Saturday, September 26, 2015

The Daily, Part 1 of 3, 9-26-15

* * * *
9/26/2015 Investment House Report
* * * *

Targets hit: None issued
Entry alerts: None issued
Trailing stops: None issued
Stop alerts: None issued

The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html

********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.

TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4

TO VIEW THE Economic SUMMARY VIDEO 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

- Relief bounce surges out of the gate then stumbles back.
- 'Brand names' gap and reverse and NASDAQ does the same.
- Calls for no rate hike to 'help the little guy' have it backward.
- Yellen speech a bit contradictory re foreign influences, broaches negative interest rates. How is THAT for 'the little guy?'
- Big name reversals not good for the upside as upside pressure released on the surge that purged.
- Relief bounce setup was good but didn't take, leaves stock indices still in the break lower, looking for a new catalyst to test the trendline break.

After the Thursday reversal and solid setups by the 'brand name' leader stocks the stock market opened Friday with a solid advance led by gaps in AMZN, NKE, PCLN. We were rather pleased with the reversal and the call on some of the big names to lead a move to test the break of the trendline in the wedge. The good start was tested as is usually the case, paring the gains into midday but holding a solid advance.

Then the market showed a new wrinkle, and it was one directly involving the big name brands. The big names started selling in the afternoon session. Not just a fade but selling and some serious high to low reversals. PCLN, GOOG, AMZN, BWLD -- stocks we touted Thursday as showing solid action to the upside. These are the stocks that, for the most part, have delivered the upside support. Not all are rolling over, e.g. SBUX, CMG, but key stocks are doing so, and if they don't check the poor action and rebound this week, the selling is likely on again without much of a bounce other than the early Friday surge.

SP500 -0.90, -0.05%
NASDAQ -47.98, -1.01%
DJ30 113.35, 0.70%
SP400 -0.17%
RUTX -1.30%
SOX 0.54%

VOLUME: NYSE faded 2% to average while NASDAQ trade nudged higher, still above average. Some distribution on NASDAQ as those big names turned over after solid gains.

A/D: NYSE -1.1:1, NASDAQ -2.1:1. NASDAQ of course suffered the most abuse as it was significantly lower on the session. Even with RUTX down 1.3% the NYSE breadth was palatable.

If a rebound of the break of the trendline from the wedge is going to occur it will take the weekend to lick the wounds and regroup. It was after all a rather strange end to the week with a bounce attempt setup and then a reversal in the afternoon Friday. With that rather strange ending to the week and with this market's volatility, that leaves Monday relatively wide open.

The overall picture, however, remains the same, i.e. a market in decline, mounting a four week test of a sharp selloff, then breaking back lower once more. If you look at SP500 and DJ30 you can see a bounce to test the break from the wedge is still a valid option. Looking at RUTX, SP400, not so much. NASDAQ? Nasty reversal suggest more downside, but even so, the 4615 level (closed at 4686) is a viable support level for a rebound. All in all, however, the patterns and the bias is downside, and the upside, as noted Thursday, is of the bounce variety only.

That leaves us still looking for PCLN, NFLX, and AMZN positions to bounce, and with their ugly Friday patterns that leaves Monday for them to show any upside. If they cannot, the upside bounce has to take a back seat to the overall downside bias, and we have to close out those positions in favor of, yes, letting our downside positions work lower and initiating some new ones on NASDAQ, etc.


NEWS/ECONOMY

TO VIEW THE Economic SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.mp4

Yellen talks liftoff, foreign influence, NIRP.

In her Thursday speech at Amherst Chairman Yellen made a lot of points. Unfortunately, it appeared as if she took statements from speeches over a several year period and put them all in one speech. What do I mean?

The Fed went out of its way when the Chinese stock market was crashing to comment that overseas issues should not influence FOMC decisions. Then, when it came to the lick log to actually hike rates two Thursdays back, the FOMC trotted out that very reason for NOT hiking rates.

Well, Thursday Ms. Yellen said "overseas developments should not influence policy decision." This after the Fed used the excuse not to hike as noted.

Then, she discussed the total contra to hiking, and that is negative interest rates or NIRP (as opposed to ZIRP, zero interest rate policy). This is where depositors PAY the bank for the privilege of the bank holding their money. No more of the 'magic penny' in the 'Love is something if you give it away song' from our childhood where if you took that penny and then loaned it spent it, etc. you would have so many they would roll all over the floor.

Yellen did not say it would happen, but she discussed it and how it could be done but not for very long. History lesson: WHENEVER the Fed starts talking about something new, there is a reason it is talking about it. It is part of the prepping of markets 'just in case' it is needed.

Cramer against a rate hike because he is 'for the little guy.'

CNBC is running a new commercial with Cramer now that the 'have we just seen a successful test of the bottom' commercial has been skewered. Reminds me of that gold commercial from 2014 saying that gold would reach $2000 before year end (in 2014!). Didn't happen so they kept running the commercial, just dropped the 'this year' part of it.

Anyway there is a new commercial with Cramer saying he wants the Fed to hold off rate hikes because he is for the little guy, Main Street, and rate hikes would hurt the common man. You know "It's people that make the difference. Little people, like you." (from . . 'Christmas Vacation' as Clark's boss Frank Shirley calls Clark 'Carl').



There is irony dripping all over those statements. First, it is the Fed and its ZIRP (zero interest rate policy) that has SLAUGHTERED the little people, particularly when aligned with the Administration's big money, big business, big government policies and regulations.

Second, as noted above, Ms. Yellen is talking out of both sides of her mouth, hedging her bets. She discusses 'liftoff' of rate hiking in 2015 but at the same time broaches the subject of NIRP, where depositors pay the banks for the privilege of putting their money into a 'safe' place. Oh THAT will help the little guy, the common man (or woman or transgender person or whatever is out there now).

Cramer's statement is one of those where he shows, just as Frank Shirley, how in touch he is with the common man. How he feels their pain and can make statements that seem on the face to be good for the average citizen but the policies espoused are what has devastated the average citizen since 2008. It is so easy to talk of very populist notions that can fool a lot of people for at least a bit of time. For some reason, I guess it is because the Pope is visiting, an old line from an old 'M*A*S*H' TV episode comes to mind where Trapper John McIntyre tells Frank Burns, after Frank was mistaken for a chaplain, 'You can fool some of the papal . . ."






THE MARKET

CHARTS

NASDAQ: Given NASDAQ and its leaders looked quite good Thursday but then tossed their waffles Friday, we lead with the leader . . . downside. NASDAQ gapped higher into the Tuesday gap zone from that gap lower. That was it. NASDAQ sold from there. It closed at one of the early September closes on the rebound test. Not great action at all, looking as if NASDAQ failed the bounce attempt. That said, there is support from the early September test of the initial relief move from the August selling. If NASDAQ doesn't hold and resume from here, the 4635-4615 level is some pretty good looking support if there is any upside left in the rebound attempt.

DJ30: Given it was the market leader Friday and posted upside we put this one on next. Surged to the 20 day EMA that matched the middle of the wedge peak, faded, giving up 151 points from high to close. UP on the day, but not great action. Held a second bottom Thursday on the low, bounced. DJ30 remains in position to bounce, but will need a catalyst.

SOX: The other up index Friday, SOX gapped then faded to a modest gain. Reversed at support Thursday, tried to bounce form it Friday. Could not hold all of the bounce but as with DJ30 it has left itself a shot to bounce. Perhaps that is wishful thinking for the upside but we will see how it plays out.

RUTX: The small caps were clobbered, gapping upside then reversing, taking out the early September low on the test of the recovery move. RUTX is well on the way to making the test of the August low.

SP400: Gapped higher, reversed as well, but did hold over the Thursday intraday low. That is about all you can say. As with RUTX, SP400 appears to be on its way to test the August bottom.


LEADERSHIP

Lots of leadership groups struggled. Look at what was up: PG, K, CLX - - personal products. AEP, PCG - - utilities. Very defensive, suggesting the attempted bounce was just that, an attempt.

Big Names: This was the new wrinkle, i.e. big name leaders getting boxed around. AMZN gapped and reversed negative. BWLD broke sharply lower, giving up a week's gains. PCLN gapped and reversed very much like AMZN, closing below the 50 day MA. GOOG gapped and reversed as well, also taking out the 50 day EMA. SBUX was lower, gapping to the August peak and reversing. CMG held up fine. NFLX faded some of the Thursday move but is still working on its rebound. AAPL tried the 50 day MA again, faded but just modestly. The sharp gaps and sharp reversals are not good news for the market overall holding on. We will have to see they react to start the week.

Software: VDSI still looks good, one of the few. VRSN gapped and reversed but volume was low. Still a decent pattern. RHT is trying to recover, struggling.

Financials: Up on the session, giving the support to DJ30 and SP500. JPM gapped higher but dojied at the 10 day EMA. WFC same action, gapping to a doji at the 10 day EMA.

Energy: HAL is still trying to work laterally in the four week range. APC gapped and turned, closing at a lower closing low as it slides down the 10 day EMA. CVX looks similar to HAL. Not tanking but they are not for your mother. Perhaps mother in-law.

Chips: Some bounces. ARMH gapped upside and held most of the gap. QRVO is still way down but again, perhaps it can rally off some solidly rising MACD. SIMO is holding up very well. MXWL gapped higher, held it.

Biotechs/Drugs: Struggling. A lot. CELG, AMGN, GILD diving. ZGNX imploded.


MARKET STATISTICS

NASDAQ
Stats: -47.98 points (-1.01%) to close at 4686.5
Volume: 1.986B (+3.27%)

Up Volume: 684.75M (-184.44M)
Down Volume: 1.36B (+250M)

A/D and Hi/Lo: Decliners led 2.07 to 1
Previous Session: Decliners led 1.25 to 1

New Highs: 42 (+17)
New Lows: 171 (-24)

S&P
Stats: -0.9 points (-0.05%) to close at 1931.34
NYSE Volume: 980M (-2%)

A/D and Hi/Lo: Decliners led 1.1 to 1
Previous Session: Decliners led 1.47 to 1

New Highs: 20 (+15)
New Lows: 144 (-211)

DJ30
Stats: +113.35 points (+0.7%) to close at 16314.67


SENTIMENT INDICATORS

VIX: 23.62; +0.15
VXN: 25.16; +0.44
VXO: 23.59; +0.02

Put/Call Ratio (CBOE): 1.3; +0.27

Recent history: 25 of 27 sessions at or over 1.0. Crazy number of closes over 1.0.


