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11/21/2015 Investment House Report
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Targets hit: NFLX
Entry alerts: CLDX; SBUX
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
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The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE 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
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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
- Friday bounces from the Thursday pause as market puts in its best week since . . . the last drop.
- Friday move decent, not great.
- Same leaders lead the move as others try to get their act together.
- ECB still talking stimulus, bolstering the dollar.
- Fed calls a Monday expedited, closed meeting.
- Thanksgiving week usually upside.
- The big market picture as the yearend approaches.
From boring to soaring? Not quite, and not a grand close for the week. All things considered, however, including the geopolitical madhouse backdrop, Friday was damn solid enough. Indeed, the on/off, on/off, then on action for the week was the playbook of a market resurrecting a yearend move. After two weeks of downside where it looked as if the rally off the August/September SP500 double bottom was over, the surge and pause, surge and pause action found some older leadership, and it looks possible that market gains will be home for Christmas. Or, at least get us over the river and through the wood to grandmother's house next week.
Friday stocks shook off any sluggishness from Thursday, and just as on Wednesday following Tuesday. The indices rallied to higher highs for the week, a week that saw a good reversal from the two weeks of selling from early November.
SP500: 7.93, 0.38%
NASDAQ 31.28, 0.62%
DJ30 91.06, 0.51%
SP400 0.45%
RUTX 0.72%
SOX 0.32%
VOLUME: NYSE +22%, rallying back to average after two days below. NASDAQ -2% and below average as on Thursday, mighty low trade for an expiration session.
A/D: NYSE 1.5:1, NASDAQ 1.7:1. Mighty weak breadth for an upside session, but there were some quality breadth advances on the week.
Okay, Friday was a continuation of the rally after a pause, but not nearly the price caliber of Wednesday. RUTX rallied almost 3/4% and NASDAQ scored a 0.62% gain, but those were rather tepid compared to the Monday and Wednesday upside moves.
Volume? It was expiration so the increase in NYSE trade cannot really be traced to an increase in buying. Indeed, NASDAQ trade faded, so it is hard to tie volume to anything on the session.
The index action was not stellar with early surges, a fade to the last hour, then a recovery. NASDAQ and RUTX show the best action on the session, holding most of the move higher. SP500, DJ30, SP400 gave back a good part of the intraday move (8 points, 90 point on SP500, DJ30).
Leadership was okay. Great moves from AMZN and GOOG, but several big names closed status quo, and some of the moves higher Thursday were flipped in industrials and financial stocks.
In sum, not a great move to end the week, but it was a week that saw a resurrection of the yearend run in the midst of boiling geopolitics. In that light, Friday not only kept the rally alive with another gain following a day of rest, but it was quite respectable.
NEWS/ECONOMY
The market awoke to another terror event, this one in Mali North Africa. Al Qaeda, now feeling as if it was relegated to yesterday news status, tried to recapture past glory with a raid on a luxury hotel. Many killed, but many more hostages made it out alive. Benghazi, now Mali. How can this be? Didn't the President 'get' Bin Laden, thus saving us all from his kind of cowardly attacks? Guess that worked about as well as the 'strategy' for containing ISIS. Of course when you forgo 75% of the ISIS targets we have in our sights as was reported today, it is kind of hard to make a dent in an enemy's strength. Oh well. Before the market closed, the event was mostly over.
Mostly over for that event in Mali, but the world remains in a state of conflict I cannot remember seeing in my lifetime. The Cold War was omnipresent during my childhood. It was a constant reminder of trouble that could flare up, but it was not a hot war. Today, hot wars everywhere.
It is the nature of the enemy today. It is not a country, it is idealism, and the enemy springs from many countries though not necessarily affiliated with the countries. Far easier for conflict to erupt anywhere, and it appears to be doing just that.
ECB: Draghi was talking more stimulus Friday, stating the "ECB will do what it must to raise inflation." Of course the euro fell against the dollar.
This is my 'tough, determined, and intelligent' look. Mirror practiced it for years.
The dollar's move was bolstered by comments from Vice Chairman Fischer Thursday night that December looked right for a rate hike, with of course, the usual fine print caveat regarding a hike being 'data dependent.' Translated: if the market is not a crashing, the Fed is a hiking.
