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6/27/2015 Investment House Report
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MARKET ALERTS:
Targets hit: None issued
Buy alerts: BRLI
Trailing stops: FEYE; SIMO; VDSI
Stop alerts: DANG; FEYE; FSL; MOBI; QRVO; VMW. Closed those not holding support.
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
- SOX breaks, chips fail in leadership, RUTX and NASDAQ try to hold the line.
- China down hard again, Greece still no deal, Fed still on the horizon.
- What a week with the Court: all laws and contracts are now ambiguous
- Sharp selloffs have led to buying. Okay, then let's see what chips and software do this week.
- Biotechs, internet, consumer discretionary stepping in to fill the leadership roles.
It was a big week in many ways though not many of them market related, at least until Friday. More Greece (or less if you are talking a done deal), Chinese stock markets start feeling the result of excess, the Fed starting to talk number of rate hikes, at least for 2015.
It was also Supreme Court week, and some rulings had immediate impact on stocks. The following is a discussion of the Court's ACA holding. It is not meant to be political, but is my legal interpretation of what the ruling accomplishes beyond the ACA. I use the ACA as an example only to illustrate my larger point. Please do not take this as a political statement; you know how I feel already about any government move into traditionally private areas; that is no secret. So, please take this as it is meant, as an analysis of what the ruling means beyond the ACA itself. If you want to skip this and miss the best analysis of this case out there (laughing with you), skip on down to the market coverage.
To hear this on video:
Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.mp4
The ACA ruling came down, and while it had an immediate impact on healthcare stocks as they shot higher, obviously anticipating the Court would rule as per the plain meaning of the words of the statute (but it did not), the bigger implications are to come. We will continue to fund/subsidize health insurance so some people can have insurance while others who were covered no longer do, and suffer or benefit (depending upon your point of view) from what will ultimately be government run healthcare (remember, the ACA was labeled just a 'stepping stone').
Moreover, the Court overturned centuries of contract and legislative law by ruling that four words with obviously clear meaning ('established by the state') was ambiguous, thus allowing it to pontificate as to what Congress' meaning was and reflect upon the circumstances at the time of passage. Realize that neither side argued the language was ambiguous. The Court made this issue up on its own. Now instead of courts applying a strict and logical rule that a contract's or law's clear words were meant to say what they say, any court on any contract or law can rule clear language ambiguous and look at whatever 'evidence' it wants (called parole evidence) to decide what it thinks was meant. In so doing, Justice Roberts opined that Congress' intent was to improve the health insurance market, not destroy it, and given his earlier ruling (that unprecedentedly allows the government to tax a person just for being in the US and thus upheld the personal mandate) that let the ACA stand and create a large infrastructure around it, to overturn it now would 'destroy' the market. So, he ruled the law had to stand.
Think about this. The Court now considers itself to be the law or contract drafter. Regardless of what the parties agreed to or thought they agreed to, the Court can take the words and render what IT believes the law or contract should have said. Maybe the court just wants to cut down on the number of contract lawyers and just have trial lawyers: doesn't matter what you put in a contract, it is all subject to litigation now regardless of what the contract or law says. That is one way to cut down on the number of lawyers.
It makes you wonder just what the ruling would have been if this court regarding the state mandate had come first, before the infrastructure was built up around the ACA. His opinion implies he would have then gone by the ordinary meaning of the words that he admitted in his opinion 'appeared clear on their face.' My word, does Constitutionality now hinge upon timing? Is an unconstitutional law suddenly constitutional after a certain period of time and reliance on it? Is promissory estoppel now a constitutional law precept?
In any event, now any court that desires can cite this case as a reason to not honor the clear words of a contract, putting a trial court judge or appellate court judge in the position of determining what he or she thinks the parties should have contracted for versus what they actually agreed to. That god-like position is not what was intended for our judicial system and makes it extremely subject to political influence, EXACTLY what our 3-branch, separate powers government was supposed to avoid.
Alas that experiment has failed as the Congress has allowed the usurpation of its role as lawmaker to the executive and the courts. Congress was clear in what it wrote; the Court decided it was not clear and applied the ruling that the executive wanted. The clear majority of the US did not want the law at the time and still does not want this law today, but that does not matter in the current system. The clear example: there was clear evidence that the country did not want the law upheld when the Massachusetts senate seat was filled by the election of a person clearly against the bill whose vote would have blocked its passage, but the bill was rushed through before he could be sworn into office. And thus prevent his vote. That evidence was discounted by the Court, but it is clear evidence of what the citizens wanted their Congress to do. This god-like subjectivity in ruling, putting the court in the game as a player and not a constitutionality umpire, is what our system was supposed to avoid.
The ramifications of this ruling will go well, well beyond the ramifications of allowing the ACA to stand, a law of dubious result. Even today people believe that they have healthcare because they have health insurance. They do so until they go to the doctor and realize they have a $4,000 deductible they have no way of affording. Having insurance does not equal having access to healthcare. What is now occurring is that people choose, just as they did before the ACA and their insurance, not to go to the doctor, or they go to the emergency room as they had before they had insurance under the ACA. That of course drives down costs because people are not going to the doctor to get treated, but EVEN SO, costs are moving higher, not lower, as the ACA was supposed to accomplish.
On to the Market! (bet you are glad about that)
Friday market leadership flip-flopped with the recent laggard indexes (SP500, DJ30) leading, while the recent leading indexes (RUTX, NASDAQ) lagged. The flip, however, was not nearly as violent as the flop. SOX was hammered almost 2.5% lower after MU's woefully weak, pathetically paltry earnings. NASDAQ was dragged 0.62% lower as chips, software, and biotechs, basically the recent leaders (though under pressure) cracked.
SP500 -0.82, -0.04%
NASDAQ -31.68, -0.62%
DJ30 56.32, 0.31%
SP400 0.14%
RUTX -0.27%
SOX -2.44%
VOLUME: NYSE +145%, NASDAQ +75%. Russell indexes rebalanced and that led to an explosion of volume. So, never mind when it comes to volume.
A/D: NYSE -1.3:1, NASDAQ -1.4:1. Interestingly light downside breadth indicating that the selling was very narrow but focused on the recent leaders.
On the positive side, RUTX held its 20 day EMA and NASDAQ reached toward its 50 day EMA and rebounded, closing near the middle of its range. And NASDAQ was one of the downside whipping boys on the session. Not a good session of course, but not a complete collapse. Again, it was the recent leaders taking the beating, and that is not good news for the market unless others step up to take their place.
SOX was the real laggard and it gapped through the 50 day MA as well as the lower channel line. There is a range of support form that channel line to a lower channel line formed off the February and March lows; SOX tapped at that on the low. Thus not a great session but SOX is still in the realm of the uptrend though weakened.
SP500, DJ30, SP400 all looked good in comparison, but before we assign leadership status to them, their charts just are not that solid. Trading ranges for the most part, but at least they are holding the ranges.
So, a wild close to a rather wild weak in many ways. Greece bailout turmoil, China stock market turmoil (Shanghai down 7.4% Friday after -3.5% Thursday), Supreme Court decisions, and FOMC rate hike realities soaking in here in the US.
Volatile news and the market showed its vulnerability by reacting in a volatile manner. Whenever the market is in a strong rally mode, it doesn't care what the news is. When some uncertainty sets in, it starts second guessing, starts reading headlines, and volatility moves in. That describes the past week, but it also was a week where the indexes, despite the volatility, held up. Well, almost; there is SOX.
THE MARKET
CHARTS
RUTX: Sold yes, but after tapping at the 20 day EMA on the low, the small caps rebounded to hold near the 10 day EMA. That puts RUTX in the middle of its uptrend channel spanning back to December 2014. Though lower Wednesday to Friday, RUTX is holding the breakout over the April prior all-time high. In short, quite good action as RUTX tests its break to a new high, very much an ordinary test. The question is, can the small caps lead the rest of the market back to the upside after this past week? The large caps have to at least follow along.
SOX: While RUTX held the line, SOX was at the other extreme, unable to hold key levels. Gapped through the 50 day MA and the lower channel line, closing at a lower channel line where it found support in February and again in late March. Not saying that SOX will find support here and bounce, but you watch these levels to see how it reacts. A bounce there has some credence given the prior holds. Chips are weakened and this Friday action certainly was not a good indication.
NASDAQ: Third downside session, undercutting the 10 and 20 day EMA. Tapped toward the 50 day EMA on the low and recovered some lost ground. Decent action, of course not great. NASDAQ broke to a higher high just over a week back, continued into Tuesday, and is now testing. It gave up the new high, but is still working in its uptrend channel from March more or less as it has done all along. May want to test a bit lower to the 50 day EMA as that would not be abnormal.
SP500: Doji just below the 50 day EMA as SP500 faded from the recovery bounce from the prior week into Tuesday. Not great action as no new high, not different action as it is still working in its 4 month, slightly ascending trading range.
SP400: The midcaps hit a higher high Tuesday then in a former RUTX move, immediately gave it back. Still they were up Friday, holding the 50 day MA and leaving themselves in good position to rebound from a higher low.
Summary: Basically the stock indexes are as they were to start the week. DJ30 hanging on, but broke into the bottom half of its 4 month range. SP500 trying to hold in its range near the 50 day MA. NASDAQ, RUTX, SP400 in position to hold and rebound once more, moving in actually pretty bullish patterns. The change is in SOX. It was not that strong coming into the week, up but needing to show more. It could not, and indeed broke sharply lower. One growth index, and an important one, breaking down. Still plenty of strength in the other three growth indexes, but if they start to falter, the market rally is in trouble, once again just after hitting new highs.
LEADERSHIP
The week saw the start of a possible shift in some leadership groups, and Friday saw that shift go full throttle. Chips and software started to break sharply lower, making us wish we had closed more positions such as we did on FFIV and others prior to Friday. Those are key leaders, and while biotechs held up reasonably well and will likely give us some plays this week, the loss of those two groups is a blow and the market has to find other groups, groups that can actually move well, to step up. I suppose you can play the homebuilders, but the possibility of a $2 move in PHM doesn't gin up all that much excitement. Of course if the market weakens, that may end up being a great upside play, relatively speaking.
Semiconductors: Some serious damage, some in position to bounce after some selling. AVGO testing the 50 day EMA. SIMO showing a big reversal from a positive Thursday. QRVO bombing to the 50 day EMA on the close. FSL breaking support, not rebounding. MLNX breaking the 50 day MA. ARMH with a massive gap lower. Hard to find many silver linings, but there are stocks that are solid, e.g. MXWL, AAOI.
Software: Issues here as well with some sharp declines. FFIV breaks the 50 day EMA. VDSI bombs the 20 day EMA on big volume. CYBR is at the 50 day and its lower trendline; not that bad. VMW sold through the 50 day MA. Some good setups arise from selling, however, e.g. BLKB.
Biotechs/Drugs: After a rough Thursday, some improvement. CELG is putting in a nice tests for an entry opportunity. BIIB as well. XON remains in good position to rally again. KITE is set up to break upside.
Health services: Generally in good shape a la biotechs. BRLI broke hard upside.
Internet: Some very interesting patterns and moves. WWWW is working well for us. DATE, FENG, and TRIP all sport very interesting patterns. Even GOOG has some promise in its pattern. This group could emerge as a new leadership group.
Big consumer names: SBUX still moving higher in its trend. NKE and UA rallying well. AMZN holding up very nicely at the 10 day EMA. Others not so great: NFLX struggling, PCLN breaking below the 200 day SMA.
Energy: No step up here as many continued lower. HAL, XEC. Long list.
MARKET STATISTICS
NASDAQ
Stats: -31.68 points (-0.62%) to close at 5080.51
Volume: 2.745B (+75.11%)
Up Volume: 1.14B (+520.63M)
Down Volume: 2.67B (+1.719B)
A/D and Hi/Lo: Decliners led 1.42 to 1
Previous Session: Decliners led 1.17 to 1
New Highs: 137 (+17)
New Lows: 78 (+28)
S&P
Stats: -0.82 points (-0.04%) to close at 2101.49
NYSE Volume: 1.9B (+145.48%)
A/D and Hi/Lo: Decliners led 1.28 to 1
Previous Session: Decliners led 1.8 to 1
New Highs: 84 (+1)
New Lows: 191 (+84)
DJ30
Stats: +56.32 points (+0.31%) to close at 17946.68
SENTIMENT INDICATORS
VIX: 14.02; +0.01
VXN: 15.33; +0.48
VXO: 14.67; +0.19
Put/Call Ratio (CBOE): 1.06; -0.02. Second session over 1.0 on the close.
Bulls and Bears: Bulls jump back over 50%, up 6 points. Bears fall back into the 15% range. They are as flighty and volatile as the market right now. No conviction either way, but overall the bulls are too high and the bears remain too low for the upside market.
Bulls: 51.6% versus 45.5% versus 47.4% versus 51.5%
Bears: 15.4% versus 16.5% versus 16.5% versus 15.8%
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: 51.6%
45.5% versus 47.4% versus 51.5% versus 47.5% versus 51.5% versus 48.5% versus 50.5% versus 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: 15.4%
16.5% versus 16.5% versus 15.8% versus 14.9% versus 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): 2.48% versus 2.40%. Gapping lower and putting in a lower below the low set two weeks back. Now watch to see if there is a false break, a reversal back through that low. Looks as if that could be the case with rising MACD on this lower low.
