Saturday, May 23, 2015

The Daily, Part 1 of 3, 5-23-15

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5/23/2015 Investment House Report
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Targets hit: LLNW; QRVO; SWKS
Buy alerts: None issued
Trailing stops: None issued
Stop alerts: None issued

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- 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.



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.


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.


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)

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)

Stats: -53.72 points (-0.29%) to close at 18232.02


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.


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


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!


NASDAQ: Closed at 5089.36

5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high

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

2126 was the April new all-time high

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

18,289 is the March 2015 high, the prior all-time high

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


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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