Stocks seem comfortable with that, at least for now that it is still theory. When the sharp slap of reality comes perhaps that changes. The Fed Minutes, however, basically said that while the Fed likely hikes in December it is not going to implement a series of staccato hikes. Couple that with China's ongoing stimulus jabs and Japan slipping into a 5-dipper recession, you have a stock market that sees enough money printing around the globe to keep money flowing into financial assets, inflating their prices.
The irony? If the ECB measured inflation by financial assets it would have all the inflation rise it could ever want. And you know what? The further irony: that is the ONLY inflation rise it will get if you print money.
The BIG news re the Fed: It is reported that it has called an expedited, closed meeting for Monday.
Well, there you go. Rate hike pre-Thanksgiving? A rate cut to undermine the dollar's advance, taking rates negative toward supposed equilibrium? Ah, transparency.
THE MARKET
CHARTS
Solid moves higher on the week in an attempt to resume the yearend run. An excellent week no matter what comes next, but a continued yearend run, or at least through Turkey Day would be a good year.
SP500: Up but gave up off the high as much as it closed positive. A solid week upside with three upside days, two marginally down days, more or less back in the middle of the March to August range. The next big test for SP500 is whether it continues higher to test the early November recovery high or even the 2015 highs in May and July. Good resurrection of the October yearend run, but hopefully there is more holiday energy left.
NASDAQ: Gapped higher Friday to cap a solid week. Back to the late April high, May high, still below the early November peak that stalled at the June and August highs, the last before the 2015 high in July. Similar to SP500, NASDAQ is still below the November peak, the recovery high off the August/September selling. The old leaders came to NASDAQ's aid last week, the reason the index moved higher. The 50 day EMA is crossing up, barely, through the 200 day SMA. Not a bad development.
DJ30: Similar to SP500, the Dow surged then gave up 90 points of the gain, as much as it closed with. Unlike SP500, the Dow tested close to the November recovery peak before backing off. That puts it near midrange for the March to August lateral move and perhaps at a bit of resistance.
RUTX: Actually, not bad action. Recovered the 50 day SMA Monday, surged past the top of the October lateral range Wednesday, held the 50 day EMA on the Thursday test, rallied upside Friday off the 50 day EMA. Not bad recovery action underway, and it would be an unexpected bonus if the small caps rejoined the move . . . once again.
SP400: Impressive week after SP400 broke below the October consolidation range. Moved back to it Monday and through it and beyond on the week. Not an auspicious move Friday but held onto enough gain to hold the break through the top of the range.
SOX: Up on the week as well, coming off the 50 day EMA. Not a huge move, more drifting higher off support. Ironic as chips sport, as a group, some of the better patterns in the market. Indeed, SOX sports a good pattern, an ABCD at the 50 day EMA off of the October run. It has yet, however, to break beyond the 200 day SMA and the October recovery high.
LEADERSHIP
Big Names: These stocks reignited the upside last week after two weeks of pullback, three in the case of SOX. NFLX continued its strong advance, touching off our initial target and we banked some of the gain per our plan. GOOG broke to a new high Friday. SBUX bounced off the Wednesday test on better volume. AMZN gapped to a doji to end a good week but not huge, still below the early November high. AAPL gapped to a doji after a very solid week. FB is up but stalling at the prior peaks. Yes these stocks helped push NASDAQ back upside, but the patterns are not all unequivocally positive. Indeed, CMG has e coli in more stores and the stock imploded yet again.
Financial: Banks enjoyed a solid week with nothing as nothing altered the notion the Fed hikes in December. Well, not entirely true; there is that Monday expedited and closed meeting to factor in. Perhaps that is why the financial stocks struggled just a bit on the Friday session, e.g. JPM, GS, BAC.
Chips: Friday was not a huge day, but still some excellent moves in progress from good patterns. AMAT is touching the October high. QRVO was off to end the week but had a good week. MXWL surged back upside Friday after a midweek melt back to support. SLAB, XLNX enjoyed a great week even if they were off a bit Friday.