Historical: 2.40% versus 2.37% versus 2.40% versus 2.36% versus 2.26% versus 2.35% versus 2.32% versus 2.32% versus 2.36% versus 2.39% versus 2.39% versus 2.48% versus 2.433% versus 2.388% versus 2.40% versus 2.31% versus 2.37% versus 2.26% versus 2.18% versus 2.10% versus 2.137% versus 2.133% versus 2.13% versus 2.21%
Euro/$: 1.1205 versus 1.1199. Slightly lower just below the 50 day MA.
Historical: 1.1199 versus 1.1170 versus 1.1341 versus 1.1344 versus 1.1372 versus 1.1339 versus 1.1243 versus 1.1284 versus 1.1254 versus 1.1268 versus 1.1325 versus 1.1277 versus 1.1288 versus 1.1119 versus 1.1241 versus 1.1272 versus 1.1144 versus 1.0922
Oil: 59.63, -0.06. Doji at the 50 day SMA, Right in the middle of the tight two month lateral move.
Gold: 1173.20, +1.40. Holding at some support in its three month lateral move below the 200 day SMA.
$/JPY: 123.82 versus 123.63. Bouncing off the 2 day test of the 20 day EMA, the dollar looks to be heading higher against the yen again.
Historical: 123.63 versus 123.88 versus 123.69 versus 123.37 versus 122.66 versus 122.91 versus 123.415 versus 123.39 versus 123.38 versus 123.41 versus 122.64 versus 124.31 versus 124.44 versus 125.50 versus 124.35 versus 124.26 versus 124.12 versus 124.81 versus 124.10 versus 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
MONDAY
Sharp selloffs such as SOX is showing (and the chips overall) as well as software have proved to be buying opportunities. We will see.
There are issues for sure. Shanghai market off 10+% in two sessions. Greece deal or no deal. Fed rate hikes sooner than later. Some leadership groups under pressure to end the week.
There are new leader groups as well. After a lot of a pullback biotech big names are setting up to move up. They can provide NASDAQ some powerful lift and give us some powerful plays. Internet stocks are setting up nicely. If they throw in with the upside that is a powerful upside group.
Even with internet stocks and biotechs, the market needs some new leaders right. If they show up again, of course the market rallies. If not, then perhaps the selloff so many are predicting or calling for comes on.
RUTX looks fine, SP400 is not bad at all, and NASDAQ has not hurt itself, testing over the 50 day EMA. Even SP500 has given itself a chance at the 50 day EMA. Perhaps a selloff is coming, but the indexes are not unanimous in that outcome, at least not at this point.
Again, that means leaders need to show up. As noted, biotech is setting up new buys. We see some others that look decent, e.g. internet (TRIP, DATE), KR with its stock split announcement and flag pattern and BLKB (software) with a flag as well. Telecom was pressured but there are still some good patterns. Ditto software. Retail started breaking higher, e.g. WSM, TJX. Even chips show good patterns, e.g. PSEM, MXWL.
There is ammunition there. The question is whether it will be used to keep the uptrends in place. There is enough also enough pessimism for the rally to fuel the upside despite the overall investment advisors.
That said, we don't want to assume the upside has to remain in place. Key breaks in chips and software are taking prime leadership away. As we always say, the market has to have leaders and they have to be in position to lead. We will see with many of the chips and software as they try to hold, or try to recover, the 50 day EMA. Also we have the biotechs; they look to be in position but will need help.
On the upside, given the time of year, you want to have reasonable expectations. Don't anticipate huge runs. Set logical goals, and take some gain. Our plays are ones that have specific targets that do not require plowing new ground to make us good money. That is a key part of the play selection: a pattern may look good, but if it has to breakout, hold the break, and then move to new highs, this is not the best time of the year. It puts some of the odds against you instead of putting the probabilities in your favor. So, we look at plays that don't have to hit the long ball to make us good, very good, money.
If they cannot make it, then some downside plays are warranted. We will see how they set up as well and if 'leaders' downside emerge. We don't care really which way the market goes as long as we are there and are ready to make the plays. Sure the upside is more comfortable, particularly after 6 years of Fed QE pushing stocks higher and higher. If the downside setups show up in number, however, we need to play them.
Short week with a Friday holiday for Independence Day.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5080.51
Resistance:
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
5206 is the upper channel line
Support:
The 50 day EMA at 5046
5042 is the March 2015 high
The lower trendline is at 5008
5008.57 is the early March 2015 post-bear market high
The June low at 4974
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)
The 200 day SMA at 4796
4774 is the January high
4751 is the January 2015 lower high
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
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 2101.49
Resistance:
The 50 day EMA at 2103
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:
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 2053
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 17,946.68
Resistance:
17,991 is the early December interim
The 50 day EMA at 18,000
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:
17,923 is the January 2015 lower high
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
The June low at 17,715
The 200 day SMA at 17,675
The March low at 17,604
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
June 26 - Friday
Michigan Sentiment - Final, June (10:00): 96.1 actual versus 94.6 expected, 94.6 prior
June 29 - Monday
Pending Home Sales, May (10:00): 1.4% expected, 3.4% prior
June 30 - Tuesday
Case-Shiller 20-city, April (9:00): 5.6% expected, 5.0% prior
Chicago PMI, June (9:45): 50.0 expected, 46.2 prior
Consumer Confidence, June (10:00): 97.5 expected, 95.4 prior
July 1 - Wednesday
MBA Mortgage Index, 06/27 (7:00): 1.6% prior
Challenger Job Cuts, June (7:30): -22.5% prior
ADP Employment Chang, June (8:15): 220K expected, 201K prior
ISM Index, June (10:00): 53.2 expected, 52.8 prior
Construction Spendin, May (10:00): 0.2% expected, 2.2% prior
Crude Inventories, 06/27 (10:30): -4.934M prior
Auto Sales, June (17:00): 5.9M prior
Truck Sales, June (17:00): 8.4M prior
July 2 - Thursday
Initial Claims, 06/27 (8:30): 270K expected, 271K prior
Continuing Claims, 06/20 (8:30): 2231K expected, 2247K prior
Nonfarm Payrolls, June (8:30): 230K expected, 280K prior
Nonfarm Private Payr, June (8:30): 225K expected, 262K prior
Unemployment Rate, June (8:30): 5.4% expected, 5.5% prior
Hourly Earnings, June (8:30): 0.2% expected, 0.3% prior
Average Workweek, June (8:30): 34.5 expected, 34.5 prior
Factory Orders, May (10:00): 0.2% expected, -0.4% prior
Natural Gas Inventor, 06/27 (10:30): 75 bcf prior
End part 1 of 3
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Saturday, June 27, 2015
Saturday, June 20, 2015
The Daily, Part 1 of 3, 6-20-15
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6/20/2015 Investment House Report
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MARKET ALERTS:
Targets hit: None issued. Took some great gain on the week, Friday let positions work.
Buy alerts: None issued
Trailing stops: AAOI
Stop alerts: AAOI; CTRP; SFUN
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
- Post-FOMC euphoria half life flashes by, but perhaps just a test.
- Stock indexes testing the new highs. Now will they hold and bounce or just roll over as in April and May?
- Leaders continue to work quite well even as market gives back some gain.
- Earnings could be the fly in the ointment, the monkey in the wrench, for this latest move.
- Looking for more of a test then we see if some buys are set up.
This weekend is my birthday so the summary will be shorter. The idea discussed Thursday is a test post-FOMC that leads to some better entries the coming week. Some semiconductors could present new buys along with more drugs/biotechs/healthcare. We have several we are looking at currently on the report, and we add some more this weekend, as well as some telecom, a chip, and other great patterns.
Friday some of the post-FOMC/Yellen the Greatest euphoria wore off. Stocks started modestly higher but could not hold the move, fading across the board. All fades were not equal, however, as RUTX was flat while SP400 and SOX were relative strength leaders. Growth continued to perform better.
SP500 -11.25, -0.53%
NASDAQ -15.95, -0.31%
DJ30 -99.89, -0.55%
SP400 -0.22%
RUTX flat
SOX -0.31%
VOLUME: Surged on an S&P rebalance. NYSE +122%, NASDAQ +25%
A/D: NYSE -1.4:1, NASDAQ -1.2:1
We said the market might give some better entry points early next week, and it looks as if that might be the case given the Friday fade. That is okay; there are a lot of good stocks that rallied hard, some that broke higher we missed, and others that just started upside but we could still use a test as a better entry. With the Friday follow up action to the post-FOMC rally, those might come around next week and give us some good entries just as we are looking for.
Thus Friday we stuck to the plan and did not enter any new positions. Not that we would have shunned a good move, we just didn't see moves that we just had to get in, moves that would not be there next week with a bit of a test.
NEWS/ECONOMY
After the FOMC meeting Thursday, it was somewhat poetic there was no scheduled economic data Friday. It was, appropriately, a very quiet news day.
There was of course news, it just was nothing too new.
No change in Greece. Lots of posturing, lots of talk, lots of rumors. Bottom line: no deal. It would be our guess that the US market is getting pretty comfortable with the idea Greece may not be bailed out, at least not by the EU/ECB/IMF. It might be Russia, China, or a combination thereof.
And of course the great IMF further undermined a deal by promising to continue funding the Ukraine even if it missed its repayment. So, the IMF is siding with Ukraine because it is against Russia, at the same time pissing off the Greeks and pushing them to side with Russia. Is that what the IMF and EU really want to accomplish? They are very close to doing just that.
THE MARKET
CHARTS
RUTX: After the new high posted Thursday, RUTX faded, but just 0.01 points. RUTX continues to demonstrate it is the leader, but the question is whether it holds the breakout. This is the EXACT action it showed in April when it broke to a new high, showed a tight doji the next session, then gapped downside. Hard. So, yes it looked quite good Friday, but recent history suggests that is not necessarily proof of anything.
SP400: The midcaps gave up some ground and the break to a new high, but not a collapse. Still a good pattern, but as with RUTX, the last time the midcaps put in a new high in May, they showed the same action, looked great, then four sessions later gapped downside.
COMPQX: Faded some of the Thursday break to a new all-time high, but still holding over the May prior peak. A solid move on the week, starting with that test lower Monday and intraday reversal. As with the RUTX and SP400, the trick for NASDAQ is to avoid the kind of selloff it put in after the new high in April. That was a fast and hard drop we would like to see it avoid. A pullback/test if fine; a flop is not.
SOX: Faded also on Friday but tapped the 10 and 20 day EMA and rebounded to cut the losses. SOX is attempting to recover leadership status, coming off a short double bottom at the 50 day SMA. Similar action to end April/start May with a short double bottom that jumped the index higher and started the move toward the June peak.
SP500: Faded the Thursday move, still holding over the 50 day EMA. Mid-range, coming off the double bottom, and now we see if SP500 can make the test and hold it to a new bounce.
DJ30: Mid-range as well, holding just over the 50 day EMA as it fades the three day bounce through the 50 day. Not leading, just following. Of course it needs something to follow, meaning the other indices need to hold and then rebound.
So with the recent history of new highs on the indexes, you can see why we wanted to wait for this week to see if the moves test a bit more, this time hold, then make new breaks higher.
LEADERSHIP:
Software: Extended, but continues its leadership role. VDSI put in a new high Friday. FEYE holds its gains along with CYBR, posting a modest test. SPLK rallied on the week.
Chips: Started breaking upside again in some cases last week. NXPI looks good to move. SWKS started upside. AVGO continues building a good pattern. QRVO rallied nicely to the prior peak.
Biotech/Drugs/Healthcare: Continued strength with some good patterns building for the next moves. XON posted a great week. TTPH put in a great recovery. HZNP, GLMD, ZIOP put in good moves. Others look solid, e.g. BRLI, AMRN, DYAX, KITE.
MARKET STATISTICS
NASDAQ
Stats: -15.95 points (-0.31%) to close at 5117
Volume: 2.287B (+24.9%)
Up Volume: 917.25M (-542.75M)
Down Volume: 1.48B (+1.086B)
A/D and Hi/Lo: Decliners led 1.22 to 1
Previous Session: Advancers led 2.34 to 1
New Highs: 154 (-18)
New Lows: 37 (0)
S&P
Stats: -11.25 points (-0.53%) to close at 2109.99
NYSE Volume: 1.9B (+122.87%)
A/D and Hi/Lo: Decliners led 1.43 to 1
Previous Session: Advancers led 2.02 to 1
New Highs: 100 (-11)
New Lows: 56 (+16)
DJ30
Stats: -99.89 points (-0.55%) to close at 18015.95
SENTIMENT INDICATORS
VIX: 13.96; +0.77
VXN: 14.61; +0.73
VXO: 14.29; +0.93
Put/Call Ratio (CBOE): 0.93; +0.04
Bulls and Bears: Bulls fall back down to 48%ish, keeping the weekly back and forth tennis match between 48 and 51 going. Bears actually break higher over 16% for the first time in what has to be ages.
Bulls: 47.4% versus 51.5% versus 48.5% versus 50.6% versus 47.5%
Still bouncing back and forth in a range that is centering around 50.