Bulls and Bears: Bulls faded modestly but bears blasted higher, reaching the highest levels since 2011. Closing in on the 35 level traditionally considered bullish. The bulls and bears remain crossed, now for three weeks, still quite bullish. That is a powerful rally signal though the rally ensues after the cross, typically not right on it.

Bulls: 26.0 versus 26.8% versus 25.7 versus 27.8 versus 31.6%

Bears: 30.2 versus 26.8% versus 27.9 versus 26.8% versus 22.5%

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: 26.0%
26.8% versus 25.7% versus 27.8% versus 31.6% versus 37.7% versus 40.2% versus 42.2% versus 43.3% versus 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%

Background: This is the lowest since the 2008 and 2009 market plummet.

Bears: 30.2%
26.8% versus 27.9 versus 26.8% versus 22.5% versus 18.4% versus 18.6% versus 17.5% versus 17.5% versus 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%

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. Getting close.


OTHER MARKETS

Bonds (10 year): 2.17% versus 2.11%. Gapped right back down after the strong upside gap Thursday. Appears as if bonds cannot make up their mind, but sold on Yellen's 'sometime this year' rate hike speculation.

Historical: 2.11% versus 2.15% versus 2.14% versus 2.20% versus 2.13% versus 2.20% versus 2.30% versus 2.28% versus 2.17% versus 2.18% versus 2.23% versus 2.18% versus 2.19% versus 2.13%


Euro/$: 1.1206 versus 1.1223. Euro holding over the 200 day SMA after falling to that level early in the week.

Historical: 1.1223 versus 1.11715 versus 1.11325 versus 1.12004 versus 1.13010 versus 1.14077 versus 1.13068 versus 1.1268 versus 1.1317 versus 1.1338 versus 1.1278 versus 1.1217 versus 1.12093 versus 1.1148 versus 1.1122 versus 1.1220 versus 1.1299 versus 1.1216 versus 1.1180 versus 1.1243 versus 1.1413 versus 1.1490


$/JPY: 120.58 versus 120.30. The dollar surged higher to the 200 day SMA then faded, cutting the gain in half. Still in the five week range, still unable to breakout.

Historical: 120.30 versus 120.19 versus 120.00 versus 120.36 versus 119.996 versus 119.82 versus 120.46 versus 120.49 versus 120.34 versus 120.58 versus 120.73 versus 120.39 versus 119.98 versus 119.04 versus 120.15


Oil: 45.34, +0.24. Still, repeat still, in the four week lateral move after the surge of the August lower low.

Gold: 1145.50, -7.80. Faded off the huge Thursday gain. Nice tap at the prior high in this move, rebounding off the low.


MONDAY

Nothing like snatching possible defeat form the jaws of victory. After breaking lower from the wedge and selling 5 of 6 days the indices were primed to bounce to test the move. They did, for the first hour to midday, depending upon the index. The sellers took over and ran many stocks, mostly on NASDAQ, lower.

The action left SP500, DJ30 and even SOX still with a near term upside bias. NASDAQ and RUTX gapped and reversed. RUTX looks like dog droppings. NASDAQ's reversal wasn't good; at least it leaves itself with a shot of a near term low at the early September low.

So, the bounce we were looking for, the one that looked quite good after the Thursday session, is at least back at the drawing board. That means the overriding theme, the flattening of the indices post-QE end, the massive break lower, the rebound to set up a test of that low, is still predominant. The question is whether there is a near term bounce to test the break below the trendline in the upward pointing wedge or a continuation of the move to test the low. Certainly enough time has been put in to make that a solid test for a solid rally, particularly when you throw in the sentiment and internal extremes already logged in the August selling.

Overall theme is eventually getting lower to test the prior low. Near term theme, the volatility continues and we can see upside moves inside the ultimate test lower. As another crossroads is left after the Thursday/Friday action, it behooves us to remain ready to play the overriding them (and thus we left our downside plays running) as well as the shorter term upside move. The latter appears in jeopardy after the Friday action; such is the life inside a bigger theme.

Again, if the big names continue the action shown Friday, the indices likely are on their way to that deeper test. Those stocks have held the indices higher, and if they go, so go the indices.

In that instance we look at more downside plays to capture that move. Some more SPY, some NASDAQ plays such as QID, some stock plays such as COST (trading range), SBUX that has put in a double top with lower MACD.

Don't forget the upside. Utilities and personal products? Not our first choice. Some precious metals? Interesting, e.g. ABX. Chips still have a bottoming chance and thus we like MXWL. Some software is still solid, e.g. VDSI.

So, it is back to the same theme, sentiment and internals hit extremes and now the indices and stocks are working on setting up their bases. Again, the same story. We are looking at the selloff and are playing that move as well as trying to play some contra moves inside of it. Then after it is over, when the selling tests the prior low, that is when we anticipate playing some solid upside setups.

The market will have a lot of data to digest in the coming week from Personal Income and Spending, Chicago PMI, Challenger Job Cuts, ISM, Jobs Report. Will they 'confirm' the Q2 GDP Final reading of 3.9% and its jump in consumer spending that added 2.42% to the 3.9% GDP print (i.e. without the sending GDP would be 1.5%)? Personal spending for August is due out, perhaps providing some foreshadowing on a Q3 GDP report expected to plummet? Ah the intrigue. All of this even with no Fed meeting!

We saw some deterioration of patterns to end the week and not as many look ready to move higher. Perhaps the selloff to test the lows makes the difference, completes the cycle. Typically that is how it works, but we will keep watching to see if there are patterns improving and whether patterns deteriorate. If there are no good patterns to lead higher on a rebound move, they ultimately fail. Thus the importance of solid upside patterns is clear. Not there yet, still working on it, but getting much closer.

Have a great weekend!


SUPPORT AND RESISTANCE

NASDAQ: Closed at 4686.50

Resistance:
4751 is the January 2015 lower high
4774 is the January high
4811 is the November 2014 peak (intraday)
4815 is the December 2014 prior market peak
The March lows at 4843 and 4825
4837 is the late August 2015 rebound high
The 50 day EMA at 4875
4910 is the July 2015 low
4912 the mid-April China dip
The 200 day SMA at 4917
The June low at 4974
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high

Support:
4636 is the early September 2015 low testing the recovery from the August selling.
4631 is the October 2014 upside gap point
4614 is the September 1 intraday low
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
4370 to 4300 (March 2014 peak to June gap point)
4185 to 4130 (May 2014 gap point to October 3014 low)
4292 is the August 2015 low


S&P 500: Closed at 1931.34

Resistance:
1972 is the December 2014 low
1989 is the last August closing high
1991 is the July 2014 high
1994 is the late August recovery peak
The 50 day EMA at 2003
2011 is the September prior all-time high
2046 is the July 2015 closing low
2062 is the January 2015 lower high
The 200 day SMA at 2065
2076 is the all-time high from November
2079 is the intraday all-time high from November
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:
1913 is the early September 2015 closing low testing the bounce from the August selling
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.
1867 is the August 2015 low
1862 is the October 2014 closing low
The December and January highs at 1848
1829 us the October 2014 intraday low
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 16,314.67

Resistance:
16,506 is the March 2014 peak
16,589 is the December 2013 all-time high
16,632 is the April 2014 all-time high
16,665 is the late August 2015 closing high. Key, key level.
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak. Key level.
16,736 is a prior all-time high from May 2014
The 50 day EMA at 16,851
16,933 is the September 2015 recovery peak
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
17067 is the December 2014 low
17,068 is the early July 2014 peak
17,152 is the mid-July post bear market high
17,351 is the September 2014 all-time high.
17,515 is the early July closing low
17,585 to 17,579, the March intraday lows, helping mark the bottom of the Dow's The February to July trading range.
The 200 day SMA at 17,653
June low at 17,715
The March low at 17,786
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range

Support:
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
15,855 is the October 2014 intraday low
15,372 is the February 2014 closing low
15,370 is the August 2015 intraday low
14,803 is the October 2013 low


ECONOMIC CALENDAR

September 25 - Friday
GDP - Third Estimate, Q2 (8:30): 3.9% actual versus 3.7% expected, 3.7% prior
GDP Deflator - Third, Q2 (8:30): 2.1% actual versus 2.1% expected, 2.1% prior
Michigan Sentiment - Final, September (10:00): 87.2 actual versus 87.0 expected, 85.7 prior

September 28 - Monday
Personal Income, August (8:30): 0.4% expected, 0.4% prior
Personal Spending, August (8:30): 0.3% expected, 0.3% prior
PCE Prices - Core, August (8:30): 0.1% expected, 0.1% prior
Pending Home Sales, August (10:00): 0.5% expected, 0.5% prior

September 29 - Tuesday
Case-Shiller 20-city, July (9:00): 5.0% expected, 5.0% prior
Consumer Confidence, September (10:00): 96.0 expected, 101.5 prior

September 30 - Wednesday
MBA Mortgage Index, 09/26 (7:00): 13.9% prior
ADP Employment Chang, September (8:15): 200K expected, 190K prior
Chicago PMI, September (9:45): 52.7 expected, 54.4 prior
Crude Inventories, 09/26 (10:30): -1.925M prior

October 1 - Thursday
Challenger Job Cuts, September (7:30): 2.9% prior
Initial Claims, 09/26 (8:30): 270K expected, 267K prior
Continuing Claims, 09/19 (8:30): 2248K expected, 2242K prior
ISM Index, September (10:00): 50.6 expected, 51.1 prior
Construction Spending, August (10:00): 0.5% expected, 0.7% prior
Natural Gas Inventor, 09/26 (10:30): 106 bcf prior
Auto Sales, September (17:00): 5.6M prior
Truck Sales, September (17:00): 8.5M prior

October 2 - Friday
Nonfarm Payrolls, September (8:30): 205K expected, 173K prior
Nonfarm Private Payr, September (8:30): 200K expected, 140K prior
Unemployment Rate, September (8:30): 5.1% expected, 5.1% prior
Hourly Earnings, September (8:30): 0.2% expected, 0.3% prior
Average Workweek, September (8:30): 34.6 expected, 34.6 prior
Factory Orders, August (10:00): -1.0% expected, 0.4% prior

End part 1 of 3
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Saturday, September 19, 2015

The Daily, Part 1 of 3, 9-19-15

* * * *
9/19/2015 Investment House Report
* * * *

Targets hit: BWLD; VA
Entry alerts: None issued
Trailing stops: FCX; UBNT
Stop alerts: AMKR; RIG

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

- Post-FOMC angst continues as stocks gap lower.
- Indices reverse, set to test the August lows.
- Many stocks ignore Thursday and Friday, many continue working on bottoms.
- More downside likely even as stocks work on their bases.