China: Another good week, another mixed week. YNDX up nicely all week, including Friday. SOHU moved higher nicely but stalled at the 200 day SMA Thursday and Friday. CTRP gapped higher again Thursday. BIDU broke higher midweek, tested some Friday. Still a solid session.
Energy: Basically in a struggle. CVX, HAL. APC has flopped, but at least back to a support level.
Drugs/Biotech: Some nice moves higher, but in many cases, not what you could call recoveries, e.g. CELG, AMGN. Others not bad, e.g. CLDX bursting higher Friday. BIIB setting up a nice pattern. MYL enjoyed a solid week. KITE continues to rally.
Retail: COST was up nicely. Some recovered late in the week, but after massive drops. DDS back up after earnings but a bear flag. RH is trying to hold support after a 15 point drop. WSM continued to sell but showed a very large doji Friday, also at a support level. FL beat earnings results and gapped upside but after a huge drop before that. ANF beat and gapped through the 200 day SMA and other resistance. LB bounced off the 200 day SMA, getting a rise in anticipation of the holiday fashion show? There is some life starting to come back in. Just not in M or in JWN as the latter has bounced to a bear flag similar to DDS.
Industrials: Some good, some not so good. ETN posted a nice bounce from the 50 day SMA and continued the move Friday. FLR bounced nicely off the 50 day EMA but Friday gapped higher then reversed the gains. MMM posted a decent week, finding traction at the 200 day MA and bouncing Wednesday to Friday.
MARKET STATISTICS
NASDAQ
Stats: +31.28 points (+0.62%) to close at 5104.92
Volume: 1.717B (-1.9%)
Up Volume: 1.18B (+195.46M)
Down Volume: 556.17M (-235.17M)
A/D and Hi/Lo: Advancers led 1.7 to 1
Previous Session: Decliners led 1.23 to 1
New Highs: 73 (+4)
New Lows: 86 (-25)
S&P
Stats: +7.93 points (+0.38%) to close at 2089.17
NYSE Volume: 1B (+21.85%)
A/D and Hi/Lo: Advancers led 1.47 to 1
Previous Session: Advancers led 1.12 to 1
New Highs: 74 (+26)
New Lows: 122 (+36)
DJ30
Stats: +91.06 points (+0.51%) to close at 17823.81
SENTIMENT INDICATORS
VIX: 15.47; -1.52
VXN: 17.03; -0.91
VXO: 15.4; -1.29
Put/Call Ratio (CBOE): 0.94; -0.01
Recent history: The ratio put in a strong of 1.0+ closes over two weeks long during the selling. Backed off on the rally, but then put in almost 10 straight sessions above 1.0 as stocks sold the first half of November. Sure enough, the market has bounced from there.
Bulls and Bears: Bulls pulled back on the week, the second straight weekly decline, but frankly not much of a drop at all. Bears went the other way, fading from a bounce higher the prior week. At this level they don't really mean much. They crossed back in the selling and helped set the stage for a new move higher.
Bulls: 43.3 versus 45.3
Bears: 26.8 versus 28.9
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 43.3%
45.3% versus 46.9% versus 43.7% versus 37.5% versus 36.5% versus 30.2% versus 24.7% versus 26.0% versus 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
Background: Bulls hit their lowest level since the 2008 and 2009 market plummet.
Bears: 26.8%
28.9% versus 28.1% versus 29.2% versus 31.3% versus 31.2% versus 34.4% versus 35.1% versus 30.2% versus 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. Done.
OTHER MARKETS
Bonds (10 year): 2.26% versus 2.23%. After rallying further off the low high two weeks back, bonds stalled Friday and faded to test the Thursday upside gap.
Historical: 2.23% versus 2.27% versus 2.26% versus 2.27% versus 2.28% versus 2.32% versus 2.32% versus 2.35% versus 2.33% versus 2.24% versus 2.23% versus 2.22% versus 2.19% versus 2.15% versus 2.17% versus 2.09% versus 2.03% versus 2.06% versus 2.09% versus 2.03% versus 2.07% versus 2.03% versus 2.03% versus 1.98%
Euro/$: 1.06486 versus 1.0723. Still trending lower, turning sharply lower Friday after bumping the 10 day EMA Thursday. Steady trend lower.
