reading students of the industry who are writing that this is just the beginning, that prices are, as many anticipated, going to explode.
Losing the war in Syria, outmaneuvered by Russia, China South China Sea military base gambit threatening the next major war, Kansas limiting ATM withdrawals to $25, the Fed steadfast it will raise rates, email accounts of our highest officials hacked and inexcusably unsecure. Over 100M Americans on food stamps, 91.3M worker aged citizens out of the workforce. The list goes on and on.
Yet . . . stocks are working higher. Classic 'wall of worry' action. Things looked bad with the volatility, but just as they were set to break down stocks held and moved higher. No one it seems likes the market, no one thinks it is worth a darn, but leaders are working and we have been buying. Thus Friday, after some strong upside moves, were able to bank some gain on the likes of QRVO, SWKS, LLNW as other leaders continue running higher.
Who knows what is going to happen. This move could suddenly end next week. It is somewhat amusing how those on the financial stations pan the action and then act surprised to see some stocks that are rallying well. We were not wild about the market action, but quality stocks flashed the 'buy me' signals. Then others followed. There are still others ready to move in and support the upside as well. Friday was nothing great for the indexes, but leaders again moved. I don't know what you call it, but we here know you play the leaders when they show they should be played.
Out of the confusion the leaders are emerging to the upside.
THE MARKET
CHARTS
Still low MACD, low volume, some struggling at prior highs, but also some really nice tests of the last move, refusing to give up ground.
NASDAQ: Doji after pushing higher, closing with a modest loss on very low volume. Bumped the prior high on the week, could not push through. Lower MACD, volume, at the prior high. Doesn't look at that promising with a double top, but that is always the case when an index tries for a new high. Critical point but NASDAQ has leadership in position to take the index higher.
SOX: Modest gain as SOX cleared the April peak last week, taking a leadership role in the market. Many chips are performing very well. Still room to work higher to the February and March peaks another 15 points higher.
SP500: Didn't move up Friday, but did not suffer. Working laterally Tuesday to Friday, holding the highs. In great position to make the next move higher.
DJ30: Nice 10 day EMA test on light trade. This after a good move higher into Tuesday. Nice fade, in great position to move back up.
RUTX: Lateral move Tuesday to Friday similar to SP500. Holding over the 50 day SMA and the 10 day EMA and in position to at least make a run at the prior high.
SP400: After the Monday move to a new nigh, a very nice tight lateral move into Friday. Excellent setup to make the next break higher.
LEADERSHIP
Great stocks moving, others in position to move.
Chips: A good week for many. AAOI and QRVO blasted higher Friday. NXPI had a good week, SWKS blasted higher early and held the gains into the weekend, FSL broke higher on Thursday. Some very nice moves.
Software: Some good moves, some good setups. Some really good setups. FEYE blasting higher out of its triangle. VDSI bounced Friday off a test of the breakout move through Monday. Others are setup well, e.g. FFIV, SPLK, VMW.
Internet: GOOG is trying to help. BITA is breaking higher. LLNW is still strong.
Telecom: Looking better and better. CAMP surging for us. VIP is in position to rally well.
Metals: Setting back up. AKS and SID at the 50 day EMA; can play either off this move.
Generally good position to move: CLVS, FFIV, SCHN, QIWI, SOHU, STMP, ZBB.
MARKET STATISTICS
NASDAQ
Stats: -1.43 points (-0.03%) to close at 5089.36
Volume: 1.515B (-7.68%)
Up Volume: 807.43M (-158.79M)
Down Volume: 694.09M (+15.66M)
A/D and Hi/Lo: Decliners led 1.33 to 1
Previous Session: Advancers led 1.01 to 1
New Highs: 81 (-10)
New Lows: 51 (-3)
S&P
Stats: -4.76 points (-0.22%) to close at 2126.06
NYSE Volume: 617.9M (-12.73%)
A/D and Hi/Lo: Decliners led 1.7 to 1
Previous Session: Advancers led 1.24 to 1
New Highs: 75 (+3)
New Lows: 51 (+25)
DJ30
Stats: -53.72 points (-0.29%) to close at 18232.02
SENTIMENT INDICATORS
VIX: 12.13; +0.02
VXN: 13.23; -0.15
VXO: 12.6; +0.45
Put/Call Ratio (CBOE): 0.89; -0.04
Bulls and Bears: Bulls surge, bears fall right back down.
Bulls: 50.6% versus 47.5% versus 52.5%
After the rather sharp drop, back up over 50%.
Bears: 15.8% versus 15.8% versus 13.9%
At least they held the highs last seen in October 2014.
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: 50.6%
47.5% versus 52.5% versus 57.4% versus 52.5% versus 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.
Bears: 15.8%
15.8% versus 13.9% versus 13.9% versus 15.2% versus 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.
OTHER MARKETS
Bonds (10 year): 2.21% versus 2.19%. Rebounded on the week, trying an oversold bounce. Still down in the dumps.
2.19% versus 2.25% versus 2.294% versus 2.22% versus 2.15% versus 2.23% versus 2.28% versus 2.26% versus 2.283% versus 2.14% versus 2.18% versus 2.23% versus 2.17% versus 2.15% versus 2.11% versus 2.04% versus 2.05% versus 1.99% versus 1.92% versus 1.92% versus 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%
Euro/$: 1.1012 versus 1.1111. Dollar breaking up through the 50 day EMA as the week was . . . strong.
1.1111 versus 1.1093 versus 1.1149 versus 1.1314 versus 1.1449 versus 1.1408 versus 1.1311 versus 1.1207 versus 1.1152 versus 1.1207 versus 1.1266 versus 1.1349 versus 1.1189 versus 1.1147 versus 1.1215 versus 1.1220 versus 1.119 versus 1.0982 versus 1.0885 versus 1.0862 versus 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
Oil: 59.72, -1.00. Modest fade after that strong Thursday bounce from the 20 day EMA.
Gold: 1204.00, -0.10. Holding the 10 day EMA on a test of that sharp surge two weeks back.
$/JPY: 121.53 versus 121.09. After a pause Thursday from the big move to that point, USD took off again and eclipsed the early March closing high.
121.09 versus 121.35 versus 120.71 versus 119.99 versus 119.33 versus 119.18 versus 119.11 versus 119.93 versus 120.13 versus 119.75 versus 119.75 versus 119.43 versus 119.85 versus 120.12 versus 120.16 versus 119.41 versus 119.02 versus 118.45 versus 119.10 versus 118.91 versus 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
MONDAY
Another week of data, Fed speeches, geopolitics, domestic politics. And more to come this week.
Through it all the market has held and moved higher to indeed, higher highs. There are stocks in position to continue the move. Does not seem logical, but in May the indices hit higher highs and leaders are moving well.
Ah, but the market doesn't do what is logical, even what is historically logical. At least not when most expect it. There likely is a selloff coming, but it will likely come when the rest of those out there doubting this move throw in. Once they are all in, there is nothing else to drive it. Then the move runs out of gas, runs out of money.
For now we see plenty of stocks in position to move and the list of leader potential is spreading out some to include telecom, chemicals, and more areas of tech and even industrials. Heck, even the shippers look good. Take a look at DSX, in a double bottom with handle formed since December. Broke higher this month and is testing. It didn't make the cut this week but it could have. Watch it; we are. DRYS is another shipper. Long, long decline but MACD turned and it gapped higher two weeks back over the 50 day EMA and has formed a handle to its own double bottom. Watch it as well. If it moves don't wait for a play.
See? Lots of new movers in terms of leaders that have made moves and are testing, others hitting highs, yet others just now turning the corner. All of these drive rallies, and despite all of the gloom, issues, and negative possibilities, these darn things continue to set up.
Have a great Memorial Day!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5089.36
Resistance:
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
Support:
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5006 is the January to April pattern trendline
The 50 day EMA at 4981
4912 the mid-April China dip
The March lows at 4843 and 4825
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 4728
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 2126.06
Resistance:
2126 was the April new all-time high
Support:
2119.59 is the February intraday prior all-time high
2115 is the late March lower high
The 50 day EMA at 2099
2094 is the December 2014 high, the prior all-time high
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 2038
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 18,232.02
Resistance:
18,289 is the March 2015 high, the prior all-time high
Support:
18,206 is the late March lower high
18,104 is the December high
The 50 day EMA at 18,037
17,991 is the early December interim
The January trendline at 17,979
17,923 is the January 2015 lower high
17,748 is the mid-April China margin selloff
The March low at 17,620
The 200 day SMA at 17,547
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
ECONOMIC CALENDAR
May 22 - Friday
CPI, April (8:30): 0.1% expected, 0.2% prior
Core CPI, April (8:30): 0.2% expected, 0.2% prior
May 26 - Tuesday
Durable Orders, April (8:30): -0.6% expected, 4.4% prior (revised from 4.0%)
Durable Goods -ex tr, April (8:30): 0.3% expected, 0.4% prior (revised from -0.2%)
Case-Shiller 20-city, March (9:00): 4.6% expected, 5.0% prior
FHFA Housing Price I, March (9:00): 0.7% prior
New Home Sales, April (10:00): 510K expected, 481K prior
Consumer Confidence, May (10:00): 94.0 expected, 95.2 prior
May 27 - Wednesday
MBA Mortgage Index, 05/23 (7:00): -1.5% prior
May 28 - Thursday
Initial Claims, 05/23 (8:30): 274K expected, 274K prior
Continuing Claims, 05/16 (8:30): 2250K expected, 2211K prior
Pending Home Sales, April (10:00): 1.0% expected, 1.1% prior
Natural Gas Inventor, 05/23 (10:30): 92 bcf prior
Crude Inventories, 05/23 (11:00): -2.674M prior
May 29 - Friday
GDP - Second Estimat, Q1 (8:30): -0.7% expected, 0.2% prior
GDP Deflator - Secon, Q1 (8:30): -0.1% expected, -0.1% prior
Chicago PMI, May (9:45): 53.0 expected, 52.3 prior
Michigan Sentiment -, May (10:00): 89.0 expected, 88.6 prior
End part 1 of 3
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5/23/2015 Investment House Report
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MARKET ALERTS:
Targets hit: LLNW; QRVO; SWKS
Buy alerts: None issued
Trailing stops: None issued
Stop alerts: None issued
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
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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
- More of the same: no index movement but the leaders are surging or ready to surge.
- Yellen says a rate hike is coming this year, rehashing her prior statement, trying to get to an early holiday weekend.
- CPI core jumps thanks to the ACA finally taking effect after pushing back the start.
- So much distrust of this move yet so many good looking stocks.
Friday the stock indices didn't do much of a thing. SOX posted a gain, but it was the lone ranger in that regard. After a solid Monday and Thursday move, Friday fit the pattern: a strong move then a day or two of nothing.
SP500: -4.76, -0.22%
NASDAQ -1.43, -0.03%
DJ30 -53.72, -0.29%
SP400 -0.08%
RUTX -0.36%
SOX 0.24%
VOLUME: Holiday light. NYSE -12%, NASDAQ -8%
A/D: NYSE -1.7:1, NASDAQ -1.3:1.
Nothing for the indexes. Leaders performed Friday as they have been doing since the stock indexes saved themselves from collapse in early May. Solid leaders stepped up and took the point. QRVO gapped upside, SPLK gapped, etc. They have kept it up since, posting nice gains, testing, surging again. Others that led early are set up to lead again. Some that lead early, e.g. QRVO, are surging already. Leadership is moving in waves and that is the sign of a healthy market.
The thing is, on any given day while there are leaders moving well the majority of stocks are doing little. Some days they put it together and everything is up. On the 'in between' days, those days were stocks pause after rallies, some of the leaders are moving, just not enough to push the entire market.