No one and done. Not even a one and nothing. Just nothing. The FOMC's transparent black box remains as opaque as possible as rate hike indicators carefully spelled out are disregarded as some new, previously undisclosed threat, or worse, previously disclosed and dismissed threat, takes precedence over all rate hike markers.

Sure there was no rate hike, but the market hated it. More uncertainty generated by the Fed. Not just when a hike will come, but investors and traders questioned why the Fed did not hike, why it ignored its indicators, and what could be so bad to run 55 straight meetings at 0% rates with no hike.

Regardless, the FOMC question, for this meeting, is out of the way. The markets can now proceed with the process that was in play before interrupted by FOMC week.

That process was attempting to put in a bottom after the sharp selling in August. We said the stock indices could like what they heard and continue the rally, or spit the bit and test the break over the late August highs or head lower toward the August lows.

Clearly stocks spit the bit. The move higher into the FOMC decision set the stage for some theatrics. Thursday stocks rallied into the result but reversed to tombstone doji after the decision. Friday stocks started lower, sold lower, attempted a meager rebound, failed.

SP500 -32.17, -1.62%
NASDAQ -66.72, -1.36%
DJ30 -290.16, -1.74%
SP400 -1.61%
RUTX -1.47%
SOX -1.66%

VOLUME: NYSE +160% (2.6B); NASDAQ +54% (2.8B). Plenty of expiration volume.

A/D: NYSE -2.3:1, NASDAQ -1.8:1. Nothing seriously bad here and this dovetails with what we see in many stocks on the day. The indices were hammered but many stocks were fine. Rather narrow downside leadership.

It would appear the test of the break over the late August highs is moot. SP500, DJ30, SP400 all flopped back below that level. NASDAQ and RUTX can still hold, but for the other indices, the test of the August lows looks to be on. Remember, NASDAQ, or any index for that matter, can test but still hold up relatively well, letting the other indices do its dirty work. Even so, NASDAQ would still likely wait until the other indices finished their tests before heading back upside with any kind of power.

So, a move higher to the FOMC decision clearing the late August recovery highs, a reversal after the decision Thursday, then a dive lower Friday. It certainly looks as if a full-fledged test of the August lows is set.

We went looking for stocks set to plunge to those lows. Sure there were some nasty moves Friday from sectors such as financials, industrials, some energy, some metals, but after scanning hundreds upon hundreds upon hundreds of stock charts, we see a surprisingly, very surprisingly, high number of stock patterns that are still showing they are in the bottoming or basing process or are just testing previous good moves in good patterns.

What does that mean? The process of finding a technical-based bottom after sentiment and internal indicators screamed to extremes is ongoing. Some are calling for not only a test of the August lows, but to the October 2014 lows. Others say that is just the start.

Perhaps ultimately they are correct. That would mean, however, that the many, many stocks currently setting up good patterns to reverse or continue runs would break those patterns. That can still happen; a plunge to the August lows would put them all under pressure. Maybe stocks do test and then put in a bottom and rally just to ultimately fail again, leading to that deeper collapse some predict.

That is plausible as well. After all, the Fed has quit QE, and as we noted the past several months, once QE ended the market behaved poorly, just as it has done as each QE round ceased. Ultimately, the economy still sucks and will continue to do so as long as the policies in place remain in place. That is a fact of economic life. Hoping the economy will get better when the Administration actively pursues policies that restrict (that is the nicest way I can think to say it) economic growth is foolish. Perhaps that in itself answers the question many have asked, i.e., why has the Fed taken upon itself to try and keep the economy afloat?

Nearer term, however, the extreme sentiment and internals, coupled with a lot of stocks that are still very engaged in the technical bottoming process, suggests that the market, even if it does drop to test the August lows as history would indicate, will try to put in a very tradable bottom near the August lows or higher.

That has been our premise all along, and as we said would be the case Wednesday, even after the FOMC meeting unless there was something clear such as a 'one and done' express statement. Nothing of the kind. The process continues.


THE MARKET

CHARTS

SP500: The index everyone is watching so we start here. Thursday SP500 rallied well past the late August high and touched the 61% Fibonacci Retracement of the August diver lower. It reversed intraday to close near the 50% retracement. That big tombstone doji combined with the late August rebound to the 50% retracement forms a double top basically at the 50% level. That typically sets up a selloff to test the prior low. The Thursday tombstone reversal and the Friday plunge indicate that test process is in place.

NASDAQ: Overall similar action though the levels are different given NASDAQ demonstrated more strength. NASDAQ cleared the late August highs Tuesday, rallying through the 200 day SMA and to the 50 day SMA Thursday. It too reversed with a tombstone doji then gapped lower Friday. The Thursday move took NASDAQ to and through the 78% Fibonacci retracement of the August selloff. It does not have a double top but a downside ABCD. Now the question is whether it makes the break lower. Friday it gapped to the late August highs and held with a tight doji. NASDAQ has some key names that are performing very well, e.g. AMZN, PCLN, BWLD, GOOG. They are providing support for NASDAQ that the other indices are not enjoying. Thus NASDAQ is more of an enigma; it likely tests lower but how far is the key.

DJ30: A much more clear cut pattern than NASDAQ, very similar to SP500. Break over the late August highs on Wednesday, big tombstone Thursday testing the 50 day EMA and the 61% Fibonacci Retracement, Friday a dump lower. As with SP500, DJ30 has a double top at the Fibonacci retracement levels.

SOX: A pattern of its own, often the case for SOX. Nonetheless, it is a double top at the 50 day MA and the coincident 78% Fibonacci retracement. A DTop at that point is a quite reliable downside signal. Of course there are some good chip patterns out there, but they can hold up during any test.

RUTX: More akin to NASDAQ with a rally to the 50 day EMA and close to the 78% Fibonacci retracement, showing a big tombstone and reversal through Friday. A downside ABCD pattern here as well.


LEADERSHIP

With the indices showing a very strong reversal signal Thursday and Friday, you would expect stocks across the board to be down. Industrials, metals, financial were indeed lower. But there were many areas of continued strength, stocks that even rallied in the face of the Friday selling.

Big Names: A continued source of strength. AMZN up Thursday and Friday. GOOG off Friday but a normal 10 day EMA test after a nice week. PCLN gapped to the 10 day EMA but is still in a solid move. BWLD gapped lower, reversed to hold its pattern. CMG is holding in at the 10 day EMA. SBUX is testing the 10 day EMA. Not all are great. AAPL failed at the 50 day EMA. NFLX is still in a struggle.

Semiconductors: A wide range of patterns. SLAB in an inverted head and shoulders. MXWL in an easy test of a blast higher. MXL still surging. Others not so great. ATML plunging, MU gapping lower. SMH has that double top at the 78% Fibonacci retracement, showing overall that a test is coming.

Biotechs/Drugs: Solid overall and many plays this weekend from this group. AMGN, BIIB, CELG don't do much for us, but KITE, INFI, IMGN, TNXP are just some that look good.

Financial: Nasty gaps lower after the Thursday reversal. JPM, WFC, DB are prime examples.

Restaurants: Still quite solid. CHUY, BWLD, RUTH.

China stocks: ATHM still looks good to go. SINA has an interesting bottoming pattern. WUBA is attempting a bottom of its own.

Energy: Some ugly, some not so. SLB is ugly. XEC is a jumble. Others sold but sold with what appears to be a purpose to establish a bottom, e.g. GPOR, APC, SLCA.


MARKET STATISTICS

NASDAQ
Stats: -66.72 points (-1.36%) to close at 4827.23
Volume: 2.842B (+54.32%)

Up Volume: 762.67M (-218.54M)
Down Volume: 2.5B (+1.601B)

A/D and Hi/Lo: Decliners led 1.84 to 1
Previous Session: Advancers led 1.23 to 1

New Highs: 53 (-13)
New Lows: 75 (+43)

S&P
Stats: -32.17 points (-1.62%) to close at 1958.03
NYSE Volume: 2.6B (+160%)

A/D and Hi/Lo: Decliners led 2.29 to 1
Previous Session: Advancers led 1.53 to 1

New Highs: 11 (-32)
New Lows: 113 (+76)

DJ30
Stats: -290.16 points (-1.74%) to close at 16384.58


SENTIMENT INDICATORS

VIX: 22.28; +1.14
VXN: 23.6; +0.97
VXO: 23.2; +1.17

Put/Call Ratio (CBOE): 1.14; +0.22

Recent history: 20 of 22 sessions over 1.0.


Bulls and Bears: Both backed off as stocks recovered from the sharp selling and from the prior week's crossover. They are now eye to eye, still an overall bullish indication. Bulls and bears crossed over two weeks back, something not done since 2011. That is a powerful rally signal though the rally ensues after the cross, typically not right on it.

Bulls: 26.8% versus 25.7 versus 27.8 versus 31.6%

Bears: 26.8% versus 27.9 versus 26.8% versus 22.5%

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: 26.8%
25.7% versus 27.8% versus 31.6% versus 37.7% versus 40.2% versus 42.2% versus 43.3% versus 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%

Background: This is the lowest since the 2008 and 2009 market plummet.