Historical: 1.0659 versus 1.0642 versus 1.0669 versus 1.0751 versus 1.0821 versus 1.0740 versus 1.0725 versus 1.0754 versus 1.0742 versus 1.0878 versus 1.0860 versus 1.0963 versus 1.1012 versus 1.1015 versus 1.10979 versus 1.1030 versus 1.1047 versus 1.1049 versus 1.1017 versus 1.1108 versus 1.1339 versus 1.1347 versus 1.1320 versus 1.1351
DXY0: Faded to the 10 day EMA after a solid move this week.
USD/JPY: 122.79 versus 122.98. Down to end the week but just testing the surge higher.
Historical: 122.98 versus 123.55 versus 123.44 versus 123.20 versus 122.67 versus 122.56 versus 122.85 versus 122.90 versus 123.16 versus 123.16 versus 121.76 versus 121.58 versus 120.98 versus 120.77 versus 120.62 versus 121.10 versus 120.34 versus 120.36 versus 121.10 versus 121.46 versus 120.71 versus 119.925 versus 119.897 versus 119.52 versus 118.87 versus 119.66
Oil: 41.46, -0.26. Tried to bounce the past week after selling off from the early November high. Made a lower low, trying to bounce but stalling at the 10 day EMA Thursday and Friday.
Gold: 1076.70, -1.20. Sold off early week, trying to bounce late week, but stalling at the July low. Ironic. Still hearing those commercials on Talk Radio stations about how all the 'great' investors are buying tons of gold. That would of course require some real catastrophic event. Maybe that happens. Certainly gold is in a position to bounce after a 100+ point drop.
MONDAY
Thanksgiving week is up and the week is often a good one or at least decent for stocks. Last year was a good week, the end of the run off of that Ebola/end of QE low. Perhaps this move continues through the week up to the November high, perhaps more.
At this point everything upside is kind of a bonus.
Here is where I will, to a modest extent, look farther out. Usually don't do so because that doesn't mean anything in the stock market. Theories about where the market will be at this time or if a crash is coming or a 20% rally are all garbage even if correct. There is a commercial on the radio now about this fellow who 'predicted' the internet bubble/crash and who predicted the housing market crash. Hell, everyone I know predicted those crashes, it was just the timing they got wrong. Internet stocks rallied for two years after some very smart people said they had to crash. Lots of money was made in those two years.
Saying you 'predicted' a crash after the fact just because you said it would happen at some point before occurred means nothing; it is not anything you can act on until you see it start. Otherwise you fall in the trap of thinking your theories, even if right, are a market timing device. Utter nonsense.
So, consider the following in that context. You cannot trade off of it but you can consider it in determining the risk/reward of the market and the type of investments (short term, long term, upside, downside) you make. Remember, investing and trading, long term or short term, is ALL about the risk/reward, i.e. the probabilities of success of each investment or trade. Is the reward such that it justifies the risk? If not, then look elsewhere.
What about that farther look out?
QE ended in October 2014 and the market dove lower that month. But the end of QE wasn't the cause; the Ebola scare ignited the selling and combined with the idea of QE ending the market plunged. As fast as it fell, however, it recovered, moving to a higher high. Stocks continued upside into mid-2015 but flattened out February to August as measured by the SP500.
Then came the August selloff. Massive selling even more powerful than the October 2014 selling. A classic late summer/early fall double bottom formed with extreme negative internals, extreme negative sentiment, and key stocks such as AMZN and PCLN holding at their trendlines. Then the upside unleashed in the October run that came close but could not take out the mid-2015 highs. They are currently testing, now rebounding, trying to get past the recovery high and challenge the prior highs.
At least for the large cap indices. SP400 and RUTX, midcaps and small caps, are not in the same position, notably lagging the large cap indices. The drivers? Mostly a small group of large cap stocks that are getting most of the money. Without the smaller cap stocks, the market has a harder time moving higher because the smaller caps project economic activity. When they lag that indicates the economy will lag. Retail stocks show utterly horrible action the past month or so. Unless they stage a serious recovery that does not bode well for the 'healthy' consumer we heard the bald guy on CNBC exclaim on Friday morning as he reviewed the ANF, FL, WSM, ROSS earnings. They were not bad earnings; they will have to prove, however, they can recover.