That keeps this current market, in our opinion, misunderstood or at least under appreciated. As with February, if you are in the stocks that are moving, you are doing well. If you are in an SP500 or other ETF, you are likely a bit frustrated with the action.
Thus a lot of commentary about a not so great market even though higher highs are logged on some indexes. As I have said, we here are not that wild about the overall market action and the indicators. MACD is not following the indexes to highs, breadth has turned weak, and volume lags.
Of course there are many quality stocks that set up patterns to move higher and are doing so. Others set up behind them and are moving, and still others are currently in great position to move higher and pitch in their support as well. QRVO, BABA, SWKS, FEYE, VDSI, NXPI, AAOI are a few moving well. CLVS, FFIV, QIWI, SCHN, SOHU, STMP and others are set up to break higher once again.
Out of the confusion stocks rise?
These moves are occurring in the midst of almost mind-blowing economic, political, and geopolitical turmoil.
The Fed is going to go about restating how it adjusts GDP because it feels Q1 GDP has been too low too many times. Maybe that is just the new normal for our economy that is nowhere near performing or acting as it used to.
CPI is viewed as tame as the core annual remains at 1.8%. Yet the month over month rose 0.3%, the most since March 2006. The driver? Medical costs surging 0.7% in April, the biggest move since January 2007. Moreover, expenses are almost at a 21 year high!
What happened? The ACA is not so affordable. Anyone who looked at the law realized expenses would explode, but the key implementation was pushed back time and again for political convenience, i.e. give waivers, etc. until after the last election. Now there is no way things can be pushed out further, and the prices are spiking. We are reading students of the industry who are writing that this is just the beginning, that prices are, as many anticipated, going to explode.
Losing the war in Syria, outmaneuvered by Russia, China South China Sea military base gambit threatening the next major war, Kansas limiting ATM withdrawals to $25, the Fed steadfast it will raise rates, email accounts of our highest officials hacked and inexcusably unsecure. Over 100M Americans on food stamps, 91.3M worker aged citizens out of the workforce. The list goes on and on.
Yet . . . stocks are working higher. Classic 'wall of worry' action. Things looked bad with the volatility, but just as they were set to break down stocks held and moved higher. No one it seems likes the market, no one thinks it is worth a darn, but leaders are working and we have been buying. Thus Friday, after some strong upside moves, were able to bank some gain on the likes of QRVO, SWKS, LLNW as other leaders continue running higher.
Who knows what is going to happen. This move could suddenly end next week. It is somewhat amusing how those on the financial stations pan the action and then act surprised to see some stocks that are rallying well. We were not wild about the market action, but quality stocks flashed the 'buy me' signals. Then others followed. There are still others ready to move in and support the upside as well. Friday was nothing great for the indexes, but leaders again moved. I don't know what you call it, but we here know you play the leaders when they show they should be played.
Out of the confusion the leaders are emerging to the upside.
THE MARKET
CHARTS
Still low MACD, low volume, some struggling at prior highs, but also some really nice tests of the last move, refusing to give up ground.
NASDAQ: Doji after pushing higher, closing with a modest loss on very low volume. Bumped the prior high on the week, could not push through. Lower MACD, volume, at the prior high. Doesn't look at that promising with a double top, but that is always the case when an index tries for a new high. Critical point but NASDAQ has leadership in position to take the index higher.
SOX: Modest gain as SOX cleared the April peak last week, taking a leadership role in the market. Many chips are performing very well. Still room to work higher to the February and March peaks another 15 points higher.
SP500: Didn't move up Friday, but did not suffer. Working laterally Tuesday to Friday, holding the highs. In great position to make the next move higher.
DJ30: Nice 10 day EMA test on light trade. This after a good move higher into Tuesday. Nice fade, in great position to move back up.
RUTX: Lateral move Tuesday to Friday similar to SP500. Holding over the 50 day SMA and the 10 day EMA and in position to at least make a run at the prior high.
SP400: After the Monday move to a new nigh, a very nice tight lateral move into Friday. Excellent setup to make the next break higher.
LEADERSHIP
Great stocks moving, others in position to move.
Chips: A good week for many. AAOI and QRVO blasted higher Friday. NXPI had a good week, SWKS blasted higher early and held the gains into the weekend, FSL broke higher on Thursday. Some very nice moves.
Software: Some good moves, some good setups. Some really good setups. FEYE blasting higher out of its triangle. VDSI bounced Friday off a test of the breakout move through Monday. Others are setup well, e.g. FFIV, SPLK, VMW.
Internet: GOOG is trying to help. BITA is breaking higher. LLNW is still strong.
Telecom: Looking better and better. CAMP surging for us. VIP is in position to rally well.
Metals: Setting back up. AKS and SID at the 50 day EMA; can play either off this move.
Generally good position to move: CLVS, FFIV, SCHN, QIWI, SOHU, STMP, ZBB.
MARKET STATISTICS
NASDAQ
Stats: -1.43 points (-0.03%) to close at 5089.36
Volume: 1.515B (-7.68%)
Up Volume: 807.43M (-158.79M)
Down Volume: 694.09M (+15.66M)
A/D and Hi/Lo: Decliners led 1.33 to 1
Previous Session: Advancers led 1.01 to 1
New Highs: 81 (-10)
New Lows: 51 (-3)
S&P
Stats: -4.76 points (-0.22%) to close at 2126.06
NYSE Volume: 617.9M (-12.73%)
A/D and Hi/Lo: Decliners led 1.7 to 1
Previous Session: Advancers led 1.24 to 1
New Highs: 75 (+3)
New Lows: 51 (+25)
DJ30
Stats: -53.72 points (-0.29%) to close at 18232.02
SENTIMENT INDICATORS
VIX: 12.13; +0.02
VXN: 13.23; -0.15
VXO: 12.6; +0.45
Put/Call Ratio (CBOE): 0.89; -0.04
Bulls and Bears: Bulls surge, bears fall right back down.
Bulls: 50.6% versus 47.5% versus 52.5%
After the rather sharp drop, back up over 50%.
Bears: 15.8% versus 15.8% versus 13.9%
At least they held the highs last seen in October 2014.
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: 50.6%
47.5% versus 52.5% versus 57.4% versus 52.5% versus 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.
Bears: 15.8%
15.8% versus 13.9% versus 13.9% versus 15.2% versus 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.
OTHER MARKETS
Bonds (10 year): 2.21% versus 2.19%. Rebounded on the week, trying an oversold bounce. Still down in the dumps.
2.19% versus 2.25% versus 2.294% versus 2.22% versus 2.15% versus 2.23% versus 2.28% versus 2.26% versus 2.283% versus 2.14% versus 2.18% versus 2.23% versus 2.17% versus 2.15% versus 2.11% versus 2.04% versus 2.05% versus 1.99% versus 1.92% versus 1.92% versus 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%
Euro/$: 1.1012 versus 1.1111. Dollar breaking up through the 50 day EMA as the week was . . . strong.
1.1111 versus 1.1093 versus 1.1149 versus 1.1314 versus 1.1449 versus 1.1408 versus 1.1311 versus 1.1207 versus 1.1152 versus 1.1207 versus 1.1266 versus 1.1349 versus 1.1189 versus 1.1147 versus 1.1215 versus 1.1220 versus 1.119 versus 1.0982 versus 1.0885 versus 1.0862 versus 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
Oil: 59.72, -1.00. Modest fade after that strong Thursday bounce from the 20 day EMA.
Gold: 1204.00, -0.10. Holding the 10 day EMA on a test of that sharp surge two weeks back.
$/JPY: 121.53 versus 121.09. After a pause Thursday from the big move to that point, USD took off again and eclipsed the early March closing high.
121.09 versus 121.35 versus 120.71 versus 119.99 versus 119.33 versus 119.18 versus 119.11 versus 119.93 versus 120.13 versus 119.75 versus 119.75 versus 119.43 versus 119.85 versus 120.12 versus 120.16 versus 119.41 versus 119.02 versus 118.45 versus 119.10 versus 118.91 versus 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
MONDAY
Another week of data, Fed speeches, geopolitics, domestic politics. And more to come this week.
Through it all the market has held and moved higher to indeed, higher highs. There are stocks in position to continue the move. Does not seem logical, but in May the indices hit higher highs and leaders are moving well.
Ah, but the market doesn't do what is logical, even what is historically logical. At least not when most expect it. There likely is a selloff coming, but it will likely come when the rest of those out there doubting this move throw in. Once they are all in, there is nothing else to drive it. Then the move runs out of gas, runs out of money.
For now we see plenty of stocks in position to move and the list of leader potential is spreading out some to include telecom, chemicals, and more areas of tech and even industrials. Heck, even the shippers look good. Take a look at DSX, in a double bottom with handle formed since December. Broke higher this month and is testing. It didn't make the cut this week but it could have. Watch it; we are. DRYS is another shipper. Long, long decline but MACD turned and it gapped higher two weeks back over the 50 day EMA and has formed a handle to its own double bottom. Watch it as well. If it moves don't wait for a play.
See? Lots of new movers in terms of leaders that have made moves and are testing, others hitting highs, yet others just now turning the corner. All of these drive rallies, and despite all of the gloom, issues, and negative possibilities, these darn things continue to set up.
Have a great Memorial Day!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5089.36
Resistance:
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
Support:
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5006 is the January to April pattern trendline
The 50 day EMA at 4981
4912 the mid-April China dip
The March lows at 4843 and 4825
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 4728
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 2126.06
Resistance:
2126 was the April new all-time high
Support:
2119.59 is the February intraday prior all-time high
2115 is the late March lower high
The 50 day EMA at 2099
2094 is the December 2014 high, the prior all-time high
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 2038
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 18,232.02
Resistance:
18,289 is the March 2015 high, the prior all-time high
Support:
18,206 is the late March lower high
18,104 is the December high
The 50 day EMA at 18,037
17,991 is the early December interim
The January trendline at 17,979
17,923 is the January 2015 lower high
17,748 is the mid-April China margin selloff
The March low at 17,620
The 200 day SMA at 17,547
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
ECONOMIC CALENDAR
May 22 - Friday
CPI, April (8:30): 0.1% expected, 0.2% prior
Core CPI, April (8:30): 0.2% expected, 0.2% prior
May 26 - Tuesday
Durable Orders, April (8:30): -0.6% expected, 4.4% prior (revised from 4.0%)
Durable Goods -ex tr, April (8:30): 0.3% expected, 0.4% prior (revised from -0.2%)
Case-Shiller 20-city, March (9:00): 4.6% expected, 5.0% prior
FHFA Housing Price I, March (9:00): 0.7% prior
New Home Sales, April (10:00): 510K expected, 481K prior
Consumer Confidence, May (10:00): 94.0 expected, 95.2 prior
May 27 - Wednesday
MBA Mortgage Index, 05/23 (7:00): -1.5% prior
May 28 - Thursday
Initial Claims, 05/23 (8:30): 274K expected, 274K prior
Continuing Claims, 05/16 (8:30): 2250K expected, 2211K prior
Pending Home Sales, April (10:00): 1.0% expected, 1.1% prior
Natural Gas Inventor, 05/23 (10:30): 92 bcf prior
Crude Inventories, 05/23 (11:00): -2.674M prior
May 29 - Friday
GDP - Second Estimat, Q1 (8:30): -0.7% expected, 0.2% prior
GDP Deflator - Secon, Q1 (8:30): -0.1% expected, -0.1% prior
Chicago PMI, May (9:45): 53.0 expected, 52.3 prior
Michigan Sentiment -, May (10:00): 89.0 expected, 88.6 prior
End part 1 of 3
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Sunday, May 17, 2015
The Daily, Part 1 of 3, 5-16-15
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5/16/2015 Investment House Report
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Trailing stops: DGLY; MA
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
- A tame expiration Friday, but the indices again hold a solid upside surge.