Bears: 26.8%
27.9 versus 26.8% versus 22.5% versus 18.4% versus 18.6% versus 17.5% versus 17.5% versus 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%

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. Getting close.


OTHER MARKETS

Bonds (10 year): 2.13% versus 2.20%. Bonds gapped and rallied back through the 50 day MA's. Still well off the last August high but are making a run after the four week pullback.

Historical: 2.20% versus 2.30% versus 2.28% versus 2.17% versus 2.18% versus 2.23% versus 2.18% versus 2.19% versus 2.13% versus 2.17% versus 2.19% versus 2.16% versus 2.21% versus 2.18% versus 2.19% versus 2.13% versus 2.01% versus 2.05% versus 2.08% versus 2.12% versus 2.20% versus 2.15% versus 2.20% versus 2.19% versus 2.15% versus 2.14% versus 2.24% versus 2.17% versus 2.27% versus 2.15% versus 2.19% versus 2.29% versus 2.25%


Euro/$: 1.13010 versus 1.14077. Gave back the Wednesday move higher.

Historical: 1.14077 versus 1.13068 versus 1.1268 versus 1.1317 versus 1.1338 versus 1.1278 versus 1.1217 versus 1.12093 versus 1.1148 versus 1.1122 versus 1.1220 versus 1.1299 versus 1.1216 versus 1.1180 versus 1.1243 versus 1.1413 versus 1.1490 versus 1.1595 versus 1.1362 versus 1.1237 versus 1.1132 versus 1.1032 versus 1.1080 versus 1.1110 versus 1.1154


$/JPY: 119.996 versus 119.82. Sold off, recovered, but still in the 5 week trading range after the mid-August selloff.

Historical: 119.82 versus 120.46 versus 120.49 versus 120.34 versus 120.58 versus 120.73 versus 120.39 versus 119.98 versus 119.04 versus 120.15 versus 120.25 versus 119.59 versus 121.24 versus 121.73 versus 121.06 versus 119.93 versus 118.97 versus 118.58 versus 122.06 versus 123.39 versus 123.79 versus 124.39 versus 124.44 versus 124.32


Oil: 45.02, -1.88. After the Wednesday break higher form the nice two week flag, oil flopped back and gave up that Wednesday move. Still holding the test, but failed the rally attempt.

Gold: 1137.80, +20.80. Gold gapped through the 50 day EMA and continued the rally that started Wednesday. Gold put in an ABCD pattern and is surging upside.


MONDAY

The pattern appears set for the indices to work lower toward that August low. Will it plunge to scare everyone out or slowly work lower to that level, boring everyone out? It is never a straight line; expect continued back and forth just as the market has shown. It will bounce around in attempts to fool you, to get you to misstep. It will get you on a play here or there, but keep in mind the big picture, the overall process as stocks use the selling to set up bases or bottoms.

Indeed, as we looked at stocks for weekend plays, we saw many, many stocks in the process of building a pattern. The frustrating thing is, there just are not that many in position to buy upside or downside. The test of the August low will help that on both fronts, as upside patterns use the selling to complete their patterns and new downside plays emerge.

In that respect, you see that the selling is a necessary part of getting upside patterns built and in place to support a move higher. At this juncture, however, it is fairly frustrating trying to find patterns that we really like on stocks that we really like. We have found some, but we have to take some of our own advice this weekend and remain patient and let the patterns set up on the stocks we really like to play.

We anticipate letting our current downside run and adding plays as they show us good entries. Friday our SPY and DXD plays gapped away, but maybe we get an early week rebound to enter next to test the Friday drop and give us an entry.

As for the upside, many ignored the selling, going about their own business Friday. As long as they do that we can let them work for us. At the same time we will continue looking for new plays as they set up and be ready for when they make their moves. So many plays this weekend are in the process but are just not there. They will no doubt use market weakness to further set up their bases. We will keep watching for good setups, and as they ripen, we will put our favorites on the report. Time for patience and to let them set up and then of course show the moves.

There will be news out on the week and it will be talked up, but with the jobs report and FOMC no-decision settled, the technical process can go about its business and set up in the wake of the extreme sentiment and internals.

Have a great weekend!


SUPPORT AND RESISTANCE

NASDAQ: Closed at 4827.23

Resistance:
4837 is the late August 2015 rebound high
The 50 day EMA at 4903
4910 is the July 2015 low
4912 the mid-April China dip
The 200 day SMA at 4918
The June low at 4974
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high
The lower trendline is at 5151

Support:
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
4614 is the September 1 intraday low
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
4370 to 4300 (March 2014 peak to June gap point)
4185 to 4130 (May 2014 gap point to October 3014 low)
4292 is the August 2015 low


S&P 500: Closed at 1958.03

Resistance:
1972 is the December 2014 low
1989 is the last August closing high
1991 is the July 2014 high
1994 is the late August recovery peak
2011 is the September prior all-time high
The 50 day EMA at 2017
2046 is the July 2015 closing low
2062 is the January 2015 lower high
The 200 day SMA at 2068
2076 is the all-time high from November
2079 is the intraday all-time high from November
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:
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.
1867 is the August 2015 low
1862 is the October 2014 closing low
The December and January highs at 1848
1829 us the October 2014 intraday low
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 16,384.58

Resistance:
16,506 is the March 2014 peak
16,589 is the December 2013 all-time high
16,632 is the April 2014 all-time high
16,665 is the late August 2015 closing high. Key, key level.
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak. Key level.
16,736 is a prior all-time high from May 2014
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
The 50 day EMA at 16,968
17067 is the December 2014 low
17,068 is the early July 2014 peak
17,152 is the mid-July post bear market high
17,351 is the September 2014 all-time high.
17,515 is the early July closing low
17,585 to 17,579, the March intraday lows, helping mark the bottom of the Dow's The February to July trading range.
The 200 day SMA at 17,692
June low at 17,715
The March low at 17,786
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range

Support:
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
15,855 is the October 2014 intraday low
15,372 is the February 2014 closing low
15,370 is the August 2015 intraday low
14,803 is the October 2013 low


ECONOMIC CALENDAR

September 18 - Friday
Leading Indicators, August (10:00): 0.1% actual versus 0.2% expected, 0.0% prior (revised from -0.2%)

September 21 - Monday
Existing Home Sales, August (10:00): 5.50M expected, 5.59M prior

September 22 - Tuesday
FHFA Housing Price I, July (9:00): 0.2% prior

September 23 - Wednesday
MBA Mortgage Index, 09/19 (7:00): -7.0% prior
Crude Inventories, 09/19 (10:30): -2.104M prior

September 24 - Thursday
Initial Claims, 09/19 (8:30): 271K expected, 264K prior
Continuing Claims, 09/12 (8:30): 2248K expected, 2237K prior
Durable Orders, August (8:30): -2.0% expected, 2.2% prior (revised from 2.0%)
Durable Goods -ex tr, August (8:30): 0.2% expected, 0.4% prior (revised from 0.6%)
New Home Sales, August (10:00): 515K expected, 507K prior
Natural Gas Inventor, 09/19 (10:30): 73 bcf prior

September 25 - Friday
GDP - Third Estimate, Q2 (8:30): 3.7% expected, 3.7% prior
GDP Deflator - Third, Q2 (8:30): 2.1% expected, 2.1% prior
Michigan Sentiment -, September (10:00): 87.0 expected, 85.7 prior

End part 1 of 3
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Saturday, September 12, 2015

The Daily, Part 1 of 3, 9-12-15

* * * *
9/12/2015 Investment House Report
* * * *

Targets hit: None issued
Buy alerts: AVGO
Trailing stops: None issued
Stop alerts: None issued

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TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
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The REPORTS SCHEDULE is as follows:

Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.

Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.

Access to all current videos will remain assessable each day using the play links in the reports.

If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.

MARKET SUMMARY

- Market ends the week calmer. Calm before the storm?
- Index patterns are all less than appealing, but more stocks improve and set up for an eventual bottom.
- Market getting down to the lick log with another 'the most important FOMC meeting of our lives.'
- Keep emotions at bay, think, profit.

Volatility calmed last week. Not so much Tuesday and Wednesday as the indices again moved in huge swings, but Thursday and Friday the ranges were much narrower. Calmer action as they worked laterally, still holding the reflex move off the late August low, thus far fighting off attempts to sell it.

Sign of strength, of an impending move higher? It can be read that way. Some groups of stocks are setting up very interesting bottoming patterns, e.g. semiconductors, software, while other leaders never really collapsed and are strengthening: BWLD, AMZN, PCLN, GOOG. Sentiment continues to show extremes with bulls and bears crossing over, i.e. more bearish than bullish investment advisors. Tepper made what could be another one of his opposite the market move sentiment calls Thursday when he said it was a good time to sell stocks. $33+B left the markets from mutual funds and ETF's the past two weeks.



Improving patterns is part of the bottoming process. Extreme sentiment as well. They do not mean there won't be a test of the August low. If you look at index charts on a close line basis it certainly looks as if the indices need that test of that prior low. A move such as that sets up a great bottoming pattern to go along with the stocks that are already showing the signs of putting in bottoms themselves.

Last week didn't answer either question but it was another week doing a good job of setting up that resolution. At this juncture the indices have enough 'bounce time' on this relief move to make a test of the August low a big enough base to support a solid move higher. If it takes a bit more time, that works even better.

Friday the indices posted a gain, offsetting the Wednesday selling and the Thursday push. Lower volume, narrow breadth. Just biding time until the weekend and next week's FOMC meeting.

SP500 8.76, 0.45%
NASDAQ 26.09, 0.54%
DJ30 102.69, 0.63%
SP400 0.56%
RUTX 0.41%
SOX 0.08%

VOLUME: NYSE -17%, NASDAQ -9%.

A/D: NYSE 1.2:1, NASDAQ 1.3:1.