That is the setup. With the large cap indices not far off the 2015 highs and the small and midcaps not following, the upside risk/reward is not the best. Don't be me wrong; there are very good setups to the upside that we are playing right now. NFLX is a classic example. There are other nice setups in industrials, chips, etc. They can make great money into the yearend as the run continues.
Even if the indices reach the old highs, then it is a matter if the move broadens out once more to include the small and midcaps as well.
You know our view on the economy: bifurcated, skewed to the advantage of the largest companies and food service companies. Those companies do not produce the jobs that the economy used to. Lots of hourly, low pay jobs in the service industry, few salaried breadwinner jobs that the economy used to produce. Unless the policies change dramatically, the economy won't change.
Thus no backup from the economy. The Fed is going to hike rates. QE is over. The market has formed a top and pitched over after QE's end. It has recovered but now is at a crucial test of the prior highs.
As noted above, this suggests a poorer upside risk/reward overall. In the big picture, without some other Fed inducement, this end of QE likely results in what all QE ends thus far have resulted: the market struggling and moving lower. The Fed so wants to raise rates and cut stimulus, however, that it will take a market selloff of significant proportion to move it to strike up QE again.
That raises the question as to what will come out of the Monday expedited meeting. Does the Fed see the confluence of the retail sales, retail stock charts, overall market patterns, geopolitical strife and now fears a meltdown? Very peculiar event this expedited meeting.
For us, all things as is, without some new Fed initiative the upside may be limited as the large cap indices bunch up against the prior highs. This looks like pretty classic rollover action over the past 14 months. So, we play the upside on this yearend run just as we said we would do off of that September low when the market set up that classic bottom, noting that the end of that run may be approaching during the holiday season. That means we play good setups as we have, and there are still several out there though the big names that again started the upside are not all in position to buy. We take gains when they are there, let positions run as far as they will, taking profits along the way. Then as the good setups become less frequent we are automatically lighter as we take profits and buy less new positions. If the leaders stumble we start closing down the upside, get even lighter, see what sets up downside if anything, and play what the market gives.
Thanksgiving Week. As noted, often an upside week. Stocks are higher heading in so it may not be an upside barnburner. We picked up some good positions heading in and as long as they work higher we let them work. Thus far the market has not turned on its leaders in the recovery. As long as that holds there is upside potential.
Monday to Wednesday are full sessions. Market closed Thursday and closes at 1:00ET Friday. Normal report Monday, abbreviated Tuesday, Wednesday market stats and updated play tables. Reports resume the following Monday. Alerts will issue as usual during market hours.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5104.92
Resistance:
5164 is the June 2015 peak, 5175 is the August intraday peak
5232 is the July high
Support:
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
4999 is the October upper gap point
The June low at 4974
The 200 day SMA at 4964
The 50 day EMA at 4964
4920 is the lower gap point from mid-October
4912 the mid-April China dip
4910 is the July 2015 closing low
4837 is the late August 2015 rebound high
4828 is the late August peak
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
S&P 500: Closed at 2089.17
Resistance:
2094 is the December 2014 high, the prior all-time high
2115 is the late March lower high
2119.59 is the February intraday prior all-time high
2126 was the April prior all-time high
2130 is the June 2015 peak
2135 is the May 2015 all-time high
Support:
2079 is the intraday all-time high from November 2014
2076 is the all-time high from November
The 200 day SMA at 2065
2062 is the January 2015 lower high
2046 is the July 2015 closing low
The 50 day EMA at 2044
2040 is the March 2015 closing low
2011 is the September prior all-time high
1994 is the late August recovery peak
1991 is the July 2014 high
1989 is the last August closing high
1972 is the December 2014 low
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.
