* * * *
7/25/2015 Investment House Report
* * * *
Targets hit: AMBA
Buy alerts: None issued
Trailing stops: TTPH
Stop alerts: None issued
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
The REPORTS SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- Market cannot celebrate a return to good earnings.
- Gap and rollover is not good technical though not automatic death.
- Large cap indexes can still hold support if the mood strikes, while the small and midcaps struggle.
- Leadership remains in the same narrow groups as wannabes suffer setbacks.
- Overall the market looks to be in a protracted topping formation, but the big names have not bought into that just yet.
Once again a key stock index, NASDAQ, moved to a new high, and once again that key index reversed and coughed up the new high. Along with it, the other indexes that failed to follow NASDAQ to a new high are struggling with a very hard downside session Friday. Even before that session things were not pleasant for indexes such as the RUTX, SP400, and SOX, and Friday put them at least on the back foot.
SP500 -22.50, -1.07%
NASDAQ -57.78, -1.12%
DJ30 -163.39, -0.92%
SP400 -0.92%
RUTX -1.52%
SOX -1.99%
VOLUME: NYSE +4%, NASDAQ flat. Some distribution as volume remained well above average on both exchanges, indicating that the net is unloading of stocks.
A/D: NYSE -2.7:1, NASDAQ -3.1:1. The breadth shows the selling started taking down most areas of the market. Perhaps not breaking all sectors down, but they were under pressure.
THE MARKET
The leadership ranks tried to grow on the last move higher, but some of the new groups attempting to join the biotechs/drugs, big name NASDAQ, restaurants/fast food leaders failed in their efforts. Indeed, even the leadership groups were hit. Biotechs struggled in the wake of the BIIB warning. Fast food/restaurants took a hard punch. Big names also had some issues, but key big names not so much. More on that later.
Moreover, set the context: there were big earnings announced Thursday night from AMZN, SBUX, SWKS, V, JNPR. Futures surged on the news and they gapped higher, taking a lot of their countrymen with them. It looked to be another good, strong move to push those NASDAQ large cap big name leaders even higher.
CHARTS
Then it did not. The plug was pulled and the gaps were reversed on the big names. They didn't collapse, but they closed well off their highs. NASDAQ on the other hand, suffered a sharp drop from the 10 day EMA it was holding. Not an implosion there thanks to its new high; that allowed NASDAQ to hold its uptrend channel.
For the smaller cap indexes, however, the picture is not quite as pretty (or should I say is a bit uglier?) with SP400 midcaps showing a big rounded top, RUTX breaking the lower trendline from December, also with a topping (head and shoulders).
As for SP500 and DJ30, the large cap indexes look better, even if it is only in a relative sense. DJ30, it is at the bottom of its trading range, the lowest support in that range. SP500 put in a third top and has ripped lower, but it can still put in an bottoming pattern off of this.
SOX is the downside leader and after such a selloff you have to look at it for possible signs of bouncing. SOX is at a lower closing low off of the early June peak, but also at some larger support. It is quite oversold and appears as if it is trying to double bottom at that bigger support. If so, it will have a lot to prove on any move higher as there are gaps yawning below way back in October.
NASDAQ still in its channel with some solid leadership from the big name large caps. SP500 was down hard Friday but it is at support, is oversold, and can put in an inverted head and shoulders here at the low of potential right shoulder. DJ30 is at the lower range of support in its trading range and after four sharp downside sessions is oversold at that support. It has used this to bounce before. Long shot? Yes, but this market has made its highs off of long shots when it looked as if it was finally done.
So that is the upside scenario in terms of the indexes, what there is of it, but the last time I laid out the reasons the market could rally the market promptly tumbled. It was at a higher level, however, and not at the threshold of hell (to quote Clark Griswold from 'Christmas Vacation').
Take a look around you Ellen, we're at the threshold of hell!' --Clark Griswold, 'Christmas Vacation' (1989)
Of course the market did recover from that tumble just when it appeared to be breaking down. Again, it managed to turn a break lower into a false breakdown and rallied.
The frequency of the failures, however, tends to wear out an uptrend. As the Tour de France winds down, it provides a good analogy. Some riders continually attack on the mountain stages, but if they cannot make the gap and make it hold, they eventual wear out, blow up, and fade back into the grupeto.
That is the concern after Friday saw some serious breaks lower from the laggard indexes. When you consider how commodities have collapsed, industrial machinery is collapsing, rails and trucks reversing a bottoming attempt -- basically all parts of the industrial complex are struggling hard -- you get the sense the foundation is crumbling out from below the economy and of course that would mean the stock market.
After that barrage of downside, it certainly appears the indexes are oversold at least near term. If DJ30, NASDAQ SOX, and even SP500 can muster a bounce off of this support the real story is how the move holds.
LEADERSHIP
Leadership remains pretty much the same, and as the market action indicates, that is not necessarily a good thing. Many leaders sold in the overall market weakness, but most remain in quite good shape. Of course they had good runs and a little selling doesn't damage their patterns. More selling . . . well that is another matter.
Big Names: AMZN gapped sharply higher on earnings but gave up 50 points of a 97 point move. EBAY gapped higher but gave it back, though it is still in a very nice test. SBUX gapped upside on its earnings then reversed most of the move. Still trending up the 10 day EMA. NFLX spent the week testing, ending Friday in a pennant/flag over the 10 day EMA. FB gapped higher on the day after getting close to the 10 day EMA Thursday.
Biotechs: BIIB, after already falling Wednesday and Thursday, opened the floodgates Friday with its warning, and that hurt some biotechs, selling in sympathy (a.k.a. fear). CELG gapped lower but no big deal after its move. GILD tumbled to the early July low. TTPH broke the 20 day EMA and we exited. KITE sold but is holding over support. XON is not even at the 10 day EMA. BRLI tested after its nice Wednesday and Thursday surge. Some selling for sure but overall holding up quite well.
Restaurants/Fast food: JACK was sold for a second session but light trade. It held the 20 day EMA on the low. CMG unscathed. BWLD Gapped to a doji at the 200 day SMA, still holding the 200 day SMA. CAKE is fine, testing its Thursday upside gap from a nice consolidation. PZZA in a normal test but heading lower. DPZ is breaking down. SONC is breaking lower.
Financial: Testing but holding up. JPM at the 20 day EMA in a test after hitting a higher high. BAC in a nice 10 day EMA after its breakout and surge. V gapped upside though it did sell off some of its gain. Regional banks, a mainstay in the prior run, are testing back, some breaking support such as the Southwest banks and their oil relationship.
Tech: Some turns in progress? SNDK, after a series of gaps lower, now shows a big gap upside. NMBL is holding up well in a lot of market turbulence. JNPR gapped out of a pullback.
MARKET STATISTICS
NASDAQ
Stats: -57.78 points (-1.12%) to close at 5088.63
Volume: 1.945B (-0.08%)
Up Volume: 460.53M (-402.15M)
Down Volume: 1.54B (+420M)
A/D and Hi/Lo: Decliners led 3.12 to 1
Previous Session: Decliners led 2.16 to 1
New Highs: 53 (-62)
New Lows: 246 (+76)
S&P
Stats: -22.5 points (-1.07%) to close at 2079.65
NYSE Volume: 892.2M (+3.96%)
A/D and Hi/Lo: Decliners led 2.68 to 1
Previous Session: Decliners led 2.16 to 1
New Highs: 34 (-58)
New Lows: 411 (+99)
DJ30
Stats: -163.39 points (-0.92%) to close at 17568.53
SENTIMENT INDICATORS
VIX: 13.74; +1.1
VXN: 15.85; +1.69
VXO: 14.32; +1.63
Put/Call Ratio (CBOE): 1.41; +0.38. Second close over 1.0 after 8 sessions below and 11 above before that. Jumped right back up.
Bulls and Bears: Bulls bounce right back up to the recent highs, just about, following the prior week's move higher. Now they can fall again. Bears, of course, were still flat line.
Bulls: 49.0% versus 43.7% versus 44.8% versus 49.5%
Bears: 15.6% versus 15.6% versus 15.6% versus 15.4% versus 15.4% versus 16.5%
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: 49.0%
43.7% versus 44.8% versus 49.5% versus 51.6% versus 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: 15.6%
15.6% versus 15.6% versus 15.4% versus 15.4% versus 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): 2.27% versus 2.27%. Big week for bonds though Friday was something of a wash. Moved to a higher high on the week, topping the early July high.
Historical: 2.27% versus 2.32% versus 2.34% versus 2.37% versus 2.34% versus 2.35% versus 2.35% versus 2.40% versus 2.44% versus 2.42% versus 2.31% versus 2.206% versus 2.26% versus 2.29% versus 2.38% versus 2.42% versus 2.34% versus 2.364% versus 2.48% versus 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%
Euro/$: 1.0977 versus 1.0992. Modest test to the 10 day EMA on the week, testing the prior surge upside.
Historical: 1.0977 versus 1.0927 versus 1.0944 versus 1.0927 versus 1.0825 versus 1.0836 versus 1.0880 versus 1.0946 versus 1.1005 versus 1.0999 versus 1.1157 versus 1.1032 versus 1.11069 versus 1.1099 versus 1.1055 versus 1.1082 versus 1.1054 versus 1.1131 versus 1.1243 versus 1.1205
Oil: 48.14, -0.31. Continuing lower down the 10 day EMA. No life in oil.
Gold: 1085.50, -8.60. Big doji Friday as gold holds at the Monday intraday low and rebounds off it. Trying to set up an oversold bounce.
$/JPY: 123.79 versus 123.89. Nice easy 10 day EMA test after the surge back upside. Still below the June high but testing the initial recovery, setting up a run at that high.
Historical: 123.89 versus 123.96 versus 123.88 versus 124.31 versus 124.07 versus 124.13 versus 123.78 versus 123.38 versus 123.42 versus 122.76 versus 121.29 versus 120.66 versus 122.46 versus 122.51 versus 123.04 versus 123.115 versus 122.43 versus 122.497 versus 123.82 versus 123.63 versus 123.88 versus 123.69 versus 123.37 versus 122.66
MONDAY
Again the stock indexes find themselves in a more bearish stance, having failed another bounce attempt. That is fine; the market has rallied, failed, rallied failed, and it keeps coming back. As noted, however, that can erode the trend that has been in place for quite some time.
After the sharp week of selling and with NASDAQ at its trendline, the Dow at the bottom of its range, an oversold bounce should try to form. There are still some excellent leaders testing, putting in good patterns for entries. Biotechs tested, some of the big names, restaurants, financials. How they rebound will tell a good part of the story and again, how some of the potential new sectors trying to form up, e.g. techs, telecom, will tell the state of the market.
Overall, given the repeated sharp selloffs after new index highs, the split in the market to mostly large cap NASDAQ leadership, the out and out dives in many stocks and commodities tied directly to economic activity, the upside situation is just does not appear that bullish. Of course it has looked that way before and rallied right back.
Again, watching how the leaders react shows the prognosis. For clarity, however, it will take a pretty major sea change in leadership to give the market the kind of fresh blood it needs to sustain a broad move.