Bears: 16.5% versus 15.8% versus 14.9% versus 15.8% versus 15.8% versus 13.9%
This week both bulls and bears move in the same direction in terms of both being a bit more negative.
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: 47.4%
51.5% versus 47.5% versus 51.5% versus 48.5% versus 50.5% versus 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: 16.5%
15.8% versus 14.9% versus 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): 2.26% versus 2.35%. Bonds put in a higher low on the week with the Friday fairly massive upside gap. Rallying off the lows from two weeks back, but a long way to go to even approach the peak from February.
Historical: 2.35% versus 2.32% versus 2.32% versus 2.36% versus 2.39% versus 2.39% versus 2.48% versus 2.433% versus 2.388% versus 2.40% versus 2.31% versus 2.37% versus 2.26% versus 2.18% versus 2.10% versus 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/$: 1.1344 versus 1.1372. Modest gain but gave back much of the move on the session. The dollar is still down the past four weeks versus the euro, but perhaps attempting a double bottom spanning May to June.
Historical: 1.1372 versus 1.1339 versus 1.1243 versus 1.1284 versus 1.1254 versus 1.1268 versus 1.1325 versus 1.1277 versus 1.1288 versus 1.1119 versus 1.1241 versus 1.1272 versus 1.1144 versus 1.0922 versus 1.0985 versus 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
Oil: 59.97, -0.48. Gold continues to work laterally in its 7 week trading range.
Gold: 1201.90, -0.10. Holding the Thursday break higher toward the 200 day SMA. Up and now has to take out the 200 day SMA.
$/JPY: 122.675 versus 122.91. The dollar sold for the third session this week, breaking lower form the lateral consolidation at the 20 day EMA. Nothing like the Fed cheesing up on a rate hike, and more than that, bending over backwards to blunt the notion, has on the currency.
Historical: 122.91 versus 123.415 versus 123.39 versus 123.38 versus 123.41 versus 122.64 versus 124.31 versus 124.44 versus 125.50 versus 124.35 versus 124.26 versus 124.12 versus 124.81 versus 124.10 versus 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
MONDAY
Again, our primary plan of action is to let the market test a bit more post-FOMC and see if any new buys set up in the leading areas and emerging sectors. Three indexes broke to new highs the past week and are now testing. They did this in April and May and the results were less than positive. Thus we want to see the test, see it hold, and watch for leaders breaking back upside.
If they cannot hold the breaks to new highs we will be taking positions off the table. Fortunately we have banked quite a bit of gain on the way up in the event the move runs out of gas.
Pretty straightforward plan of action, but of course the market has a way of throwing curves when we prepare for fastballs.
Some of the potential curves are earnings reports. This week saw some of the first earnings trickle in and they were less than encouraging. ORCL whined about the dollar as it missed. KMX missed on the top line. RHT and SWHC beat, but they guided lower. FDX missed top and bottom line. ADBE guided lower. JBL missed top line, guided lower as well. Less than impressive early results.
This could be a problem for the stock market and it might start pricing in that possibility ahead of results. That is something to watch for and we will of course see it in the indexes' ability to hold the breaks higher and leaders holding their gains and patterns. It is summer, stocks typically struggle once midsummer, recover, then struggle in September into October. We have good moves in place but that does not mean they have to hold.
So this week we start watching for a bit more of a fade of last week's move, watching for the leaders to hold near support, and pick up some positions as they break back upside. Some good stocks are already in position, e.g. NXPI, BRLI, MOBI. CRM looks ready to test its break higher and possible present a good entry. There are quality patterns from quality stocks. We will let them set up, and if they show the 'buy me' action, then we act accordingly.
Thanks for letting me be brief today. Birthday, Father's Day, Anniversary this coming week; I try to cram them all in at once. More efficient.
Have a great Father's Day!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5117.00
Resistance:
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
5207 is the upper channel line
Support:
5042 is the March 2015 high
The 50 day EMA at 5029
5008.57 is the early March 2015 post-bear market high
The June low at 4974
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)
The 200 day SMA at 4783
4774 is the January high
4751 is the January 2015 lower high
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
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 2109.99
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 2050
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 18,105.95
Resistance:
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:
18,104 is the December high
The 50 day EMA at 17,998
17,991 is the early December interim
17,923 is the January 2015 lower high
17,748 is the mid-April China margin selloff
The June low at 17,715
The 200 day SMA at 17,651
The March low at 17,604
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
June 22 - Monday
Existing Home Sales, May (10:00): 5.26M expected, 5.04M prior
June 23 - Tuesday
Durable Orders, May (8:30): -0.5% expected, -1.0% prior (revised from -0.5%)
Durable Goods -ex tr, May (8:30): 0.6% expected, -0.2% prior (revised from 0.5%)
FHFA Housing Price I, April (9:00): 0.3% prior
New Home Sales, May (10:00): 525K expected, 517K prior
June 24 - Wednesday
MBA Mortgage Index, 06/20 (7:00)
GDP - Third Estimate, Q1 (8:30): -0.2% expected, -0.7% prior
GDP Deflator - Third, Q1 (8:30): -0.1% expected, -0.1% prior
Crude Inventories, 06/20 (10:30)
June 25 - Thursday
Initial Claims, 06/20 (8:30): 271K expected, 267K prior
Continuing Claims, 06/13 (8:30): 2210K expected, 2222K prior
Personal Income, May (8:30): 0.5% expected, 0.4% prior
Personal Spending, May (8:30): 0.7% expected, 0.0% prior
PCE Prices - Core, May (8:30): 0.1% expected, 0.1% prior
Natural Gas Inventor, 06/20 (10:30): 89 bcf prior
June 26 - Friday
Michigan Sentiment - Final, June (10:00): 94.8 expected, 94.6 prior
End part 1 of 3
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MARKET ALERTS:
Targets hit: None issued. Took some great gain on the week, Friday let positions work.
Buy alerts: None issued
Trailing stops: AAOI
Stop alerts: AAOI; CTRP; SFUN
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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.
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If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- Post-FOMC euphoria half life flashes by, but perhaps just a test.
- Stock indexes testing the new highs. Now will they hold and bounce or just roll over as in April and May?
- Leaders continue to work quite well even as market gives back some gain.
- Earnings could be the fly in the ointment, the monkey in the wrench, for this latest move.
- Looking for more of a test then we see if some buys are set up.
This weekend is my birthday so the summary will be shorter. The idea discussed Thursday is a test post-FOMC that leads to some better entries the coming week. Some semiconductors could present new buys along with more drugs/biotechs/healthcare. We have several we are looking at currently on the report, and we add some more this weekend, as well as some telecom, a chip, and other great patterns.
Friday some of the post-FOMC/Yellen the Greatest euphoria wore off. Stocks started modestly higher but could not hold the move, fading across the board. All fades were not equal, however, as RUTX was flat while SP400 and SOX were relative strength leaders. Growth continued to perform better.
SP500 -11.25, -0.53%
NASDAQ -15.95, -0.31%
DJ30 -99.89, -0.55%
SP400 -0.22%
RUTX flat
SOX -0.31%
VOLUME: Surged on an S&P rebalance. NYSE +122%, NASDAQ +25%
A/D: NYSE -1.4:1, NASDAQ -1.2:1
We said the market might give some better entry points early next week, and it looks as if that might be the case given the Friday fade. That is okay; there are a lot of good stocks that rallied hard, some that broke higher we missed, and others that just started upside but we could still use a test as a better entry. With the Friday follow up action to the post-FOMC rally, those might come around next week and give us some good entries just as we are looking for.
Thus Friday we stuck to the plan and did not enter any new positions. Not that we would have shunned a good move, we just didn't see moves that we just had to get in, moves that would not be there next week with a bit of a test.
NEWS/ECONOMY
After the FOMC meeting Thursday, it was somewhat poetic there was no scheduled economic data Friday. It was, appropriately, a very quiet news day.
There was of course news, it just was nothing too new.
No change in Greece. Lots of posturing, lots of talk, lots of rumors. Bottom line: no deal. It would be our guess that the US market is getting pretty comfortable with the idea Greece may not be bailed out, at least not by the EU/ECB/IMF. It might be Russia, China, or a combination thereof.
And of course the great IMF further undermined a deal by promising to continue funding the Ukraine even if it missed its repayment. So, the IMF is siding with Ukraine because it is against Russia, at the same time pissing off the Greeks and pushing them to side with Russia. Is that what the IMF and EU really want to accomplish? They are very close to doing just that.
THE MARKET
CHARTS
RUTX: After the new high posted Thursday, RUTX faded, but just 0.01 points. RUTX continues to demonstrate it is the leader, but the question is whether it holds the breakout. This is the EXACT action it showed in April when it broke to a new high, showed a tight doji the next session, then gapped downside. Hard. So, yes it looked quite good Friday, but recent history suggests that is not necessarily proof of anything.
SP400: The midcaps gave up some ground and the break to a new high, but not a collapse. Still a good pattern, but as with RUTX, the last time the midcaps put in a new high in May, they showed the same action, looked great, then four sessions later gapped downside.
COMPQX: Faded some of the Thursday break to a new all-time high, but still holding over the May prior peak. A solid move on the week, starting with that test lower Monday and intraday reversal. As with the RUTX and SP400, the trick for NASDAQ is to avoid the kind of selloff it put in after the new high in April. That was a fast and hard drop we would like to see it avoid. A pullback/test if fine; a flop is not.
SOX: Faded also on Friday but tapped the 10 and 20 day EMA and rebounded to cut the losses. SOX is attempting to recover leadership status, coming off a short double bottom at the 50 day SMA. Similar action to end April/start May with a short double bottom that jumped the index higher and started the move toward the June peak.
SP500: Faded the Thursday move, still holding over the 50 day EMA. Mid-range, coming off the double bottom, and now we see if SP500 can make the test and hold it to a new bounce.
DJ30: Mid-range as well, holding just over the 50 day EMA as it fades the three day bounce through the 50 day. Not leading, just following. Of course it needs something to follow, meaning the other indices need to hold and then rebound.
So with the recent history of new highs on the indexes, you can see why we wanted to wait for this week to see if the moves test a bit more, this time hold, then make new breaks higher.
LEADERSHIP:
Software: Extended, but continues its leadership role. VDSI put in a new high Friday. FEYE holds its gains along with CYBR, posting a modest test. SPLK rallied on the week.
Chips: Started breaking upside again in some cases last week. NXPI looks good to move. SWKS started upside. AVGO continues building a good pattern. QRVO rallied nicely to the prior peak.
Biotech/Drugs/Healthcare: Continued strength with some good patterns building for the next moves. XON posted a great week. TTPH put in a great recovery. HZNP, GLMD, ZIOP put in good moves. Others look solid, e.g. BRLI, AMRN, DYAX, KITE.
MARKET STATISTICS
NASDAQ
Stats: -15.95 points (-0.31%) to close at 5117
Volume: 2.287B (+24.9%)
Up Volume: 917.25M (-542.75M)
Down Volume: 1.48B (+1.086B)
A/D and Hi/Lo: Decliners led 1.22 to 1
Previous Session: Advancers led 2.34 to 1
New Highs: 154 (-18)
New Lows: 37 (0)
S&P
Stats: -11.25 points (-0.53%) to close at 2109.99
NYSE Volume: 1.9B (+122.87%)
A/D and Hi/Lo: Decliners led 1.43 to 1
Previous Session: Advancers led 2.02 to 1
New Highs: 100 (-11)
New Lows: 56 (+16)
DJ30
Stats: -99.89 points (-0.55%) to close at 18015.95
SENTIMENT INDICATORS
VIX: 13.96; +0.77
VXN: 14.61; +0.73
VXO: 14.29; +0.93
Put/Call Ratio (CBOE): 0.93; +0.04
Bulls and Bears: Bulls fall back down to 48%ish, keeping the weekly back and forth tennis match between 48 and 51 going. Bears actually break higher over 16% for the first time in what has to be ages.
Bulls: 47.4% versus 51.5% versus 48.5% versus 50.6% versus 47.5%
Still bouncing back and forth in a range that is centering around 50.
Bears: 16.5% versus 15.8% versus 14.9% versus 15.8% versus 15.8% versus 13.9%
This week both bulls and bears move in the same direction in terms of both being a bit more negative.
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: 47.4%
51.5% versus 47.5% versus 51.5% versus 48.5% versus 50.5% versus 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: 16.5%
15.8% versus 14.9% versus 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): 2.26% versus 2.35%. Bonds put in a higher low on the week with the Friday fairly massive upside gap. Rallying off the lows from two weeks back, but a long way to go to even approach the peak from February.
Historical: 2.35% versus 2.32% versus 2.32% versus 2.36% versus 2.39% versus 2.39% versus 2.48% versus 2.433% versus 2.388% versus 2.40% versus 2.31% versus 2.37% versus 2.26% versus 2.18% versus 2.10% versus 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/$: 1.1344 versus 1.1372. Modest gain but gave back much of the move on the session. The dollar is still down the past four weeks versus the euro, but perhaps attempting a double bottom spanning May to June.
Historical: 1.1372 versus 1.1339 versus 1.1243 versus 1.1284 versus 1.1254 versus 1.1268 versus 1.1325 versus 1.1277 versus 1.1288 versus 1.1119 versus 1.1241 versus 1.1272 versus 1.1144 versus 1.0922 versus 1.0985 versus 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
Oil: 59.97, -0.48. Gold continues to work laterally in its 7 week trading range.