Friday experienced a dearth of news, a veritable dustbowl of interesting stories. Goldman said oil could fall to $20/bbl. Anything is possible. US PPI was flat, the core rose 0.3%, and core final demand rose 0.9% year/year. Eggs were up 23%; it is said they could be $6 a dozen by year end. Apparel rose 7%. No inflation, yeah verily they are saying there is deflation in the US . . . unless you eat and apparently feel the compulsion to wear clothes.

The real stories the market awaits are the China weekend data (retail sales, capital investment, industrial production) and the FOMC meeting Thursday. Be still my heart.

The real lick log is the two-day FOMC policy decision on Thursday, but China could set the tone leading into it. Some say a hike is priced in, others say not. Looking at the August plunge, gold, and bonds, I would say the market has done a pretty good job of pricing in a 25BP one and done hike as Fischer and Dudley imply. 25BP is hardly a recession instigator, and if the Fed says it is not going into a regular schedule of hikes the market likely can handle that truth.

The market can handle it, but the trip to that point is always the interesting aspect. NASDAQ and SOX sport some of the better stock setups and NASDAQ is the only index thus far to avoid the 'death cross.' SOX was first, but it is so far past that it was in the consolidation phase ahead of everyone else. Still, all of the index patterns are worrisome and frankly have to overcome typical historical trends to avoid another downside move. The improvement is there, it would simply appear the work is not quite done.


THE MARKET

CHARTS

The trading ranges narrowed Thursday and Friday as the indices all worked laterally last week. While some sport some modestly different looks, they are basically all the same: rebounded from the selling, avoided an immediate selloff attempt, working laterally for roughly two weeks, bumping key resistance levels. They often test the prior lows but don't have to. If the Fed acts this week, that gives them the perfect reason to test and sets up the 'pat' downside drop to set a double bottom in the fall. Seems too contrived, but it often works that way. The close line charts suggest it. Still, watch for 'in your ear.'


"He won't want to load the bases, so expect low and away . . . but watch out for in your ear." Shoeless Joe Jackson to Moonlight Graham in 'Field of Dreams' (1989)


NASDAQ: Continues holding near that late August gap point and the late 2014 peaks/March 2015 lows. Big name NASDAQ stocks and semiconductors are helping NASDAQ hold near that level the past four sessions. Shows promise but when you look at the close line chart NASDAQ, and indeed all of the indices, have a heavy look that almost begs for the test of that prior low. NASDAQ avoided a drop last week, showing relative strength thanks to its 'names,' but that is not a breakout. It is very much part of an overall bottoming process that often sees the need for that test of the lows or even lower. Note, however, that the other indices can do the work for NASDAQ, i.e. they can sell off while NASDAQ remains relatively strong and avoids the plunge. The benefits of housing leaders investors still want.

SP500: Very well-defined pennant forming the past three weeks. Instead of forming off an upside flag pole, it is forming off of an inverted flag pole. As you would expect, the opposite result, a break lower, is the typical resolution. Typical, but assume nothing, prepare for all possibilities. And of course, a possibility is that a consolidation works to chase out the remaining sellers. Just look how negative sentiment is in terms of bulls/bears, fund outflows, and of course, Tepper.

DJ30, RUTX, and SP400 all sport almost identical patterns to SP500.

SOX: SOX more resembles NASDAQ in that it is holding near the top of its range versus the neatly formed pennants. Indeed, Tuesday SOX broke through the gap point and the top of its post-selloff range. Wednesday it gapped even higher and looked strong, only to hit the 50 day MA's and reversed to negative. Not quite ready for prime time breakout. Thursday and Friday it muddled laterally. Nicely improving patterns in the SOX is supporting it at the upper levels, and as with NASDAQ, while it would likely not escape another drop by all the market, it could fare much better thanks to the money being put into its stocks as the bottoming patterns indicate. SOX also shows that this pattern can resolve to the upside, the pennant that it first formed that is. That suggests the other indices could do the same.



LEADERSHIP

I would not say Friday saw any new breakthroughs in leadership, but it did show more solid work in the semiconductors as well as in some of the big names on NASDAQ. Metals remains solid, at least some of them, and I would suggest that some of the industrial equipment stocks and some energy stocks are about to bounce. Telecom sports some good stocks and software is attempting a revival. There are plenty of areas already setting up some good patterns or are getting to that point. All of this is positive but it does not mean any bell has rung.


Big Names: AMZN continues to perform well. BWLD punched out a new high on the week. PCLN holds an important break higher. CMG shook out some sellers and holds near its high. SBUX started to recover, moving easily through the 50 day SMA. NFLX is still suffering from its excesses.

Software: VDSI is perking up as we expected, just got bored with it. VRSN (security) looks very good. PANW gapped upside on the week. BLKB is near highs but its pattern continues to round out on top. RHT is broken for now. Some interesting patterns, but overall work to be done.

Telecom: UBNT remains strong. TSYS is trying to move.

Semiconductors: A list of good patterns. SLAB, LRCX, QRVO (still hanging in), MXL, AMKR, ATML, MU. Most are well off highs but have the 'turning the corner' patterns or true bottoming patterns such as the inverted head and shoulders.

Energy: A bottom process in place. DO, RIG (offshore drilling). UNT (onshore drilling). GPOR. All showing rising MACD on the lows.

Industrials: Trying to set up double bottoms and the like, showing rising MACD, e.g. CAT.

Financial: Patterns mirror the indices, so whichever way they break, the market follows, at least SP500, DJ30, SP400. WFC, JPM, BAC. All are interchangeable right now.

Metals: Stealth recovery continues. Hearing nothing on 'Fast Money' or the financial stations about these stocks. SID, FCX.

Social: FB is a new play from Thursday as it sets up and shows great relative strength. TWTR remains in a nice pattern. LNKD put on a solid bounce last week.


MARKET STATISTICS

NASDAQ
Stats: +26.09 points (+0.54%) to close at 4822.34
Volume: 1.641B (-8.82%)

Up Volume: 898.5M (-301.5M)
Down Volume: 746.34M (+114.69M)

A/D and Hi/Lo: Advancers led 1.28 to 1
Previous Session: Advancers led 1.42 to 1

New Highs: 35 (+5)
New Lows: 85 (+17)

S&P
Stats: +8.76 points (+0.45%) to close at 1961.05
NYSE Volume: 833M (-16.7%)

A/D and Hi/Lo: Advancers led 1.17 to 1
Previous Session: Advancers led 1.15 to 1

New Highs: 9 (+1)
New Lows: 146 (+33)

DJ30
Stats: +102.69 points (+0.63%) to close at 16433.09


SENTIMENT INDICATORS

VIX: 23.2; -1.17
VXN: 25.02; -1.42
VXO: 23.79; -2.03

Put/Call Ratio (CBOE): 1.21; +0.02. Continues to show downside hedging and fear. The sheer number of 1.0+ closing shows the downside worry is getting extreme.

Recent history: 16 of 17 sessions over 1.0. 22 over, 7 below the past 29 sessions.


Bulls and Bears: Bulls continue their decline, bears continue their rise, this time they have crossed over, something not done since 2011. That is a powerful rally signal though the rally ensues after the cross, typically not right on it.

Bulls: 25.7 versus 27.8 versus 31.6%

Bears: 27.9 versus 26.8% versus 22.5%

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: 25.7%
27.8% versus 31.6% versus 37.7% versus 40.2% versus 42.2% versus 43.3% versus 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%

Background: This is the lowest since the 2008 and 2009 market plummet.

Bears: 27.9%
26.8% versus 22.5% versus 18.4% versus 18.6% versus 17.5% versus 17.5% versus 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%

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. Getting close.


OTHER MARKETS

Bonds (10 year): 2.18% versus 2.23%. Back and for last week but still trending lower after the massive gap lower the last week of August. Still appears to not have much belief the Fed will not hike rates.

Historical: 2.23% versus 2.18% versus 2.19% versus 2.13% versus 2.17% versus 2.19% versus 2.16% versus 2.21% versus 2.18% versus 2.19% versus 2.13% versus 2.01% versus 2.05% versus 2.08% versus 2.12% versus 2.20% versus 2.15% versus 2.20% versus 2.19% versus 2.15% versus 2.14% versus 2.24% versus 2.17% versus 2.27% versus 2.15% versus 2.19% versus 2.29% versus 2.25%


Euro/$: 1.1338 versus 1.1278. Euro spikes higher again after the 50 day EMA test.

Historical: 1.1278 versus 1.1217 versus 1.12093 versus 1.1148 versus 1.1122 versus 1.1220 versus 1.1299 versus 1.1216 versus 1.1180 versus 1.1243 versus 1.1413 versus 1.1490 versus 1.1595 versus 1.1362 versus 1.1237 versus 1.1132 versus 1.1032 versus 1.1080 versus 1.1110 versus 1.1154


$/JPY: 120.58 versus 120.73. Dollar lost some ground Friday after a Tuesday to Wednesday recovery took it back to bump the 200 day SMA from below.

Historical: 120.73 versus 120.39 versus 119.98 versus 119.04 versus 120.15 versus 120.25 versus 119.59 versus 121.24 versus 121.73 versus 121.06 versus 119.93 versus 118.97 versus 118.58 versus 122.06 versus 123.39 versus 123.79 versus 124.39 versus 124.44 versus 124.32


Oil: 44.63, -1.29. Goldman says oil could fall to $20/bbl. Didn't do it Friday as oil holds the two week pennant test after the initial rally from late August. Still looks as if it wants to climb off of that low.

Gold: 1103.30, -6.00. Tough week, the second down week as gold has lost its upside mojo on the August bounce. As with bonds, gold does not appear to believe the Fed will pass on a rate hike.


MONDAY

Fed week and yet another 'biggest Fed meeting in our lifetime' hype. Over 25BP? Seriously? And be clear, it IS over 25BP because the Fed desperately wants to at least get above 0% but it is petrified to go any further with any kind of tightening. You would think the Fed would hike given the data it watches, but with pressure from around the world (IMF, World Bank, Larry Summers, Paul Krugman) and now even Larry Kudlow, will Yellen keep the resolve to get off of zero? As the very old TV commercial pushing women's hair care products would say, only her hairdresser knows. Or in the case of others, those monitoring the server in the bathroom. I don't want to go too far here; don't want to get accused of 'Trumping' any female readers, whether actual, transgender, or those that just 'identify with' females. What a complicated world we live in. Makes the stock market seem easy.