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
Dow: Closed at 17,823.81
Resistance:
17,978 is the November 2015 peak
18,110 - 18,120 from December 2014, July 2015 peaks
18,289 from February 2015
18,351 from May 2015 and the all-time high
Support:
The March low at 17,786
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
June low at 17,715
The 200 day SMA at 17,589
17,585 to 17,579, the March intraday lows, helping mark the bottom of the Dow's The February to July trading range.
17,351 is the September 2014 all-time high.
The 50 day EMA at 17,346
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery peak
16,736 is a prior all-time high from May 2014
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,665 is the late August 2015 closing high. Key, key level.
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
ECONOMIC CALENDAR
November 23 - Monday
Existing Home Sales, October (10:00): 5.50M expected, 5.55M prior
November 24 - Tuesday
GDP - Second Estimate, Q3 (8:30): 2.0% expected, 1.5% prior
GDP Deflator - Second, Q3 (8:30): 1.2% expected, 1.3% prior
Case-Shiller 20-city, September (9:00): 5.2% expected, 5.1% prior
Consumer Confidence, November (10:00): 99.6 expected, 97.6 prior
November 25 - Wednesday
MBA Mortgage Index, 11/21 (7:00): +6.2% prior
Initial Claims, 11/21 (8:30): 272K expected, 271K prior
Continuing Claims, 11/14 (8:30): 2164K expected, 2175K prior
Personal Income, October (8:30): 0.4% expected, -0.1% prior
Personal Spending, October (8:30): 0.3% expected, 0.1% prior
PCE Prices - Core, October (8:30): 0.2% expected, 0.1% prior
Durable Orders, October (8:30): 1.5% expected, -1.2% prior
Durable Goods -ex transports, October (8:30): 0.5% expected, -0.6% prior (revised from -0.4%)
FHFA Housing Price I, September (9:00): 0.3% prior
Michigan Sentiment - Final, November (10:00): 93.1 expected, 93.1 prior
New Home Sales, October (10:00): 504K expected, 468K prior
Crude Inventories, 11/21 (10:30): 0.252M prior
Natural Gas Inventories, 11/21 (24:00): 15 bcf prior
End part 1 of 3
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Sunday, November 22, 2015
Thursday, November 19, 2015
The Daily, Part 1 of 3, 11-18-15
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11/18/2015 Investment House Report
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Targets hit: None issued
Entry alerts: ETN; GLOG; GS; SOHU
Trailing stops: None issued
Stop alerts: AMZN; GOOG; NXPI
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
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The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
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The REPORTS SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- Large cap indices move right past the Wednesday doji as all indices score good price gains.
- Once again the big names take the lead along with some other groups familiar with the upside rallies.
- Housing starts drop as economic data remains weaker.
- Fed gives no overt indication there is any change in a December rate hike. Discussion of equilibrium rates, however, opens the door for other kinds of stimulus.
- Rebound in progress and watching the peaks of the last move as stocks try to resurrect the yearend run.
SP500 and DJ30 patterns may have looked a bit weaker, but that didn't hinder a move higher, not at all. After the tombstone doji at potential resistance those indices blew right past Tuesday's high. SP500 shot through the 200 day SMA, DJ30 as well. Of the two better positioned indices, NASDAQ surged while SOX, though up, lagged a bit.
What about RUTX and SP400? Decent bounces. RUTX moved up off the 50 day SMA and broke over the 50 day EMA and the top of the October lateral consolidation. SP400 broke the 50 day EMA and is back at the top of that October consolidation. Better, but not convincing.
Of course, it would appear those indices don't need to be that convincing. The big names acted like big names. Financials worked well, aided by Fed-speak in the morning and Minutes in the afternoon. China stocks enjoyed the usual scattered good moves. Better leadership. Not convincing, blow away leadership, but the kind that drove the indices toward those prior highs, and they look to be doing it again.
The result was a day that saw the Tuesday laggards move to the fore, though some leaders such as NFLX were already were on the move earlier this week. Leaders lead, and NFLX had sold after its results and after a shakeout (that shook us out of our last positions -- full disclosure here) NFLX is surging higher.