Gold: 1201.90, -0.10. Holding the Thursday break higher toward the 200 day SMA. Up and now has to take out the 200 day SMA.
$/JPY: 122.675 versus 122.91. The dollar sold for the third session this week, breaking lower form the lateral consolidation at the 20 day EMA. Nothing like the Fed cheesing up on a rate hike, and more than that, bending over backwards to blunt the notion, has on the currency.
Historical: 122.91 versus 123.415 versus 123.39 versus 123.38 versus 123.41 versus 122.64 versus 124.31 versus 124.44 versus 125.50 versus 124.35 versus 124.26 versus 124.12 versus 124.81 versus 124.10 versus 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
MONDAY
Again, our primary plan of action is to let the market test a bit more post-FOMC and see if any new buys set up in the leading areas and emerging sectors. Three indexes broke to new highs the past week and are now testing. They did this in April and May and the results were less than positive. Thus we want to see the test, see it hold, and watch for leaders breaking back upside.
If they cannot hold the breaks to new highs we will be taking positions off the table. Fortunately we have banked quite a bit of gain on the way up in the event the move runs out of gas.
Pretty straightforward plan of action, but of course the market has a way of throwing curves when we prepare for fastballs.
Some of the potential curves are earnings reports. This week saw some of the first earnings trickle in and they were less than encouraging. ORCL whined about the dollar as it missed. KMX missed on the top line. RHT and SWHC beat, but they guided lower. FDX missed top and bottom line. ADBE guided lower. JBL missed top line, guided lower as well. Less than impressive early results.
This could be a problem for the stock market and it might start pricing in that possibility ahead of results. That is something to watch for and we will of course see it in the indexes' ability to hold the breaks higher and leaders holding their gains and patterns. It is summer, stocks typically struggle once midsummer, recover, then struggle in September into October. We have good moves in place but that does not mean they have to hold.
So this week we start watching for a bit more of a fade of last week's move, watching for the leaders to hold near support, and pick up some positions as they break back upside. Some good stocks are already in position, e.g. NXPI, BRLI, MOBI. CRM looks ready to test its break higher and possible present a good entry. There are quality patterns from quality stocks. We will let them set up, and if they show the 'buy me' action, then we act accordingly.
Thanks for letting me be brief today. Birthday, Father's Day, Anniversary this coming week; I try to cram them all in at once. More efficient.
Have a great Father's Day!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5117.00
Resistance:
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
5207 is the upper channel line
Support:
5042 is the March 2015 high
The 50 day EMA at 5029
5008.57 is the early March 2015 post-bear market high
The June low at 4974
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)
The 200 day SMA at 4783
4774 is the January high
4751 is the January 2015 lower high
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
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 2109.99
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 2050
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 18,105.95
Resistance:
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:
18,104 is the December high
The 50 day EMA at 17,998
17,991 is the early December interim
17,923 is the January 2015 lower high
17,748 is the mid-April China margin selloff
The June low at 17,715
The 200 day SMA at 17,651
The March low at 17,604
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
June 22 - Monday
Existing Home Sales, May (10:00): 5.26M expected, 5.04M prior
June 23 - Tuesday
Durable Orders, May (8:30): -0.5% expected, -1.0% prior (revised from -0.5%)
Durable Goods -ex tr, May (8:30): 0.6% expected, -0.2% prior (revised from 0.5%)
FHFA Housing Price I, April (9:00): 0.3% prior
New Home Sales, May (10:00): 525K expected, 517K prior
June 24 - Wednesday
MBA Mortgage Index, 06/20 (7:00)
GDP - Third Estimate, Q1 (8:30): -0.2% expected, -0.7% prior
GDP Deflator - Third, Q1 (8:30): -0.1% expected, -0.1% prior
Crude Inventories, 06/20 (10:30)
June 25 - Thursday
Initial Claims, 06/20 (8:30): 271K expected, 267K prior
Continuing Claims, 06/13 (8:30): 2210K expected, 2222K prior
Personal Income, May (8:30): 0.5% expected, 0.4% prior
Personal Spending, May (8:30): 0.7% expected, 0.0% prior
PCE Prices - Core, May (8:30): 0.1% expected, 0.1% prior
Natural Gas Inventor, 06/20 (10:30): 89 bcf prior
June 26 - Friday
Michigan Sentiment - Final, June (10:00): 94.8 expected, 94.6 prior
End part 1 of 3
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Saturday, June 13, 2015
The Daily, Part 1 of 3, 6-13-15
* * * *
6/13/2015 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: None issued
Buy alerts: ININ; VDSI
Trailing stops: CMGE; NOAH
Stop alerts: CRIS
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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TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.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
- Large caps resume decline, small and midcaps holding up very well.
- Nothing has really changed for the market and that can be good and that can be bad.
- Just when you thought you could just sit back and trust the data . . .
- Not seeing much good come out of the Wednesday FOMC rate decision announcement.
Friday was back to the downside after a two day upside bounce. Bigger picture, it was really more of the same in terms of individual stock index moves and also the market move overall. That means some indexes show renewed strength while other indexes are showing renewed weakness in a market that remains somewhat split.
DJ30 and SP500 faded from their two day bounce to the 50 day EMA breaches. Sure looks like a relief bounce in the process of failing for those two.
NASDAQ and SOX were lower as well with NASDAQ at the 20 day EMA, gapping lower after the Thursday gap higher to the April and May peaks. That could be an issue for the upside as NASDAQ was rejected with a gap, but the day did not show a cataclysmic decline or reversal. SOX gapped lower to the 50 day EMA where it held, trying to reset for another move from a possible short term double bottom. Perhaps, but it will have to show it and prove that it can regain the leader mantle.
RUTX and SP400 continue to look the most leader-like, at least in terms of the upside. Yes both were lower along with the rest of the indexes, but showing very tame action after good recoveries. RUTX shows a very tight doji above the 10 day EMA. SP400 sold back but is easily holding above the 50 day MA's and the lower trendline in its January channel. These are not just awesome patterns by any stretch; they have simply held on and are overcoming the odds of some pretty bad patterns, and that is impressive given the overall market summer lethargy.
Interesting isn't it? The dollar is lower the past three weeks after a bounce from the April to May selling, and is still well off the peaks from March and April. You would think that would benefit the large cap stocks and thus SP500, DJ30. Yet, those indexes are selling while the smaller caps are performing better. Is it all regional banks providing the lift for SP400 and RUTX thanks to the interest rate gains? They are no doubt a good part of the strength, but other areas in these indexes, e.g. biotech/drugs, are performing well.
SP500 -14.75, -0.70%
NASDAQ -13.41, -0.62%
DJ30 -140.53, -0.78%
SP400 -0.43%
RUTX -0.31%
SOX -0.89%
VOLUME: NYSE -16%, NASDAQ -11%. Lower volume so no dumping, but definitely no bids to support stocks on the session.
A/D: NYSE -1.8:1 decliners over advancers. NASDAQ -1.4:1.
Leadership was very good in some cases, though mostly taking a pause. Software was mixed, strong early week with some fading late (FFIV, VMW), while others faded early then finished strong (CYBR, VDSI). Others held up nicely, e.g. SPLK.
Semiconductors were mixed as well. QRVO rallying off a test, AVGO bouncing off the 20 day EMA as well. Ditto SIMO. AMBA exploded upside. AAOI tested the same level and rebounded Wednesday to Friday. Lacking: FSL, NXPI, SWKS; but they can come along.
Biotech/Drugs looked good early but finished poorly Friday. CRIS broke lower, TTPH is struggling to continue the breakout. We got out of AGIO midweek and it bombed Friday. XON had a tougher Friday, slipping just below the 10 day EMA but on light trade. Still good overall but being tested. There are many biotech stocks showing a head and shoulders pattern, a topping pattern though it has a history of many false positives.
There are more but you get the point: leadership is still holding up but in some cases slipped to a point where they need to hold the line and resume the move higher or the market starts losing its leaders. Bad time of year to be doing that.
What has changed? Not much.
Last week I brought up the point that despite everything confronting the market, nothing has really changed. The economic data, what you can believe of it, continues improvement off a crappy Q1 and crappy start to Q2. Retail Sales looked great Thursday, until you look at the details. Yes we had to do lift up the skirt just to check. What we saw was a seasonal adjustment that was 10x the usual May seasonal adjustment. That turned a falling unadjusted number into a positive that still only just beat expectations. What was the explanation given for the revision? None. It is what it is. So, just when you thought it was safe to start believing the economic data was getting better you see that the assumptions are what is driving the improvement, not the data.
It is rather amusing and sad to listen to the mainstream defend the number crunchers in the federal government. While it is difficult and incorrect to label them all as lackey's of the Administration doing whatever its bidding is, the data has been manipulated. Pre-2012 election it was proved the jobs data was altered to drop unemployment levels. The LIBOR market, a market that was supposedly too big and too liquid to be manipulated was indeed manipulated. It didn't even take the power of a government holding all the cards in order to do it. Thus it becomes not so difficult to acknowledge that a few could manipulate the data either on their own or at the request of 'higher ups,' particularly when the data show huge seasonal adjustments that are out of line with all of the May adjustments for years upon years upon years. What was so different about May to cause such a revision? Nothing. Thus I find most of the data now utterly useless in predictive value for the economy.
Back to the status quo of the status quo. If nothing has changed in terms of Greece, Ukraine, Iran, US economic data, etc., why would anything change for the market? It has trended higher since the October Ebola plunge and recovery, albeit a quite choppy trend.
That action can continue but the action itself is not that constructive with new highs hit just to be disgorged and continued back and forth action day to day. This kind of action can be its own worst enemy as it wears out the bids. Good moves in certain sectors is attracting money, and that is what is keeping the overall market afloat. Not making and holding new highs upon new highs, but just hanging on. Without something else to catalyze the upside, that action eventually wears out.
What can trigger the next move?
What can be a catalyst? Economic data? The market still is not quite ready to react well to better data, bogus as it may be. Earnings? They are coming but not quite time for that pre-earnings push.
Fed? It does meet this coming week. Not many expect a rate hike, and while that gives the market a bit more time in terms of breathing room, it will not put off the inevitable rate hike this year, likely in September. Even if the Fed does not hike, it has to start more aggressive language about a stronger economy and the need to hike.
As such, even if there is no hike, I don't see much good coming out of this week's Fed meeting in terms of the market taking solace in what the Fed is going to do. Perhaps I am totally off base, but the Fed has to prep the market more for the rate hike and the market likely won't like that as it still cannot react positively to positive economic news.
Now I sound as if I am talking myself out of wanting to play any further upside. That is the risk of over-thinking the patterns and the news. There are those we have talked about before who have made themselves look foolish with their TV appearances saying what they are doing and are going to do. That is tough to do, i.e. go on TV and say what you are doing that day and then come back a week later and, because you are a faster trader, are doing something completely different. Makes you look like an idiot but all you did was follow the market and likely made money using your system that you understand.
Anyway, our brokerage accounts are up nicely right now but they keep bumping near the same levels on the upside and then the market backs off. Increasing in value overall, but each new high is met with a fade. The temptation is to take a lot off the table, but when we look at the positions for most there is no reason at all to do so based upon their patterns and action. If the Fed does dump on the market, and it may not even intend to do so but that is just how the market views it, then the gains retreat again and have to make another run.
That action in the accounts also tells you that the risk/reward is not as good overall at this juncture. Indices at or just off their highs, they make moves higher but find it hard to hold the moves. Not as it was in May when SOX broke out from the wedge and had open field ahead of it.
That is why we take partial profits at logical points, right? You bank some money, get naturally a bit leaner after good runs, and it allows you to think clearly versus worrying over what you might lose. Heading into the FOMC meeting on Wednesday, however, if we get a decent move ahead of that announcement, we will be banking gain. We also have some more downside plays on the report this weekend and will add more as the week progresses.
THE MARKET
MARKET STATISTICS
NASDAQ
Stats: -31.41 points (-0.62%) to close at 5051.1
Volume: 1.399B (-10.88%)
Up Volume: 537.41M (-219.74M)
Down Volume: 865.79M (+25.2M)
A/D and Hi/Lo: Decliners led 1.38 to 1
Previous Session: Advancers led 1.05 to 1
New Highs: 79 (-47)
New Lows: 36 (+3)
S&P
Stats: -14.75 points (-0.7%) to close at 2094.11
NYSE Volume: 659.6M (-16.04%)
A/D and Hi/Lo: Decliners led 1.8 to 1
Previous Session: Advancers led 1.57 to 1
New Highs: 49 (-52)
New Lows: 86 (0)
DJ30
Stats: -140.53 points (-0.78%) to close at 17898.84
SENTIMENT INDICATORS
VIX: 13.78; +0.93
VXN: 15.16; +0.52
VXO: 14.64; +1.39
Put/Call Ratio (CBOE): 1.06; +0.22. 8 of the last 14 over 1.0. Still quite a bit of downside hedging, speculation.
Bulls and Bears: Bulls fall back down to 48%ish, keeping the weekly back and forth tennis match between 48 and 51 going. Bears actually break higher over 16% for the first time in what has to be ages.
