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7/31/2015 Investment House Report
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Targets hit: None issued
Buy alerts: AMZN
Trailing stops: None issued
Stop alerts: None issued
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The REPORTS SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- A second pause in the range after two good upside moves.
- RUTX, SP400 lead Friday, but SP500 is still the one looking for a new high following NASDAQ's high and bye.
- NASDAQ big names still look good to go.
- Range trading action should set up more rising leaders, but thus far it is mostly just the same groups. Not that great for market strength.
- August and September historically weaker, but not 2014 and for now money is still working into certain groups.
- Playing the continued SP500 move toward its range high, then prep for the trade back down.
For a second session stocks paused after a good Tuesday to Wednesday bounce from the selling after NASDAQ moved to a new high. In the good tradition of this market of late, a new high was, after just a few short sessions basking in the glow, unceremoniously dumped.
SP500 -4.79, -0.23%
NASDAQ -0.50, -0.01%
DJ30 -56.12, -0.32%
SP400 0.17%
RUTX 0.54%
SOX -1.20%
VOLUME: NYSE +25%, NASDAQ -3%.
A/D: NYSE 1.7:1, NASDAQ 1.3:1. Bland but it should be in this kind of action.
As has been the tradition as well, however, when the indexes looked as if they were cracking and ready to make that real rollover to a really significant selloff, they found support and bounced. SP500 and RUTX at the 200 day SMA, NASDAQ at a series of prior price highs and lows.
Now, the history has been that when one index makes a new high and punts it, another index presses upward to take its place. The market showed that before with the RUTX, SP400 taking the point with the first new highs, followed by the rest of the indexes.
On the Tuesday and Wednesday bounce there was no new high made. Hey, it was just two days. SP500 actually looks promising as it held important support at the 200 day SMA and moved through the 50 day MA's. It has the top of its range right at 2130 to 2135. It closed at 2014ish, so it is just a couple of decent sessions away from that level and its moment of brief new high glory.
Of course we are currently playing this last upside move with some nice well-known NASDAQ stocks as well as some biotech and drugs and restaurants, all leaders in the current market. This after booking some pretty awesome downside on QRVO, VIPS, UTHR as they made some downside plunges. The idea over the next several sessions is an SP500 run at the prior highs and perhaps a new high, then repeat the cycle if it will again repeat.
Thus far it has. DJ30 broke below support as did SP400. Both, however, proved to be that old false breakdown that is a characteristic of the entire rally since 2009: a stock breaks key support, historically a time to move in to the downside. With the algos running a lot of the show, however, that has switched. The algos are programmed, if everything else is equal, to buy that break a day or two after a stock or index closes below that support. Thus the false breakdown has been one of those patterns to watch and use because it has made a lot of money.
Anyway, Thursday and Friday saw something of a market pause in the sharp 1-2 of Tuesday and Wednesday. Some stocks did rise, of course, even with the market weakness, e.g. NFLX, posting nice gains Thursday and Friday. Others did the same while others put what look to be the finishing touches on pullbacks. See this quite a bit in the biotechs and drugs, but also in some chip names (AAOI, AMBA), software (PANW, FEYE), and techs (e.g. SNDK).
The Fed released its penultimate statement before the infamous September rate hike meeting to come, a massive number of companies have reported earnings that are now, on the whole, again disappointing in terms of revenue growth, and the economic data continues to be, at best, mixed. Pretty much the status quo, so we are pretty much looking for the same. That of course, means SP500 rallying off this two day test to end the week and putting in an appearance near the May and early July highs.
I guess that puts us in the 'bullish' camp, but with this market that means little. You are bullish on the upswings, bearish when the moves peak, and overall just wonder how the market can rally with such a so-so US and terrible world economic picture.