- Economic data remains weak overall yet market tries to rally.
- Leadership is still there, still in good patterns, but still needing to really step up the effort.
- Bearish sentiment takes a more significant step higher.
- Many experts are worried about the market's future and economic future. Is this enough of a wall of worry?
Most of last week was spent watching to see if stocks could manage to hold the Friday upside surge. It wasn't pretty but they managed to hold enough so when the indexes surged on Thursday for no real reason the question then became can they hold the Thursday gain without immediately giving it back.
Friday wasn't pretty either, but the indexes did hold the move. Futures were higher early but steadily eroded toward the open. As trade began stocks immediately sold negative and held it into mid-afternoon. A bounce began with two hours left, however, and stocks dutifully recovered to the close and a mixed showing, though very much flat line, very much holding the Thursday move. Again, not pretty, but utilitarian.
SP500 1.63, 0.08%
NASDAQ -2.51, -0.05%
DJ30 20.32, 0.11%
SP400 -0.05%
RUTX -0.09%
SOX 0.17%
VOLUME: Pretty paltry for an expiration Friday. NYSE +16%, moving barely above average, NASDAQ -4%, still well below average. Wow, when expiration cannot get anyone excited you know you have low volume.
A/D: NYSE 1.4:1, NASDAQ decliners slightly led.
The internals were less than impressive, but they matched the action. Volume was up on NYSE, moving above average for the first time in over a week as SP500 showed a tight doji. You could call that churn, but it was expiration and that did push up volume. Basically you would say the action was a pause ahead of the weekend, after a strong upside surge, at least in terms of price.
Of course, the afterhours financial shows were all asking the same question: can the market hold this move given all the problems confronting it: Fed rate hikes, weakening economic data, articles suggesting the 'smart money' is buying protection now. News flash, those holding massively large positions in many stocks ALWAYS buy protection at new highs. Why? Because it is cheaper to do so.
Another news flash: it appears stock investors are not as concerned as bond investors about rate hikes. Bonds sold the past month, sold rather aggressively. They posted a bit of a bounce on Friday thanks to more atrocious economic data in terms of the Michigan Sentiment and misses form the New York PMI, Industrial Production, and Capacity Utilization, but they are pricing in higher rates.
It would appear investors, however, either don't think the Fed is all that serious or just don't care about one rate hike. After the litany of weaker economic reports last week (outside the so-called 'good' jobless claims report), the debate shifted from a June hike to a September or December hike. More than that, a lot of stock investors believe that even if the Fed does hike it will be more of a 'one and done' kind of move that is more for show than substance.
If that is your view, you won't give much concern to promises of a rate hike in the second half of the year that may very well just be a one hike and done scenario.
That mindset will have the opportunity to prove itself. Again. SP500 was a snake pit in late April and early May as day to day and intraday volatility spiked as the index surged back and forth. Just when it looked as if the uptrend was done when it crashed lower the first Tuesday and Wednesday of May, it surged upside that Friday. That move was tested, then Thursday it broke to a new closing high.
Despite the negatives, it broke to a higher high. It somewhat proved up that Friday recovery surge with yet another surge. Yet there are still many who do not believe the move. I cannot say I fully view it as a confirmation of the a new leg upside, but you know what I say about my feelings: they are nothing more than feelings as far as the stock market is concerned. The moves are what tells the story.
THE MARKET
CHARTS
Thursday saw a resumption of the upside with a solid price break pushing SP500 to a new closing high. DJ30 continued its superior pattern though it is still seeking that next new high. Friday it was another day to see if stocks could hold a gain. They did. Now the next big test is next week. Two good upside moves out of some pretty ugly volatility, not great volume, but some solid moves and leadership moving pretty well. Pretty well; the setups are better than the moves right now.
DJ30: Some pretty decent volume, but it was expiration so doesn't really count. What does count is DJ30 continues its solid upside pattern, still looking for a new all-time high, but just 16 points off it. No issues with this pattern of course, though the Dow leading, or at least sporting the best pattern, is not that inspiring for massive market upside. It's the Dow for goodness sake.
Now the DJ20 transports are not breaking to higher highs, and you are likely hearing from commentators about the DJ20 not confirming the Dow's move. For one, there is nothing to confirm yet because the DJ30 is not at a new high. Hopefully soon, but not yet. More importantly, DJ20 transports are prepped for a bounce off of a very important support level that has worked as the bottom of a trading range spanning back to late 2014.
SP500: Volume was up as SP500 traded modestly higher, showing a doji. That suggests some churn, but it was expiration and volume was up just modestly. Basically a day off after breaking to a new high. That works for now.
NASDAQ: Gapped upside Friday then closed flat on the day. Held the Thursday break over the mid-March high, the last resistance before the April all-time closing high. Got some help from AAPL finally, and there are many software and chip stocks in position to move higher.
SOX: A decent week, gapping through the 50 day SMA Thursday, clearing the upper trendline in its three month downward wedge/channel. A good start, there are chips in position to move.
SP400: Nice break higher Thursday, paused Friday. Cleared the February peak with the Thursday move. It is now in the middle 7 week lateral consolidation. That might not be great, but it is a vast improvement over SP400's position just two weeks back.
RUTX: Better off but still a lot of work as it is below the 50 day MA though just above the February high. Still in the teeth of resistance, still weak, but at least it is following the other indices though not making any great upside strides.
LEADERSHIP
Software: Some good moves on the week though a breather Friday. SPLK surged Wednesday and added Friday, making a higher rally high. FFIV put in a higher rally high on the week. VDSI started its breakout move. RHT is breaking out of its trading range. VMW was down on the week but has a great setup to move higher.
Semiconductors: Not great moves on the week but as with software, they are set to move. NXPI gave up the prior week's gain but has a solid pattern. QRVO broke higher off its test Thursday. BRCM rallied well. SWKS broke higher but gave it back Friday. AVGO excited the sector for a few minutes Thursday when it said it was looking for an acquisition, but that had a short half-life. Set up, and looking for something good from this group to help the market continue its upside break.
Biotechs: Still a very mixed group. AGIO moved up nicely on the week. CLVS exploded higher Thursday, gave some back Friday. AMGN had a good week though it gave up a pretty decent Friday upside gap.
Energy: Another very mixed group. ESV sold hard Thursday, checked up at the 50 day EMA Friday with a doji. CVX is holding the 50 day MA. RIG enjoyed a strong week. APC sold hard but trying to set up a bounce.
Metals: Another good week. AKS rallied again though gave some back to end the week. FCX put in another week of testing but looks good. SCHN is doing the same. As with other groups, set up to move, just waiting for the move.
Big Names: Thursday AAPL shook off some of its sleep though Friday it was flattish. GOOG was up some but finished the week weaker. AMZN is testing but it is struggling more to hang onto the 10 day EMA. SBUX enjoyed a much better week.
MARKET STATISTICS
NASDAQ
Stats: -2.5 points (-0.05%) to close at 5048.29
Volume: 1.628B (-3.81%)
Up Volume: 881.51M (-308.49M)
Down Volume: 706.94M (+177.64M)
A/D and Hi/Lo: Decliners led 1 to 1
Previous Session: Advancers led 2.2 to 1
New Highs: 116 (+3)
New Lows: 35 (+2)
S&P
Stats: +1.63 points (+0.08%) to close at 2122.73
NYSE Volume: 828.9M (+16.16%)
A/D and Hi/Lo: Advancers led 1.36 to 1
Previous Session: Advancers led 3.1 to 1
New Highs: 87 (-8)
New Lows: 13 (-11)
DJ30
Stats: +191.75 points (+1.06%) to close at 18252.24
SENTIMENT INDICATORS
VIX: 12.38; -0.36
VXN: 13.89; -0.42
VXO: 12.86; -0.37
Put/Call Ratio (CBOE): 0.83; +0.04
Bulls and Bears: Bulls surge, bears fall right back down.
Bulls: 47.5% versus 52.5% versus 57.4%
This backs up the commentary about the worry in the market, and reflects the late April, early March volatility.
Bears: 15.8% versus 13.9% versus 13.9% versus 15.2%
This is the highest bears reading since October 2014. Finally some significant movement in bears as the notion of a Fed always at the market's back fades. This is a good part of that 'wall of worry' discussed in the report conclusion.
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: 47.5%
52.5% versus 57.4% versus 52.5% versus 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.
Bears: 15.8%
13.9% versus 13.9% versus 15.2% versus 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.
OTHER MARKETS
Bonds (10 year): 2.15% versus 2.23%. A bit of a snapback rally after three weeks of hammering.
2.23% versus 2.28% versus 2.26% versus 2.283% versus 2.14% versus 2.18% versus 2.23% versus 2.17% versus 2.15% versus 2.11% versus 2.04% versus 2.05% versus 1.99% versus 1.92% versus 1.92% versus 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%
Euro/$: 1.1449 versus 1.1408. A down week as the dollar bounced to the 10 day EMA Monday, then fell the rest of the week. A downtrend that finds resistance at the 10 day is a strong downtrend.
1.1408 versus 1.1311 versus 1.1207 versus 1.1152 versus 1.1207 versus 1.1266 versus 1.1349 versus 1.1189 versus 1.1147 versus 1.1215 versus 1.1220 versus 1.119 versus 1.0982 versus 1.0885 versus 1.0862 versus 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
Oil: 59.69, -0.19. Bounced off the 10 day EMA early week, then faded to Friday, but showing a nice doji with tail at the 10 day EMA. In position to rebound and continue the break upside.
Gold: 1225.30, +0.10. Took a breather, holding the Wednesday to Thursday surge out of the range and through the 200 day SMA. Seems gold thinks the Fed won't raise rates either.
$/JPY: 119.33 versus 119.18
119.18 versus 119.11 versus 119.93 versus 120.13 versus 119.75 versus 119.75 versus 119.43 versus 119.85 versus 120.12 versus 120.16 versus 119.41 versus 119.02 versus 118.45 versus 119.10 versus 118.91 versus 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
MONDAY
Similar to the start of last week, this week finds the stocks indices sitting on a solid late week upside move, looking to again hold the move and more than that, build upon it. The market rallied, paused three days, and then rallied again. A second Friday rally would have been nice, but now we have to wait to this week to see again if stocks can build upon the two upside moves.
It is the nature of the current market that each upside rally, now with two of them building higher to new highs, is met with skepticism. GS is telling clients to sell in May and go away for a year. One economist voiced a concern many have, that is the financial crisis was not cured, just the ultimate effects delayed and that the real problems are coming home at some point. In short, there are a lot of fears as to what may be over the course of the year.
We have our doubts as well. The series of data this year suggest recession. When you get the sequence of declining data over several months that the economy is showing, recession comes to mind. Ever since October and QE's end the market has struggled. Now that does not necessarily mean it is economic; QE didn't fix the economy, just inflated asset prices in an effort to float the economy over the rocks until time healed all economic wounds as it typically does in our economy.
But this is not the typical, historic US economy. We have allowed it to be changed into a European like economy in terms of growth due to massive, massive amounts of new regulations that have impacted most severely the one area that always makes us the best: the small entrepreneur coming up with the new and better ideas that lead to new growth companies and the next wave of new and better jobs.
The CFR, Code of Federal Regulations, has grown to over 175,000 pages. These are the regulations the administrators write pursuant to the purposefully vague and general laws Congress drafts and passes, often without reading. Then the regulators make 'reasonable and just,' or 'generally fair and equitable' as the Supreme Court has allowed in its opinions. What is worse, if you break these rules, the agencies that wrote them act as your court with their 'administrative courts' that act without constitutional bounds. Oh you can get to the actual courts eventual, but you have to 'exhaust your avenues of recourse' through the administrative courts first and then you MAY get a hearing in front of the constitutional courts. Of course as most find out or know, your ability to fight the issue, and that means your money, is often EXHAUSTED long before you get to that point.