Bulls: 47.4% versus 51.5% versus 48.5% versus 50.6% versus 47.5%
Still bouncing back and forth in a range that is centering around 50.
Bears: 16.5% versus 15.8% versus 14.9% versus 15.8% versus 15.8% versus 13.9%
This week both bulls and bears move in the same direction in terms of both being a bit more negative.
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: 47.4%
51.5% versus 47.5% versus 51.5% versus 48.5% versus 50.5% versus 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: 16.5%
15.8% versus 14.9% versus 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): 2.39% versus 2.39%. Bounced off the Wednesday lower low, but not a reversal move.
Historical: 2.39% versus 2.48% versus 2.433% versus 2.388% versus 2.40% versus 2.31% versus 2.37% versus 2.26% versus 2.18% versus 2.10% versus 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/$: 1.1254 versus 1.1268 versus 1.1325. Dollar slid on the week but managed to hold at some support from the January high.
Historical: 1.1268 versus 1.1325 versus 1.1277 versus 1.1288 versus 1.1119 versus 1.1241 versus 1.1272 versus 1.1144 versus 1.0922 versus 1.0985 versus 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
Oil: 59.96, -0.59. Working laterally in the range that started at the first of May.
Gold: 1179.20, -2.30. Going nowhere in its three month range.
$/JPY: 123.41 versus 122.64 versus 124.31. Down on the week, finding support for now at the 20 day EMA post-President's denied remark on the problem of a strong dollar.
Historical: 122.64 versus 124.31 versus 124.44 versus 125.50 versus 124.35 versus 124.26 versus 124.12 versus 124.81 versus 124.10 versus 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
MONDAY
Friday we picked up some more VDSI and started some ININ as VDSI showed a great doji with tail off the 10 day EMA and ININ bounced off the 50 day MA. We also closed some so-so positions such as CMGE and NOAH, both with modest gains. We bagged CRIS as it broke near support rather convincingly.
As noted earlier, our positions are mostly holding up quite well and for now letting them work, even though the overall market action is sluggish and in the cases of SP500 and DJ30 downright negative.
Monday is a new week with the same issues (Greece, dollar, Fed worries along with a Fed meeting), and each session of late is characterized as a relative crapshoot by the financial station experts. Perhaps, but we see many stocks, and we are in them, that are working quite well, and with a bit more work even more can join in. Semiconductors re-engaging would be a boon for the upside, and thus how SWKS, NXPI, FSL and company react from this week's continued test will play a role in the market's ability to hold and extend this move.
There is also that Fed decision to factor in and the overall market action and time of the year. We don't want to talk ourselves out of profits, but again, if we get a move higher into the FOMC announcement on Wednesday, we anticipate, for now, in banking some more gain to be lighter when the FOMC decision is released.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5051.10
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
The 50 day EMA at 5017
5008.57 is the early March 2015 post-bear market high
The June low at 4974
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
The 200 day SMA at 4770
4751 is the January 2015 lower high
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 2094.11
Resistance:
The 50 day EMA at 2100
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:
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 2048
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 17,898.84
Resistance:
17,923 is the January 2015 lower high
17,991 is the early December interim
The 50 day EMA at 18,007
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:
17,748 is the mid-April China margin selloff
The June low at 17,715
The 200 day SMA at 17,630
The March low at 17,604
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
June 15 - Monday
Empire Manufacturing, June (8:30): 6.0 expected, 3.1 prior
Industrial Productio, May (9:15): 0.3% expected, -0.3% prior
Capacity Utilization, May (9:15): 78.3% expected, 78.2% prior
NAHB Housing Market , June (10:00): 56 expected, 54 prior
Net Long-Term TIC Fl, April (16:00): $17.6B prior
June 16 - Tuesday
Housing Starts, May (8:30): 1100K expected, 1135K prior
Building Permits, May (8:30): 1100K expected, 1143K prior
June 17 - Wednesday
MBA Mortgage Index, 06/13 (7:00)
Crude Inventories, 06/13 (10:30): -6.812M prior
FOMC Rate Decision, June (14:00): 0.25% expected, 0.25% prior
June 18 - Thursday
Initial Claims, 06/13 (8:30): 276K expected, 279K prior
Continuing Claims, 06/06 (8:30): 2270K expected, 2265K prior
CPI, May (8:30): 0.5% expected, 0.1% prior
Core CPI, May (8:30): 0.2% expected, 0.3% prior
Current Account Bala, Q1 (8:30): -$116.4B expected, -$113.5B prior
Philadelphia Fed, June (10:00): 8.0 expected, 6.7 prior
Leading Indicators, May (10:00): 0.4% expected, 0.7% prior
Natural Gas Inventor, 06/13 (10:30): 111 bcf prior
End part 1 of 3
_______________________________________________________
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6/13/2015 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: None issued
Buy alerts: ININ; VDSI
Trailing stops: CMGE; NOAH
Stop alerts: CRIS
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
- Large caps resume decline, small and midcaps holding up very well.
- Nothing has really changed for the market and that can be good and that can be bad.
- Just when you thought you could just sit back and trust the data . . .
- Not seeing much good come out of the Wednesday FOMC rate decision announcement.
Friday was back to the downside after a two day upside bounce. Bigger picture, it was really more of the same in terms of individual stock index moves and also the market move overall. That means some indexes show renewed strength while other indexes are showing renewed weakness in a market that remains somewhat split.
DJ30 and SP500 faded from their two day bounce to the 50 day EMA breaches. Sure looks like a relief bounce in the process of failing for those two.
NASDAQ and SOX were lower as well with NASDAQ at the 20 day EMA, gapping lower after the Thursday gap higher to the April and May peaks. That could be an issue for the upside as NASDAQ was rejected with a gap, but the day did not show a cataclysmic decline or reversal. SOX gapped lower to the 50 day EMA where it held, trying to reset for another move from a possible short term double bottom. Perhaps, but it will have to show it and prove that it can regain the leader mantle.
RUTX and SP400 continue to look the most leader-like, at least in terms of the upside. Yes both were lower along with the rest of the indexes, but showing very tame action after good recoveries. RUTX shows a very tight doji above the 10 day EMA. SP400 sold back but is easily holding above the 50 day MA's and the lower trendline in its January channel. These are not just awesome patterns by any stretch; they have simply held on and are overcoming the odds of some pretty bad patterns, and that is impressive given the overall market summer lethargy.
Interesting isn't it? The dollar is lower the past three weeks after a bounce from the April to May selling, and is still well off the peaks from March and April. You would think that would benefit the large cap stocks and thus SP500, DJ30. Yet, those indexes are selling while the smaller caps are performing better. Is it all regional banks providing the lift for SP400 and RUTX thanks to the interest rate gains? They are no doubt a good part of the strength, but other areas in these indexes, e.g. biotech/drugs, are performing well.
SP500 -14.75, -0.70%
NASDAQ -13.41, -0.62%
DJ30 -140.53, -0.78%
SP400 -0.43%
RUTX -0.31%
SOX -0.89%
VOLUME: NYSE -16%, NASDAQ -11%. Lower volume so no dumping, but definitely no bids to support stocks on the session.
A/D: NYSE -1.8:1 decliners over advancers. NASDAQ -1.4:1.
Leadership was very good in some cases, though mostly taking a pause. Software was mixed, strong early week with some fading late (FFIV, VMW), while others faded early then finished strong (CYBR, VDSI). Others held up nicely, e.g. SPLK.
Semiconductors were mixed as well. QRVO rallying off a test, AVGO bouncing off the 20 day EMA as well. Ditto SIMO. AMBA exploded upside. AAOI tested the same level and rebounded Wednesday to Friday. Lacking: FSL, NXPI, SWKS; but they can come along.
Biotech/Drugs looked good early but finished poorly Friday. CRIS broke lower, TTPH is struggling to continue the breakout. We got out of AGIO midweek and it bombed Friday. XON had a tougher Friday, slipping just below the 10 day EMA but on light trade. Still good overall but being tested. There are many biotech stocks showing a head and shoulders pattern, a topping pattern though it has a history of many false positives.
There are more but you get the point: leadership is still holding up but in some cases slipped to a point where they need to hold the line and resume the move higher or the market starts losing its leaders. Bad time of year to be doing that.
What has changed? Not much.
Last week I brought up the point that despite everything confronting the market, nothing has really changed. The economic data, what you can believe of it, continues improvement off a crappy Q1 and crappy start to Q2. Retail Sales looked great Thursday, until you look at the details. Yes we had to do lift up the skirt just to check. What we saw was a seasonal adjustment that was 10x the usual May seasonal adjustment. That turned a falling unadjusted number into a positive that still only just beat expectations. What was the explanation given for the revision? None. It is what it is. So, just when you thought it was safe to start believing the economic data was getting better you see that the assumptions are what is driving the improvement, not the data.
It is rather amusing and sad to listen to the mainstream defend the number crunchers in the federal government. While it is difficult and incorrect to label them all as lackey's of the Administration doing whatever its bidding is, the data has been manipulated. Pre-2012 election it was proved the jobs data was altered to drop unemployment levels. The LIBOR market, a market that was supposedly too big and too liquid to be manipulated was indeed manipulated. It didn't even take the power of a government holding all the cards in order to do it. Thus it becomes not so difficult to acknowledge that a few could manipulate the data either on their own or at the request of 'higher ups,' particularly when the data show huge seasonal adjustments that are out of line with all of the May adjustments for years upon years upon years. What was so different about May to cause such a revision? Nothing. Thus I find most of the data now utterly useless in predictive value for the economy.
Back to the status quo of the status quo. If nothing has changed in terms of Greece, Ukraine, Iran, US economic data, etc., why would anything change for the market? It has trended higher since the October Ebola plunge and recovery, albeit a quite choppy trend.
That action can continue but the action itself is not that constructive with new highs hit just to be disgorged and continued back and forth action day to day. This kind of action can be its own worst enemy as it wears out the bids. Good moves in certain sectors is attracting money, and that is what is keeping the overall market afloat. Not making and holding new highs upon new highs, but just hanging on. Without something else to catalyze the upside, that action eventually wears out.
What can trigger the next move?
What can be a catalyst? Economic data? The market still is not quite ready to react well to better data, bogus as it may be. Earnings? They are coming but not quite time for that pre-earnings push.
Fed? It does meet this coming week. Not many expect a rate hike, and while that gives the market a bit more time in terms of breathing room, it will not put off the inevitable rate hike this year, likely in September. Even if the Fed does not hike, it has to start more aggressive language about a stronger economy and the need to hike.
As such, even if there is no hike, I don't see much good coming out of this week's Fed meeting in terms of the market taking solace in what the Fed is going to do. Perhaps I am totally off base, but the Fed has to prep the market more for the rate hike and the market likely won't like that as it still cannot react positively to positive economic news.
Now I sound as if I am talking myself out of wanting to play any further upside. That is the risk of over-thinking the patterns and the news. There are those we have talked about before who have made themselves look foolish with their TV appearances saying what they are doing and are going to do. That is tough to do, i.e. go on TV and say what you are doing that day and then come back a week later and, because you are a faster trader, are doing something completely different. Makes you look like an idiot but all you did was follow the market and likely made money using your system that you understand.
Anyway, our brokerage accounts are up nicely right now but they keep bumping near the same levels on the upside and then the market backs off. Increasing in value overall, but each new high is met with a fade. The temptation is to take a lot off the table, but when we look at the positions for most there is no reason at all to do so based upon their patterns and action. If the Fed does dump on the market, and it may not even intend to do so but that is just how the market views it, then the gains retreat again and have to make another run.
That action in the accounts also tells you that the risk/reward is not as good overall at this juncture. Indices at or just off their highs, they make moves higher but find it hard to hold the moves. Not as it was in May when SOX broke out from the wedge and had open field ahead of it.
That is why we take partial profits at logical points, right? You bank some money, get naturally a bit leaner after good runs, and it allows you to think clearly versus worrying over what you might lose. Heading into the FOMC meeting on Wednesday, however, if we get a decent move ahead of that announcement, we will be banking gain. We also have some more downside plays on the report this weekend and will add more as the week progresses.
THE MARKET
MARKET STATISTICS
NASDAQ
Stats: -31.41 points (-0.62%) to close at 5051.1
Volume: 1.399B (-10.88%)
Up Volume: 537.41M (-219.74M)
Down Volume: 865.79M (+25.2M)
A/D and Hi/Lo: Decliners led 1.38 to 1
Previous Session: Advancers led 1.05 to 1
New Highs: 79 (-47)
New Lows: 36 (+3)
S&P
Stats: -14.75 points (-0.7%) to close at 2094.11
NYSE Volume: 659.6M (-16.04%)
A/D and Hi/Lo: Decliners led 1.8 to 1
Previous Session: Advancers led 1.57 to 1
New Highs: 49 (-52)
New Lows: 86 (0)
DJ30
Stats: -140.53 points (-0.78%) to close at 17898.84
SENTIMENT INDICATORS
VIX: 13.78; +0.93
VXN: 15.16; +0.52
VXO: 14.64; +1.39
Put/Call Ratio (CBOE): 1.06; +0.22. 8 of the last 14 over 1.0. Still quite a bit of downside hedging, speculation.
Bulls and Bears: Bulls fall back down to 48%ish, keeping the weekly back and forth tennis match between 48 and 51 going. Bears actually break higher over 16% for the first time in what has to be ages.