Oh yes, I forgot. Central banks means central planning. China is literally hunting down anyone with net sell positioning, forcing brokerages to turn over documentation. Hey, it is just protecting its investment. How can it expect people to sell when it is pumping in hundreds of billions of dollars into its markets and at best just being able to tread water? China will find that it is easier to kill and otherwise oppress people that don't conform to its communist ways than it is to try and control markets. Markets are like ideas; you cannot kill them. Wow, that was profound. Now, on with the countdown.
THE MARKET
CHARTS
NASDAQ: Got the ball rolling with a Tuesday to Thursday rally, not just two days, as some of its 'names' and leading groups such as biotechs rebounded from the selling. NASDAQ is at the late June high and still has a long way to move to get back to the July peak, but it is working well and likely works with SP500, or at least follows it, as the large cap NYSE index seeks its prior high for its turn at a new high.
SP500: Nice bounce off the 200 day SMA Tuesday and Wednesday, clearing the 50 day MA, testing to end the week. Very, very much in a trading range, now nearing the top. Another push higher this week off of this test and SP500 either breaks to a new high following NASDAQ's footsteps (meaning it coughs it up a couple of sessions later), or turns over and trades back down in the range after brushing those highs.
RUTX: Small caps led the upside Friday, but not sure they accomplished much. A lower low on the week and then a rebound, so a false break of sorts. Now it is up a week (rose Tuesday through Friday, also the best of the indexes) and at some resistance. It would be great if it continues, but it is really in a rather wretched pattern. Again, it likely follows on any further move higher.
SP400: Also up four sessions on the week, SP400 started as one of the stronger movers. It is back in its range, hit the 50 day EMA on the Friday high and faded some. Good place to test and then resume the move if it can. Would be great to see these stocks step back up into leadership after that late July break to a lower low; yes, a false break.
DJ30: Moved back up into the range through Thursday then weakened Friday. Still has room inside the range to test and start back upside, more or less following SP500. It had to post a false break down reversal to do it, but that works.
SOX: Rallied up to the 10 day EMA through Thursday then rolled lower Friday. Not looking that strong, still finding resistance at the 10 day EMA.
LEADERSHIP
The back and forth in trading ranges helps encourage new areas to try and form up to assist in leading. Energy and metals have bounced, but other than oversold slaughter there are not really patterns there. Telecom is still trying to set up, internet is somewhat interesting. Overall, however, the same groups are providing the bulk of the better patterns.
Big Names: These stocks contributed at different times during the week though most are still in a form of testing. NFLX did start its move back up, however, leading higher Thursday and Friday when most of the market was dormant. AMZN started to stir higher Thursday though paused Friday. GOOG showed signs but is still testing the gap. MSFT helped the upside at least Wednesday and Thursday with its move on Windows 10. FB is testing, but it s a really nice test. AAPL still struggles, heading the opposite direction and finding the 200 day SMA Friday. Perhaps that sparks a bounce as it did early July.
Biotech/Drugs: Mixed as always but still solid overall. CELG is still testing but KITE is moving up. TTPH still looks ready to bounce. BRLI has put in a nice test. ENDP looks ready for a serious move. ACAD, ZGNX, ALXN, LCI, UTHR are all setting up.
Chips: AMBA is trying to turn back to an upside play. PXLW is looking interesting as is AAOI. Others, not so much so: LRCX, QRVO. A widely divergent group.
Software: PANW is setting up. SPLK may be close to rebounding in its channel. RHT still chugging along the 20 day EMA, trending higher in what is likely the world's slowest trend.
Restaurants: Still cooking. CAKE is rising nicely. CMG is in orbit. BWLD flapped, er, gapped higher and is holding the move. JACK is back.
Telecom: Still trying to set up to help out. TSYS, SONS, VIP.