SP500 33.14, 1.62%
NASDAQ 89.19, 1.79%
DJ30 247.66, 1.42%
SP400 1.68%
RUTX 1.61%
SOX 0.96%
VOLUME: NYSE -19%. NASDAQ +7%. NYSE rallied but volume faded back below average. Hmmm. NASDAQ showing solid volume, moving back above average as NASDAQ gapped and rallied. Mixed volume action, but leadership stocks on NASDAQ getting the volume again.
A/D: NYSE 3.4:1, NASDAQ 2:1. Broader on NYSE as RUTX, SP400 put in solid price gains. NASDAQ was more of a large cap move as discussed above and the breadth somewhat confirms.
Solid breaks higher by the indices. The large cap indices look pretty solid though outside of NASDAQ volume faded. SOX not bad but did not surge. Small and midcaps, up nicely but more work to do on their patterns after they fell back in the hole they tried to climb from. Hmmm. Sure seems like old times, i.e. during October when the large caps rallied while the small and midcaps flat-lined.
NEW/ECONOMY
Any catalysts? Yes and no. Housing starts flopped as multi units tanked 25.5% in October, hitting a 7 month low. Not great data for the Fed to chew on but with permits up 4.1% from -4.8% the Fed won't see an issue there.
Fed-Speak. Lacker took his still-warm chair on CNBC pre-market discussing the 'data' as he saw it to that point. As for the Paris attacks, Lacker sees a transitory impact on the economy. It had even a shorter half life on US stocks. In any event, they were not enough to change Lacker's thoughts on hiking interest rates.
In the afternoon the Fed minutes didn't do anything to change the December lift off, at least on the first few pages. On page 12, however, the Fed talked of equilibrium rates, something we have discussed before and something the Fed has raised. That is where a lender will lend to a borrower with no outside influences. That is perceived at less than 0%. Of course if the Fed feels it is too loose, it doesn't matter what the equilibrium rate or any other rate measure is; it will hike. But, the Fed mentions it and when it mentions things it is considering them. If the Fed won't go negative rates and indeed wants to hike, then how does it achieve a rate level where the economy still works given a negative equilibrium rate? QE. MStanley pointed out the equilibrium mentions by the Fed, we supply some analysis.
Remember, I made the recession call this past weekend. Nothing else to say, just reminding everyone.
Oh, Philly Fed is out Thursday and it will try to slow the contraction to -1.0 according to the experts. Negative PMI's; obviously a healthy, non-recessionary economy.
It is ironic how the data is poor, the retail sales are poor, and the retail charts stink. Of course, October is always a slower month in so-so economic times as people prepare for the holidays by cutting back on their pre-holiday spending to save up some cash. I noticed this every October in my house in the 1970's. My dad would get all stressed out about how slow work was. Every October. After a few years I noticed the trend and one October when my Dad was stressed I told him it slowed EVERY October and then business rallied year end and first of the year. He acknowledged that may be the case. But, he didn't stop stressing. The plight of a father.
Anyway, with weaker data but the denial things could be getting bad, you hear a bunch of bogus explanations. And you get tired of hearing the crapola.
Case in point: We are deep into the election process for 2016 with lots of candidates talking daily. Complaints about the economy, how it is handled, what needs to be done, etc. are quite common.
So is the status quo carping. Once again we are hearing how the politicians and their talk about the economy is causing an economic lag? The argument goes like this: candidates talk about the problems with the economy and country, it makes consumers think there are real problems, consumers stop buying, economy sags. The bald guy on CNBC was pushing this propaganda today, saying he was talking with CEO's who were blaming the political process for slowing business.
Utter nonsense. First, consider the source. These are the people who have had it MADE for the past 7 years after the stimulus and regulations that effectively eliminated their competition from upstarts or other smaller businesses. They have a vested interest in maintaining the status quo so of course they don't want anything to threaten their power. When some candidates talk common sense, get us back to free enterprise ideas, they have to take action to protect their monopolies. Second, WE get tired of THEM berating our country's political process that we hold dear. You can make money AND have freedom, individual and economic.