Ah the stock market. It is really working on putting in a bottom. Bottoming patterns are in progress, some already in position, just waiting for the trigger.

That trigger may be the final flush out, when stocks drop, either precipitously or in a slow 'bleeding from a thousand cuts' fashion. By the way, still waiting to hear that description trotted out; it will happen if we get a two to three week slow test lower and lower each day. When that trigger hits, these stocks in the better patterns will jump and be off. Leaders lead, right?

The FOMC decision could be the catalyst for a decline or it could be the catalyst for the break higher. It could be both in one: the news that pushes the weak hands to sell out and that in turn triggers the rebound.



We need to try to keep the emotions in check and stay above the fray, thinking our way through it. Given what appears to be upward pressure or support from big name stocks and others building good upside patterns, any break lower of significance we want to use to take gain or otherwise close out the downside lest we don't get a ton of downside and get caught hanging on too long. Remember, downside often happens fast, particularly if you are near an inflection point, i.e. when there are signs of bottoming as we have now.

That said, don't be trigger happy and close out on the first sign of a drop; be patient and let it work. If it is a cataclysmic drop that hits a support point (the prior low perhaps) and starts to reverse, take some off. If that holds and builds, take the rest off. If it closes on the session low, let it run. If it opens higher the next session, see if it fails and rolls back over; it often does. If it opens lower, let it ride, but when that lower open selloff shows support, particularly at a logical bounce point, start taking some downside off the table.

For the upside, given we like the bottoming action we are seeing, we let them hang in as long as they can hold the pattern together on the session closes. They are forming up for a reason: big money wants them and is putting money in them as they appear sold out, e.g. the semiconductors. That tends to help them weather the selling as long as the bigger players remain in. These stocks can suffer some intraday jogs lower but they should close decently. We will try to hang in them as much as we can.

At the same time we look for new opportunities and they are out there. We have several current plays that are still a go if they can make the moves, and we are adding more almost each session as more set up patterns. If these stocks can keep it together during any selling, they are fire tested and are ones we want to be in as they likely form up the next market leadership on an upside move.

The import of that? Others can rebound sharply, but leaders breakout sharply and then they tend to sustain the move time and time again, rising, testing, rising, testing, etc. in a very clockwork manner. We can sit back and let them do the work for us as we troll for others setting up to do the same.

We still have to see what China does with its data this weekend, but that is all part of the 'noise' that contributes to what we are seeing ongoing right now in terms of the bigger picture process in progress. China data and the FOMC will help focus the energies on the process, but that is all they do. They act as the trigger for the market move that is already set up.

Have a great weekend!


SUPPORT AND RESISTANCE

NASDAQ: Closed at 4822.34

Resistance:
The March lows at 4843 and 4825
4837 is the late August 2015 rebound high
4912 the mid-April China dip
The 50 day EMA at 4913
The 200 day SMA at 4916. A 'death cross' but just the 50 day EMA and many discount that.
The June low at 4974
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high
The lower trendline is at 5145

Support:
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
4614 is the September 1 intraday low
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
4370 to 4300 (March 2014 peak to June gap point)
4185 to 4130 (May 2014 gap point to October 3014 low)
4292 is the August 2015 low


S&P 500: Closed at 1961.05

Resistance:
1972 is the December 2014 low
1989 is the last August closing high
1991 is the July 2014 high
1994 is the late August recovery peak
2011 is the September prior all-time high
The 50 day EMA at 2027
2046 is the July closing low
2062 is the January 2015 lower high
The 200 day SMA at 2071
2076 is the all-time high from November
2079 is the intraday all-time high from November
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:
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.
1867 is the August 2015 low
1862 is the October 2014 closing low
The December and January highs at 1848
1829 us the October 2014 intraday low
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 16,433.09

Resistance:
16,506 is the March 2014 peak
16,589 is the December 2013 all-time high
16,632 is the April 2014 all-time high
16,665 is the late August 2015 closing high
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak. Key level.
16,736 is the penultimate all-time high from May 2014
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
The 50 day EMA at 17,060
17067 is the December 2014 low
17,068 is the early July 2014 peak
17,152 is the mid-July post bear market high
17,351 is the September 2014 all-time high.
17,515 is the early July closing low
17,585 to 17,579, the March intraday lows, helping mark the bottom of the Dow's The February to July trading range.
June low at 17,715
The March low at 17,786
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range

Support:
16,117 is the October 2014 closing low
16,026 is the April 2014 low
15,855 is the October 2014 intraday low
15,372 is the February 2014 closing low
15,370 is the August 2015 intraday low
14,803 is the October 2013 low


ECONOMIC CALENDAR

September 8 - Tuesday
Consumer Credit, July (15:00): $19.1B actual versus $18.0B expected, $27.0B prior (revised from $20.7B)

September 9 - Wednesday
MBA Mortgage Index, 09/05 (7:00): -6.2% actual versus 11.3% prior
JOLTS - Job Openings, July (10:00): 5.753M actual versus 5.323M prior (revised from 5.249M)

September 10 - Thursday
Initial Claims, 09/05 (8:30): 275K actual versus 275K expected, 281K prior (revised from 282K)
Continuing Claims, 08/29 (8:30): 2260K actual versus 2257K expected, 2259K prior (revised from 2257K)
Export Prices ex-ag., August (8:30): -1.3% actual versus -0.5% prior (revised from -0.4%)
Import Prices ex-oil, August (8:30): -0.4% actual versus -0.3% prior
Wholesale Inventories, July (10:00): -0.1% actual versus 0.3% expected, 0.7% prior (revised from 0.9%)
Natural Gas Inventories, 09/05 (10:30): 68 bcf actual versus 94 bcf prior
Crude Inventories, 09/05 (11:00): 2.570M actual versus 4.670M prior

September 11 - Friday
PPI, August (8:30): 0.0% actual versus -0.1% expected, 0.2% prior
Core PPI, August (8:30): 0.3% actual versus 0.1% expected, 0.3% prior
Michigan Sentiment, September (10:00): 85.7 actual versus 91.5 expected, 91.9 prior
Treasury Budget, August (14:00): -$64.4B actual versus -$62.0B expected, -$128.7B prior

September 15 - Tuesday
Retail Sales, August (8:30): 0.3% expected, 0.6% prior
Retail Sales ex-auto, August (8:30): 0.2% expected, 0.4% prior
Empire Manufacturing, September (8:30): 0.3 expected, -14.9 prior
Industrial Production, August (9:15): -0.2% expected, 0.6% prior
Capacity Utilization, August (9:15): 77.8% expected, 78.0% prior
Business Inventories, July (10:00): 0.1% expected, 0.8% prior

September 16 - Wednesday
MBA Mortgage Index, 09/12 (7:00): -6.2% prior
CPI, August (8:30): -0.1% expected, 0.1% prior
Core CPI, August (8:30): 0.1% expected, 0.1% prior
NAHB Housing Market , September (10:00): 61 expected, 61 prior
Crude Inventories, 09/12 (10:30): 2.570M prior
Net Long-Term TIC Flows, July (16:00): $103.0B prior

September 17 - Thursday
Initial Claims, 09/12 (8:30): 275K expected, 275K prior
Continuing Claims, 09/05 (8:30): 2254K expected, 2260K prior
Housing Starts, August (8:30): 1160K expected, 1206K prior
Building Permits, August (8:30): 1159K expected, 1119K prior
Current Account Bal., Q2 (8:30): -$112.2B expected, -$113.3B prior
Philadelphia Fed, September (10:00): 6.5 expected, 8.3 prior
Natural Gas Inventories, 09/12 (10:30): 68 bcf prior
FOMC Rate Decision, September (14:00): 0.25% expected, 0.25% prior

September 18 - Friday
Leading Indicators, August (10:00): 0.2% expected, -0.2% prior

End part 1 of 3
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Monday, September 07, 2015

The Daily, Part 1 of 3, 9-5-15

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9/5/2015 Investment House Report
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Targets hit: None issued
Buy alerts: MA; MSFT
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

- Jobs announced, mixed reviews on the same old story, but stocks sell.
- Still debating a 'successful test' but if Tuesday was fear then we have forgot what fear is like, just as we have forgot what a really good economy looks like.
- Market is building for a bottom as the process continues with some promising patterns forming up.

Long before the jobs report hit the wires Friday morning stock futures were lower. After the jobs report was released futures were lower. It was simply going to be a down session. Thursday the stock market tried to continue the Wednesday upside rebound and indeed made that move early on. That move reversed, however, showing tombstone doji on all of the indices.

Off of that signal we anticipated the downside to continue. It did. Stocks gapped lower off that doji, tried to bounce back in the first hour, failed rather miserably. Hit new session lows mid-afternoon, but also build inverted head and shoulders patterns on SPY. A last 1.5 hour rally made the losses more respectable as shorts covered madly after a down week ahead of a 3-day weekend. As a somewhat poetic end, the last ten minutes saw stocks reverse hard with most indices closing down 1% or more. Hey, at least they avoided the session lows.

SP500 -29.91, -1.52%
NASDAQ -49.58, -1.05%
DJ30 -272.38, -1.66%
SP400 -1.21%
RUTX -0.78%
SOX -1.80%

VOLUME: NYSE -6.8%, NASDAQ -12.5%. At least volume was lower and below average. Just a complete and utter lack of bids as volume trailed off to end the week ahead of the Labor Day weekend. Even the jobs report could not muster any volume.

A/D: NYSE -3:1, NASDAQ -1.7:1. NYSE breadth again swelled on the downside. NASDAQ is actually showing some resilience with quite mild breadth. There is some stamina in some NASDAQ big names and some perhaps not so big names.


NEWS/ECONOMY

Okay, the jobs report. Depending upon who you listen to it was either strong or just more of the same, indeed more of what is not good about the same.