So for now we continue to look at what is working. That brings you to the big names that rallied well and are testing. If they give the buy signal, we will play them to be in what continues to work. Same with the other leadership groups: if they bounce right back and can hold the moves, showing that Friday was some sympathy selling, they can get some of our money as well.
We have some good downside positions working along with some good upside. After this selloff there is likely a bounce. Again, we can make money on that if the market puts in the kind of bounces it has in the past. After it fizzles, we see where it does, if it weakens at a lower point, then the downside bias grows even more.
Indeed, if I have to speculate, and I must, I must, even though that certainly means nothing as it is the market that makes the decisions not my speculation, I would say this is the response to the end of the Fed's 6+ year reign of stimulus.
Ever since QE ended in October 2014 the market volatility increased, the moves became shorter and choppier (look at October to early 2015), and then morphed into a trading range. Nominal new highs were met, but immediately sold. The move flattened into the trading range and now there are sectors breaking to lower lows. The rise tried to resume out of October, did for awhile, topped out into a trading range, and started putting in lower lows on the downside, one index after another. If the large cap indexes break here, the market will have to then find a new range.
This is of course not the first time stocks have struggled in their long run, but there are some economic issues thrown into the mix around the world and the US as well, and thus even if this is not a major, end of stimulus with no economic support to hold the market up kind of selloff, the action is definitely less robust to the upside.
Here is how I summed up the action late in the Friday session:
Not trying to sugar coat the selling. There is damage being done but the same leaders are holding on. They are down in sympathy but are overall holding up.
It looks like some kind of end of week dump here. If it lets up, the leaders jump back up. Of course if the selling barrage continues next week the leaders are left circling the wagons and might get cut down. I note that FB and ULTA continue to toy with the buy points even heading into the close. Indeed stocks are trying a late rebound as they usually do after getting hammered on a session.
Looked at our positions, some such as JACK are worrisome in the harder drop, but are holding support and bouncing a bit. Not the time to assume all is lost. Never like these reversals, but then again, the indexes are trading in ranges and are still in the ranges in the large cap cases and are at support for the smaller and midcaps (SP400 at the 200 day MA and March low).
Not getting too lathered up on this move though not loving it for the upside. Watching how the key stocks hold support, deciding if we want to jettison JACK with a modest gain or see if it can rebound from the 20 day EMA tap. In short, not planning on major position changes.
As always, take what the market gives, play what works. That is why we are still looking at the big name leaders because they are indeed still working. We have seen this before, and if they want to lead, so be it. We will play them.
Have a great weekend.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5088.63
Resistance:
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
5150-5160 is the June peak range
5164 is the June prior all-time high
The upper trendline at 5260
Support:
The 50 day EMA at 5066
The lower trendline is at 5066
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
The June low at 4974
4912 the mid-April China dip
The 200 day SMA at 4849
The March lows at 4843 and 4825
4815 is the December 2014 prior market peak
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
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 2079.65
Resistance:
The lower channel line at 2092
The 50 day EMA at 2098
2094 is the December 2014 high, the prior all-time high
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
2130 is the June 2015 peak
2135 is the May 2015 all-time high
Support:
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 2063
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 17,568.53
Resistance:
The June low at 17,715
The March low at 17,718
The 200 day SMA at 17,748
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
The 50 day EMA at 17,909
17,923 is the January 2015 lower high
17,991 is the early December intraday high
18,104 is the December high
18,200 to 18,206 (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:
17,585 to 17,579, the March intraday lows, helping mark the bottom of the Dow's February to present trading range.
17,515 is the early July closing low
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
July 24 - Friday
New Home Sales, June (10:00): 482K actual versus 550K expected, 517K prior (revised from 546K)
July 27 - Monday
Durable Orders, June (8:30): 3.0% expected, -2.2% prior (revised from -1.8%)
Durable Goods -ex tr, June (8:30): 0.5% expected, 0.0% prior (revised from 0.5%)
July 28 - Tuesday
Case-Shiller 20-city, May (9:00): 5.6% expected, 4.9% prior
Consumer Confidence, July (10:00): 100.0 expected, 101.4 prior
July 29 - Wednesday
MBA Mortgage Index, 07/25 (7:00): 0.1% prior
Pending Home Sales, June (10:00): 1.0% expected, 0.9% prior
Crude Inventories, 07/25 (10:30): 2.468M prior
FOMC Rate Decision, July (14:00): 0.25% expected, 0.25% prior
July 30 - Thursday
Initial Claims, 07/25 (8:30): 271K expected, 255K prior
Continuing Claims, 07/18 (8:30): 2200K expected, 2207K prior
GDP-Adv., Q2 (8:30): 2.6% expected, -0.2% prior
Chain Deflator-Adv., Q2 (8:30): 1.5% expected, 0.0% prior
Natural Gas Inventor, 07/25 (10:30): 61 bcf prior
July 31 - Friday
Employment Cost Index, Q2 (8:30): 0.6% expected, 0.7% prior
Chicago PMI, July (9:45): 50.5 expected, 49.4 prior
Michigan Sentiment -, July (10:00): 94.0 expected, 93.3 prior
End part 1 of 3
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Saturday, July 25, 2015
Saturday, July 18, 2015
The Daily, Part 1 of 3, 7-18-15
* * * *
7/18/2015 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: FB; PANW; UBNT; ZIOP
Buy alerts: NMBL
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
- GOOG cuts costs and explodes higher, taking NASDAQ with it.
- NASDAQ large caps far and away the leadership group as breath collapses.
- All must be well. Housing starts rebound, but it is all multifamily.
- Wealth shifts impacting consumption patterns, e.g. real estate.
- Will small caps finish the consolidation and join in the upside?
Another large cap day Friday as GOOG led the NASDAQ 100 and NASDAQ to new all-time highs. GOOG, NFLX, AMZN, FB, CELG, EBAY. GOOG alone saw its market cap increase, not total but just increased, by more than the market cap of over 400 of the S&P 500 stocks. The NASDAQ large caps provided lots of upside horsepower, but not a lot of horses. Meaning? The big names are powerful and they move the indexes, but breadth is lagging. Lots of generals right now, not a lot of soldiers; a more colorful way of saying leadership is still thin.
SP500 2.35, 0.11%
NASDAQ 46.96, 0.91%
NASDAQ 100 1.45%
DJ30 -33.80, -0.19%
SP400 -0.77%
RUTX -0.45%
SOX -0.23%
VOLUME: NYSE +17.5%, NASDAQ +1%. Expiration so how much can you put on the volume? Both exchanges show volume moving farther above average. NASDAQ suggests accumulation though GOOGL traded at over 6x average volume, FB over 2x, and most other big NASDAQ names trading above average volume levels. Accumulation of a few, but I will say, volume has been very good on all the leaders this week.
A/D: -1.9:1 NYSE, -3:2 NASDAQ. Just not a lot of stocks moving higher on the session. After three powerful upside price moves that is not that surprising as the indexes have somewhat shot their near term ammunition on this week's surge.
The surge on the week is a story of serendipity. A selloff just ahead of earnings as earnings are anticipated to decline this past quarter. Greece issues are 'resolved,' at least for now. China stops its massive hemorrhage and Puerto Rico once again returns to 'ignore' status. Then some big earnings come in better than expected. Not just on the bottom line thanks to cost cutting, but on the top line as well as revenues expanded. Not for all, but for the right stocks, e.g. NFLX, EBAY, GOOG, even INTC.
Investors were so enamored they bought large cap NASDAQ stocks. Not growth stocks all around, mostly just the large caps ones. This even with the dollar finding a bottom and surging upside.
We have seen this before. It happened a lot in the 1990's as DELL, MSFT, SUNW, INTC, HPQ, AMAT, KLAC rallied, leaving everything else behind. It was not until the internet boom that the market really got back into smaller caps as everything .com was a 'strong buy.' I remember making many thousands an afternoon on plays such as CMGI options pre-split and thinking it was great but not unusual for the times. And no, I wasn't buying 100 contracts, just a 10 contract position. Or how about QCOM rallying over $100 in a day and returning tens of thousands on a 5 contract position taken ahead of the split announcement? That was insane.
Are we there yet? Who really knows. Does it mean the end is here? At some point it will be. Years before the 2000 market top actually set in, the experts were forecasting a top, warning to get out. Yellen warned a year ago biotechs were done. We made a lot of money off biotechs since that warning. Things are somewhat nutty with some of these narrow moves as money pours in to chase a few names, but history shows that action can last a lot longer than anyone expects or can afford to short.
That said, after this kind of surge on the week we banked some more gain. Did it Thursday, Wednesday, Tuesday. FB surged to the target, PANW made a good run at it. We banked some UBNT and ZIOP as they put in good moves on the week as well. Again, after this kind of surge the odds of a continued strong move holding over to next week diminishes, so it is prudent to bank some gain. Oh yes, and we bought some NMBL on the day, looking for something similar to XON that we bought and took some big gains on this week. That one can fly, and NMBL has some room to run as well.
NEWS/ECONOMY
Greece: A deal in name is struck and in theory solving the problems. CHECK.
China: Market 'stabilized' after crashing to the 200 day SMA and massive liquidity injections, selling bans, criminalizing short selling stemmed the tide. For now. CHECK.
Iran: A deal that will prevent Iran obtaining a nuke in the future thus guaranteeing Middle East peace. If you define the future as 10 years and if Iran doesn't already have everything it needs to assemble one in the next year. CHECK.
Yellen: Talked to Congress, no handicapping stock valuations, really wants to hike rates. Market seemed to think there was nothing new here (but Yellen will likely hike in September unless there is a major crash, somewhere). CHECK.
Puerto Rico: What's a Puerto Rico? CHECK.
All must be well. Party on Garth. CHECK.
Housing Starts, June: +9.8% from -10.8%. Big check. Or really?
June: 9.8% versus 7.1% expected versus -10.8% May.
The problem: After one month of single family homes actually posting solid advance, it is right back to the new normal, i.e. millennials shunning home ownership and instead preferring to pay rent instead of building equity.
Starts: Single Family -0.9%. Multifamily +29.4%
Permits: Single Family +0.9%. Multifamily +15.3% (highest since 1990)
Ted Cruz said this the other day: In the 1980's your kids came home to start a business in your garage. In the 2000's your kids get a degree and come home to live in the garage. With poor jobs quality in the '3 million jobs created,' weak real wage growth (at least there has been some growth), still very stringent post-crash lending requirements, there is simply not the same demand for the smaller homes that historically comes with moves out of recession/depression. The upper end of the market is smoking hot.
Makes sense as the benefits of the recovery, thanks to the policies of the Administration and the Federal Reserve, have strangled small business and thus the middle class and instead allowed massive accumulation of wealth at the upper end. Record numbers of billionaires are created while the average wealth of the middle class declines by 25% or more. They have to be content with their iPhones, internet connection, 7 year subprime auto loan, and college degree that landed a part-time job. But they likely get their school debts forgiven. Lucky, huh?