Bulls: 47.4% versus 51.5% versus 48.5% versus 50.6% versus 47.5%
Still bouncing back and forth in a range that is centering around 50.
Bears: 16.5% versus 15.8% versus 14.9% versus 15.8% versus 15.8% versus 13.9%
This week both bulls and bears move in the same direction in terms of both being a bit more negative.
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: 47.4%
51.5% versus 47.5% versus 51.5% versus 48.5% versus 50.5% versus 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: 16.5%
15.8% versus 14.9% versus 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): 2.39% versus 2.39%. Bounced off the Wednesday lower low, but not a reversal move.
Historical: 2.39% versus 2.48% versus 2.433% versus 2.388% versus 2.40% versus 2.31% versus 2.37% versus 2.26% versus 2.18% versus 2.10% versus 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/$: 1.1254 versus 1.1268 versus 1.1325. Dollar slid on the week but managed to hold at some support from the January high.
Historical: 1.1268 versus 1.1325 versus 1.1277 versus 1.1288 versus 1.1119 versus 1.1241 versus 1.1272 versus 1.1144 versus 1.0922 versus 1.0985 versus 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
Oil: 59.96, -0.59. Working laterally in the range that started at the first of May.
Gold: 1179.20, -2.30. Going nowhere in its three month range.
$/JPY: 123.41 versus 122.64 versus 124.31. Down on the week, finding support for now at the 20 day EMA post-President's denied remark on the problem of a strong dollar.
Historical: 122.64 versus 124.31 versus 124.44 versus 125.50 versus 124.35 versus 124.26 versus 124.12 versus 124.81 versus 124.10 versus 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
MONDAY
Friday we picked up some more VDSI and started some ININ as VDSI showed a great doji with tail off the 10 day EMA and ININ bounced off the 50 day MA. We also closed some so-so positions such as CMGE and NOAH, both with modest gains. We bagged CRIS as it broke near support rather convincingly.
As noted earlier, our positions are mostly holding up quite well and for now letting them work, even though the overall market action is sluggish and in the cases of SP500 and DJ30 downright negative.
Monday is a new week with the same issues (Greece, dollar, Fed worries along with a Fed meeting), and each session of late is characterized as a relative crapshoot by the financial station experts. Perhaps, but we see many stocks, and we are in them, that are working quite well, and with a bit more work even more can join in. Semiconductors re-engaging would be a boon for the upside, and thus how SWKS, NXPI, FSL and company react from this week's continued test will play a role in the market's ability to hold and extend this move.
There is also that Fed decision to factor in and the overall market action and time of the year. We don't want to talk ourselves out of profits, but again, if we get a move higher into the FOMC announcement on Wednesday, we anticipate, for now, in banking some more gain to be lighter when the FOMC decision is released.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5051.10
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
The 50 day EMA at 5017
5008.57 is the early March 2015 post-bear market high
The June low at 4974
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
The 200 day SMA at 4770
4751 is the January 2015 lower high
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 2094.11
Resistance:
The 50 day EMA at 2100
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:
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 2048
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 17,898.84
Resistance:
17,923 is the January 2015 lower high
17,991 is the early December interim
The 50 day EMA at 18,007
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:
17,748 is the mid-April China margin selloff
The June low at 17,715
The 200 day SMA at 17,630
The March low at 17,604
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
June 15 - Monday
Empire Manufacturing, June (8:30): 6.0 expected, 3.1 prior
Industrial Productio, May (9:15): 0.3% expected, -0.3% prior
Capacity Utilization, May (9:15): 78.3% expected, 78.2% prior
NAHB Housing Market , June (10:00): 56 expected, 54 prior
Net Long-Term TIC Fl, April (16:00): $17.6B prior
June 16 - Tuesday
Housing Starts, May (8:30): 1100K expected, 1135K prior
Building Permits, May (8:30): 1100K expected, 1143K prior
June 17 - Wednesday
MBA Mortgage Index, 06/13 (7:00)
Crude Inventories, 06/13 (10:30): -6.812M prior
FOMC Rate Decision, June (14:00): 0.25% expected, 0.25% prior
June 18 - Thursday
Initial Claims, 06/13 (8:30): 276K expected, 279K prior
Continuing Claims, 06/06 (8:30): 2270K expected, 2265K prior
CPI, May (8:30): 0.5% expected, 0.1% prior
Core CPI, May (8:30): 0.2% expected, 0.3% prior
Current Account Bala, Q1 (8:30): -$116.4B expected, -$113.5B prior
Philadelphia Fed, June (10:00): 8.0 expected, 6.7 prior
Leading Indicators, May (10:00): 0.4% expected, 0.7% prior
Natural Gas Inventor, 06/13 (10:30): 111 bcf prior
End part 1 of 3
_______________________________________________________
Member: tweet@investbilling.com
Customer Support: http://www.InvestBilling.com
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Saturday, June 06, 2015
The Daily, Part 1 of 3, 6-6-15
* * * *
6/6/2015 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: None issued
Buy alerts: CYBR; QRVO; ZBB
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 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
********************************************************************
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 beats, shows some solid improvement, but still suffers from some of the old issues as well.
- DJ30, SP500 sell, RUTX rises: dollar, interest rate effect.
- SOX is setup well to rebound and lead. That is a must.
- More areas joining in the leadership.
- Upside still setting up very well. Still so many issues impacting markets, but the underlying drivers remain the same.
Another Friday and no real change in the market status. At least no change from Thursday when DJ30 and SP500 broke lower below support. The market bifurcation remains as DJ30 continued lower, SP500 spun its wheels and slipped a bit deeper. RUTX again sported the best move Friday as it did Wednesday. Even so, it is still stuck at the 50 day EMA, holding it, making some attempts at starting a move, but as of yet unable to launch from it. SOX is set up, making the test of the big upside breakout, holding the 20 day EMA with a nice doji with tail.
Those are the barbell ends: DJ30 and SP500 on one end, RUTX and SOX on the other.
The 'bar' consists of SP400 midcaps, reaching lower and rebounding to hold over the 50 day SMA and its December uptrend, and NASDAQ, reaching down close to the 50 day EMA then rebounding positive to hold the 20 day EMA.
What is the cause of the split? Perhaps the recovery of the dollar from its April to mid-May decline is driving the wedge between the indexes once again. DJ30 formed a triangle into early May as the dollar declined from its March and April peaks. DJ30 broke higher, recall it led the market upside in early May, the one index that held its support at the 50 day MA. It rallied higher into mid-May until the dollar bottomed at the January consolidation range and started higher. DJ30 faltered, faded back to the 50 day EMA, tried to hold as the dollar faded some, but as the dollar rebounded late last week, DJ30 broke support.
RUTX shows a different route, breaking support in late April and early May as the dollar sold for its third and fourth week and just as DJ30 was holding support. RUTX recovered as the dollar held and turned back up. As the dollar rebounded last week off of a test of the new upside, RUTX broke higher Wednesday and again on Friday.
It is not just the dollar this time, however. Interest rates are shooting higher, and with them the small regional banks. Rates are to them as the dollar is to other small cap businesses. Those stocks are helping lift RUTX along with the dollar. Not a powerful lift yet, but very notable juxtaposed with the DJ30.
Regardless of the dollar's interplay or not, there is no rush upside by any of the major indexes. Even for the best looking it is a fight to hold as NASDAQ, SP400, and even RUTX are working hard just to hang in above support.
SP500 -3.01, -0.14%
NASDAQ 9.34, 0.18%
DJ30 -56.12, -0.31%
SP400 0.34%
RUTX 0.78%
SOX 0.07%
VOLUME: NYSE +7.4%, NASDAQ +0.4%. NASDAQ trade still above average as NASDAQ reached lower and rebounded. Not bad action as it shows buyers still there, but not dominant over the Thursday selling volume. On the week NASDAQ upside session volume surpassed rising volume on downside sessions 3:1. NYSE trade rallied higher, moving to average, as SP500 reached lower but recovered mush of the downside. Perhaps the doji shows a bounce back coming, but given the week's action it has to prove it.
A/D: NYSE -1.1:1; NASDAQ 1.8:1.
Yet, there are great stocks that faded to test and started back upside this week and even on Friday. Some semis started upside, e.g. QRVO, AAOI, AVGO. Others are set to do the same, e.g. FSL, SWKS, NXPI. Software started higher on the week and Friday, e.g. FEYE, CYBR, PANW, VDSI, VMW. Biotechs are mixed but we see good patterns and moves in AGIO, CRIS, GILD. Telecom shows promise, e.g. GIMO rallying, TSYS, JDSU and others setting up, showing momentum turns.
It is not the best time of the year for the market, but it is a good time for certain categories of stocks. They used the weakness on the week to set up and are starting back to the upside. The market overall may struggle, but the patterns and years of summer experience tells us that some stocks perform to the upside even as the indexes struggle and sell. Indeed, on Friday even as our DIA puts enjoyed the DJ30 downside, our software, chip, financial, telecom, biotech positions enjoyed nice upside.
The market is now definitely in the summer season and we trade accordingly: play specific stocks in specific sectors, take gains on good, strong moves, be ready to cut and run when a position loses momentum and its pattern as we did with several positions early in the week specifically so we could reallocate that money into stocks in leading sectors that were setting up for the next move higher, e.g. semis, software, China stocks, etc.
Oh, there was other stories on the day. OPEC kept oil production at 30M bbl/day. Bonds continued their massive selloff. The dollar continued back upside. The Jobs Report beat expectations, saw some hourly wage increases, and was heralded, yet again, as a clear indication the economy was not only healing but really strong. It was no doubt better in some areas. Unfortunately the report was maligned by the same old problems below the headlines that show the headlines are just part of the story. More jobs? Yes. More full-time jobs this time around but low hourly wage positions in the same low-wage sectors of past reports dominated the jobs creation. The headlines mask the story told by the jobs mix, and thus the continued evisceration of the middle class. But, most still have their iphone, internet access, sub-prime auto loan, free student loan, illusion of low-cost healthcare, and illusion of freedom to keep them docile. All is well. Whew, and I was worried.
THE NEWS/ECONOMY
Jobs top expectations, show better wages, show real improvement, but the headlines again mask some of the same shortcomings.
Household survey shows +272K employed, +125K unemployed.
Workforce increased by 397K.
Out of workforce: Still 93M
Participation rate steady at 62.9%
Jobs Quality: some improvement in better paying areas, but the jobs created are still dominated by the lower paying sectors:
Retail, Business, Temporary, Education/health, leisure/hospitality.
High pay sectors:
Construction: Added 17K, but that is half of April.
Manufacturing: so-so
Mining: -18K
Information: -3K
Indeed, two-thirds of the jobs created were from the lowest paying sectors.
But . . . full-time jobs actually GREW by 630K. Very good news though at 121.4M they are still 500K less than 2007 when the collapse started.
Wages: Better at 0.3%. Heaven knows we need it, but the 0.3% does not tell the story.
The following chart shows wages are up, but look where they were in 2007. Nowhere near that level now and indeed they are coming off an ugly downturn to end 2014 and start 2015.
Beyond that, WHO is getting the wage increases tells a story. The majority of the gains are taken in by supervisors:
While the non-supervisors are barely moving higher:
The problem remains: jobs quality is low so wages are low. With low quality jobs, productivity remains low as well. This is a major reason the US cannot pull out of economic malaise and averages 1.8% GDP per quarter the past six years.
THE MARKET
CHARTS
Overall the stock indexes remain under pressure as they move further from the end of QE in October 2014. They remain in trends higher, some indexes better than others, some breaking their near term trends, but each successive new high is smaller in height and shorter in length. In other words, each move higher has less buyers and the bids fail and sellers take over faster. The sellers have been somewhat reluctant to step in and really sell the market as that has been a game of picking up nickels in front of the steamroller. With each weaker peak, however, the sellers have a better shot and it remains to be seen when they take it.
DJ30: After spending just over a week again testing the 50 day EMA following the early to mid-May bounce, the Dow broke lower Thursday, falling through the 50 day EMA on rising trade, unable to hold that important support. Friday it sold again though not as aggressively. The break of the 50 day EMA is not necessarily the kiss of death; it did the same several times in December to January and again in March to April, recovering each time. Each rally, however, it has put in a weaker high with less and less movement after breaking to that high. It wants to test lower toward the 200 day SMA and the late April/early May lows, and that will be the first point to evaluate how negative it is. We picked up some DIA puts on this break lower.
RUTX: Somewhat the opposite of DJ30, RUTX broke ranks and sold through the 50 day EMA in late April/early May, and there was no immediate recovery. Indeed it looked to have broken and rolled over. Then DJ30, NASDAQ and particularly SOX took over, with DJ30 starting the move then SOX took over, having repaired a suspect pattern. RUTX played the reluctant follower. It recovered the 50 day EMA in mid-May, worked laterally after that into Wednesday. It broke higher, faded Thursday, then broke upside Friday after testing below the 50 day MA. It is showing some life, no doubt aided by the dollar's recovery and also life in regional banks, the smaller banks that are now rallying thanks to higher interest rates.