Thus if someone in some one of the thousands of government agencies decides they don't like you or your business, they can work the system to drive you out of business before you can really get started. And it doesn't even have to be that specific or that nefarious intent. The massive number of regulations starve small businesses of funding as the result of their incredibly complex and unforeseen results (Dodd-Frank, Sarbanes-Oxley), or prevent them from obtaining the licensing they are required to have in order to give someone something as simple as a haircut or a shave (but you cannot give them both unless you have a barber's license and a hair cutting license). I know, some are going to day but you need to ensure that a hair cutter is good or that their shop is sanitary. Well, if they are NOT good no one will go there. You may get a bad haircut or get nicked with a razor, but it won't be a life altering event. And if sanitation is the worry, there are inspectors that can look at that; having a license to shave someone's face does not automatically guarantee that person is a hygiene freak.
Okay, that is a long way from where this started, but it gives the background for what I have been saying a long time: the economy is not the same economy it was in terms of its ability to create new and better jobs and thus increase our standard of living. Quite the opposite as we saw in the April jobs report where the net of all jobs created were part-time jobs as 200+K of full-time jobs were lost while 466K part-time jobs were created. That has the ripple effect of lower wages, lower disposable income, etc.
And of course the solution offered by our leaders, increasing the minimum wage, ultimately only hastens the demise of even those jobs where that wage is hiked: companies will in the near term cut jobs, try to survive with fewer workers, and either limp along or fold. Or, as will be the case for McDonalds and other large service companies, they will end up going fully automated and eliminated virtually all part-time jobs in exchange for a full-time systems operator and a few to keep the place clean. Hey, that solves a lot of your affordable care act issues as well, i.e. 50 employee cutoff level, etc.
So, yes, there may be a recession coming or actually already started. That is what has many worried about the stock market's future, near term and through the rest of they year.
Thus that makes each break upside somewhat suspect. Everyone wonders if this will be the one the sellers attack. They have been on the hunt since October; the market is much choppier with two big consolidation periods and the February rally sandwiched in between. The market is trying to launch another February-like run with the recent action, overcoming that severe late April volatility. Many indexes hit new highs recently but could not make the move stick. To their credit they are trying again, perhaps doing what they often do when worry is high, i.e. climbing that wall of worry.
As we have noted the past couple of weeks, there are stocks moving higher (e.g. metals) and stocks that are trending higher and setting up nicely to make better moves (software, semiconductors), and some old groups coming back around again (biotech). It will be up to those in position to make the next moves to go ahead and make them if the market is going to defy the May jinx and put on another February-like move.
Thus again everyone is watching how the market reacts to a sharp move upside. That the market generated another upside break similar to the previous Friday, without giving that Friday move back, would appear to answer that worry. Perhaps that it did not is a good thing, the old wall of worry issue, as noted above. While we don't love the economic situation and don't love all of the violent volatility in late April and early May, the market is finding buyers to break it higher. That still doesn't mean the deal is done, but it does fly in the face of the worries recently voiced by many. Of course, as I also say, it is all just a pretty picture until it makes the moves.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5048.29
Resistance:
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
Support:
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5006 is the January to April pattern trendline
The 50 day EMA at 4959
4912 the mid-April China dip
The March lows at 4843 and 4825
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 4710
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 2122.73
Resistance:
2126 is the April new all-time high
Support:
2119.59 is the February intraday prior all-time high
2115 is the late March lower high
2094 is the December 2014 high, the prior all-time high
The 50 day EMA at 2093
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 2033
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 18,272.56
Resistance:
18,289 is the all-time high
Support:
18,206 is the late March lower high
18,104 is the December high
17,991 is the early December interim
The 50 day EMA at 17,983
The January trendline at 17,979
17,923 is the January 2015 lower high
17,748 is the mid-April China margin selloff
The March low at 17,620
The 200 day SMA at 17,502
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
ECONOMIC CALENDAR
May 15- Friday
Empire Manufacturing, May (8:30): 3.1 actual versus 4.5 expected, -1.2 prior
Industrial Productio, April (9:15): -0.3% actual versus 0.1% expected, -0.3% prior (revised from -0.6%)
Capacity Utilization, April (9:15): 78.2% actual versus 78.4% expected, 78.6% prior (revised from 78.4%)
Mich Sentiment, May (10:00): 88.6 actual versus 96.0 expected, 95.9 prior
Net Long-Term TIC Fl, March (16:00): $17.6B actual versus $20.9B prior (revised from $9.8B)
May 18 - Monday
NAHB Housing Market , May (10:00): 57 expected, 56 prior
May 19 - Tuesday
Housing Starts, April (8:30): 1019K expected, 926K prior
Building Permits, April (8:30): 1065K expected, 1039K prior
May 20 - Wednesday
MBA Mortgage Index, 05/16 (7:00): -3.5% prior
Crude Inventories, 05/16 (10:30): -2.191M prior
FOMC Minutes, 4/29 (14:00)
May 21 - Thursday
Initial Claims, 05/16 (8:30): 270K expected, 264K prior
Continuing Claims, 05/09 (8:30): 2250K expected, 2229K prior
Existing Home Sales, April (10:00): 5.24M expected, 5.19M prior
Philadelphia Fed, May (10:00): 8.0 expected, 7.5 prior
Leading Indicators, April (10:00): 0.3% expected, 0.2% prior
Natural Gas Inventor, 05/16 (10:30): 111 bcf prior
May 22 - Friday
CPI, April (8:30): 0.1% expected, 0.2% prior
Core CPI, April (8:30): 0.2% expected, 0.2% prior
End part 1 of 3
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5/16/2015 Investment House Report
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MARKET ALERTS:
Targets hit: None issued
Buy alerts: None issued
Trailing stops: DGLY; MA
Stop alerts: None issued
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:
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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 tame expiration Friday, but the indices again hold a solid upside surge.
- Economic data remains weak overall yet market tries to rally.
- Leadership is still there, still in good patterns, but still needing to really step up the effort.
- Bearish sentiment takes a more significant step higher.
- Many experts are worried about the market's future and economic future. Is this enough of a wall of worry?
Most of last week was spent watching to see if stocks could manage to hold the Friday upside surge. It wasn't pretty but they managed to hold enough so when the indexes surged on Thursday for no real reason the question then became can they hold the Thursday gain without immediately giving it back.
Friday wasn't pretty either, but the indexes did hold the move. Futures were higher early but steadily eroded toward the open. As trade began stocks immediately sold negative and held it into mid-afternoon. A bounce began with two hours left, however, and stocks dutifully recovered to the close and a mixed showing, though very much flat line, very much holding the Thursday move. Again, not pretty, but utilitarian.
SP500 1.63, 0.08%
NASDAQ -2.51, -0.05%
DJ30 20.32, 0.11%
SP400 -0.05%
RUTX -0.09%
SOX 0.17%
VOLUME: Pretty paltry for an expiration Friday. NYSE +16%, moving barely above average, NASDAQ -4%, still well below average. Wow, when expiration cannot get anyone excited you know you have low volume.
A/D: NYSE 1.4:1, NASDAQ decliners slightly led.
The internals were less than impressive, but they matched the action. Volume was up on NYSE, moving above average for the first time in over a week as SP500 showed a tight doji. You could call that churn, but it was expiration and that did push up volume. Basically you would say the action was a pause ahead of the weekend, after a strong upside surge, at least in terms of price.
Of course, the afterhours financial shows were all asking the same question: can the market hold this move given all the problems confronting it: Fed rate hikes, weakening economic data, articles suggesting the 'smart money' is buying protection now. News flash, those holding massively large positions in many stocks ALWAYS buy protection at new highs. Why? Because it is cheaper to do so.
Another news flash: it appears stock investors are not as concerned as bond investors about rate hikes. Bonds sold the past month, sold rather aggressively. They posted a bit of a bounce on Friday thanks to more atrocious economic data in terms of the Michigan Sentiment and misses form the New York PMI, Industrial Production, and Capacity Utilization, but they are pricing in higher rates.
It would appear investors, however, either don't think the Fed is all that serious or just don't care about one rate hike. After the litany of weaker economic reports last week (outside the so-called 'good' jobless claims report), the debate shifted from a June hike to a September or December hike. More than that, a lot of stock investors believe that even if the Fed does hike it will be more of a 'one and done' kind of move that is more for show than substance.
If that is your view, you won't give much concern to promises of a rate hike in the second half of the year that may very well just be a one hike and done scenario.
That mindset will have the opportunity to prove itself. Again. SP500 was a snake pit in late April and early May as day to day and intraday volatility spiked as the index surged back and forth. Just when it looked as if the uptrend was done when it crashed lower the first Tuesday and Wednesday of May, it surged upside that Friday. That move was tested, then Thursday it broke to a new closing high.
Despite the negatives, it broke to a higher high. It somewhat proved up that Friday recovery surge with yet another surge. Yet there are still many who do not believe the move. I cannot say I fully view it as a confirmation of the a new leg upside, but you know what I say about my feelings: they are nothing more than feelings as far as the stock market is concerned. The moves are what tells the story.
THE MARKET
CHARTS
Thursday saw a resumption of the upside with a solid price break pushing SP500 to a new closing high. DJ30 continued its superior pattern though it is still seeking that next new high. Friday it was another day to see if stocks could hold a gain. They did. Now the next big test is next week. Two good upside moves out of some pretty ugly volatility, not great volume, but some solid moves and leadership moving pretty well. Pretty well; the setups are better than the moves right now.
DJ30: Some pretty decent volume, but it was expiration so doesn't really count. What does count is DJ30 continues its solid upside pattern, still looking for a new all-time high, but just 16 points off it. No issues with this pattern of course, though the Dow leading, or at least sporting the best pattern, is not that inspiring for massive market upside. It's the Dow for goodness sake.
Now the DJ20 transports are not breaking to higher highs, and you are likely hearing from commentators about the DJ20 not confirming the Dow's move. For one, there is nothing to confirm yet because the DJ30 is not at a new high. Hopefully soon, but not yet. More importantly, DJ20 transports are prepped for a bounce off of a very important support level that has worked as the bottom of a trading range spanning back to late 2014.
SP500: Volume was up as SP500 traded modestly higher, showing a doji. That suggests some churn, but it was expiration and volume was up just modestly. Basically a day off after breaking to a new high. That works for now.
NASDAQ: Gapped upside Friday then closed flat on the day. Held the Thursday break over the mid-March high, the last resistance before the April all-time closing high. Got some help from AAPL finally, and there are many software and chip stocks in position to move higher.
SOX: A decent week, gapping through the 50 day SMA Thursday, clearing the upper trendline in its three month downward wedge/channel. A good start, there are chips in position to move.
SP400: Nice break higher Thursday, paused Friday. Cleared the February peak with the Thursday move. It is now in the middle 7 week lateral consolidation. That might not be great, but it is a vast improvement over SP400's position just two weeks back.
RUTX: Better off but still a lot of work as it is below the 50 day MA though just above the February high. Still in the teeth of resistance, still weak, but at least it is following the other indices though not making any great upside strides.
LEADERSHIP
Software: Some good moves on the week though a breather Friday. SPLK surged Wednesday and added Friday, making a higher rally high. FFIV put in a higher rally high on the week. VDSI started its breakout move. RHT is breaking out of its trading range. VMW was down on the week but has a great setup to move higher.