This massive shift in wealth of course leads to the wealthy looking for something to do with their money, and that always means buying real estate. Indeed, Bloomberg reported last week that the very wealthy are buying millions upon millions of acres of farmland. They apparently see the spike in food prices, see the drought issues, see the other issues coming, and are making strategic investments. In any event, they are the ones with the money to do so and thus a very hot upper end of the real estate markets but not for the rest.
THE MARKET
CHARTS
NASDAQ: Gapped again this time to an all-time high. Six of seven sessions upside, from a lower low to a higher high. It not totally the large caps, but most of the upside is due to the large caps. Very mid-1990's like.
SP500: 6 of 7 upside sessions here as well with SP500 the next closest to an all-time high. SP500 is showing a doji above the late June closing high and the May all-time high. Does it go on to a new high? A lot of ammunition was shot up last week, the upside surprise in earnings did its job. How much is left at this juncture is questionable as SP500 bumps the prior highs. After a big run to get there often there is a test to measure it and then the breakout. Either way SP500 has rallied well off support but is not in that great of a risk/reward at the moment in terms of overall new entries.
DJ30: Started to slow toward the end of the week as it approached the March/April/June peaks that surround the May all-time high. It held its range after flashing a lower close and rallied back to the top. As with SP500 it could use a test to take on the highs, and as noted, the Dow slowed some the back half of the week and a bit of a test looks as if it could be in the cards this week and give DJ30 the boost to again take on the highs.
RUTX: Good move the first half of the week then stalled Wednesday to Friday. Stalled, but working laterally after gapping through the 50 day MA. The 10 day EMA is rising to catch up, and that could provide the next upside catalyst. RUTX sits below the April peaks, just below them, the last highs before the June all-time high. This lateral test allows it to set up for a run at that high.
SP400: Not looking all that solid. Gapped higher Monday and rallied to the 50 day SMA as of the Tuesday close. Then it struggled, falling rather hard Wednesday and then Friday breaking back into the gap zone. Not very strong at all.
SOX: Still in purgatory, moving higher Monday and Tuesday to the 10 day EMA, then stalling out there Wednesday to Friday. Perhaps it can make a new move higher as MACD is improving as SOX at least holds the Monday move.
LEADERSHIP
You have to look large cap, and NASDAQ large cap specifically. GOOG, AMZN, EBAY, NFLX, CELG, FB, GILD are driving NASDAQ higher while midcaps languish, small caps consolidate, and the NYSE large caps follow but at a distance. Still quite thin, not having a lot of time to set up, but if you look at RUTX, it is testing some and that allows those stocks to set up while the large cap NASDAQ stocks lead for now. Leadership in waves is good, and this action actually does help that.
Biotech/Drugs: Another strong week. XON, TTPH, KITE, CELG, GILD. Might need to pause a bit but plenty of money coming their way.
Retail: A big group, but even with real wages declining they are performing.
Restaurants: JACK, BWLD, CMG all testing a good surge higher, all in good position to continue after this test.
Online retail: AMZN, EBAY moving to new highs.
Internet: GOOG of course. FB was enjoying a good week through Thursday then Friday exploded upside. Outside of those, so-so. AKAM is attempting to set up a next move.
Financial: Big recoveries on the week recovered some lost ground in a sharp selloff, sharp rebound type of move. JPM is back up to the prior high but with lower MACD; not great. BAC rode earning to a huge move and higher high. WFC is similar to JPM with a lower MACD peak at a second top. V (Visa) moved to a new high Thursday and Friday.
Energy: Still languishing. HAL, CVX, APC. They are approaching longer term support levels and that will be a key indication for them. There is talk of a bounce, but talk is talk.
Metals: Anti-leaders. STLD, AKS, SID all putting in lower lows.
Software: Some leadership still here. PANW enjoyed a great week, BLKB continues a low volume ascent. SPLK has moved back to the June high but has that low volume, low MACD issue.
MARKET STATISTICS
NASDAQ
Stats: +46.96 points (+0.91%) to close at 5210.14
Volume: 1.791B (+0.98%)
Up Volume: 808.45M (-511.55M)
Down Volume: 1.02B (+528.78M)
A/D and Hi/Lo: Decliners led 1.51 to 1
Previous Session: Advancers led 1.92 to 1
New Highs: 134 (-59)
New Lows: 98 (+19)
S&P
Stats: +2.35 points (+0.11%) to close at 2126.64
NYSE Volume: 874.8M (+17.53%)
A/D and Hi/Lo: Decliners led 1.85 to 1
Previous Session: Advancers led 2.28 to 1
New Highs: 71 (-72)
New Lows: 189 (+72)
DJ30
Stats: -33.8 points (-0.19%) to close at 18086.45
SENTIMENT INDICATORS
VIX: 11.95; -0.16
VXN: 12.93; +0.34
VXO: 11.5; -0.22
Put/Call Ratio (CBOE): 0.85; -0.03. Five sessions below 1.0 after 11 straight above 1.0.
Bulls and Bears: Bulls fall again even on a week the market bounced. This past week's gains likely bounce bulls back a bit. So much earnings excitement.
Bulls: 43.7% versus 44.8% versus 49.5% versus 51.6% versus 45.5%
Bears: 15.6% versus 15.6% versus 15.4% versus 15.4% versus 16.5%
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: 43.7%
44.8% versus 49.5% versus 51.6% versus 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: 15.6%
15.6% versus 15.4% versus 15.4% versus 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): 2.34% versus 2.35%. Rallied off the bottom of the two month range, back to the 50 day MA where it failed in early July. MACD is stronger, suggesting TLT breaks higher, but the Fed does want to hike.
Historical: 2.35% versus 2.35% versus 2.40% versus 2.44% versus 2.42% versus 2.31% versus 2.206% versus 2.26% versus 2.29% versus 2.38% versus 2.42% versus 2.34% versus 2.364% versus 2.48% versus 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%
Euro/$: 1.0836 versus 1.0880. Took out the May and June peak on the week, now moving toward the April then March high. Interestingly, China, through Brussels, has sold a record $143B in US treasuries in the past three months. Russia and China continue to divest of US financial assets (not hard assets) as they put their efforts in their Asia bank.
Historical: 1.0880 versus 1.0946 versus 1.1005 versus 1.0999 versus 1.1157 versus 1.1032 versus 1.11069 versus 1.1099 versus 1.1055 versus 1.1082 versus 1.1054 versus 1.1131 versus 1.1243 versus 1.1205 versus 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: 50.89, -0.03. Faded Wednesday to Friday after a solid Tuesday move. Stalled at the 10 day EMA and faded to a lower closing low on this leg lower from the breakdown from the May to June range. It will be very interesting to see oil's reaction to the Iran deal and Iran's 're-entry' into the oil market. The word is, Iran has produced millions upon millions of barrels (51M according to Maritime Tracker) that are sitting on 280M long ships around the world. Once they get the okay, those ships will start sailing toward buyers, meaning suddenly millions and millions of more barrels on the market. Supply and demand Watson.
Gold: 1131.90, -11.90. Friday showed a major break of key long term support.
$/JPY: 124.07 versus 124.13 . Strong week continued the bounce from the 200 day SMA. Took out the late June closing highs, still over 1.50 off the early June high.
Historical: 124.13 versus 123.78 versus 123.38 versus 123.42 versus 122.76 versus 121.29 versus 120.66 versus 122.46 versus 122.51 versus 123.04 versus 123.115 versus 122.43 versus 122.497 versus 123.82 versus 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
MONDAY
It was a bit frustrating when the rally started as a lot of stocks we were interested in gapped away, not with just one gap, but two and three consecutive gaps upside. Nonetheless we looked for stocks that were still setting up or gave us another bite at the apple. That allowed some nice gains on XON, AMBA, ZIOP, JACK, ALKS, etc. There are also other stocks we see setting up that could help the market continue its move next week, though over all the market could use a test.
Well, how about the large cap indexes putting in a test? The smaller growth indexes are putting in a nice lateral consolidation right now, holding the move higher that continued early week, then pausing to work laterally to close out the week. SP400 midcaps are struggling, but overall the smaller growth stocks are already setting up the tests for the next move higher if the buyers hang in this market.
This could play out nicely, i.e. the large cap indices coming back to test their upside surges while the small caps and midcaps get some bids off of their tests. With the dollar moving higher you would anticipate the smaller cap indexes would start to reap some upside as a result.
Earnings cannot be forgotten, however, and the initial reaction is much rejoicing at better than expected bottom lines as well as actual top line beats (though GOOG was not a top line beat; go figure). How long will that last? If the top line beats keep coming, it could carry through the season or at least a good portion of it.
The large caps will test the move, NASDAQ will test the move. At that point, however, the small caps will have had the opportunity to consolidate and set up and we will see what they produce given the rising dollar.
If the small caps cannot produce a large number of winners out of this consolidation then the market could be entering a period similar to the early 1990's when one group of stocks dominated the market moves. If the view is the US recovery is stalling or not creating enough small to midcap companies, that certainly can be the outcome.
Do we care? IN a sense of wanting the US to reach its potential, of course. In terms of making money, well, we go where the money goes and take what the market gives.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5210.14
Resistance:
The upper trendline at 5246
Support:
The June all-time high at 5164
5132.52 is the 3/2000 all-time high
5120 is the April 2015 post-bear market high
5042 is the March 2015 high
The lower trendline is at 5048
The 50 day EMA at 5044
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
The 200 day SMA at 4831
4815 is the December 2014 prior market peak
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
4566 is the lower gap point from late October
4563 and 4567 are the January lows
4547 is the December low
S&P 500: Closed at 2126.64
Resistance:
2126 was the April prior all-time high
2130 is the June 2015 peak
2135 is the May 2015 all-time high
Support:
2119.59 is the February intraday prior all-time high
2115 is the late March lower high
2094 is the December 2014 high, the prior all-time high
The 50 day EMA at 2096
The lower channel line at 2089
2079 is the intraday all-time high from November
2076 is the all-time high from November
2062 is the January 2015 lower high
The 200 day SMA at 2060
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 18,086.45
Resistance:
18,200 to 18,206 (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
17,991 is the early December intraday high
The 50 day EMA at 17,928
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 200 day SMA at 17,724
The March low at 17,718
The June low at 17,715
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
July 17 - Friday
CPI, June (8:30): 0.3% actual versus 0.3% expected, 0.4% prior
Core CPI, June (8:30): 0.2% actual versus 0.2% expected, 0.1% prior
Building Permits, June (8:30): 1275K prior
Housing Starts, June (8:30): 1174K actual versus 1120K expected, 1069K prior (revised from 1036K)
Building Permits, June (8:30): 1343K actual versus 1150K expected, 1250K prior (revised from 1275K)
Mich Sentiment, July (10:00): 93.3 actual versus 96.5 expected, 96.1 prior
July 22 - Wednesday
MBA Mortgage Index, 07/18 (7:00): -1.9% prior
FHFA Housing Price I, May (9:00): 0.3% prior
Existing Home Sales, June (10:00): 5.40M expected, 5.35M prior
Crude Inventories, 07/18 (10:30): -4.346M prior
July 23 - Thursday
Initial Claims, 07/18 (8:30): 278K expected, 281K prior
Continuing Claims, 07/11 (8:30): 2218K expected, 2215K prior
Leading Indicators, June (10:00): 0.2% expected, 0.7% prior
Natural Gas Inventor, 07/18 (10:30): 99 bcf prior
July 24 - Friday
New Home Sales, June (10:00): 550K expected, 546K prior
End part 1 of 3
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7/18/2015 Investment House Report
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MARKET ALERTS:
Targets hit: FB; PANW; UBNT; ZIOP
Buy alerts: NMBL
Trailing stops: None issued
Stop alerts: None issued
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MARKET SUMMARY
- GOOG cuts costs and explodes higher, taking NASDAQ with it.