MARKET STATISTICS
NASDAQ
Stats: -0.5 points (-0.01%) to close at 5128.28
Volume: 1.809B (-2.98%)
Up Volume: 875.64M (-119M)
Down Volume: 1.02B (+133.86M)
A/D and Hi/Lo: Advancers led 1.32 to 1
Previous Session: Advancers led 1.08 to 1
New Highs: 95 (+29)
New Lows: 84 (-2)
S&P
Stats: -4.79 points (-0.23%) to close at 2103.84
NYSE Volume: 1B (+25.69%)
Up Volume: 1.74B (+190M)
Down Volume: 1.91B (-80M)
A/D and Hi/Lo: Advancers led 1.69 to 1
Previous Session: Advancers led 1.03 to 1
New Highs: 110 (+29)
New Lows: 71 (-6)
DJ30
Stats: -56.12 points (-0.32%) to close at 17689.86
SENTIMENT INDICATORS
VIX: 12.12; -0.01
VXN: 14.59; +0.15
VXO: 12.4; +0.06
Put/Call Ratio (CBOE): 1.11; +0.35
Recent history: 1 over, 3 below, 3 over, 8 below, 11 above.
Bulls and Bears: A possible breakthrough. The back and forth in the range, making new highs then punting them, is wearing on investment advisors AND individual investors.
The AAII (American Association of Independent Investors) reports bullishness dropping to 21% with bears rising to 47%.
As for Investment Advisors, bears finally cracked, or appear to have cracked, rising to 17.5%. They did hit 17.4% six months back, then lost it. We will see if the belief in the Fed put finally dissipates.
Bulls: 43.3% versus 49.0% versus 43.7% versus 44.8% versus 49.5%
Bears: 17.5% versus 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: 43.3%
49.0% versus 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: 17.5%
15.6% versus 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): 2.19% versus 2.26%. Don't tell the Fed no one believes it will raise rates. Reminds me of Joe Danby (Bruce Dern) in the movie 'Support Your Local Sheriff.' From his jail cell he told his 'pa' that everyone joked and laughed about hanging him but he didn't think they were really going to do it. Oh, they really were, he was just in denial. Anyway, bonds gapped to a higher high on this recovery.
Historical: 2.29% versus 2.25% versus 2.23% versus 2.27% versus 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%
Euro/$: 1.0978 versus 1.0936. Held the 50 day EMA on the week, bounced. Great pattern suggests more upside.
Historical: 1.0936 versus 1.0983 versus 1.1058 versus 1.1092 versus 1.0977 versus 1.0992 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
$/JPY: 123.89 versus 124.15. Started to bounce off the test midweek, still looks solid.
Historical: 124.15 versus 123.99 versus 123.56 versus 123.26 versus 123.79 versus 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
Oil: 46.77, -1.67. After bouncing to the 10 day EMA, oil rolled over hard to a lower closing low on this selling.
Gold: 1095.00, +7.70. A two week lateral move as gold tries to consolidate for a bounce after a hard mid-July drop.
MONDAY
Earnings are not really winding down as more of the non-SP500 stocks report the month after the 'traditional' reporting month. The news builds, one would suppose, toward the Friday monthly jobs report. With the jobs market so strong as several pundits claimed last week, the number should be blowout. If you want a bartending or table waiting job that is great. If you aspire to something else, good luck. As I stated at least twice last week when weak numbers were released, it is so obvious why wages are lower: most jobs created in this economy to replace those lost in the collapse are in the lowest paying sectors. Of course we will fix that problem by raising the minimum wage. That is why WMT just raised its minimum wage and laid off a thousand.
Oh well, suffice it to say there will be more news, more hope the news gets better, the same old crappy results (because until the policies change, the outcome won't change). Pretty much status quo.
And I think status quo works. The stock indexes are range trading in this status quo. At some point the range breaks, upside or downside, and that makes each false break lower somewhat of a pulse quickener (my new word for the day) simply because everyone says a major correction is due but the market keeps skating by that day of reckoning.
For now we are still, as is obvious by now, playing the SP500 roll back up in its range. Two strong upside sessions, a pair of quiet rest days, and now it should be ready to move up toward its high with the new month.
August and September tend to be harder on the market, suffering downside that sets up October bottoms. That did not happen in August last year, however, as, after some quick downside continued from July, stocks surged back upside to set up a September peak that rolled over into the October end of QE (Quantitative Ebola).