Semiconductors: Not great moves on the week but as with software, they are set to move. NXPI gave up the prior week's gain but has a solid pattern. QRVO broke higher off its test Thursday. BRCM rallied well. SWKS broke higher but gave it back Friday. AVGO excited the sector for a few minutes Thursday when it said it was looking for an acquisition, but that had a short half-life. Set up, and looking for something good from this group to help the market continue its upside break.
Biotechs: Still a very mixed group. AGIO moved up nicely on the week. CLVS exploded higher Thursday, gave some back Friday. AMGN had a good week though it gave up a pretty decent Friday upside gap.
Energy: Another very mixed group. ESV sold hard Thursday, checked up at the 50 day EMA Friday with a doji. CVX is holding the 50 day MA. RIG enjoyed a strong week. APC sold hard but trying to set up a bounce.
Metals: Another good week. AKS rallied again though gave some back to end the week. FCX put in another week of testing but looks good. SCHN is doing the same. As with other groups, set up to move, just waiting for the move.
Big Names: Thursday AAPL shook off some of its sleep though Friday it was flattish. GOOG was up some but finished the week weaker. AMZN is testing but it is struggling more to hang onto the 10 day EMA. SBUX enjoyed a much better week.
MARKET STATISTICS
NASDAQ
Stats: -2.5 points (-0.05%) to close at 5048.29
Volume: 1.628B (-3.81%)
Up Volume: 881.51M (-308.49M)
Down Volume: 706.94M (+177.64M)
A/D and Hi/Lo: Decliners led 1 to 1
Previous Session: Advancers led 2.2 to 1
New Highs: 116 (+3)
New Lows: 35 (+2)
S&P
Stats: +1.63 points (+0.08%) to close at 2122.73
NYSE Volume: 828.9M (+16.16%)
A/D and Hi/Lo: Advancers led 1.36 to 1
Previous Session: Advancers led 3.1 to 1
New Highs: 87 (-8)
New Lows: 13 (-11)
DJ30
Stats: +191.75 points (+1.06%) to close at 18252.24
SENTIMENT INDICATORS
VIX: 12.38; -0.36
VXN: 13.89; -0.42
VXO: 12.86; -0.37
Put/Call Ratio (CBOE): 0.83; +0.04
Bulls and Bears: Bulls surge, bears fall right back down.
Bulls: 47.5% versus 52.5% versus 57.4%
This backs up the commentary about the worry in the market, and reflects the late April, early March volatility.
Bears: 15.8% versus 13.9% versus 13.9% versus 15.2%
This is the highest bears reading since October 2014. Finally some significant movement in bears as the notion of a Fed always at the market's back fades. This is a good part of that 'wall of worry' discussed in the report conclusion.
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: 47.5%
52.5% versus 57.4% versus 52.5% versus 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.
Bears: 15.8%
13.9% versus 13.9% versus 15.2% versus 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.
OTHER MARKETS
Bonds (10 year): 2.15% versus 2.23%. A bit of a snapback rally after three weeks of hammering.
2.23% versus 2.28% versus 2.26% versus 2.283% versus 2.14% versus 2.18% versus 2.23% versus 2.17% versus 2.15% versus 2.11% versus 2.04% versus 2.05% versus 1.99% versus 1.92% versus 1.92% versus 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%
Euro/$: 1.1449 versus 1.1408. A down week as the dollar bounced to the 10 day EMA Monday, then fell the rest of the week. A downtrend that finds resistance at the 10 day is a strong downtrend.
1.1408 versus 1.1311 versus 1.1207 versus 1.1152 versus 1.1207 versus 1.1266 versus 1.1349 versus 1.1189 versus 1.1147 versus 1.1215 versus 1.1220 versus 1.119 versus 1.0982 versus 1.0885 versus 1.0862 versus 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
Oil: 59.69, -0.19. Bounced off the 10 day EMA early week, then faded to Friday, but showing a nice doji with tail at the 10 day EMA. In position to rebound and continue the break upside.
Gold: 1225.30, +0.10. Took a breather, holding the Wednesday to Thursday surge out of the range and through the 200 day SMA. Seems gold thinks the Fed won't raise rates either.
$/JPY: 119.33 versus 119.18
119.18 versus 119.11 versus 119.93 versus 120.13 versus 119.75 versus 119.75 versus 119.43 versus 119.85 versus 120.12 versus 120.16 versus 119.41 versus 119.02 versus 118.45 versus 119.10 versus 118.91 versus 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
MONDAY
Similar to the start of last week, this week finds the stocks indices sitting on a solid late week upside move, looking to again hold the move and more than that, build upon it. The market rallied, paused three days, and then rallied again. A second Friday rally would have been nice, but now we have to wait to this week to see again if stocks can build upon the two upside moves.
It is the nature of the current market that each upside rally, now with two of them building higher to new highs, is met with skepticism. GS is telling clients to sell in May and go away for a year. One economist voiced a concern many have, that is the financial crisis was not cured, just the ultimate effects delayed and that the real problems are coming home at some point. In short, there are a lot of fears as to what may be over the course of the year.
We have our doubts as well. The series of data this year suggest recession. When you get the sequence of declining data over several months that the economy is showing, recession comes to mind. Ever since October and QE's end the market has struggled. Now that does not necessarily mean it is economic; QE didn't fix the economy, just inflated asset prices in an effort to float the economy over the rocks until time healed all economic wounds as it typically does in our economy.
But this is not the typical, historic US economy. We have allowed it to be changed into a European like economy in terms of growth due to massive, massive amounts of new regulations that have impacted most severely the one area that always makes us the best: the small entrepreneur coming up with the new and better ideas that lead to new growth companies and the next wave of new and better jobs.
The CFR, Code of Federal Regulations, has grown to over 175,000 pages. These are the regulations the administrators write pursuant to the purposefully vague and general laws Congress drafts and passes, often without reading. Then the regulators make 'reasonable and just,' or 'generally fair and equitable' as the Supreme Court has allowed in its opinions. What is worse, if you break these rules, the agencies that wrote them act as your court with their 'administrative courts' that act without constitutional bounds. Oh you can get to the actual courts eventual, but you have to 'exhaust your avenues of recourse' through the administrative courts first and then you MAY get a hearing in front of the constitutional courts. Of course as most find out or know, your ability to fight the issue, and that means your money, is often EXHAUSTED long before you get to that point.
Thus if someone in some one of the thousands of government agencies decides they don't like you or your business, they can work the system to drive you out of business before you can really get started. And it doesn't even have to be that specific or that nefarious intent. The massive number of regulations starve small businesses of funding as the result of their incredibly complex and unforeseen results (Dodd-Frank, Sarbanes-Oxley), or prevent them from obtaining the licensing they are required to have in order to give someone something as simple as a haircut or a shave (but you cannot give them both unless you have a barber's license and a hair cutting license). I know, some are going to day but you need to ensure that a hair cutter is good or that their shop is sanitary. Well, if they are NOT good no one will go there. You may get a bad haircut or get nicked with a razor, but it won't be a life altering event. And if sanitation is the worry, there are inspectors that can look at that; having a license to shave someone's face does not automatically guarantee that person is a hygiene freak.
Okay, that is a long way from where this started, but it gives the background for what I have been saying a long time: the economy is not the same economy it was in terms of its ability to create new and better jobs and thus increase our standard of living. Quite the opposite as we saw in the April jobs report where the net of all jobs created were part-time jobs as 200+K of full-time jobs were lost while 466K part-time jobs were created. That has the ripple effect of lower wages, lower disposable income, etc.
And of course the solution offered by our leaders, increasing the minimum wage, ultimately only hastens the demise of even those jobs where that wage is hiked: companies will in the near term cut jobs, try to survive with fewer workers, and either limp along or fold. Or, as will be the case for McDonalds and other large service companies, they will end up going fully automated and eliminated virtually all part-time jobs in exchange for a full-time systems operator and a few to keep the place clean. Hey, that solves a lot of your affordable care act issues as well, i.e. 50 employee cutoff level, etc.
So, yes, there may be a recession coming or actually already started. That is what has many worried about the stock market's future, near term and through the rest of they year.
Thus that makes each break upside somewhat suspect. Everyone wonders if this will be the one the sellers attack. They have been on the hunt since October; the market is much choppier with two big consolidation periods and the February rally sandwiched in between. The market is trying to launch another February-like run with the recent action, overcoming that severe late April volatility. Many indexes hit new highs recently but could not make the move stick. To their credit they are trying again, perhaps doing what they often do when worry is high, i.e. climbing that wall of worry.
As we have noted the past couple of weeks, there are stocks moving higher (e.g. metals) and stocks that are trending higher and setting up nicely to make better moves (software, semiconductors), and some old groups coming back around again (biotech). It will be up to those in position to make the next moves to go ahead and make them if the market is going to defy the May jinx and put on another February-like move.
Thus again everyone is watching how the market reacts to a sharp move upside. That the market generated another upside break similar to the previous Friday, without giving that Friday move back, would appear to answer that worry. Perhaps that it did not is a good thing, the old wall of worry issue, as noted above. While we don't love the economic situation and don't love all of the violent volatility in late April and early May, the market is finding buyers to break it higher. That still doesn't mean the deal is done, but it does fly in the face of the worries recently voiced by many. Of course, as I also say, it is all just a pretty picture until it makes the moves.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5048.29
Resistance:
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
Support:
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5006 is the January to April pattern trendline
The 50 day EMA at 4959
4912 the mid-April China dip
The March lows at 4843 and 4825
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 4710
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 2122.73
Resistance:
2126 is the April new all-time high
Support:
2119.59 is the February intraday prior all-time high
2115 is the late March lower high
2094 is the December 2014 high, the prior all-time high
The 50 day EMA at 2093
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 2033
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 18,272.56
Resistance:
18,289 is the all-time high
Support:
18,206 is the late March lower high
18,104 is the December high
17,991 is the early December interim
The 50 day EMA at 17,983
The January trendline at 17,979
17,923 is the January 2015 lower high
17,748 is the mid-April China margin selloff
The March low at 17,620
The 200 day SMA at 17,502
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
ECONOMIC CALENDAR
May 15- Friday
Empire Manufacturing, May (8:30): 3.1 actual versus 4.5 expected, -1.2 prior
Industrial Productio, April (9:15): -0.3% actual versus 0.1% expected, -0.3% prior (revised from -0.6%)
Capacity Utilization, April (9:15): 78.2% actual versus 78.4% expected, 78.6% prior (revised from 78.4%)
Mich Sentiment, May (10:00): 88.6 actual versus 96.0 expected, 95.9 prior
Net Long-Term TIC Fl, March (16:00): $17.6B actual versus $20.9B prior (revised from $9.8B)
May 18 - Monday
NAHB Housing Market , May (10:00): 57 expected, 56 prior
May 19 - Tuesday
Housing Starts, April (8:30): 1019K expected, 926K prior
Building Permits, April (8:30): 1065K expected, 1039K prior
May 20 - Wednesday
MBA Mortgage Index, 05/16 (7:00): -3.5% prior
Crude Inventories, 05/16 (10:30): -2.191M prior
FOMC Minutes, 4/29 (14:00)
May 21 - Thursday
Initial Claims, 05/16 (8:30): 270K expected, 264K prior
Continuing Claims, 05/09 (8:30): 2250K expected, 2229K prior
Existing Home Sales, April (10:00): 5.24M expected, 5.19M prior
Philadelphia Fed, May (10:00): 8.0 expected, 7.5 prior
Leading Indicators, April (10:00): 0.3% expected, 0.2% prior
Natural Gas Inventor, 05/16 (10:30): 111 bcf prior
May 22 - Friday
CPI, April (8:30): 0.1% expected, 0.2% prior
Core CPI, April (8:30): 0.2% expected, 0.2% prior
End part 1 of 3
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Saturday, May 09, 2015
The Daily, Part 1 of 3, 5-9-15
* * * *
5/9/2015 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: None issued
Buy alerts: NXPI
Trailing stops: None issued
Stop alerts: TRIP
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
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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
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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
- Jobs report good or bad, stocks surge with DJ30 leading.