SOX: The semiconductors spent last week testing that strong surge from the prior week on the AVGO/BRCM deal that sent many stocks higher. The test was needed, it took SOX back to the 20 day EMA on Thursday, and Friday it showed a nice doji with tail. Many of the leading chips have tested near support as well and show very nice setups to move back up.
NASDAQ: Struggled to hold a lateral move all week, Friday reaching down toward the 50 day EMA then rebounding to a gain on some better trade. Perhaps some buyers stepping in on that lower low for the week. All week volume was elevated as the index moved laterally below the April peak; that suggests some churn, that higher volume turnover that can erode upside moves. Still trending higher but struggling to do so and needs the help of SOX.
SP500: Broke lower along with DJ30 though not as dramatically. It too is impacted by the dollar moves to a certain extent. Spent last week trying to hold the 50 day EMA, but broke it Thursday and showed a doji below it Friday after tapping that resistance on the session high. Even less of a death signal than DJ30, SP500 has broken its 50 day EMA many times on its move higher. It will have a chance to recover again, but we do note that, as with DJ30, each higher high lasts a shorter period, something ongoing since QE ended in October 2014.
LEADERSHIP:
Semiconductors: As anticipated, some very nice setups here as the leaders tested back to near support and are in position to move higher. Indeed QRVO started upside on Friday with SWKS looking very ready. NXPI, FSL, AAOI, PLAB, SIMO, AVGO and others look very good.
Software: After looking good for so long yet doing nothing, they are on the move. VDSI and VMW started the move with big Wednesday surges on volume. CYBR was at it Friday along with SPLK. FEYE never tested; it just keeps moving up and exploded higher Friday.
China: These stocks are taking off again. SOHU is working well for us, moving to a new closing high on Friday. NOAH was up all week. Wish we didn't sell JD as it jumped 4.5% Friday. WUBA, SFUN, ATHM -- all look very good.
Biotech/Drugs: Still mixed but working well overall. CRIS, AGIO continue solid moves. TTPH in drugs ran into a deeper fade but held the breakout and Friday started upside.
Retail: Some interesting tests and we will see if they can make something of it, e.g. KIRK, M. On the other hand stocks such as ROST look ready to roll back over, and COST broke its 200 day SMA Friday.
Banks: The small banks jumped quickly on the interest rate climb. Most are out of range for now but they will test and we will see which ones provide good potential return.
MARKET STATISTICS
NASDAQ
Stats: +9.33 points (+0.18%) to close at 5068.46
Volume: 1.772B (+0.39%)
Up Volume: 970.64M (+457.98M)
Down Volume: 844.16M (-425.84M)
A/D and Hi/Lo: Advancers led 1.82 to 1
Previous Session: Decliners led 2.56 to 1
New Highs: 122 (+29)
New Lows: 47 (+11)
S&P
Stats: -3.01 points (-0.14%) to close at 2092.83
NYSE Volume: 783.9M (+7.38%)
A/D and Hi/Lo: Decliners led 1.13 to 1
Previous Session: Decliners led 3.37 to 1
New Highs: 59 (+24)
New Lows: 154 (+73)
DJ30
Stats: -56.12 points (-0.31%) to close at 17849.46
SENTIMENT INDICATORS
VIX: 14.21; -0.5
VXN: 15.77; -0.02
VXO: 16.55; +1.06
Put/Call Ratio (CBOE): 1.04; -0.12. Two sessions over 1.0, making the total 6 such sessions in the past 8. Plenty of speculation in the puts to drive some stocks higher.
Bulls and Bears: Bulls back over 50, averaging that level of late while bears rise as well, now liking 15.8%. At least that is better than 13% as before.
Bulls: 51.5% versus 48.5% versus 50.6% versus 47.5% versus 52.5%
Still bouncing back and forth in a range that is centering around 50.
Bears: 15.8% versus 14.9% versus 15.8% versus 15.8% versus 13.9%
Once again the moves are opposite in terms of sentiment as both bulls and bears rise. Bulls still remain too high overall with no break and bears are too low though rising. As for bears it appears the idea of the permanent Fed put behind the market is ending, but they are giving in slow, slow, slowly.
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: 51.5%
50.5% versus 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: 15.8%
14.9% versus 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): 2.40% versus 2.31%. Surged to 2.44% post-Jobs Report. Tough week for bonds, but good for banks.
Historical: 2.31% versus 2.37% versus 2.26% versus 2.18% versus 2.10% versus 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/$: 1.1119 versus 1.1241. Dollar fought back after a stronger jobs report, moving back through the 50 day EMA. Please read the dollar/Dow, dollar/RUTX commentary.
Historical: 1.1241 versus 1.1272 versus 1.1144 versus 1.0922 versus 1.0985 versus 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: 59.13, +1.13. Tapped the 50 day EMA on the low then rebounded to a gain. Held this support for the second time in two weeks.
Gold: 1168.10, -6.70. Down Wednesday through Friday after tapping at the 50 day EMA . . . and failing.
$/JPY: 125.50 versus 124.35. After a brief rest, another massive surge higher versus the yen.
Historical: 124.35 versus 124.26 versus 124.12 versus 124.81 versus 124.10 versus 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
MONDAY
So many issues impacting stocks. Geopolitical issues involving Greece and the EU and that relationship's impact on the dollar. Now stories and hacked emails show that George Soros is the puppet master of sorts in the Ukraine conflict, reminding you of the villain media mogul Elliot Carver in the James Bond flick 'Tomorrow Never Dies.'
Elliot Carver: 'You provide the pictures,
I'll provide the war' (quoting William Randolph Hurst) in 'Tomorrow Never Dies' (1997)
Every day the world is confronted with self-aggrandized central banks, megalomaniac billionaires, suffocatingly paternalistic governments, and out and out villains (though some would argue they are all the latter). With so many possible impacts on our lives and the market, it is a wonder any rational trading and living can take place. It is very sad that we have to spend more time worrying about what central banks and governments will do to our businesses and investments than what the market will do.
Nonetheless, stocks still set up just as they always have and move just as they always have because ultimately, whether machines control the buys late in the day or not, human emotions are at the root of market moves. You can see it in how the algos pursue certain news and events with fervor just as a human would.
Overall the market still looks problematic, continuing its less than confident moves since October and QE's end. Even so there are excellent stocks that are set up well and are making the moves and making us money. Heading into this week there are even more as other areas join in ore re-engage, e.g. regional banks and Chinese stocks.
Thus, despite all of the external noise and calls for a certain correction, there are great setups to play and make money. Upside setups. That can all change in a few days of turmoil, but that is always the case. We have some good plays working for us, we have cut back several plays that were so-so movers, and we have new plays that look very good to make good moves. If they continue to do this, we will continue to use them to make money.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5068.46
Resistance:
5075 is the January to April pattern trendline
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
The 50 day EMA at 5010
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
The 200 day SMA at 4757
4751 is the January 2015 lower high
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 2092.83
Resistance:
The 50 day EMA at 2102
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:
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 2045
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 17,849.46
Resistance:
17,923 is the January 2015 lower high
17,991 is the early December interim
The 50 day EMA at 18,031
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:
17,748 is the mid-April China margin selloff
The March low at 17,604
The 200 day SMA at 17,608
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
June 5 - Friday
Nonfarm Payrolls, May (8:30): 280K actual versus 225K expected, 221K prior (revised from 223K)
Nonfarm Private Payrolls, May (8:30): 262K actual versus 225K expected, 206K prior (revised from 213K)
Unemployment Rate, May (8:30): 5.5% actual versus 5.4% expected, 5.4% prior
Hourly Earnings, May (8:30): 0.3% actual versus 0.2% expected, 0.1% prior
Average Workweek, May (8:30): 34.5 actual versus 34.5 expected, 34.5 prior
Consumer Credit, April (14:00): $16.8B expected, $20.5B prior
Consumer Credit, April (15:00): $20.5B actual versus $16.8B expected, $21.3B prior (revised from $20.5B)
June 9 - Tuesday
Wholesale Inventories, April (10:00): 0.2% expected, 0.1% prior
JOLTS - Job Openings, April (10:00): 4.994M prior
June 10 - Wednesday
MBA Mortgage Index, 06/06 (7:00): -7.6% prior
Crude Inventories, 06/06 (10:30): -1.948M prior
Treasury Budget, May (14:00): -$130.0B prior
June 11 - Thursday
Initial Claims, 06/06 (8:30): 278K expected, 276K prior
Continuing Claims, 05/30 (8:30): 2200K expected, 2196K prior
Retail Sales, May (8:30): 1.1% expected, 0.0% prior
Retail Sales ex-auto, May (8:30): 0.7% expected, 0.1% prior
Export Prices ex-ag., May (8:30): -0.7% prior
Import Prices ex-oil, May (8:30): -0.4% prior
Business Inventories, April (10:00): 0.2% expected, 0.1% prior
Natural Gas Inventor, 06/06 (10:30): 132 bcf prior
June 12 - Friday
PPI, May (8:30): 0.5% expected, -0.4% prior
Core PPI, May (8:30): 0.1% expected, -0.2% prior
Michigan Sentiment, June (10:00): 91.5 expected, 90.7 prior
End part 1 of 3
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6/6/2015 Investment House Report
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MARKET ALERTS:
Targets hit: None issued
Buy alerts: CYBR; QRVO; ZBB
Trailing stops: None issued
Stop alerts: None issued
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TO VIEW THE MARKET OVERVIEW CLICK 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
- Jobs report beats, shows some solid improvement, but still suffers from some of the old issues as well.
- DJ30, SP500 sell, RUTX rises: dollar, interest rate effect.
- SOX is setup well to rebound and lead. That is a must.
- More areas joining in the leadership.
- Upside still setting up very well. Still so many issues impacting markets, but the underlying drivers remain the same.
Another Friday and no real change in the market status. At least no change from Thursday when DJ30 and SP500 broke lower below support. The market bifurcation remains as DJ30 continued lower, SP500 spun its wheels and slipped a bit deeper. RUTX again sported the best move Friday as it did Wednesday. Even so, it is still stuck at the 50 day EMA, holding it, making some attempts at starting a move, but as of yet unable to launch from it. SOX is set up, making the test of the big upside breakout, holding the 20 day EMA with a nice doji with tail.
Those are the barbell ends: DJ30 and SP500 on one end, RUTX and SOX on the other.
The 'bar' consists of SP400 midcaps, reaching lower and rebounding to hold over the 50 day SMA and its December uptrend, and NASDAQ, reaching down close to the 50 day EMA then rebounding positive to hold the 20 day EMA.
What is the cause of the split? Perhaps the recovery of the dollar from its April to mid-May decline is driving the wedge between the indexes once again. DJ30 formed a triangle into early May as the dollar declined from its March and April peaks. DJ30 broke higher, recall it led the market upside in early May, the one index that held its support at the 50 day MA. It rallied higher into mid-May until the dollar bottomed at the January consolidation range and started higher. DJ30 faltered, faded back to the 50 day EMA, tried to hold as the dollar faded some, but as the dollar rebounded late last week, DJ30 broke support.
RUTX shows a different route, breaking support in late April and early May as the dollar sold for its third and fourth week and just as DJ30 was holding support. RUTX recovered as the dollar held and turned back up. As the dollar rebounded last week off of a test of the new upside, RUTX broke higher Wednesday and again on Friday.
It is not just the dollar this time, however. Interest rates are shooting higher, and with them the small regional banks. Rates are to them as the dollar is to other small cap businesses. Those stocks are helping lift RUTX along with the dollar. Not a powerful lift yet, but very notable juxtaposed with the DJ30.
Regardless of the dollar's interplay or not, there is no rush upside by any of the major indexes. Even for the best looking it is a fight to hold as NASDAQ, SP400, and even RUTX are working hard just to hang in above support.
SP500 -3.01, -0.14%
NASDAQ 9.34, 0.18%
DJ30 -56.12, -0.31%
SP400 0.34%
RUTX 0.78%
SOX 0.07%
VOLUME: NYSE +7.4%, NASDAQ +0.4%. NASDAQ trade still above average as NASDAQ reached lower and rebounded. Not bad action as it shows buyers still there, but not dominant over the Thursday selling volume. On the week NASDAQ upside session volume surpassed rising volume on downside sessions 3:1. NYSE trade rallied higher, moving to average, as SP500 reached lower but recovered mush of the downside. Perhaps the doji shows a bounce back coming, but given the week's action it has to prove it.
A/D: NYSE -1.1:1; NASDAQ 1.8:1.
Yet, there are great stocks that faded to test and started back upside this week and even on Friday. Some semis started upside, e.g. QRVO, AAOI, AVGO. Others are set to do the same, e.g. FSL, SWKS, NXPI. Software started higher on the week and Friday, e.g. FEYE, CYBR, PANW, VDSI, VMW. Biotechs are mixed but we see good patterns and moves in AGIO, CRIS, GILD. Telecom shows promise, e.g. GIMO rallying, TSYS, JDSU and others setting up, showing momentum turns.
It is not the best time of the year for the market, but it is a good time for certain categories of stocks. They used the weakness on the week to set up and are starting back to the upside. The market overall may struggle, but the patterns and years of summer experience tells us that some stocks perform to the upside even as the indexes struggle and sell. Indeed, on Friday even as our DIA puts enjoyed the DJ30 downside, our software, chip, financial, telecom, biotech positions enjoyed nice upside.