Nonfarm Payrolls, August (8:30): 173K actual versus 217K expected, 245K prior (revised from 215K)
Nonfarm Private Payrolls, August (8:30): 140K actual versus 210K expected, 224K prior (revised from 210K)
Unemployment Rate, August (8:30): 5.1% actual versus 5.2% expected, 5.3% prior
Hourly Earnings, August (8:30): 0.3% actual versus 0.2% expected, 0.2% prior
Average Workweek, August (8:30): 34.6 actual versus 34.6 expected, 34.5 prior (revised from 34.6)

The notable points:
-Headline payrolls missed but revisions to June and July added 44K jobs. As they love to say, it was a wash.
-Unemployment rate dropped two notches.
-Workweek rose to 34.6 but after lowered from that level to 34.5 the prior month

Mark Zandi: "The jobs market, by all accounts, is very, very strong."

Fox Business analysts: Noting the increase in temporary workers, "this is how recoveries start, adding temporary jobs."

Sounds peachy. Surely the jobs market has finally, after 6 years of recovery, 'turned the corner.'

That is the case, if the jobs market is chasing its tail in circles.

Jobs mix: Once again the jobs created are in the lowest pay sectors.

Healthcare: 56K
Professional and Business: 33K
Food and Drink: 26K
Retail: 11K
Manufacturing: -17K.
Mining: -9K
Government: +33K

Mining: Falls to 823K, the lowest number of workers in 4 years and 8 consecutive monthly declines.

Manufacturing: First decline in 2+ years. Just 28K manufacturing jobs added in 2015.

Bartenders and waiters: All-time record 11.1M with 207,100 of these jobs added in 2015.

Manufacturing -1.4M jobs, waiters/bartenders +1.5M. That tells the story of the recovery.



Participation: "The unemployment rate fell for the right reasons." Fox Business reporter.

Citing the statistic that the economy employed 196K more people while the unemployed fell 237K, the Fox reporter made that erroneous conclusion. Why is that erroneous, for the same reason the unemployment rate has dropped this entire recovery.

Indeed, if you pay any attention at all to history, you wonder how the economy can feel so crappy when during boom times when Reagan was President and even when Bush was President sported 7%ish and 6%ish unemployment respectively in their recoveries.

The answer is the same: Participation.

Participation rate: 62.6%, a level not seen since 1977. At that point participation was on the rise as the economy tried to come out of recession. It is now at that level again, but heading lower as the economy and jobs market supposedly continues to recover. Is anyone calling Bull Sh*t on this yet?



94M working age adults are now out of the workforce, as 261K dropped out in August.

1.8M people have dropped out the past 12 months. 14.9M dropouts since 12/2007 when the Great Recession started.

They keep dropping out of the workforce instead of moving back in and taking advantage of all of those jobs. Why? Because the jobs are low pay, more menial jobs that many prefer just not to work and instead collect benefits and get the occasional cash job to make ends meet.

Is this a 'very, very strong' jobs market? Perhaps you could at least make a prima facie case for that if you measure jobs only by gross numbers. If you look at what kind of jobs are created and how many people are opting not to work those jobs, the picture is ugly. You have to be in denial to avoid seeing the decimation of the jobs market in the US and the contemporaneous collapse of the middle class.

Is it about to turn the corner thanks to increased temporary jobs? This is the sixth year of recovery. Every year there are a few months that show an increase in temporary jobs. Like clockwork, the old broken record is played about how temporary jobs lead to permanent jobs and thus the jobs market is turning the corner. Every year it doesn't happen.

Why the same problems? Nothing has changed because the policies creating this low-wage jobs economy have not changed. The ACA penalizes working over 30 hours/week. The massive regulatory and tax burdens on small businesses have stifled innovation and the quality, breadwinner jobs that arise from new small businesses becoming new large businesses. Without that engine creating the new technologies, processes, etc., the jobs machine cannot crank up.


Forgot where we came from.

Today I heard at least four commentators state that the jobs market was very strong and/or the economy was booming. The fascinating and sad aspect of this is they were not young, but old enough to remember the 1970's to 2000. The question I have to ask is how anyone who lived through those times and even remotely claims to have knowledge of economics can make those types of statements.

Very, very strong jobs market? 173K jobs and a 220K average the past three months is very, very strong? How about creating 1M jobs in a month? Reagan did it. Clinton did it. that is very, very strong. 173K? Are you joking?

Booming economy? 3.6% GDP is booming? Only 4 quarters of 4+% GDP in the entire recovery. Booming? How about 11% growth in one quarter under Reagan? How about that spurt bracketed by quarters of 7+%, 6+%, 8+%, 9+%? How about 10+% under Clinton? 8% under Bush 2? THAT is booming.

These commentators only prove what I posited several years ago would happen: we have accepted mediocrity as excellence. Sub-2% to 2% growth is seen as 'booming.' 40% of the working age citizens out of the labor force is 'very, very strong.' Net losses of 1.4M manufacturing jobs versus creation of 1.5M wait staff and bartender jobs is very, very strong. We have forgotten where we came from, what we can be, and are accepting mediocrity and the decline of our standard of living by redefining the standards by which we have always measured the US economy. Shame on us.


THE MARKET

CHARTS

The failed rebound attempt hopefully opens the door for a nasty downside test that causes severe puckering. The problem as we see it is everyone is looking for that test. The bald guy on CNBC has a commercial spot for his show that keeps asking the question if we just saw a successful test or not. With everyone looking for the test it doesn't work. To set the bottom the test has to scare all the sellers out. An expected test doesn't do that.

SP500: Nasty Tuesday selloff, Wednesday bounce to a Thursday tombstone doji, then a predictable rollover. Low volume but it was the last official Friday of summer, so lower volume goes without saying. Perhaps this action leads to a test of the prior lows, and if it works right, an undercut that panics those watching for a test. That is the false break lower, the one that makes the technicians say more selling is coming just as the algos buy and reverse the market.

NASDAQ: The techs gapped lower to a doji on low volume. This is a very jumbled pattern, but the theme is 1) big selloff crashing the trend, 2) a rollover at the 61% Fibonacci Retracement of that selloff, 3) a rebound attempt failing at the 10 day EMA with a tombstone doji, 4) a gap lower to a doji Friday. Overall it appears to be weakening with the rest of the market for a second big drop, but note that many important 'name' stocks such as AMZN, PCLN, CMG are not selling off but working on patterns. Okay, they can continue working on their patterns even as other big names drop in the deeper test, it just doesn't happen all that much.

RUTX: Very similar action to NASDAQ, gapping lower to a doji Friday. Negative overall but not throwing in the towel and going full monty downside.

DJ30: Higher volume selloff after the tombstone doji at the 10 day EMA Thursday. Ugly selloff, but even DJ30 did not undercut the Tuesday low yet.

SP400: Broke lower after the Thursday tombstone doji at the 10 day EMA. Closed near the session low, under pressure, and not that far from the 1350 low from late August (closed at 1386 Friday).

SOX: Gapped lower yes, but chips are not rolling over. Instead they are bouncing up and down in a trading range the past six sessions. Approaching the low side of the range at 590 and would not be surprised if SOX tried to bounce when it gets there.


LEADERSHIP

Big Names: PCLN, AMZN both look very interesting, two names are holding up very well. They could provide the backbone for the market when the selling ends. GOOG is struggling. SBUX looks ready to roll over. MSFT gapped lower, looks weak. Definitely mixed but some key stocks are holding up and setting up well.

Financial: Continue to struggle, falling off tombstone doji at resistance. JPM gapped lower Friday off that Thursday doji below the 200 day SMA. WFC gapped lower off the tombstone at the 10 day EMA. MA gapped lower though it did manage to hold the 200 day SMA after undercutting it intraday. Overall financials remain weak, and that is not good for the market overall.

Chips: Trying to firm up. AMKR worked well this week. AAOI is testing in a good pattern. QRVO looks great. MXWL is still setting up. AVGO is trying to set up over the 200 day SMA. SLAB is attempting to set up an inverted head and shoulders as is FORM. MLNX is trying but some of these are far from slam dunks.

Social: Trying to bottom but work to do. LNKD not bad, TWTR trying to form up an inverted head and shoulders. FB is a mess.

Internet: AKAM is trying to set up to lead. XXIA is still in a great pattern. Some life here.

Metals: Still setting up their patterns, e.g. AKS, FCX, SID.



MARKET STATISTICS

NASDAQ
Stats: -49.58 points (-1.05%) to close at 4683.92
Volume: 1.533B (-12.47%)

Up Volume: 379.46M (-587.74M)
Down Volume: 1.18B (+359.47M)

A/D and Hi/Lo: Decliners led 1.69 to 1
Previous Session: Advancers led 1.06 to 1

New Highs: 12 (-19)
New Lows: 70 (+30)

S&P
Stats: -29.91 points (-1.53%) to close at 1921.22
NYSE Volume: 828M (-6.8%)

A/D and Hi/Lo: Decliners led 3.1 to 1
Previous Session: Advancers led 1.83 to 1

New Highs: 5 (-3)
New Lows: 135 (+105)

DJ30
Stats: -272.38 points (-1.66%) to close at 16102.38


SENTIMENT INDICATORS

VIX: 27.8; +2.19
VXN: 28.92; +0.82
VXO: 28.04; +2.31

Put/Call Ratio (CBOE): 1.48; +0.36

Recent history: 13 straight over 1.0. 19 over, 7 below in the past 26 sessions. Belt and suspenders. Has easily met the threshold for a reversal upside.


Bulls and Bears: Bulls continue their plung, hitting levels not hit since the depths of the 2008 selloff. Bears are surging, almost ready to cross over with bulls on their collapse. Impressive collapse in bulls and bears are getting there.

Bulls: 27.8 versus 31.6% versus 37.7% versus 40.2% versus 42.2% versus 43.3% versus 49.0%

Bears: 26.8% versus 22.5% versus 18.4% versus 18.6% versus 17.5% versus 17.5% versus 15.6%

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: 27.8%
31.6% versus 37.7% versus 40.2% versus 42.2% versus 43.3% versus 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%

Background: This is the lowest since the 2008 and 2009 market plummet.