- Same old story with jobs: part-time now 100% of the jobs, low paying dominate, 55+ get all the jobs, wages falling, record out of workforce.
- Wholesale sales fall for fourth straight month, worst since 2008.
- Eliminating worker skill and training from the pay equation.
- US jobs market resembling state-controlled markets, paving the way for automation.
- Still some good leaders on a solid upside price move: will investors continue putting a bid to the market, i.e. can the move hold?
Thursday I opined the indexes left themselves in position to move higher but that it would take something big to overcome the technical negatives. Friday they certainly did move higher, but whether the Jobs Report was really that strong is open to debate, one we discuss below. In any event, stocks roared upside on the news with SP500 and DJ30 clearly leading the pack based upon both percentage moves and their patterns.
SP500 28.10, 1.35%
NASDAQ 58.01, 1.17%
DJ30 267.05, 1.49%
SP400 0.90%
RUTX 0.77%
SOX 1.00%
VOLUME: NYSE -3.9%, NASDAQ -3%. Lower volume with NYSE sliding a bit lower below average. NASDAQ volume remained above average though slightly lower. Not bad volume at all, but once again, being totally technically anal (TTA, a market technical phrase), volume was lower on an advance than the selling.
A/D: NYSE 4:1, NASDAQ 1.7:1. NASDAQ breadth surprisingly narrow, suggesting more a large cap move. NYSE breadth was excellent, as the small and midcaps staged a recovery after getting hammered the prior two weeks.
SP500 and DJ30 posted the best technical moves with DJ30 clearly the best as it exploded through the top of its triangle and showing better volume, even if it was still below average. SP500 broke through the top of its pattern as well though it is right in the teeth of the prior peaks that failed. Lower volume as well . . . good but not convincing.
NASDAQ gapped back into the pattern and right to resistance. Beats tanking on the news. RUTX gapped to a doji just below the 50 day EMA, gapped to the 50 day SMA. SOX gapped over the 50 day EMA with some help from some big name leaders.
Okay, quite the response to the jobs number. They found their upside catalyst. As discussed last week, how they hold the move is the key. DJ30 is the clear leader, SP500 is there as well but the pattern is not as clear, moving right to resistance. The other indexes are up but did not change the character of their patterns. Some good individual stock moves no doubt, but this week they have to drive the move farther.
NEWS, ECONOMY
Jobs Report extolled as good by some, panned by others as more of the same.
The post-mortem on the April Jobs Report was a 180 degree view. Some say it is great, showing a bounce back from a dismal March revised even lower than first reported. Some say it is a pile of . . . you know what. Our view: it is from the BLS so any resemblance to reality is strictly unintentional.
The takeaways that scream out:
Revisions lower in March for jobs and wages.
New all-time high in persons not in the workforce.
Part-time jobs 100% of jobs created as full-time jobs fall.
55+ age group nets 100% of jobs.
Non-Farm Jobs: 223K versus 218K expected versus 85K March (from 126K).
March was the lowest since June 2012. The 3 month average fell below 200K.
Wages: 0.1% versus 0.2% versus 0.2% prior (revised from 0.3%).
Revisions: Both the number of jobs and waged written lower. Worst of the worst in terms of trends.
Not in the labor force: Moved higher to 93.194M versus 93.175M. Yes, things are getting better.
Workweek: same at 34.5. No growth in hours worked.
Job Types: Some good news, but mostly more of the same.
Construction good at +45K.
Manufacturing not so good: +1K on top of the 0 (goose egg) in March.
For every manufacturing job created, 26 waiter/bartender jobs were created. Fat, Drunk and stupid is no way to go through life, son.
Dean Wormer, 'Animal House' (1978)
Thank goodness the Administration policies have spurred the creation of those wait staff and bartender jobs to replace those manufacturing jobs lost. An equitable trade? Yea, right.
Lowest wage areas lead again:
Professional/Business services: +46K
Healthcare: +61K
Leisure and Hospitality: +17K
Full-time versus Part-time: and the winner is . . . part-time of course
Of the jobs created in April, 100% were part-time. 437K part-time jobs created versus a LOSS of 200K+ fulltime jobs. Fulltime jobs still remain below the 2008 peak.
Who gets the jobs?
Surprise: Still the 55+ age group.
The Household Survey reported a net 255K workers added. Of those jobs over 100% (266K) went to workers aged 55+. In other words, the 54 and younger age demographics LOST jobs. The older generations have to go back to work in ever-increasing numbers to pay for the necessities as it is hard to make interest income at 0% interest rates. Again, darn good thing there are all of those low-paying part-time jobs out there they can pick and choose between.
WHOLESALE INVENTORIES FADE, SALES NEGATIVE FOR 4TH STRAIGHT MONTH
Wholesale Inventories, March: 0.1% versus 0.3% versus 0.2% (from 0.3%)
Wholesale Sales: -0.2%. Four straight months of negative sales, the longest streak since 7 straight negative months in that banner year 2008.
Inventories fell but they did not fall because everyone was buying up the goods as sales were again lower. They just are not buying as much goods given a steady sales decline.
Thus, with this kind of data, you understand the economy is still truly weak, that QE and 0% interest rates and six years of the Administration's policies are not fixing the problem. They inflated financial assets as planned, but step 2 didn't materialize, i.e. the increase in money velocity as the free money was put to work. That never happened, at least outside of stock buybacks and M&A (buy it, don't build it). Therefore the jobs report, with new record highs in people out of the workforce, falling wages, stagnant hours, and more low pay jobs, is not really a positive.
US Labor Market more resembles socialist, indeed communist, labor forces.
Indeed, the US labor market is getting absurdly like the communist labor market under the USSR. A California city just mandated a $16/hour minimum wage and there is the continued push among the fast food workers to raise the minimum wage to $15/hour. This amount of money for rank, unskilled labor.
At the same time, contract legal services that provide fully licensed attorneys for document reviews in mergers and acquisitions and in litigation are paying $20-$26/hour. Three years of law school, passing the bar exam, maintaining expertise with continuing education, incurring tens of thousands of dollars in debt. For all of that, the wage difference versus a fast food worker in one California city is $4.
We are eliminating the benefit of having a skill, JUST as in the communist countries. Baker, welder, nuclear sub crewman: you all worked for the 'good' of the state. Oh if you could play hockey or were freakishly limber for gymnastics you could have a decent life. Everyone else, it didn't matter.
The result: chronically low output and a chronically weak economy with only the elites in the society enjoying the wealth. Wow, sure sounds as if the US is indeed on that path.
The next logical step: Japan has just unveiled robots that move like humans with the aid of a gel-like substance. China is unveiling the first fully robotic plant. It will not be long before McDonald's and all-fast food restaurants have 100% robotic food prep and ordering with just a person to make sure the system is running correctly. And a janitor. The low level jobs will be eliminated THANKS TO THE VERY POLICIES THAT WERE CONTRIVED UNDER THE BELIEF THEY WOULD BENEFIT THE WORKER. Of course with the government the way it is now, it would probably just pass a mandate that no robotic workers were allowed . . .
THE MARKET
CHARTS
DJ30: Strongest chart now, breaking through the top of the pattern and eyeing the February all-time high near 18,300 (closed at 18,191). If all the charts looked like this, the market would look great. Note, however, MACD is lower as it moves toward the high. Not dispositive, but something to watch along with volume as DJ30 attempts the breakout.
SP500: Moved sharply higher, right to the mid-February high and just below the late April and early May high. Weaker volume, lower MACD, but it fought the selling fire with buying fire. Now at the cusp of a new high yet again, not looking internally that great, but following DJ30.
NASDAQ: Gapped into the tip of its triangle, but at this juncture that pattern is pretty battered and beaten. It is at the February, March and early April peaks. Even with this move, it is still problematic on the upside; has to hold the move, right?
SOX: Gapped through the 50 day EMA and the upper trendline, rallied to the 50 day SMA. Tapped it, faded from the high. Not bad, had the help of some big names, e.g. NXPI, FSL, and made a good move. Still needs to break to a higher high, ending the series of lower highs. That will be a more definitive move.
RUTX: Gapped to a tight doji just below the 50 day EMA and the mid-February peak. Up, following the other indices, but not a strong move. Not writing it off, but we are putting a downside IWM play on the report if it kisses the 50 day EMA goodbye.
SP400: Gapped through the 50 day EMA and rallied just past the 50 day SMA. Similar to RUTX and bumping the mid-February peak. Top-heavy, but a bit better position than the RUTX from the look of it.
LEADERSHIP
Still plenty of leadership in key areas, and the biotechs, Yellen or no, look to be back in the mix.
Chips: Some good moves from NXPI, FSL. SWKS looks decent but no volume to speak of. SIMO continues to sport a very nice pattern. Good to see as the market needs the chips to lead.
Software: CYBR reported good results and gapped higher but showed a very big doji and a rather ambiguous pattern in terms of new entries. SPLK gapped nicely, cleared the February closing high, but then gave that up. Still good but needs to keep going. VDSI put in a higher low at the 50 day MA in its triangle; good action. FFIV jumped beautifully. VMW looks ready to bounce back up. An important leadership group.
Big Names: GOOG gapped higher for a second good move. AMZN gapped upside for a second day off the 10 day EMA. AAPL remains sluggish. MNST was bombed on its earnings.
Energy: After two rough sessions, in the move. USO back up. RIG bouncing nicely. ESV looks ready for another entry.
Metals: Off modestly, but for the most part holding their gains. AKS flat and trending up the 10 day EMA, FCX gapped upside to a doji, still in the 10 day EMA test flag.
Financial: Excellent Friday. Our MA gapped to a higher high, V gapped and ran hard, JPM gapped and rallied to a higher high.
Biotechs: Like what we see in AMGN coming off its trendline. AGIO and CLVS look super.
MARKET STATISTICS
NASDAQ
Stats: +58 points (+1.17%) to close at 5003.55
Volume: 1.926B (-2.99%)
Up Volume: 1.38B (+130M)
Down Volume: 586.8M (-186.88M)
A/D and Hi/Lo: Advancers led 1.69 to 1
Previous Session: Advancers led 1.26 to 1
New Highs: 79 (+34)
New Lows: 47 (-22)
S&P
Stats: +28.1 points (+1.35%) to close at 2116.1
NYSE Volume: 776.1M (-3.85%)
A/D and Hi/Lo: Advancers led 4.03 to 1
Previous Session: Advancers led 1.38 to 1
New Highs: 74 (+48)
New Lows: 26 (-23)
DJ30
Stats: +267.05 points (+1.49%) to close at 18191.11
SENTIMENT INDICATORS
VIX: 12.86; -2.27
VXN: 15.38; -1.99
VXO: 12.57; -3.5
Put/Call Ratio (CBOE): 0.86; -0.08. Three sessions over 1.0 in 7. Never was that strong to support a bounce, but didn't seem to matter.
Bulls and Bears: Bulls surge, bears fall right back down.
Bulls: 52.5% versus 57.4% versus 52.5% versus 50.5%
Right back down to the 52.5% level, but after getting close to that 60% level that has marked market tops.
Bears: 13.9% versus 13.9% versus 15.2% versus 13.9%
Bulls fall, bears hold steady. Still the belief that the Fed has the market's back and thus no rise in bearishness at all. This is the one indicator that proves up the market belief the Fed won't let the market fall and shows the problems of moral hazard of bailouts, etc.