The market is now definitely in the summer season and we trade accordingly: play specific stocks in specific sectors, take gains on good, strong moves, be ready to cut and run when a position loses momentum and its pattern as we did with several positions early in the week specifically so we could reallocate that money into stocks in leading sectors that were setting up for the next move higher, e.g. semis, software, China stocks, etc.
Oh, there was other stories on the day. OPEC kept oil production at 30M bbl/day. Bonds continued their massive selloff. The dollar continued back upside. The Jobs Report beat expectations, saw some hourly wage increases, and was heralded, yet again, as a clear indication the economy was not only healing but really strong. It was no doubt better in some areas. Unfortunately the report was maligned by the same old problems below the headlines that show the headlines are just part of the story. More jobs? Yes. More full-time jobs this time around but low hourly wage positions in the same low-wage sectors of past reports dominated the jobs creation. The headlines mask the story told by the jobs mix, and thus the continued evisceration of the middle class. But, most still have their iphone, internet access, sub-prime auto loan, free student loan, illusion of low-cost healthcare, and illusion of freedom to keep them docile. All is well. Whew, and I was worried.
THE NEWS/ECONOMY
Jobs top expectations, show better wages, show real improvement, but the headlines again mask some of the same shortcomings.
Household survey shows +272K employed, +125K unemployed.
Workforce increased by 397K.
Out of workforce: Still 93M
Participation rate steady at 62.9%
Jobs Quality: some improvement in better paying areas, but the jobs created are still dominated by the lower paying sectors:
Retail, Business, Temporary, Education/health, leisure/hospitality.
High pay sectors:
Construction: Added 17K, but that is half of April.
Manufacturing: so-so
Mining: -18K
Information: -3K
Indeed, two-thirds of the jobs created were from the lowest paying sectors.
But . . . full-time jobs actually GREW by 630K. Very good news though at 121.4M they are still 500K less than 2007 when the collapse started.
Wages: Better at 0.3%. Heaven knows we need it, but the 0.3% does not tell the story.
The following chart shows wages are up, but look where they were in 2007. Nowhere near that level now and indeed they are coming off an ugly downturn to end 2014 and start 2015.
Beyond that, WHO is getting the wage increases tells a story. The majority of the gains are taken in by supervisors:
While the non-supervisors are barely moving higher:
The problem remains: jobs quality is low so wages are low. With low quality jobs, productivity remains low as well. This is a major reason the US cannot pull out of economic malaise and averages 1.8% GDP per quarter the past six years.
THE MARKET
CHARTS
Overall the stock indexes remain under pressure as they move further from the end of QE in October 2014. They remain in trends higher, some indexes better than others, some breaking their near term trends, but each successive new high is smaller in height and shorter in length. In other words, each move higher has less buyers and the bids fail and sellers take over faster. The sellers have been somewhat reluctant to step in and really sell the market as that has been a game of picking up nickels in front of the steamroller. With each weaker peak, however, the sellers have a better shot and it remains to be seen when they take it.
DJ30: After spending just over a week again testing the 50 day EMA following the early to mid-May bounce, the Dow broke lower Thursday, falling through the 50 day EMA on rising trade, unable to hold that important support. Friday it sold again though not as aggressively. The break of the 50 day EMA is not necessarily the kiss of death; it did the same several times in December to January and again in March to April, recovering each time. Each rally, however, it has put in a weaker high with less and less movement after breaking to that high. It wants to test lower toward the 200 day SMA and the late April/early May lows, and that will be the first point to evaluate how negative it is. We picked up some DIA puts on this break lower.
RUTX: Somewhat the opposite of DJ30, RUTX broke ranks and sold through the 50 day EMA in late April/early May, and there was no immediate recovery. Indeed it looked to have broken and rolled over. Then DJ30, NASDAQ and particularly SOX took over, with DJ30 starting the move then SOX took over, having repaired a suspect pattern. RUTX played the reluctant follower. It recovered the 50 day EMA in mid-May, worked laterally after that into Wednesday. It broke higher, faded Thursday, then broke upside Friday after testing below the 50 day MA. It is showing some life, no doubt aided by the dollar's recovery and also life in regional banks, the smaller banks that are now rallying thanks to higher interest rates.
SOX: The semiconductors spent last week testing that strong surge from the prior week on the AVGO/BRCM deal that sent many stocks higher. The test was needed, it took SOX back to the 20 day EMA on Thursday, and Friday it showed a nice doji with tail. Many of the leading chips have tested near support as well and show very nice setups to move back up.
NASDAQ: Struggled to hold a lateral move all week, Friday reaching down toward the 50 day EMA then rebounding to a gain on some better trade. Perhaps some buyers stepping in on that lower low for the week. All week volume was elevated as the index moved laterally below the April peak; that suggests some churn, that higher volume turnover that can erode upside moves. Still trending higher but struggling to do so and needs the help of SOX.
SP500: Broke lower along with DJ30 though not as dramatically. It too is impacted by the dollar moves to a certain extent. Spent last week trying to hold the 50 day EMA, but broke it Thursday and showed a doji below it Friday after tapping that resistance on the session high. Even less of a death signal than DJ30, SP500 has broken its 50 day EMA many times on its move higher. It will have a chance to recover again, but we do note that, as with DJ30, each higher high lasts a shorter period, something ongoing since QE ended in October 2014.
LEADERSHIP:
Semiconductors: As anticipated, some very nice setups here as the leaders tested back to near support and are in position to move higher. Indeed QRVO started upside on Friday with SWKS looking very ready. NXPI, FSL, AAOI, PLAB, SIMO, AVGO and others look very good.
Software: After looking good for so long yet doing nothing, they are on the move. VDSI and VMW started the move with big Wednesday surges on volume. CYBR was at it Friday along with SPLK. FEYE never tested; it just keeps moving up and exploded higher Friday.
China: These stocks are taking off again. SOHU is working well for us, moving to a new closing high on Friday. NOAH was up all week. Wish we didn't sell JD as it jumped 4.5% Friday. WUBA, SFUN, ATHM -- all look very good.
Biotech/Drugs: Still mixed but working well overall. CRIS, AGIO continue solid moves. TTPH in drugs ran into a deeper fade but held the breakout and Friday started upside.
Retail: Some interesting tests and we will see if they can make something of it, e.g. KIRK, M. On the other hand stocks such as ROST look ready to roll back over, and COST broke its 200 day SMA Friday.
Banks: The small banks jumped quickly on the interest rate climb. Most are out of range for now but they will test and we will see which ones provide good potential return.
MARKET STATISTICS
NASDAQ
Stats: +9.33 points (+0.18%) to close at 5068.46
Volume: 1.772B (+0.39%)
Up Volume: 970.64M (+457.98M)
Down Volume: 844.16M (-425.84M)
A/D and Hi/Lo: Advancers led 1.82 to 1
Previous Session: Decliners led 2.56 to 1
New Highs: 122 (+29)
New Lows: 47 (+11)
S&P
Stats: -3.01 points (-0.14%) to close at 2092.83
NYSE Volume: 783.9M (+7.38%)
A/D and Hi/Lo: Decliners led 1.13 to 1
Previous Session: Decliners led 3.37 to 1
New Highs: 59 (+24)
New Lows: 154 (+73)
DJ30
Stats: -56.12 points (-0.31%) to close at 17849.46
SENTIMENT INDICATORS
VIX: 14.21; -0.5
VXN: 15.77; -0.02
VXO: 16.55; +1.06
Put/Call Ratio (CBOE): 1.04; -0.12. Two sessions over 1.0, making the total 6 such sessions in the past 8. Plenty of speculation in the puts to drive some stocks higher.
Bulls and Bears: Bulls back over 50, averaging that level of late while bears rise as well, now liking 15.8%. At least that is better than 13% as before.
Bulls: 51.5% versus 48.5% versus 50.6% versus 47.5% versus 52.5%
Still bouncing back and forth in a range that is centering around 50.
Bears: 15.8% versus 14.9% versus 15.8% versus 15.8% versus 13.9%
Once again the moves are opposite in terms of sentiment as both bulls and bears rise. Bulls still remain too high overall with no break and bears are too low though rising. As for bears it appears the idea of the permanent Fed put behind the market is ending, but they are giving in slow, slow, slowly.
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: 51.5%
50.5% versus 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: 15.8%
14.9% versus 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): 2.40% versus 2.31%. Surged to 2.44% post-Jobs Report. Tough week for bonds, but good for banks.
Historical: 2.31% versus 2.37% versus 2.26% versus 2.18% versus 2.10% versus 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/$: 1.1119 versus 1.1241. Dollar fought back after a stronger jobs report, moving back through the 50 day EMA. Please read the dollar/Dow, dollar/RUTX commentary.
Historical: 1.1241 versus 1.1272 versus 1.1144 versus 1.0922 versus 1.0985 versus 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: 59.13, +1.13. Tapped the 50 day EMA on the low then rebounded to a gain. Held this support for the second time in two weeks.
Gold: 1168.10, -6.70. Down Wednesday through Friday after tapping at the 50 day EMA . . . and failing.
$/JPY: 125.50 versus 124.35. After a brief rest, another massive surge higher versus the yen.
Historical: 124.35 versus 124.26 versus 124.12 versus 124.81 versus 124.10 versus 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
MONDAY
So many issues impacting stocks. Geopolitical issues involving Greece and the EU and that relationship's impact on the dollar. Now stories and hacked emails show that George Soros is the puppet master of sorts in the Ukraine conflict, reminding you of the villain media mogul Elliot Carver in the James Bond flick 'Tomorrow Never Dies.'
Elliot Carver: 'You provide the pictures,
I'll provide the war' (quoting William Randolph Hurst) in 'Tomorrow Never Dies' (1997)
Every day the world is confronted with self-aggrandized central banks, megalomaniac billionaires, suffocatingly paternalistic governments, and out and out villains (though some would argue they are all the latter). With so many possible impacts on our lives and the market, it is a wonder any rational trading and living can take place. It is very sad that we have to spend more time worrying about what central banks and governments will do to our businesses and investments than what the market will do.
Nonetheless, stocks still set up just as they always have and move just as they always have because ultimately, whether machines control the buys late in the day or not, human emotions are at the root of market moves. You can see it in how the algos pursue certain news and events with fervor just as a human would.
Overall the market still looks problematic, continuing its less than confident moves since October and QE's end. Even so there are excellent stocks that are set up well and are making the moves and making us money. Heading into this week there are even more as other areas join in ore re-engage, e.g. regional banks and Chinese stocks.
Thus, despite all of the external noise and calls for a certain correction, there are great setups to play and make money. Upside setups. That can all change in a few days of turmoil, but that is always the case. We have some good plays working for us, we have cut back several plays that were so-so movers, and we have new plays that look very good to make good moves. If they continue to do this, we will continue to use them to make money.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5068.46
Resistance:
5075 is the January to April pattern trendline
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
The 50 day EMA at 5010
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
The 200 day SMA at 4757
4751 is the January 2015 lower high
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 2092.83
Resistance:
The 50 day EMA at 2102
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:
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 2045
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 17,849.46
Resistance:
17,923 is the January 2015 lower high
17,991 is the early December interim
The 50 day EMA at 18,031
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:
17,748 is the mid-April China margin selloff
The March low at 17,604
The 200 day SMA at 17,608
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
June 5 - Friday
Nonfarm Payrolls, May (8:30): 280K actual versus 225K expected, 221K prior (revised from 223K)
Nonfarm Private Payrolls, May (8:30): 262K actual versus 225K expected, 206K prior (revised from 213K)
Unemployment Rate, May (8:30): 5.5% actual versus 5.4% expected, 5.4% prior
Hourly Earnings, May (8:30): 0.3% actual versus 0.2% expected, 0.1% prior
Average Workweek, May (8:30): 34.5 actual versus 34.5 expected, 34.5 prior
Consumer Credit, April (14:00): $16.8B expected, $20.5B prior
Consumer Credit, April (15:00): $20.5B actual versus $16.8B expected, $21.3B prior (revised from $20.5B)
June 9 - Tuesday
Wholesale Inventories, April (10:00): 0.2% expected, 0.1% prior
JOLTS - Job Openings, April (10:00): 4.994M prior
June 10 - Wednesday
MBA Mortgage Index, 06/06 (7:00): -7.6% prior
Crude Inventories, 06/06 (10:30): -1.948M prior
Treasury Budget, May (14:00): -$130.0B prior
June 11 - Thursday
Initial Claims, 06/06 (8:30): 278K expected, 276K prior
Continuing Claims, 05/30 (8:30): 2200K expected, 2196K prior
Retail Sales, May (8:30): 1.1% expected, 0.0% prior
Retail Sales ex-auto, May (8:30): 0.7% expected, 0.1% prior
Export Prices ex-ag., May (8:30): -0.7% prior
Import Prices ex-oil, May (8:30): -0.4% prior
Business Inventories, April (10:00): 0.2% expected, 0.1% prior
Natural Gas Inventor, 06/06 (10:30): 132 bcf prior
June 12 - Friday
PPI, May (8:30): 0.5% expected, -0.4% prior
Core PPI, May (8:30): 0.1% expected, -0.2% prior
Michigan Sentiment, June (10:00): 91.5 expected, 90.7 prior
End part 1 of 3
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