Bears: 26.8%
22.5% versus 18.4% versus 18.6% versus 17.5% versus 17.5% versus 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%

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. Getting close.


OTHER MARKETS

Bonds (10 year): 2.13% versus 2.17%

Historical: 2.17% versus 2.19% versus 2.16% versus 2.21% versus 2.18% versus 2.19% versus 2.13% versus 2.01% versus 2.05% versus 2.08% versus 2.12% versus 2.20% versus 2.15% versus 2.20% versus 2.19% versus 2.15% versus 2.14% versus 2.24% versus 2.17% versus 2.27% versus 2.15% versus 2.19% versus 2.29% versus 2.25%


Euro/$: 1.1148 versus 1.1122. Euro firmed at the 200 day SMA, ready to rebound.

Historical: 1.1122 versus 1.1220 versus 1.1299 versus 1.1216 versus 1.1180 versus 1.1243 versus 1.1413 versus 1.1490 versus 1.1595 versus 1.1362 versus 1.1237 versus 1.1132 versus 1.1032 versus 1.1080 versus 1.1110 versus 1.1154


$/JPY: 119.04 versus 120.15. Dollar continues to dive versus the yen, putting in a lower closing low on this move.

Historical: 120.15 versus 120.25 versus 119.59 versus 121.24 versus 121.73 versus 121.06 versus 119.93 versus 118.97 versus 118.58 versus 122.06 versus 123.39 versus 123.79 versus 124.39 versus 124.44 versus 124.32 versus 124.41 versus 124.15 versus 125.08 versus 124.36 versus 124.74 versus 124.78 versus 124.31 versus 123.99 versus 123.89 versus 124.15 versus 123.99


Oil: 46.05, -0.64. Testing the big surge higher, still in a flag test.

Gold: 1121.40, -3.10. Testing the surge higher with a little double bottom test.


TUESDAY

The jobs report is in the bag and those on Fed watch can argue the report lessened the likelihood of a rate hike while others say there is no change. Indeed, Mr. Lacker Friday gave the market a piece of his mind on the September rate hike. Of course as Boss Hog said to Sheriff Roscoe P. Coltrane on 'The Dukes of Hazzard,' if he gave a piece of his mind he might not have any mind left. That, however, is another story.


James Best also played Jim Lindsey on the Andy Griffith show who became a guitar player for Jimmy Fleet and His Band with the Beat.

Lacker stated there was a "strong case for a rate hike' in September, and that the "jobs data won't change that decision." Okay, so much for the lack of clarity.

Lacker also said that "both mandate conditions appear to have been met" such that exceptionally low interest rates are no longer warranted. Again, clarity. Maybe only in his mind, but at least he is clear. Indeed, if all is so great as we are told, the Fed has no business NOT hiking. In a bit less than two weeks we will know, but likely the market is already pricing in a 25BP hike.

That means back to the market. It is still seeking bottom. It would make absolute sense that the market starts to rally at or just before the FOMC makes the decision to hike rates. What happens in the buildup to war? Markets sell on uncertainty, but once the war starts they rally. The point: markets prepare for the worst, rally on fact, whether considered good or bad.

Right now the market is still in the process of preparing for the worst. Next week should be lower, but as we have seen, the course of this market is as straight as Lombard Street in San Francisco: it zigs and zags but it does trend in one direction.

Thus while it bounces up then down, the market likely trends lower near term to find that test that sets the bottom. It is too easy to say if it matches the last low the bottom is in. There has to be that element of super fear once more to scare out the sellers. OR it takes you by surprise, either selling off slowly, slowly, sneaking up on you as it bores people out of the market, and they exit in frustration. Or it deceives you and rallies from here, making Tuesday the successful test as some have argued.

Still looking for the market to sell further, however, the more pat move. Pat with a twist, i.e. an undercut of the prior low to put some more fear back in.

Timing is the thing. Two weeks to the FOMC. Bottoms that week? On the news? We will see.

We will let current downside continue; of course, also looking at new downside as they set up. At the same time we build a list of good upside patterns in addition to the ones we already have. Several chips are forming inverted head and shoulders patterns, the 'other' pattern we were looking to develop in addition to double bottoms. Some big names are still setting up nicely. Others less known are setting up as well. Still a lot to do, still need more to set up. Additional up and down in the selling should do that.

Have a great Labor Day weekend!


SUPPORT AND RESISTANCE

NASDAQ: Closed at 4683.92

Resistance:
4751 is the January 2015 lower high
4774 is the January high
4811 is the November 2014 peak (intraday)
4815 is the December 2014 prior market peak
The March lows at 4843 and 4825
4837 is the late August 2015 rebound high
4912 the mid-April China dip
The 200 day SMA at 4914
The 50 day EMA at 4933
The June low at 4974
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high
The lower trendline is at 5145

Support:
4631 is the October 2014 upside gap point
4614 is the September 1 intraday low
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
4370 to 4300 (March 2014 peak to June gap point)
4185 to 4130 (May 2014 gap point to October 3014 low)
4292 is the August 2015 low


S&P 500: Closed at 1921.22

Resistance:
The 10 day EMA at 1958
1972 is the December 2014 low
1991 is the July 2014 high
1994 is the late August recovery peak
2011 is the September prior all-time high
The 50 day EMA at 2039
2046 is the July closing low
2062 is the January 2015 lower high
The 200 day SMA at 2073
2076 is the all-time high from November
2079 is the intraday all-time high from November
2094 is the December 2014 high, the prior all-time high
The lower channel line at 2103
2115 is the late March lower high
2119.59 is the February intraday prior all-time high
2126 was the April prior all-time high
2130 is the June 2015 peak
2135 is the May 2015 all-time high

Support:
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.
1867 is the August 2015 low
1862 is the October 2014 closing low
The December and January highs at 1848
1829 us the October 2014 intraday low
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 16,102.38

Resistance:
16,117 is the October 2014 closing low
16,506 is the March 2014 peak
16,589 is the December 2013 all-time high
16,632 is the April 2014 all-time high
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak. Key level.
16,736 is the penultimate all-time high from May 2014
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
17067 is the December 2014 low
17,068 is the early July 2014 peak
17,152 is the mid-July post bear market high
The 50 day EMA at 17,179
17,351 is the September 2014 all-time high.
17,515 is the early July closing low
17,585 to 17,579, the March intraday lows, helping mark the bottom of the Dow's The February to July trading range.
June low at 17,715
The March low at 17,786
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range

Support:
16,026 is the April 2014 low
15,855 is the October 2014 intraday low
15,372 is the February 2014 closing low
15,370 is the August 2015 intraday low
14,803 is the October 2013 low


ECONOMIC CALENDAR

August 31 - Monday
Chicago PMI, August (9:45): 54.4 actual versus 54.7 expected, 54.7 prior

September 1 - Tuesday
ISM Index, August (10:00): 51.1 actual versus 52.6 expected, 52.7 prior
Construction Spending, July (10:00): 0.7% actual versus 0.5% expected, 0.7% prior (revised from 0.1%)
Auto Sales, August (17:00): 5.8M prior
Truck Sales, August (17:00): 8.4M prior

September 2 - Wednesday
MBA Mortgage Index, 08/29 (7:00): 11.3% actual versus 0.2% prior
ADP Employment Change, August (8:15): 190K actual versus 201K expected, 177K prior (revised from 185K)
Productivity-Rev., Q2 (8:30): 3.3% actual versus 2.8% expected, 1.3% prior
Unit Labor Costs - Final, Q2 (8:30): -1.4% actual versus -0.9% expected, 0.5% prior
Factory Orders, July (10:00): 0.4% actual versus 0.9% expected, 2.2% prior (revised from 1.8%)
Crude Inventories, 08/29 (10:30): 4.670M actual versus -5.452M prior

September 3 - Thursday
Challenger Job Cuts, August (7:30): 2.9% actual versus 125.4% prior
Initial Claims, 08/29 (8:30): 282K actual versus 273K expected, 270K prior (revised from 271K)
Continuing Claims, 08/22 (8:30): 2257K actual versus 2261K expected, 2266K prior (revised from 2269K)
Trade Balance, July (8:30): -$41.9B actual versus -$42.7B expected, -$45.2B prior (revised from -$43.8B)
ISM Services, August (10:00): 59.0 actual versus 58.4 expected, 60.3 prior
Natural Gas Inventor, 08/29 (10:30): 94 bcf actual versus 69 bcf prior

September 4 - Friday
Nonfarm Payrolls, August (8:30): 173K actual versus 217K expected, 245K prior (revised from 215K)
Nonfarm Private Payr, August (8:30): 140K actual versus 210K expected, 224K prior (revised from 210K)
Unemployment Rate, August (8:30): 5.1% actual versus 5.2% expected, 5.3% prior
Hourly Earnings, August (8:30): 0.3% actual versus 0.2% expected, 0.2% prior
Average Workweek, August (8:30): 34.6 actual versus 34.6 expected, 34.5 prior (revised from 34.6)

September 8 - Tuesday
Consumer Credit, July (15:00): $18.0B expected, $20.7B prior

September 9 - Wednesday
MBA Mortgage Index, 09/05 (7:00): 11.3% prior
JOLTS - Job Openings, July (10:00): 5.249M prior

September 10 - Thursday
Initial Claims, 09/05 (8:30): 275K expected, 282K prior
Continuing Claims, 08/29 (8:30): 2257K expected, 2257K prior
Export Prices ex-ag., August (8:30): -0.4% prior
Import Prices ex-oil, August (8:30): -0.3% prior
Wholesale Inventories, July (10:00): 0.3% expected, 0.9% prior
Natural Gas Inventor, 09/05 (10:30): 94 bcf prior
Crude Inventories, 09/05 (11:00): 4.670M prior

September 11 - Friday
PPI, August (8:30): -0.1% expected, 0.2% prior
Core PPI, August (8:30): 0.1% expected, 0.3% prior
Michigan Sentiment, Preliminary September (10:00): 91.5 expected, 91.9 prior
Treasury Budget, August (14:00): -$128.7B prior

End part 1 of 3
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