- NASDAQ large caps far and away the leadership group as breath collapses.
- All must be well. Housing starts rebound, but it is all multifamily.
- Wealth shifts impacting consumption patterns, e.g. real estate.
- Will small caps finish the consolidation and join in the upside?
Another large cap day Friday as GOOG led the NASDAQ 100 and NASDAQ to new all-time highs. GOOG, NFLX, AMZN, FB, CELG, EBAY. GOOG alone saw its market cap increase, not total but just increased, by more than the market cap of over 400 of the S&P 500 stocks. The NASDAQ large caps provided lots of upside horsepower, but not a lot of horses. Meaning? The big names are powerful and they move the indexes, but breadth is lagging. Lots of generals right now, not a lot of soldiers; a more colorful way of saying leadership is still thin.
SP500 2.35, 0.11%
NASDAQ 46.96, 0.91%
NASDAQ 100 1.45%
DJ30 -33.80, -0.19%
SP400 -0.77%
RUTX -0.45%
SOX -0.23%
VOLUME: NYSE +17.5%, NASDAQ +1%. Expiration so how much can you put on the volume? Both exchanges show volume moving farther above average. NASDAQ suggests accumulation though GOOGL traded at over 6x average volume, FB over 2x, and most other big NASDAQ names trading above average volume levels. Accumulation of a few, but I will say, volume has been very good on all the leaders this week.
A/D: -1.9:1 NYSE, -3:2 NASDAQ. Just not a lot of stocks moving higher on the session. After three powerful upside price moves that is not that surprising as the indexes have somewhat shot their near term ammunition on this week's surge.
The surge on the week is a story of serendipity. A selloff just ahead of earnings as earnings are anticipated to decline this past quarter. Greece issues are 'resolved,' at least for now. China stops its massive hemorrhage and Puerto Rico once again returns to 'ignore' status. Then some big earnings come in better than expected. Not just on the bottom line thanks to cost cutting, but on the top line as well as revenues expanded. Not for all, but for the right stocks, e.g. NFLX, EBAY, GOOG, even INTC.
Investors were so enamored they bought large cap NASDAQ stocks. Not growth stocks all around, mostly just the large caps ones. This even with the dollar finding a bottom and surging upside.
We have seen this before. It happened a lot in the 1990's as DELL, MSFT, SUNW, INTC, HPQ, AMAT, KLAC rallied, leaving everything else behind. It was not until the internet boom that the market really got back into smaller caps as everything .com was a 'strong buy.' I remember making many thousands an afternoon on plays such as CMGI options pre-split and thinking it was great but not unusual for the times. And no, I wasn't buying 100 contracts, just a 10 contract position. Or how about QCOM rallying over $100 in a day and returning tens of thousands on a 5 contract position taken ahead of the split announcement? That was insane.
Are we there yet? Who really knows. Does it mean the end is here? At some point it will be. Years before the 2000 market top actually set in, the experts were forecasting a top, warning to get out. Yellen warned a year ago biotechs were done. We made a lot of money off biotechs since that warning. Things are somewhat nutty with some of these narrow moves as money pours in to chase a few names, but history shows that action can last a lot longer than anyone expects or can afford to short.
That said, after this kind of surge on the week we banked some more gain. Did it Thursday, Wednesday, Tuesday. FB surged to the target, PANW made a good run at it. We banked some UBNT and ZIOP as they put in good moves on the week as well. Again, after this kind of surge the odds of a continued strong move holding over to next week diminishes, so it is prudent to bank some gain. Oh yes, and we bought some NMBL on the day, looking for something similar to XON that we bought and took some big gains on this week. That one can fly, and NMBL has some room to run as well.
NEWS/ECONOMY
Greece: A deal in name is struck and in theory solving the problems. CHECK.
China: Market 'stabilized' after crashing to the 200 day SMA and massive liquidity injections, selling bans, criminalizing short selling stemmed the tide. For now. CHECK.
Iran: A deal that will prevent Iran obtaining a nuke in the future thus guaranteeing Middle East peace. If you define the future as 10 years and if Iran doesn't already have everything it needs to assemble one in the next year. CHECK.
Yellen: Talked to Congress, no handicapping stock valuations, really wants to hike rates. Market seemed to think there was nothing new here (but Yellen will likely hike in September unless there is a major crash, somewhere). CHECK.
Puerto Rico: What's a Puerto Rico? CHECK.
All must be well. Party on Garth. CHECK.
Housing Starts, June: +9.8% from -10.8%. Big check. Or really?
June: 9.8% versus 7.1% expected versus -10.8% May.
The problem: After one month of single family homes actually posting solid advance, it is right back to the new normal, i.e. millennials shunning home ownership and instead preferring to pay rent instead of building equity.
Starts: Single Family -0.9%. Multifamily +29.4%
Permits: Single Family +0.9%. Multifamily +15.3% (highest since 1990)
Ted Cruz said this the other day: In the 1980's your kids came home to start a business in your garage. In the 2000's your kids get a degree and come home to live in the garage. With poor jobs quality in the '3 million jobs created,' weak real wage growth (at least there has been some growth), still very stringent post-crash lending requirements, there is simply not the same demand for the smaller homes that historically comes with moves out of recession/depression. The upper end of the market is smoking hot.
Makes sense as the benefits of the recovery, thanks to the policies of the Administration and the Federal Reserve, have strangled small business and thus the middle class and instead allowed massive accumulation of wealth at the upper end. Record numbers of billionaires are created while the average wealth of the middle class declines by 25% or more. They have to be content with their iPhones, internet connection, 7 year subprime auto loan, and college degree that landed a part-time job. But they likely get their school debts forgiven. Lucky, huh?
This massive shift in wealth of course leads to the wealthy looking for something to do with their money, and that always means buying real estate. Indeed, Bloomberg reported last week that the very wealthy are buying millions upon millions of acres of farmland. They apparently see the spike in food prices, see the drought issues, see the other issues coming, and are making strategic investments. In any event, they are the ones with the money to do so and thus a very hot upper end of the real estate markets but not for the rest.
THE MARKET
CHARTS
NASDAQ: Gapped again this time to an all-time high. Six of seven sessions upside, from a lower low to a higher high. It not totally the large caps, but most of the upside is due to the large caps. Very mid-1990's like.
SP500: 6 of 7 upside sessions here as well with SP500 the next closest to an all-time high. SP500 is showing a doji above the late June closing high and the May all-time high. Does it go on to a new high? A lot of ammunition was shot up last week, the upside surprise in earnings did its job. How much is left at this juncture is questionable as SP500 bumps the prior highs. After a big run to get there often there is a test to measure it and then the breakout. Either way SP500 has rallied well off support but is not in that great of a risk/reward at the moment in terms of overall new entries.
DJ30: Started to slow toward the end of the week as it approached the March/April/June peaks that surround the May all-time high. It held its range after flashing a lower close and rallied back to the top. As with SP500 it could use a test to take on the highs, and as noted, the Dow slowed some the back half of the week and a bit of a test looks as if it could be in the cards this week and give DJ30 the boost to again take on the highs.
RUTX: Good move the first half of the week then stalled Wednesday to Friday. Stalled, but working laterally after gapping through the 50 day MA. The 10 day EMA is rising to catch up, and that could provide the next upside catalyst. RUTX sits below the April peaks, just below them, the last highs before the June all-time high. This lateral test allows it to set up for a run at that high.
SP400: Not looking all that solid. Gapped higher Monday and rallied to the 50 day SMA as of the Tuesday close. Then it struggled, falling rather hard Wednesday and then Friday breaking back into the gap zone. Not very strong at all.
SOX: Still in purgatory, moving higher Monday and Tuesday to the 10 day EMA, then stalling out there Wednesday to Friday. Perhaps it can make a new move higher as MACD is improving as SOX at least holds the Monday move.
LEADERSHIP
You have to look large cap, and NASDAQ large cap specifically. GOOG, AMZN, EBAY, NFLX, CELG, FB, GILD are driving NASDAQ higher while midcaps languish, small caps consolidate, and the NYSE large caps follow but at a distance. Still quite thin, not having a lot of time to set up, but if you look at RUTX, it is testing some and that allows those stocks to set up while the large cap NASDAQ stocks lead for now. Leadership in waves is good, and this action actually does help that.
Biotech/Drugs: Another strong week. XON, TTPH, KITE, CELG, GILD. Might need to pause a bit but plenty of money coming their way.
Retail: A big group, but even with real wages declining they are performing.
Restaurants: JACK, BWLD, CMG all testing a good surge higher, all in good position to continue after this test.
Online retail: AMZN, EBAY moving to new highs.
Internet: GOOG of course. FB was enjoying a good week through Thursday then Friday exploded upside. Outside of those, so-so. AKAM is attempting to set up a next move.
Financial: Big recoveries on the week recovered some lost ground in a sharp selloff, sharp rebound type of move. JPM is back up to the prior high but with lower MACD; not great. BAC rode earning to a huge move and higher high. WFC is similar to JPM with a lower MACD peak at a second top. V (Visa) moved to a new high Thursday and Friday.
Energy: Still languishing. HAL, CVX, APC. They are approaching longer term support levels and that will be a key indication for them. There is talk of a bounce, but talk is talk.
Metals: Anti-leaders. STLD, AKS, SID all putting in lower lows.
Software: Some leadership still here. PANW enjoyed a great week, BLKB continues a low volume ascent. SPLK has moved back to the June high but has that low volume, low MACD issue.
MARKET STATISTICS
NASDAQ
Stats: +46.96 points (+0.91%) to close at 5210.14
Volume: 1.791B (+0.98%)
Up Volume: 808.45M (-511.55M)
Down Volume: 1.02B (+528.78M)
A/D and Hi/Lo: Decliners led 1.51 to 1
Previous Session: Advancers led 1.92 to 1
New Highs: 134 (-59)
New Lows: 98 (+19)
S&P
Stats: +2.35 points (+0.11%) to close at 2126.64
NYSE Volume: 874.8M (+17.53%)
A/D and Hi/Lo: Decliners led 1.85 to 1
Previous Session: Advancers led 2.28 to 1
New Highs: 71 (-72)
New Lows: 189 (+72)
DJ30
Stats: -33.8 points (-0.19%) to close at 18086.45
SENTIMENT INDICATORS
VIX: 11.95; -0.16
VXN: 12.93; +0.34
VXO: 11.5; -0.22
Put/Call Ratio (CBOE): 0.85; -0.03. Five sessions below 1.0 after 11 straight above 1.0.