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%
57.4% versus 52.5% versus 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.
Bears: 13.9%
13.9% versus 15.2% versus 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.
OTHER MARKETS
Bonds (10 year): 2.14%. Perhaps a bit more belief the Fed might hold off, but if you look at TLT, this is a bear flag relief bounce to the 200 day SMA it broke on Monday.
2.18% versus 2.23% versus 2.17% versus 2.15% versus 2.11% versus 2.04% versus 2.05% versus 1.99% versus 1.92% versus 1.92% versus 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/$: 1.1207 versus 1.1266. Modest bounce as on Thursday. One 'Fast Money' trader actually ventured that the dollar/market connection was not a connection right now.
1.1266 versus 1.1349 versus 1.1189 versus 1.1147 versus 1.1215 versus 1.1220 versus 1.119 versus 1.0982 versus 1.0885 versus 1.0862 versus 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
Oil: 59.32, +0.44. After a two-day weaker trade oil found support at the 10 day EMA with a nice doji.
Gold: 1189.10, +6.80. Up but still in the lower half of the 7 week range.
$/JPY: 119.75 versus 119.75. Flat on the session hold at the 50 day SMA in its own 8 week range.
119.75 versus 119.43 versus 119.85 versus 120.12 versus 120.16 versus 119.41 versus 119.02 versus 118.45 versus 119.10 versus 118.91 versus 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
MONDAY
Jobs Report: check. Earnings: check (more or less). Now what?
Quite simple, actually. With the Jobs Report and its initial reaction to the upside in the bank, we see if the market can hold the move.
Overall the stock indexes were not looking great ahead of the Jobs Report. That report, whether viewed as good enough for the economy without Fed help or as bad enough to put the Fed on hold, induced its move. Now we see if the buyers can take the baton from the jobs data and continue the move with more bids put in because of a belief in better times ahead. Or will the sellers re-emerge and capitalize on the pattern weakness in everything sans DJ30? We will see.
So we are lighter than we were a week ago in terms of positions. We have upside, we have downside, we have new upside and new downside to move to depending upon where the market breaks from here. We view it as technical at this point; of course we typically do.
Friday showed more strength than we thought it would in some instances (DJ30), but was at expectations in terms of other indexes, e.g. RUTX, SP400, even NASDAQ. SP500 looked stronger but was not really that strong in our view.
But, of course, our view does not count, nor does the view of any other pundit count, at least not singularly. So we are watching the leaders, have good plays to go on those (and groups coming back such as the biotechs) as well as some more downside plays.
Our plan is to let the Friday move run its course and see if it can stick. Still view the market as at an important post-QE moment here as it has stumbled upside since QE ended in October. It is not showing the same strength it had in prior moves and indeed is acting somewhat as it did when other QE rounds ended and the market wandered aimlessly, similar to an army of drones when the command center is destroyed. Given that history, it should not be much of a surprise the market is struggling, and as the Fed said QE is over but the economy is not that strong,
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5003.55
Resistance:
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
Support:
4979 is the January to April pattern trendline
The 50 day EMA at 4948
4912 the mid-April China dip
The March lows at 4843 and 4825
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 4696
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 2116.10
Resistance:
2115 is the late March lower high
2119.59 is the February intraday prior all-time high
2126 is the April new all-time high
Support:
2094 is the December 2014 high, the prior all-time high
The 50 day EMA at 2089
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 2030
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 18,191.11
Resistance:
18,206 is the late March lower high
18,289 is the all-time high
Support:
18,104 is the December high
17,991 is the early December interim
The 50 day EMA at 17,944
The January trendline at 17,928
17,923 is the January 2015 lower high
17,748 is the mid-April China margin selloff
The March low at 17,620
The 200 day SMA at 17,472
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
ECONOMIC CALENDAR
May 8 - Friday
Nonfarm Payrolls, April (8:30): 223K actual versus 218K expected, 85K prior (revised from 126K)
Nonfarm Private Payrolls, April (8:30): 213K actual versus 215K expected, 94K prior (revised from 129K)
Unemployment Rate, April (8:30): 5.4% actual versus 5.4% expected, 5.5% prior
Hourly Earnings, April (8:30): 0.1% actual versus 0.2% expected, 0.2% prior (revised from 0.3%)
Average Workweek, April (8:30): 34.5 actual versus 34.5 expected, 34.5 prior
Wholesale Inventories, March (10:00): 0.1% actual versus 0.3% expected, 0.2% prior (revised from 0.3%)
May 12 - Tuesday
JOLTS - Job Openings, March (12:00): 5.133M prior
JOLTS - Job Openings, March (10:00): 5.133M prior
Treasury Budget, April (14:00): $155.0B expected, $106.9B prior
May 13 - Wednesday
MBA Mortgage Index, 05/09 (7:00): -4.6% prior
Retail Sales, April (8:30): 0.2% expected, 0.9% prior
Retail Sales ex-auto, April (8:30): 0.4% expected, 0.4% prior
Export Prices ex-ag., April (8:30): 0.2% prior
Import Prices ex-oil, April (8:30): -0.4% prior
Business Inventories, March (10:00): 0.2% expected, 0.3% prior
Crude Inventories, 05/09 (10:30): -3.882M prior
May 14 - Thursday
Initial Claims, 05/09 (8:30): 275K expected, 265K prior
Continuing Claims, 05/02 (8:30): 2300K expected, 2228K prior
PPI, April (8:30): 0.2% expected, 0.2% prior
Core PPI, April (8:30): 0.1% expected, 0.2% prior
Natural Gas Inventor, 05/09 (10:30): 76 bcf prior
May 15 - Friday
Empire Manufacturing, May (8:30): 4.0 expected, -1.2 prior
Industrial Production, April (9:15): 0.1% expected, -0.6% prior
Capacity Utilization, April (9:15): 78.4% expected, 78.4% prior
Michigan Sentiment, May (10:00): 96.0 expected, 95.9 prior
Net Long-Term TIC Fl, March (16:00): $9.8B prior
End part 1 of 3
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5/9/2015 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 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
- Jobs report good or bad, stocks surge with DJ30 leading.
- Same old story with jobs: part-time now 100% of the jobs, low paying dominate, 55+ get all the jobs, wages falling, record out of workforce.
- Wholesale sales fall for fourth straight month, worst since 2008.
- Eliminating worker skill and training from the pay equation.
- US jobs market resembling state-controlled markets, paving the way for automation.
- Still some good leaders on a solid upside price move: will investors continue putting a bid to the market, i.e. can the move hold?
Thursday I opined the indexes left themselves in position to move higher but that it would take something big to overcome the technical negatives. Friday they certainly did move higher, but whether the Jobs Report was really that strong is open to debate, one we discuss below. In any event, stocks roared upside on the news with SP500 and DJ30 clearly leading the pack based upon both percentage moves and their patterns.
SP500 28.10, 1.35%
NASDAQ 58.01, 1.17%
DJ30 267.05, 1.49%
SP400 0.90%
RUTX 0.77%
SOX 1.00%
VOLUME: NYSE -3.9%, NASDAQ -3%. Lower volume with NYSE sliding a bit lower below average. NASDAQ volume remained above average though slightly lower. Not bad volume at all, but once again, being totally technically anal (TTA, a market technical phrase), volume was lower on an advance than the selling.
A/D: NYSE 4:1, NASDAQ 1.7:1. NASDAQ breadth surprisingly narrow, suggesting more a large cap move. NYSE breadth was excellent, as the small and midcaps staged a recovery after getting hammered the prior two weeks.
SP500 and DJ30 posted the best technical moves with DJ30 clearly the best as it exploded through the top of its triangle and showing better volume, even if it was still below average. SP500 broke through the top of its pattern as well though it is right in the teeth of the prior peaks that failed. Lower volume as well . . . good but not convincing.
NASDAQ gapped back into the pattern and right to resistance. Beats tanking on the news. RUTX gapped to a doji just below the 50 day EMA, gapped to the 50 day SMA. SOX gapped over the 50 day EMA with some help from some big name leaders.
Okay, quite the response to the jobs number. They found their upside catalyst. As discussed last week, how they hold the move is the key. DJ30 is the clear leader, SP500 is there as well but the pattern is not as clear, moving right to resistance. The other indexes are up but did not change the character of their patterns. Some good individual stock moves no doubt, but this week they have to drive the move farther.
NEWS, ECONOMY
Jobs Report extolled as good by some, panned by others as more of the same.
The post-mortem on the April Jobs Report was a 180 degree view. Some say it is great, showing a bounce back from a dismal March revised even lower than first reported. Some say it is a pile of . . . you know what. Our view: it is from the BLS so any resemblance to reality is strictly unintentional.
The takeaways that scream out:
Revisions lower in March for jobs and wages.
New all-time high in persons not in the workforce.
Part-time jobs 100% of jobs created as full-time jobs fall.
55+ age group nets 100% of jobs.
Non-Farm Jobs: 223K versus 218K expected versus 85K March (from 126K).
March was the lowest since June 2012. The 3 month average fell below 200K.
Wages: 0.1% versus 0.2% versus 0.2% prior (revised from 0.3%).
Revisions: Both the number of jobs and waged written lower. Worst of the worst in terms of trends.
Not in the labor force: Moved higher to 93.194M versus 93.175M. Yes, things are getting better.
Workweek: same at 34.5. No growth in hours worked.
Job Types: Some good news, but mostly more of the same.
Construction good at +45K.
Manufacturing not so good: +1K on top of the 0 (goose egg) in March.
For every manufacturing job created, 26 waiter/bartender jobs were created. Fat, Drunk and stupid is no way to go through life, son.
Dean Wormer, 'Animal House' (1978)
Thank goodness the Administration policies have spurred the creation of those wait staff and bartender jobs to replace those manufacturing jobs lost. An equitable trade? Yea, right.
Lowest wage areas lead again:
Professional/Business services: +46K
Healthcare: +61K
Leisure and Hospitality: +17K
Full-time versus Part-time: and the winner is . . . part-time of course
Of the jobs created in April, 100% were part-time. 437K part-time jobs created versus a LOSS of 200K+ fulltime jobs. Fulltime jobs still remain below the 2008 peak.
Who gets the jobs?
Surprise: Still the 55+ age group.
The Household Survey reported a net 255K workers added. Of those jobs over 100% (266K) went to workers aged 55+. In other words, the 54 and younger age demographics LOST jobs. The older generations have to go back to work in ever-increasing numbers to pay for the necessities as it is hard to make interest income at 0% interest rates. Again, darn good thing there are all of those low-paying part-time jobs out there they can pick and choose between.
WHOLESALE INVENTORIES FADE, SALES NEGATIVE FOR 4TH STRAIGHT MONTH
Wholesale Inventories, March: 0.1% versus 0.3% versus 0.2% (from 0.3%)
Wholesale Sales: -0.2%. Four straight months of negative sales, the longest streak since 7 straight negative months in that banner year 2008.
Inventories fell but they did not fall because everyone was buying up the goods as sales were again lower. They just are not buying as much goods given a steady sales decline.
Thus, with this kind of data, you understand the economy is still truly weak, that QE and 0% interest rates and six years of the Administration's policies are not fixing the problem. They inflated financial assets as planned, but step 2 didn't materialize, i.e. the increase in money velocity as the free money was put to work. That never happened, at least outside of stock buybacks and M&A (buy it, don't build it). Therefore the jobs report, with new record highs in people out of the workforce, falling wages, stagnant hours, and more low pay jobs, is not really a positive.
US Labor Market more resembles socialist, indeed communist, labor forces.