We are not entering this period expecting the market to show greatness. Heck, the Fed says it will hike rates in September. What we are looking for, however, is the continued trading range action, perhaps breaking SP500 to a new high as the next to do so in what has been a strange form of range trading rotation that brings one index after the next to higher highs, but only after the other gives the high up.
Will the small and midcaps pull out new highs this time? If they do it will be a surprise. I feel NASDAQ, given its market leading stocks getting most of the money, would be more likely to revisit its recent new high before the small or midcaps can make that happen. Even so, we cannot be predisposed to any particular outcome, just watch for what is working and gravitate that way.
For this week we look for SP500 and NASDAQ to lead the way back up to the top of the range, make some plays accordingly, e.g. PANW, AMBA, UTHR, maybe FEYE, AFOP, ARRS, SNDK, then take some gain.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5128.28
Resistance:
5132.52 is the 3/2000 all-time high
5150-5160 is the June peak range
5164 is the June prior all-time high
Support:
5120 is the April 2015 post-bear market high
The lower trendline is at 5078
The 50 day EMA at 5072
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 4869
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 2103.84
Resistance:
2115 is the late March lower high
2119.59 is the February intraday prior all-time high
2126 was the April prior all-time high
2130 is the June 2015 peak
2135 is the May 2015 all-time high
Support:
The 50 day EMA at 2098
2094 is the December 2014 high, the prior all-time high
The lower channel line at 2094
2079 is the intraday all-time high from November
2076 is the all-time high from November
The 200 day SMA at 2068
2062 is the January 2015 lower high
2046 is the July closing low
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 17,689.86
Resistance:
The June low at 17,715
The March low at 17,718
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
The 200 day SMA at 17,775
The 50 day EMA at 17,863
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 31 - Friday
Employment Cost Inde, Q2 (8:30): 0.2% actual versus 0.6% expected, 0.7% prior
Chicago PMI, July (9:45): 54.7 actual versus 50.5 expected, 49.4 prior
Michigan Sentiment - Final, July (10:00): 93.1 actual versus 94.0 expected, 93.3 prior
August 3 - Monday
Personal Income, June (8:30): 0.3% expected, 0.5% prior
Personal Spending, June (8:30): 0.2% expected, 0.9% prior
PCE Prices - Core, June (8:30): 0.2% expected, 0.1% prior
ISM Index, July (10:00): 53.7 expected, 53.5 prior
Construction Spendin, June (10:00): 0.6% expected, 0.8% prior
Auto Sales, July (17:00): 5.6M prior
Truck Sales, July (17:00): 8.0M prior
August 4 - Tuesday
Factory Orders, June (10:00): 1.8% expected, -1.0% prior
August 5 - Wednesday
MBA Mortgage Index, 08/01 (7:00): 0.8% prior
ADP Employment Chang, July (8:15): 220K expected, 237K prior
Trade Balance, June (8:30): -$42.7B expected, -$41.9B prior
ISM Services, July (10:00): 56.3 expected, 56.0 prior
Crude Inventories, 08/01 (10:30): -4.203M prior
August 6 - Thursday
Challenger Job Cuts, July (7:30): 9.3% prior
Initial Claims, 08/01 (8:30): 271K expected, 267K prior
Continuing Claims, 07/25 (8:30): 2238K expected, 2262K prior
Natural Gas Inventor, 08/01 (10:30): 52 bcf prior
August 7 - Friday
Nonfarm Payrolls, July (8:30): 227K expected, 223K prior
Nonfarm Private Payr, July (8:30): 223K expected, 223K prior
Unemployment Rate, July (8:30): 5.3% expected, 5.3% prior
Hourly Earnings, July (8:30): 0.2% expected, 0.0% prior
Average Workweek, July (8:30): 34.5 expected, 34.5 prior
Consumer Credit, June (15:00): $17.0B expected, $16.1B prior
End part 1 of 3
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