Bulls and Bears: Bulls fall again even on a week the market bounced. This past week's gains likely bounce bulls back a bit. So much earnings excitement.
Bulls: 43.7% versus 44.8% versus 49.5% versus 51.6% versus 45.5%
Bears: 15.6% versus 15.6% versus 15.4% versus 15.4% versus 16.5%
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: 43.7%
44.8% versus 49.5% versus 51.6% versus 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: 15.6%
15.6% versus 15.4% versus 15.4% versus 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): 2.34% versus 2.35%. Rallied off the bottom of the two month range, back to the 50 day MA where it failed in early July. MACD is stronger, suggesting TLT breaks higher, but the Fed does want to hike.
Historical: 2.35% versus 2.35% versus 2.40% versus 2.44% versus 2.42% versus 2.31% versus 2.206% versus 2.26% versus 2.29% versus 2.38% versus 2.42% versus 2.34% versus 2.364% versus 2.48% versus 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%
Euro/$: 1.0836 versus 1.0880. Took out the May and June peak on the week, now moving toward the April then March high. Interestingly, China, through Brussels, has sold a record $143B in US treasuries in the past three months. Russia and China continue to divest of US financial assets (not hard assets) as they put their efforts in their Asia bank.
Historical: 1.0880 versus 1.0946 versus 1.1005 versus 1.0999 versus 1.1157 versus 1.1032 versus 1.11069 versus 1.1099 versus 1.1055 versus 1.1082 versus 1.1054 versus 1.1131 versus 1.1243 versus 1.1205 versus 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: 50.89, -0.03. Faded Wednesday to Friday after a solid Tuesday move. Stalled at the 10 day EMA and faded to a lower closing low on this leg lower from the breakdown from the May to June range. It will be very interesting to see oil's reaction to the Iran deal and Iran's 're-entry' into the oil market. The word is, Iran has produced millions upon millions of barrels (51M according to Maritime Tracker) that are sitting on 280M long ships around the world. Once they get the okay, those ships will start sailing toward buyers, meaning suddenly millions and millions of more barrels on the market. Supply and demand Watson.
Gold: 1131.90, -11.90. Friday showed a major break of key long term support.
$/JPY: 124.07 versus 124.13 . Strong week continued the bounce from the 200 day SMA. Took out the late June closing highs, still over 1.50 off the early June high.
Historical: 124.13 versus 123.78 versus 123.38 versus 123.42 versus 122.76 versus 121.29 versus 120.66 versus 122.46 versus 122.51 versus 123.04 versus 123.115 versus 122.43 versus 122.497 versus 123.82 versus 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
MONDAY
It was a bit frustrating when the rally started as a lot of stocks we were interested in gapped away, not with just one gap, but two and three consecutive gaps upside. Nonetheless we looked for stocks that were still setting up or gave us another bite at the apple. That allowed some nice gains on XON, AMBA, ZIOP, JACK, ALKS, etc. There are also other stocks we see setting up that could help the market continue its move next week, though over all the market could use a test.
Well, how about the large cap indexes putting in a test? The smaller growth indexes are putting in a nice lateral consolidation right now, holding the move higher that continued early week, then pausing to work laterally to close out the week. SP400 midcaps are struggling, but overall the smaller growth stocks are already setting up the tests for the next move higher if the buyers hang in this market.
This could play out nicely, i.e. the large cap indices coming back to test their upside surges while the small caps and midcaps get some bids off of their tests. With the dollar moving higher you would anticipate the smaller cap indexes would start to reap some upside as a result.
Earnings cannot be forgotten, however, and the initial reaction is much rejoicing at better than expected bottom lines as well as actual top line beats (though GOOG was not a top line beat; go figure). How long will that last? If the top line beats keep coming, it could carry through the season or at least a good portion of it.
The large caps will test the move, NASDAQ will test the move. At that point, however, the small caps will have had the opportunity to consolidate and set up and we will see what they produce given the rising dollar.
If the small caps cannot produce a large number of winners out of this consolidation then the market could be entering a period similar to the early 1990's when one group of stocks dominated the market moves. If the view is the US recovery is stalling or not creating enough small to midcap companies, that certainly can be the outcome.
Do we care? IN a sense of wanting the US to reach its potential, of course. In terms of making money, well, we go where the money goes and take what the market gives.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5210.14
Resistance:
The upper trendline at 5246
Support:
The June all-time high at 5164
5132.52 is the 3/2000 all-time high
5120 is the April 2015 post-bear market high
5042 is the March 2015 high
The lower trendline is at 5048
The 50 day EMA at 5044
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
The 200 day SMA at 4831
4815 is the December 2014 prior market peak
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
4566 is the lower gap point from late October
4563 and 4567 are the January lows
4547 is the December low
S&P 500: Closed at 2126.64
Resistance:
2126 was the April prior all-time high
2130 is the June 2015 peak
2135 is the May 2015 all-time high
Support:
2119.59 is the February intraday prior all-time high
2115 is the late March lower high
2094 is the December 2014 high, the prior all-time high
The 50 day EMA at 2096
The lower channel line at 2089
2079 is the intraday all-time high from November
2076 is the all-time high from November
2062 is the January 2015 lower high
The 200 day SMA at 2060
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 18,086.45
Resistance:
18,200 to 18,206 (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
17,991 is the early December intraday high
The 50 day EMA at 17,928
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 200 day SMA at 17,724
The March low at 17,718
The June low at 17,715
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
July 17 - Friday
CPI, June (8:30): 0.3% actual versus 0.3% expected, 0.4% prior
Core CPI, June (8:30): 0.2% actual versus 0.2% expected, 0.1% prior
Building Permits, June (8:30): 1275K prior
Housing Starts, June (8:30): 1174K actual versus 1120K expected, 1069K prior (revised from 1036K)
Building Permits, June (8:30): 1343K actual versus 1150K expected, 1250K prior (revised from 1275K)
Mich Sentiment, July (10:00): 93.3 actual versus 96.5 expected, 96.1 prior
July 22 - Wednesday
MBA Mortgage Index, 07/18 (7:00): -1.9% prior
FHFA Housing Price I, May (9:00): 0.3% prior
Existing Home Sales, June (10:00): 5.40M expected, 5.35M prior
Crude Inventories, 07/18 (10:30): -4.346M prior
July 23 - Thursday
Initial Claims, 07/18 (8:30): 278K expected, 281K prior
Continuing Claims, 07/11 (8:30): 2218K expected, 2215K prior
Leading Indicators, June (10:00): 0.2% expected, 0.7% prior
Natural Gas Inventor, 07/18 (10:30): 99 bcf prior
July 24 - Friday
New Home Sales, June (10:00): 550K expected, 546K prior
End part 1 of 3
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Saturday, July 11, 2015
The Daily, Part 1 of 3, 7-11-15
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7/11/2015 Investment House Report
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Buy alerts: JACK
Trailing stops: None issued
Stop alerts: None issued
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MARKET SUMMARY
- Stocks predictably surge on a supposed move closer to EU salvation, Chinese stock market rebound.
- China shuts down sellers and incredibly buyers return . . . for a 200 day SMA bounce.
- Jobless claims move up toward 300K
- Wholesale inventories rise but sales drop sharply. Half full? Half empty?
- Will the EU accept the Greek proposal that was just rejected by Greek citizens last weekend?
- Indexes rebound, some recover their ranges, growth struggles to do so.
- Good bounces, some leaders surging, more leaders needed.
- Another reversal on the cusp of a collapse? A market driven by outside influences needs the Greece deal, but Germany again is balking.
Greece cave, France new assertiveness toward Germany, and stocks surge anew on deal hopes.
Another 'deal' rally. Thursday night PM Tsipras issued the capitulation letter, France liked it and urged Germany to accept it. Everyone high-fived on a sure deal.
Stocks opened higher, sold off to the pre-market lows (though still easily positive), then climbed back to the upside through the close. A deal in the bag, shorts forced to cover ahead of the weekend. Sure the Greek parliament still had to vote on the deal and then the EU had to approve it, but the changes were believed enough to make a deal. Stocks held the gains.
SP500 25.31, 1.23%
NASDAQ 75.30, 1.53%
DJ30 211.79, 1.21%
SP400 1.07%
RUTX 1.45%
SOX 1.89%
VOLUME: Disappointing. NYSE -11%, well below average. NASDAQ -14% and well below average. Not the power needed to show a real surge with conviction. Perhaps just a Friday in the summer, but with all the grand news you would expect some better trade.
A/D: NYSE 3.8:1, NASDAQ 3.6:1. Those are some very good numbers.
So, is there a deal or not?
This time it is different, right? A new run at a deal, this time with the Greek PM Tsipras sending a capitulation letter to the EU, outlining basically the deal the Greek people rejected last weekend by over 63%. Many in the Greek parliament said they would not vote for the PM's offer, one that some are saying the PM knows the EU will reject.
Early Saturday the Greece parliament approved the capitulation.
Greece is also getting support for its offer from other areas. France is now cheerleading for Greece, finally stepping up to face Germany and its 'no nothing for the Greeks because it may impinge on bailouts in the future and we really don't like the Greeks anyway' position. Ironically, or not really when you think about it, a poll yesterday shows 79% of Greeks opposing Tsipras' offer.
There are of course other issues. Germany, regardless of France's involvement, is speaking through its Finance Minister and the rhetoric is the kind of feisty, indeed caustic, type we have come to expect. As for restructuring the Greek debt Mr. Schaeuble says "we know from the treaties that debt relief is not possible," and in any event "Greeks won't pay their bills . . . everyone knows they can't be believed." Wow, what a great union!
'I'm really a nice guy . . . '
Shauble then proposed a 5 year Greek exit "Grexit" with "humanitarian support." It is difficult on the limited information coming out to figure out just what he is proposing, but it looks like a five year push out the door, keeping the people form starving, but not forgiving debt or anything else. Hey, what are you supposed to do for people just earlier in the day you said could not be trusted? Make proposals that treat them that way. Of course, with these kind of 'union mates,' perhaps Germany should be thinking about what Greece does when it leaves the EU.
Tsipras: 'You're the only one who gets me, Vladimir.'
Putin: 'Oh, I will get you . . . '
Other EU countries are of course not as hard line but are not saying a deal is done. The EUC VP says the proposal is basically what was proposed to Greece (the one the Greek people rejected). The Netherlands says it is a step forward . . . but it has problems. Comments run the gamut though most outside of Germany are a bit more hopeful.
That is how compromise happens, i.e. both sides get a deal they don't want. Question is, is this what the stock market was pricing in on Friday?
China makes great strides in spurring, I mean, controlling markets as a good communist government should.
Friday saw more 'progress' in stabilizing Chinese markets as Shanghai rose 5.2%. The Chinese SEC is 'suggesting' to companies that they take action to support their stocks such as buybacks, employees shareholder programs, etc. That is how Yahoo and CNBC style it. Other sources report more of the story, i.e. that the companies are REQUIRED to submit in two days reports on how they WILL support their share prices. Ah, the stick versus the carrot. Also, the Chinese police are hot on the trail of tracking down those enemies of the state who actually sold shares in Petrochina and other state companies into the close on 7/8, thus undermining the PBOC's efforts at propping them up with liquidity. You can't have a controlled market if all don't do the state's bidding. Criminals.