Indeed, the US labor market is getting absurdly like the communist labor market under the USSR. A California city just mandated a $16/hour minimum wage and there is the continued push among the fast food workers to raise the minimum wage to $15/hour. This amount of money for rank, unskilled labor.
At the same time, contract legal services that provide fully licensed attorneys for document reviews in mergers and acquisitions and in litigation are paying $20-$26/hour. Three years of law school, passing the bar exam, maintaining expertise with continuing education, incurring tens of thousands of dollars in debt. For all of that, the wage difference versus a fast food worker in one California city is $4.
We are eliminating the benefit of having a skill, JUST as in the communist countries. Baker, welder, nuclear sub crewman: you all worked for the 'good' of the state. Oh if you could play hockey or were freakishly limber for gymnastics you could have a decent life. Everyone else, it didn't matter.
The result: chronically low output and a chronically weak economy with only the elites in the society enjoying the wealth. Wow, sure sounds as if the US is indeed on that path.
The next logical step: Japan has just unveiled robots that move like humans with the aid of a gel-like substance. China is unveiling the first fully robotic plant. It will not be long before McDonald's and all-fast food restaurants have 100% robotic food prep and ordering with just a person to make sure the system is running correctly. And a janitor. The low level jobs will be eliminated THANKS TO THE VERY POLICIES THAT WERE CONTRIVED UNDER THE BELIEF THEY WOULD BENEFIT THE WORKER. Of course with the government the way it is now, it would probably just pass a mandate that no robotic workers were allowed . . .
THE MARKET
CHARTS
DJ30: Strongest chart now, breaking through the top of the pattern and eyeing the February all-time high near 18,300 (closed at 18,191). If all the charts looked like this, the market would look great. Note, however, MACD is lower as it moves toward the high. Not dispositive, but something to watch along with volume as DJ30 attempts the breakout.
SP500: Moved sharply higher, right to the mid-February high and just below the late April and early May high. Weaker volume, lower MACD, but it fought the selling fire with buying fire. Now at the cusp of a new high yet again, not looking internally that great, but following DJ30.
NASDAQ: Gapped into the tip of its triangle, but at this juncture that pattern is pretty battered and beaten. It is at the February, March and early April peaks. Even with this move, it is still problematic on the upside; has to hold the move, right?
SOX: Gapped through the 50 day EMA and the upper trendline, rallied to the 50 day SMA. Tapped it, faded from the high. Not bad, had the help of some big names, e.g. NXPI, FSL, and made a good move. Still needs to break to a higher high, ending the series of lower highs. That will be a more definitive move.
RUTX: Gapped to a tight doji just below the 50 day EMA and the mid-February peak. Up, following the other indices, but not a strong move. Not writing it off, but we are putting a downside IWM play on the report if it kisses the 50 day EMA goodbye.
SP400: Gapped through the 50 day EMA and rallied just past the 50 day SMA. Similar to RUTX and bumping the mid-February peak. Top-heavy, but a bit better position than the RUTX from the look of it.
LEADERSHIP
Still plenty of leadership in key areas, and the biotechs, Yellen or no, look to be back in the mix.
Chips: Some good moves from NXPI, FSL. SWKS looks decent but no volume to speak of. SIMO continues to sport a very nice pattern. Good to see as the market needs the chips to lead.
Software: CYBR reported good results and gapped higher but showed a very big doji and a rather ambiguous pattern in terms of new entries. SPLK gapped nicely, cleared the February closing high, but then gave that up. Still good but needs to keep going. VDSI put in a higher low at the 50 day MA in its triangle; good action. FFIV jumped beautifully. VMW looks ready to bounce back up. An important leadership group.
Big Names: GOOG gapped higher for a second good move. AMZN gapped upside for a second day off the 10 day EMA. AAPL remains sluggish. MNST was bombed on its earnings.
Energy: After two rough sessions, in the move. USO back up. RIG bouncing nicely. ESV looks ready for another entry.
Metals: Off modestly, but for the most part holding their gains. AKS flat and trending up the 10 day EMA, FCX gapped upside to a doji, still in the 10 day EMA test flag.
Financial: Excellent Friday. Our MA gapped to a higher high, V gapped and ran hard, JPM gapped and rallied to a higher high.
Biotechs: Like what we see in AMGN coming off its trendline. AGIO and CLVS look super.
MARKET STATISTICS
NASDAQ
Stats: +58 points (+1.17%) to close at 5003.55
Volume: 1.926B (-2.99%)
Up Volume: 1.38B (+130M)
Down Volume: 586.8M (-186.88M)
A/D and Hi/Lo: Advancers led 1.69 to 1
Previous Session: Advancers led 1.26 to 1
New Highs: 79 (+34)
New Lows: 47 (-22)
S&P
Stats: +28.1 points (+1.35%) to close at 2116.1
NYSE Volume: 776.1M (-3.85%)
A/D and Hi/Lo: Advancers led 4.03 to 1
Previous Session: Advancers led 1.38 to 1
New Highs: 74 (+48)
New Lows: 26 (-23)
DJ30
Stats: +267.05 points (+1.49%) to close at 18191.11
SENTIMENT INDICATORS
VIX: 12.86; -2.27
VXN: 15.38; -1.99
VXO: 12.57; -3.5
Put/Call Ratio (CBOE): 0.86; -0.08. Three sessions over 1.0 in 7. Never was that strong to support a bounce, but didn't seem to matter.
Bulls and Bears: Bulls surge, bears fall right back down.
Bulls: 52.5% versus 57.4% versus 52.5% versus 50.5%
Right back down to the 52.5% level, but after getting close to that 60% level that has marked market tops.
Bears: 13.9% versus 13.9% versus 15.2% versus 13.9%
Bulls fall, bears hold steady. Still the belief that the Fed has the market's back and thus no rise in bearishness at all. This is the one indicator that proves up the market belief the Fed won't let the market fall and shows the problems of moral hazard of bailouts, etc.
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%
57.4% versus 52.5% versus 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.
Bears: 13.9%
13.9% versus 15.2% versus 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.
OTHER MARKETS
Bonds (10 year): 2.14%. Perhaps a bit more belief the Fed might hold off, but if you look at TLT, this is a bear flag relief bounce to the 200 day SMA it broke on Monday.
2.18% versus 2.23% versus 2.17% versus 2.15% versus 2.11% versus 2.04% versus 2.05% versus 1.99% versus 1.92% versus 1.92% versus 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/$: 1.1207 versus 1.1266. Modest bounce as on Thursday. One 'Fast Money' trader actually ventured that the dollar/market connection was not a connection right now.
1.1266 versus 1.1349 versus 1.1189 versus 1.1147 versus 1.1215 versus 1.1220 versus 1.119 versus 1.0982 versus 1.0885 versus 1.0862 versus 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
Oil: 59.32, +0.44. After a two-day weaker trade oil found support at the 10 day EMA with a nice doji.
Gold: 1189.10, +6.80. Up but still in the lower half of the 7 week range.
$/JPY: 119.75 versus 119.75. Flat on the session hold at the 50 day SMA in its own 8 week range.
119.75 versus 119.43 versus 119.85 versus 120.12 versus 120.16 versus 119.41 versus 119.02 versus 118.45 versus 119.10 versus 118.91 versus 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
MONDAY
Jobs Report: check. Earnings: check (more or less). Now what?
Quite simple, actually. With the Jobs Report and its initial reaction to the upside in the bank, we see if the market can hold the move.
Overall the stock indexes were not looking great ahead of the Jobs Report. That report, whether viewed as good enough for the economy without Fed help or as bad enough to put the Fed on hold, induced its move. Now we see if the buyers can take the baton from the jobs data and continue the move with more bids put in because of a belief in better times ahead. Or will the sellers re-emerge and capitalize on the pattern weakness in everything sans DJ30? We will see.
So we are lighter than we were a week ago in terms of positions. We have upside, we have downside, we have new upside and new downside to move to depending upon where the market breaks from here. We view it as technical at this point; of course we typically do.
Friday showed more strength than we thought it would in some instances (DJ30), but was at expectations in terms of other indexes, e.g. RUTX, SP400, even NASDAQ. SP500 looked stronger but was not really that strong in our view.
But, of course, our view does not count, nor does the view of any other pundit count, at least not singularly. So we are watching the leaders, have good plays to go on those (and groups coming back such as the biotechs) as well as some more downside plays.
Our plan is to let the Friday move run its course and see if it can stick. Still view the market as at an important post-QE moment here as it has stumbled upside since QE ended in October. It is not showing the same strength it had in prior moves and indeed is acting somewhat as it did when other QE rounds ended and the market wandered aimlessly, similar to an army of drones when the command center is destroyed. Given that history, it should not be much of a surprise the market is struggling, and as the Fed said QE is over but the economy is not that strong,
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5003.55
Resistance:
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
Support:
4979 is the January to April pattern trendline
The 50 day EMA at 4948
4912 the mid-April China dip
The March lows at 4843 and 4825
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 4696
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 2116.10
Resistance:
2115 is the late March lower high
2119.59 is the February intraday prior all-time high
2126 is the April new all-time high
Support:
2094 is the December 2014 high, the prior all-time high
The 50 day EMA at 2089
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 2030
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 18,191.11
Resistance:
18,206 is the late March lower high
18,289 is the all-time high
Support:
18,104 is the December high
17,991 is the early December interim
The 50 day EMA at 17,944
The January trendline at 17,928
17,923 is the January 2015 lower high
17,748 is the mid-April China margin selloff
The March low at 17,620
The 200 day SMA at 17,472
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
ECONOMIC CALENDAR
May 8 - Friday
Nonfarm Payrolls, April (8:30): 223K actual versus 218K expected, 85K prior (revised from 126K)
Nonfarm Private Payrolls, April (8:30): 213K actual versus 215K expected, 94K prior (revised from 129K)
Unemployment Rate, April (8:30): 5.4% actual versus 5.4% expected, 5.5% prior
Hourly Earnings, April (8:30): 0.1% actual versus 0.2% expected, 0.2% prior (revised from 0.3%)
Average Workweek, April (8:30): 34.5 actual versus 34.5 expected, 34.5 prior
Wholesale Inventories, March (10:00): 0.1% actual versus 0.3% expected, 0.2% prior (revised from 0.3%)
May 12 - Tuesday
JOLTS - Job Openings, March (12:00): 5.133M prior
JOLTS - Job Openings, March (10:00): 5.133M prior
Treasury Budget, April (14:00): $155.0B expected, $106.9B prior
May 13 - Wednesday
MBA Mortgage Index, 05/09 (7:00): -4.6% prior
Retail Sales, April (8:30): 0.2% expected, 0.9% prior
Retail Sales ex-auto, April (8:30): 0.4% expected, 0.4% prior
Export Prices ex-ag., April (8:30): 0.2% prior
Import Prices ex-oil, April (8:30): -0.4% prior
Business Inventories, March (10:00): 0.2% expected, 0.3% prior
Crude Inventories, 05/09 (10:30): -3.882M prior
May 14 - Thursday
Initial Claims, 05/09 (8:30): 275K expected, 265K prior
Continuing Claims, 05/02 (8:30): 2300K expected, 2228K prior
PPI, April (8:30): 0.2% expected, 0.2% prior
Core PPI, April (8:30): 0.1% expected, 0.2% prior
Natural Gas Inventor, 05/09 (10:30): 76 bcf prior
May 15 - Friday
Empire Manufacturing, May (8:30): 4.0 expected, -1.2 prior
Industrial Production, April (9:15): 0.1% expected, -0.6% prior
Capacity Utilization, April (9:15): 78.4% expected, 78.4% prior
Michigan Sentiment, May (10:00): 96.0 expected, 95.9 prior
Net Long-Term TIC Fl, March (16:00): $9.8B prior
End part 1 of 3
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