With such a heavy hand, who would buy? Someone. The Shanghai exchange rallied another 5.2% Friday, continued the Thursday rally. That exchange hit the 200 day SMA on the Wednesday close, showing a doji. The government implemented even more controls to make buys safe. After all, if no one can sell your stocks and you are a small investor, you can buy with one of the best 'Fed puts' ever devised. So, the smaller players jumped back in and rallied stocks off the technical support.
Think about it. The PBOC injecting massive amounts of liquidity. Big stake shareholders cannot sell for 6 months, state pension funds cannot sell until further notice, and short sellers are being hunted down as criminals. Over 70% of the stocks are in a 'no sale' condition for the big holders and players. What small investor WOULD NOT buy like crazy, knowing the big players could not sell out from under you. Buy, buy, buy, ride the surge, then sell it all when it shows signs of stalling. Printing money.
What do you bet that a lot of the professionals have opened individual accounts so they can take advantage of this situation? You can pass all the regulations you want and still there will be ways around them. The desire to do better is a powerful inventive force.
Of course how long a market can stand even with such a setup is problematic. You know it will end; at some point all of the small guys will be in and the big players won't want to buy right now because they cannot sell for quite some time. Or, say they DO buy. Their money will run out as well at some point unless margin requirements are reduced further and further, allowing more share accumulation.
At some point it ends because you can only do so much to keep a market going when the economy is not. It is, of course, as I have written often, a run by the Chinese government to keep the masses happy and away from social unrest, i.e. revolt. The Chinese economy is suffering from likely the most massive bubbles in history, competing with the US' entitlement bubble. The Chinese government is desperate to walk the fine line that keeps them in control and the masses appeased. It won't, however, last. The Chinese have had the taste of freedom, and eventually, no matter what the communist government does or how much it tries to ease, communism cannot exist with freedom. The system will fail as the Chinese people will naturally seek true freedom.
US jobless claims quietly rise close to 300K
297K versus 276K versus 282K prior (from 281K).
Perhaps this is nothing, but other economic indications have recently quickly deteriorated.
Wholesale Inventories rise, sales fall in May.
Wholesale Inventories, May: 0.8% versus 0.3% versus 0.4% April.
This is one of those half full, half empty reports. If the economy is ramping, as is the hope right now, more inventories signals manufacturers and wholesalers are confident and want to have goods on hand to meet those coming sales. If the economy is weak, then rising inventories mean less sales and inventories piling up, unwanted and unsold.
This report appears to be a mix.
Wholesale sales: 0.3% versus 0.9% expected vs 1.7% April.
Year/year sales: -3.4%. Impressively bad.
Now the mixed part. Nondurables are fine. 1.2% increase and sales rose 0.7%. very solid. One of the reasons cited for the increase in inventories, however, is higher prices in petroleum products causing less consumption. Good and bad but over all good.
Durables inventories is a bigger issue. They rose 0.6% (from 0.1% April) while sales fell 0.1%. Rising inventories on falling sales means no buyers and inventories starting to stack up.
Yen and yang. Not terrible in itself; you have off months. When combined with other weaker data just recently, not a good picture for the end of Q2.
THE MARKET
CHARTS
SP500: After bouncing around the March lows for three sessions SP500 jumped back over the 200 day SMA and up to the May and June lows. Solid recovery to the bottom of the range. Volume, however, was weaker, falling well below average. Held the spring lows and is bouncing. Still a less than flattering pattern for the upside. I guess about all you can say is it is hanging in there, and with a supposed Greece deal it is still at two month lows. Maybe this is simply the bottom of this selloff; every such selloff has been a buy. Still, the pattern overall is not lovely.
DJ30: Undercut the March lows as well marking the bottom of the four month range, but Friday recovered those lows and the 200 day SMA. Volume stunk here as well, coming in well below average. For now, held where it had to and bounced.
NASDAQ: Early week NASDAQ touched the early May lows and rebounded. Lower below average volume for the first time in three sessions. Still a technically ugly pattern, still showing another bear flag as it did to end June and start July. That one failed, this one is on low volume.
RUTX: Gapped below the channel lower trendline Wednesday, gapped back up above it Friday. Maybe the channel holds yet another time and RUTX rallies back up to the 1300+ range (closed at 1252). It is at the 50 day SMA on lower volume, sporting a somewhat bearish pattern similar to NASDAQ. It was struggling in May, however, and rallied to a higher high. If the dollar strengthens with the Fed's aid or not, RUTX will have something to help it along.
SP400: Undercut a rather clearly defined range Wednesday and could not recover it Thursday. Friday, a gap back above the bottom of the channel. Not bad. SP400 is the one to watch this week along with SP500.
SOX: Gapped upside Friday but even a 1.9% gain did not change a thing in terms of a weak pattern. Ugly gap and selloff last week continued the selling after a brief bear flag respite the prior week. Three big weeks downside, three short bounce weeks in between. Now likely another little bounce then we see if there is another rollover.
LEADERSHIP
While most stocks were up Friday, the recent leaders that underwent some issues before the capitulation letter Thursday night did a very good job of moving up from good patterns. Volume was lacking in many moves but not all. A bit of a test early week and perhaps we get some entries.
Biotech/Drugs: Some good comebacks, some surprises. KITE bounced nicely as did TTPH. HZNP gapped upside to a higher high. BRLI is in a sweet breakout test. BIIB was hammered on its head of R&D jumping ship to a biotech startup. GILD is interesting as a new play as well.
Software: Jumping back into the mix big time. PANW made another solid move, pushing our positions higher. SPLK gapped upside for a second session. FEYE still looks good. BLKB continues higher. Some sported great volume, e.g. PANW, others did not, e.g. BLKB. Still others, e.g. CYBR, have somewhat bearish near term patterns.
Restaurants/Food: JACK posted a good start to the move. CMG continued a massive break upside. BWLD is up to the 200 day SMA though on perhaps some questionable volume. Everyone loves pizza and PZZA broke to a new high Friday.
Financial: Nice recoveries but still with some issues to prove. JPM gapped through the 50 day MA. BAC gapped over the 200 day up to the 50 day MA. WFC is showing a bear flag move back up to the 50 day MA. V made it to the 50 day SMA. Decent but not a clear pattern.
MARKET STATISTICS
NASDAQ
Stats: +75.3 points (+1.53%) to close at 4997.7
Volume: 1.561B (-13.86%)
Up Volume: 1.32B (+345.1M)
Down Volume: 255.14M (-611.7M)
A/D and Hi/Lo: Advancers led 3.63 to 1
Previous Session: Advancers led 1.74 to 1
New Highs: 78 (+38)
New Lows: 67 (-28)
S&P
Stats: +25.31 points (+1.23%) to close at 2076.62
NYSE Volume: 738.8M (-10.71%)
A/D and Hi/Lo: Advancers led 3.82 to 1
Previous Session: Advancers led 1.39 to 1
New Highs: 49 (+27)
New Lows: 58 (-44)
DJ30
Stats: +211.79 points (+1.21%) to close at 17760.41
SENTIMENT INDICATORS
VIX: 16.83; -3.14
VXN: 17.92; -2.4
VXO: 17.77; -3.7
Put/Call Ratio (CBOE): 1.02; -0.14. Eleven straight sessions over 1.0. As noted before, plenty of days of high put action to help fuel a bounce and indeed the market is bouncing.
Bulls and Bears: What do you know? Bulls fade further and help spark a market move upside. Bears hold steady. Still too far apart for any real surge, but you have to like how the bulls fell off the highs and ARE trending lower off of the early May high that came close to matching the highs from March.
Bulls: 44.8% versus 49.5% versus 51.6% versus 45.5%
Bears: 15.6% versus 15.4% versus 15.4% versus 16.5% versus 16.5%
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: 44.8%
49.5% versus 51.6% versus 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: 15.6%
15.4% versus 15.4% versus 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): 2.42% versus 2.31%. Gapped lower, right back down near the bottom of the range. Yellen says there will still be a rate hike this year. Market acted as if it believed it.
Historical: 2.31% versus 2.206% versus 2.26% versus 2.29% versus 2.38% versus 2.42% versus 2.34% versus 2.364% versus 2.48% versus 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%
Euro/$: 1.1157 versus 1.1032. Dollar faded against the euro but is holding the 50 day EMA, testing after a nice run higher.
Historical: 1.1032 versus 1.11069 versus 1.1099 versus 1.1055 versus 1.1082 versus 1.1054 versus 1.1131 versus 1.1243 versus 1.1205 versus 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: 52.82, +0.04. Collapsed on the week, working laterally into Friday. Ugly break, trying to stem the damage.
Gold: 1163.00, +4.20. Trended lower all week, keeping the trend from the prior week intact. Still, gold tested a key support level on the early week lows and held. Thus far.
$/JPY: 122.76 versus 121.29.
Historical: 121.29 versus 120.66 versus 122.46 versus 122.51 versus 123.04 versus 123.115 versus 122.43 versus 122.497 versus 123.82 versus 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
MONDAY
Friday priced in a Greek compromise and deal. The Greek parliament caved along with its PM. The rest of the EU is either totally against (Germany) or sees the offer as some progress with still a lot of work to do (everyone else). Debt restructuring remains a huge issue. Oh, and the Greek people? No one cares what they want. That pretty much tells them what they should do, but then again, all around the world, including the US, the government is not doing the will of the people and/or not following the laws for governance set out in their founding. So who then really cares about the Greek people?
Not the markets. They want harmony in the EU regardless of what the citizens think. We will have to see how the markets trade on Sunday and how the US futures react. It is not going to be an easy ride to a deal but there is progress from last Sunday with the Greece referendum rejecting the deal that Tsipras submitted to the EU Thursday night.
There are some very good patterns in the leadership groups we are looking at, also some downside if the market rethinks the Friday move. I think the big takeaway is that there is progress toward a deal and it looks as if the government wants a deal. It could get interesting as the Greeks are protesting in anger over the PM's "Vote no, but I don't really mean it" referendum call. You can sympathize: you ask us to tell you what we think, we do, then you do the opposite 'for our own good.' What happens if they take to the streets with violence?
Whoa there fella. That is getting way out there. Progress toward a deal is good, perhaps not enough to further push stocks but allowing them to hold the gains with perhaps a bit of consolidation and then more upside.
Recall, while SP400 and SP500 are somewhat back in their ranges/channels, most of the indexes bounced but have not overcome the selling just ahead of the Friday upside whoosh. In that light, just holding the Friday gain may not be enough. It beats the heck out of rolling over of course, but if the perceived resolution of one of the big issues confronting stocks does not reverse them, you have trouble.
So, we have a market with a history of snatching upside out of what appears to be trouble. We have indexes that are in trouble and the upside will have to snatch victory again. There are also quality, tried and true leaders that rode out the bad weather and put themselves in position to rally. PANW, restaurants/fast food, biotechs/drugs, even a chip or two. Then there are the downside setups, and of course we will be ready for those as well.
Oh yes, and there is a TON of economic data next week: Retail Sales, several PMI reports, PPI, Industrial production and capacity, Housing starts, PPI. Then there is the big news outside of geopolitical issues, earnings. AA started things off last week and of course things start getting busier each of the next few weeks.
Information overload? Yes. But, stick to patterns and the overall market moves as your guide. For now we wait for the Australian and Asian markets to open Sunday to get a better read on the markets' reaction.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4997.70
Resistance:
5008.57 is the early March 2015 post-bear market high
The 50 day EMA at 5025
The lower trendline is at 5037
5042 is the March 2015 high
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
Support:
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
The 200 day SMA at 4815
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
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 2076.62
Resistance:
2076 is the all-time high from November
2079 is the intraday all-time high from November
The lower channel line at 2086
The 50 day EMA at 2092
2094 is the December 2014 high, the prior all-time high
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:
2062 is the January 2015 lower high
The 200 day SMA at 2056
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 17,760.41
Resistance:
17,923 is the January 2015 lower high
The 50 day EMA at 17,904
17,991 is the early December interim
18,104 is the December high
18,200 to 18,206 (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 and the bottom of the 5 month trading range
The June low at 17,715
The 200 day SMA at 17,699
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
July 10 - Friday
Wholesale Inventories, May (10:00): 0.8% actual versus 0.3% expected, 0.4% prior
July 13 - Monday
Treasury Budget, June (14:00): $51.0B expected, $70.5B prior
July 14 - Tuesday
Retail Sales, June (8:30): 0.3% expected, 1.2% prior
Retail Sales ex-auto, June (8:30): 0.5% expected, 1.0% prior
Export Prices ex-ag., June (8:30): 0.7% prior
Import Prices ex-oil, June (8:30): 0.0% prior
Business Inventories, May (10:00): 0.2% expected, 0.4% prior
July 15 - Wednesday
MBA Mortgage Index, 07/11 (7:00): 4.6% prior
PPI, June (8:30): 0.3% expected, 0.5% prior
Core PPI, June (8:30): 0.1% expected, 0.1% prior
Empire Manufacturing, July (8:30): 3.5 expected, -2.0 prior
Industrial Production, June (9:15): 0.2% expected, -0.2% prior
Capacity Utilization, June (9:15): 78.1% expected, 78.1% prior
Crude Inventories, 07/11 (10:30): 0.384M prior
July 16 - Thursday
Continuing Claims, 07/04 (8:30)
Initial Claims, 07/11 (8:30): 283K expected, 297K prior
Continuing Claims, 07/04 (8:30): 2275K expected, 2334K prior
Philadelphia Fed, July (10:00): 12.0 expected, 15.2 prior
NAHB Housing Market , July (10:00): 59 expected, 59 prior
Natural Gas Inventor, 07/11 (10:30): 91 bcf prior
Net Long-Term TIC Fl, May (16:00): $53.9B prior
July 17 - Friday
CPI, June (8:30): 0.3% expected, 0.4% prior
Core CPI, June (8:30): 0.2% expected, 0.1% prior
Building Permits, June (8:30): 1275K prior
Housing Starts, June (8:30): 1123K expected, 1036K prior
Building Permits, June (8:30): 1150K expected, 1275K prior
Michigan Sentiment, July (10:00): 96.5 expected, 96.1 prior
End part 1 of 3
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7/11/2015 Investment House Report
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The REPORTS SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- Stocks predictably surge on a supposed move closer to EU salvation, Chinese stock market rebound.
- China shuts down sellers and incredibly buyers return . . . for a 200 day SMA bounce.
- Jobless claims move up toward 300K
- Wholesale inventories rise but sales drop sharply. Half full? Half empty?
- Will the EU accept the Greek proposal that was just rejected by Greek citizens last weekend?
- Indexes rebound, some recover their ranges, growth struggles to do so.
- Good bounces, some leaders surging, more leaders needed.
- Another reversal on the cusp of a collapse? A market driven by outside influences needs the Greece deal, but Germany again is balking.
Greece cave, France new assertiveness toward Germany, and stocks surge anew on deal hopes.
Another 'deal' rally. Thursday night PM Tsipras issued the capitulation letter, France liked it and urged Germany to accept it. Everyone high-fived on a sure deal.
Stocks opened higher, sold off to the pre-market lows (though still easily positive), then climbed back to the upside through the close. A deal in the bag, shorts forced to cover ahead of the weekend. Sure the Greek parliament still had to vote on the deal and then the EU had to approve it, but the changes were believed enough to make a deal. Stocks held the gains.
SP500 25.31, 1.23%
NASDAQ 75.30, 1.53%
DJ30 211.79, 1.21%
SP400 1.07%
RUTX 1.45%
SOX 1.89%
VOLUME: Disappointing. NYSE -11%, well below average. NASDAQ -14% and well below average. Not the power needed to show a real surge with conviction. Perhaps just a Friday in the summer, but with all the grand news you would expect some better trade.
A/D: NYSE 3.8:1, NASDAQ 3.6:1. Those are some very good numbers.
So, is there a deal or not?
This time it is different, right? A new run at a deal, this time with the Greek PM Tsipras sending a capitulation letter to the EU, outlining basically the deal the Greek people rejected last weekend by over 63%. Many in the Greek parliament said they would not vote for the PM's offer, one that some are saying the PM knows the EU will reject.
Early Saturday the Greece parliament approved the capitulation.
Greece is also getting support for its offer from other areas. France is now cheerleading for Greece, finally stepping up to face Germany and its 'no nothing for the Greeks because it may impinge on bailouts in the future and we really don't like the Greeks anyway' position. Ironically, or not really when you think about it, a poll yesterday shows 79% of Greeks opposing Tsipras' offer.
There are of course other issues. Germany, regardless of France's involvement, is speaking through its Finance Minister and the rhetoric is the kind of feisty, indeed caustic, type we have come to expect. As for restructuring the Greek debt Mr. Schaeuble says "we know from the treaties that debt relief is not possible," and in any event "Greeks won't pay their bills . . . everyone knows they can't be believed." Wow, what a great union!
'I'm really a nice guy . . . '
Shauble then proposed a 5 year Greek exit "Grexit" with "humanitarian support." It is difficult on the limited information coming out to figure out just what he is proposing, but it looks like a five year push out the door, keeping the people form starving, but not forgiving debt or anything else. Hey, what are you supposed to do for people just earlier in the day you said could not be trusted? Make proposals that treat them that way. Of course, with these kind of 'union mates,' perhaps Germany should be thinking about what Greece does when it leaves the EU.
Tsipras: 'You're the only one who gets me, Vladimir.'
Putin: 'Oh, I will get you . . . '
Other EU countries are of course not as hard line but are not saying a deal is done. The EUC VP says the proposal is basically what was proposed to Greece (the one the Greek people rejected). The Netherlands says it is a step forward . . . but it has problems. Comments run the gamut though most outside of Germany are a bit more hopeful.
That is how compromise happens, i.e. both sides get a deal they don't want. Question is, is this what the stock market was pricing in on Friday?
China makes great strides in spurring, I mean, controlling markets as a good communist government should.
Friday saw more 'progress' in stabilizing Chinese markets as Shanghai rose 5.2%. The Chinese SEC is 'suggesting' to companies that they take action to support their stocks such as buybacks, employees shareholder programs, etc. That is how Yahoo and CNBC style it. Other sources report more of the story, i.e. that the companies are REQUIRED to submit in two days reports on how they WILL support their share prices. Ah, the stick versus the carrot. Also, the Chinese police are hot on the trail of tracking down those enemies of the state who actually sold shares in Petrochina and other state companies into the close on 7/8, thus undermining the PBOC's efforts at propping them up with liquidity. You can't have a controlled market if all don't do the state's bidding. Criminals.
With such a heavy hand, who would buy? Someone. The Shanghai exchange rallied another 5.2% Friday, continued the Thursday rally. That exchange hit the 200 day SMA on the Wednesday close, showing a doji. The government implemented even more controls to make buys safe. After all, if no one can sell your stocks and you are a small investor, you can buy with one of the best 'Fed puts' ever devised. So, the smaller players jumped back in and rallied stocks off the technical support.
Think about it. The PBOC injecting massive amounts of liquidity. Big stake shareholders cannot sell for 6 months, state pension funds cannot sell until further notice, and short sellers are being hunted down as criminals. Over 70% of the stocks are in a 'no sale' condition for the big holders and players. What small investor WOULD NOT buy like crazy, knowing the big players could not sell out from under you. Buy, buy, buy, ride the surge, then sell it all when it shows signs of stalling. Printing money.
What do you bet that a lot of the professionals have opened individual accounts so they can take advantage of this situation? You can pass all the regulations you want and still there will be ways around them. The desire to do better is a powerful inventive force.
Of course how long a market can stand even with such a setup is problematic. You know it will end; at some point all of the small guys will be in and the big players won't want to buy right now because they cannot sell for quite some time. Or, say they DO buy. Their money will run out as well at some point unless margin requirements are reduced further and further, allowing more share accumulation.
At some point it ends because you can only do so much to keep a market going when the economy is not. It is, of course, as I have written often, a run by the Chinese government to keep the masses happy and away from social unrest, i.e. revolt. The Chinese economy is suffering from likely the most massive bubbles in history, competing with the US' entitlement bubble. The Chinese government is desperate to walk the fine line that keeps them in control and the masses appeased. It won't, however, last. The Chinese have had the taste of freedom, and eventually, no matter what the communist government does or how much it tries to ease, communism cannot exist with freedom. The system will fail as the Chinese people will naturally seek true freedom.
US jobless claims quietly rise close to 300K
297K versus 276K versus 282K prior (from 281K).
Perhaps this is nothing, but other economic indications have recently quickly deteriorated.
Wholesale Inventories rise, sales fall in May.
Wholesale Inventories, May: 0.8% versus 0.3% versus 0.4% April.
This is one of those half full, half empty reports. If the economy is ramping, as is the hope right now, more inventories signals manufacturers and wholesalers are confident and want to have goods on hand to meet those coming sales. If the economy is weak, then rising inventories mean less sales and inventories piling up, unwanted and unsold.
This report appears to be a mix.
Wholesale sales: 0.3% versus 0.9% expected vs 1.7% April.
Year/year sales: -3.4%. Impressively bad.
Now the mixed part. Nondurables are fine. 1.2% increase and sales rose 0.7%. very solid. One of the reasons cited for the increase in inventories, however, is higher prices in petroleum products causing less consumption. Good and bad but over all good.
Durables inventories is a bigger issue. They rose 0.6% (from 0.1% April) while sales fell 0.1%. Rising inventories on falling sales means no buyers and inventories starting to stack up.
Yen and yang. Not terrible in itself; you have off months. When combined with other weaker data just recently, not a good picture for the end of Q2.
THE MARKET
CHARTS
SP500: After bouncing around the March lows for three sessions SP500 jumped back over the 200 day SMA and up to the May and June lows. Solid recovery to the bottom of the range. Volume, however, was weaker, falling well below average. Held the spring lows and is bouncing. Still a less than flattering pattern for the upside. I guess about all you can say is it is hanging in there, and with a supposed Greece deal it is still at two month lows. Maybe this is simply the bottom of this selloff; every such selloff has been a buy. Still, the pattern overall is not lovely.
DJ30: Undercut the March lows as well marking the bottom of the four month range, but Friday recovered those lows and the 200 day SMA. Volume stunk here as well, coming in well below average. For now, held where it had to and bounced.
NASDAQ: Early week NASDAQ touched the early May lows and rebounded. Lower below average volume for the first time in three sessions. Still a technically ugly pattern, still showing another bear flag as it did to end June and start July. That one failed, this one is on low volume.
RUTX: Gapped below the channel lower trendline Wednesday, gapped back up above it Friday. Maybe the channel holds yet another time and RUTX rallies back up to the 1300+ range (closed at 1252). It is at the 50 day SMA on lower volume, sporting a somewhat bearish pattern similar to NASDAQ. It was struggling in May, however, and rallied to a higher high. If the dollar strengthens with the Fed's aid or not, RUTX will have something to help it along.
SP400: Undercut a rather clearly defined range Wednesday and could not recover it Thursday. Friday, a gap back above the bottom of the channel. Not bad. SP400 is the one to watch this week along with SP500.
SOX: Gapped upside Friday but even a 1.9% gain did not change a thing in terms of a weak pattern. Ugly gap and selloff last week continued the selling after a brief bear flag respite the prior week. Three big weeks downside, three short bounce weeks in between. Now likely another little bounce then we see if there is another rollover.
LEADERSHIP
While most stocks were up Friday, the recent leaders that underwent some issues before the capitulation letter Thursday night did a very good job of moving up from good patterns. Volume was lacking in many moves but not all. A bit of a test early week and perhaps we get some entries.
Biotech/Drugs: Some good comebacks, some surprises. KITE bounced nicely as did TTPH. HZNP gapped upside to a higher high. BRLI is in a sweet breakout test. BIIB was hammered on its head of R&D jumping ship to a biotech startup. GILD is interesting as a new play as well.
Software: Jumping back into the mix big time. PANW made another solid move, pushing our positions higher. SPLK gapped upside for a second session. FEYE still looks good. BLKB continues higher. Some sported great volume, e.g. PANW, others did not, e.g. BLKB. Still others, e.g. CYBR, have somewhat bearish near term patterns.
Restaurants/Food: JACK posted a good start to the move. CMG continued a massive break upside. BWLD is up to the 200 day SMA though on perhaps some questionable volume. Everyone loves pizza and PZZA broke to a new high Friday.
Financial: Nice recoveries but still with some issues to prove. JPM gapped through the 50 day MA. BAC gapped over the 200 day up to the 50 day MA. WFC is showing a bear flag move back up to the 50 day MA. V made it to the 50 day SMA. Decent but not a clear pattern.
MARKET STATISTICS
NASDAQ
Stats: +75.3 points (+1.53%) to close at 4997.7
Volume: 1.561B (-13.86%)
Up Volume: 1.32B (+345.1M)
Down Volume: 255.14M (-611.7M)
A/D and Hi/Lo: Advancers led 3.63 to 1
Previous Session: Advancers led 1.74 to 1
New Highs: 78 (+38)
New Lows: 67 (-28)
S&P
Stats: +25.31 points (+1.23%) to close at 2076.62
NYSE Volume: 738.8M (-10.71%)
A/D and Hi/Lo: Advancers led 3.82 to 1
Previous Session: Advancers led 1.39 to 1
New Highs: 49 (+27)
New Lows: 58 (-44)
DJ30
Stats: +211.79 points (+1.21%) to close at 17760.41
SENTIMENT INDICATORS
VIX: 16.83; -3.14
VXN: 17.92; -2.4
VXO: 17.77; -3.7
Put/Call Ratio (CBOE): 1.02; -0.14. Eleven straight sessions over 1.0. As noted before, plenty of days of high put action to help fuel a bounce and indeed the market is bouncing.
Bulls and Bears: What do you know? Bulls fade further and help spark a market move upside. Bears hold steady. Still too far apart for any real surge, but you have to like how the bulls fell off the highs and ARE trending lower off of the early May high that came close to matching the highs from March.
Bulls: 44.8% versus 49.5% versus 51.6% versus 45.5%
Bears: 15.6% versus 15.4% versus 15.4% versus 16.5% versus 16.5%
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: 44.8%
49.5% versus 51.6% versus 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: 15.6%
15.4% versus 15.4% versus 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): 2.42% versus 2.31%. Gapped lower, right back down near the bottom of the range. Yellen says there will still be a rate hike this year. Market acted as if it believed it.
Historical: 2.31% versus 2.206% versus 2.26% versus 2.29% versus 2.38% versus 2.42% versus 2.34% versus 2.364% versus 2.48% versus 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%
Euro/$: 1.1157 versus 1.1032. Dollar faded against the euro but is holding the 50 day EMA, testing after a nice run higher.
Historical: 1.1032 versus 1.11069 versus 1.1099 versus 1.1055 versus 1.1082 versus 1.1054 versus 1.1131 versus 1.1243 versus 1.1205 versus 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: 52.82, +0.04. Collapsed on the week, working laterally into Friday. Ugly break, trying to stem the damage.
Gold: 1163.00, +4.20. Trended lower all week, keeping the trend from the prior week intact. Still, gold tested a key support level on the early week lows and held. Thus far.
$/JPY: 122.76 versus 121.29.
Historical: 121.29 versus 120.66 versus 122.46 versus 122.51 versus 123.04 versus 123.115 versus 122.43 versus 122.497 versus 123.82 versus 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
MONDAY
Friday priced in a Greek compromise and deal. The Greek parliament caved along with its PM. The rest of the EU is either totally against (Germany) or sees the offer as some progress with still a lot of work to do (everyone else). Debt restructuring remains a huge issue. Oh, and the Greek people? No one cares what they want. That pretty much tells them what they should do, but then again, all around the world, including the US, the government is not doing the will of the people and/or not following the laws for governance set out in their founding. So who then really cares about the Greek people?
Not the markets. They want harmony in the EU regardless of what the citizens think. We will have to see how the markets trade on Sunday and how the US futures react. It is not going to be an easy ride to a deal but there is progress from last Sunday with the Greece referendum rejecting the deal that Tsipras submitted to the EU Thursday night.
There are some very good patterns in the leadership groups we are looking at, also some downside if the market rethinks the Friday move. I think the big takeaway is that there is progress toward a deal and it looks as if the government wants a deal. It could get interesting as the Greeks are protesting in anger over the PM's "Vote no, but I don't really mean it" referendum call. You can sympathize: you ask us to tell you what we think, we do, then you do the opposite 'for our own good.' What happens if they take to the streets with violence?
Whoa there fella. That is getting way out there. Progress toward a deal is good, perhaps not enough to further push stocks but allowing them to hold the gains with perhaps a bit of consolidation and then more upside.
Recall, while SP400 and SP500 are somewhat back in their ranges/channels, most of the indexes bounced but have not overcome the selling just ahead of the Friday upside whoosh. In that light, just holding the Friday gain may not be enough. It beats the heck out of rolling over of course, but if the perceived resolution of one of the big issues confronting stocks does not reverse them, you have trouble.
So, we have a market with a history of snatching upside out of what appears to be trouble. We have indexes that are in trouble and the upside will have to snatch victory again. There are also quality, tried and true leaders that rode out the bad weather and put themselves in position to rally. PANW, restaurants/fast food, biotechs/drugs, even a chip or two. Then there are the downside setups, and of course we will be ready for those as well.
Oh yes, and there is a TON of economic data next week: Retail Sales, several PMI reports, PPI, Industrial production and capacity, Housing starts, PPI. Then there is the big news outside of geopolitical issues, earnings. AA started things off last week and of course things start getting busier each of the next few weeks.
Information overload? Yes. But, stick to patterns and the overall market moves as your guide. For now we wait for the Australian and Asian markets to open Sunday to get a better read on the markets' reaction.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4997.70
Resistance:
5008.57 is the early March 2015 post-bear market high
The 50 day EMA at 5025
The lower trendline is at 5037
5042 is the March 2015 high
5120 is the April 2015 post-bear market high
5132.52 is the 3/2000 all-time high
Support:
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
The 200 day SMA at 4815
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
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 2076.62
Resistance:
2076 is the all-time high from November
2079 is the intraday all-time high from November
The lower channel line at 2086
The 50 day EMA at 2092
2094 is the December 2014 high, the prior all-time high
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:
2062 is the January 2015 lower high
The 200 day SMA at 2056
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 17,760.41
Resistance:
17,923 is the January 2015 lower high
The 50 day EMA at 17,904
17,991 is the early December interim
18,104 is the December high
18,200 to 18,206 (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 and the bottom of the 5 month trading range
The June low at 17,715
The 200 day SMA at 17,699
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
July 10 - Friday
Wholesale Inventories, May (10:00): 0.8% actual versus 0.3% expected, 0.4% prior
July 13 - Monday
Treasury Budget, June (14:00): $51.0B expected, $70.5B prior
July 14 - Tuesday
Retail Sales, June (8:30): 0.3% expected, 1.2% prior
Retail Sales ex-auto, June (8:30): 0.5% expected, 1.0% prior
Export Prices ex-ag., June (8:30): 0.7% prior
Import Prices ex-oil, June (8:30): 0.0% prior
Business Inventories, May (10:00): 0.2% expected, 0.4% prior
July 15 - Wednesday
MBA Mortgage Index, 07/11 (7:00): 4.6% prior
PPI, June (8:30): 0.3% expected, 0.5% prior
Core PPI, June (8:30): 0.1% expected, 0.1% prior
Empire Manufacturing, July (8:30): 3.5 expected, -2.0 prior
Industrial Production, June (9:15): 0.2% expected, -0.2% prior
Capacity Utilization, June (9:15): 78.1% expected, 78.1% prior
Crude Inventories, 07/11 (10:30): 0.384M prior
July 16 - Thursday
Continuing Claims, 07/04 (8:30)
Initial Claims, 07/11 (8:30): 283K expected, 297K prior
Continuing Claims, 07/04 (8:30): 2275K expected, 2334K prior
Philadelphia Fed, July (10:00): 12.0 expected, 15.2 prior
NAHB Housing Market , July (10:00): 59 expected, 59 prior
Natural Gas Inventor, 07/11 (10:30): 91 bcf prior
Net Long-Term TIC Fl, May (16:00): $53.9B prior
July 17 - Friday
CPI, June (8:30): 0.3% expected, 0.4% prior
Core CPI, June (8:30): 0.2% expected, 0.1% prior
Building Permits, June (8:30): 1275K prior
Housing Starts, June (8:30): 1123K expected, 1036K prior
Building Permits, June (8:30): 1150K expected, 1275K prior
Michigan Sentiment, July (10:00): 96.5 expected, 96.1 prior
End part 1 of 3
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