THE MARKET
CHARTS
NASDAQ: Gapped and rallied past the mid-October upper gap point. Volume moved back above average on the move through that resistance. Not bad. Of course with the breadth shown that means the big names were leading, and they were. Okay, on the way back to the June and August peaks, the last highs before the July 2015 high. If others can join NFLX in its move, those highs are the shot to shoot for.
SOX: Nice upside though lagged the overall market. Nice pattern remains in place with some chips moving well. Though it was not a day for SOX to lead, its pattern has improved quite a bit from a couple of weeks back with an ABCD using the 50 day EMA as the D point.
SP500: Blasted through the 200 day SMA and into the March to August range. Volume, not so great. It is working, however, and the financial stocks took strength from the Lacker comments as well as the FOMC minutes stating the Fed was good to go if the data remains solid. Of course many can argue, rationally so, that the data stinks. Never, however, let the facts get in the way. Working its way toward its November high, and it is an AA move: one day at a time.
DJ30: Through the 200 day SMA as well, back in the February to July range as well. Not awe inspiring but working.
RUTX: Continues its recovery move, up through the 50 day EMA and the top of the October three week range. 1080is the next resistance (closed at 1172). Working back, still not leading, but willing to follow.
SP400: Broke through the 50 day EMA and back to the top of the three week October range. Working on the recovery.
LEADERSHIP
Big Names: NFLX continued its surge. AMZN reversed its downside tendencies on rising volume. SBUX moving up off the 50 day EMA. GOOG moved to a new high though volume remains sketchy. FB gapped and rallied as well though volume was lower and below average as well. AAPL was upgraded and gapped through the 50 day EMA on rising, average volume. Once again the market finds its support from the big names. For the most part.
Financial: Solid moves on the 'rate hike is on' indications from the Fed Wednesday. JPM up 2%, V surged 2%, GS 1.5+%.
Chips: Still working in some areas (it is a broad category). QRVO, SIMO, XLNX, SLAB and others rallied. The FCS buyout by ON didn't hurt.
China: YNDX surged. BIDU is starting to break higher. SOHU moving well as is SINA.
Energy: Some moves trying to stir up, but there is work to do. ESV up on stronger volume. BHI up nicely but the pattern is questionable. Still hit or miss.
Drugs/Biotech: Starting to show life. MYL continues a strong move. BIIB jumping back toward the 50 day EMA but the pattern is not what it was. AMGN cleared the 200 day SMA, CELG rallied well, but the patterns are not huge. Getting some money however.
MARKET STATISTICS
NASDAQ
Stats: +89.19 points (+1.79%) to close at 5075.2
Volume: 1.924B (+6.7%)
Up Volume: 1.54B (+666.07M)
Down Volume: 461.14M (-475.72M)
A/D and Hi/Lo: Advancers led 2.1 to 1
Previous Session: Decliners led 1.16 to 1
New Highs: 57 (+2)
New Lows: 130 (-22)
S&P
Stats: +33.14 points (+1.62%) to close at 2083.58
NYSE Volume: 900M (-18.18%)
A/D and Hi/Lo: Advancers led 3.41 to 1
Previous Session: Decliners led 1.71 to 1
New Highs: 47 (+23)
New Lows: 134 (+12)
DJ30
Stats: +247.66 points (+1.42%) to close at 17737.16
SENTIMENT INDICATORS
VIX: 16.85; -1.99
VXN: 17.76; -1.58
VXO: 16.29; -2.32
Put/Call Ratio (CBOE): 1.02; +0.14
Recent history: Back above 1.0 after a week of below that level. Some covering of shorts on the strong move higher.
Bulls and Bears: Bulls paused for a week, backtracking a bit but still well over 35%. Bears resumed rising after a 1 week hiatus. Both bulls and bears are retracing after crossing over in September.
Bulls: 45.3 versus 46.9
Bears: 28.9 versus 28.1
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: 45.3%
46.9% versus 43.7% versus 37.5% versus 36.5% versus 30.2% versus 24.7% versus 26.0% versus 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
Background: Bulls hit their lowest level since the 2008 and 2009 market plummet.
Bears: 28.9%
28.1% versus 29.2% versus 31.3% versus 31.2% versus 34.4% versus 35.1% versus 30.2% versus 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. Done.
OTHER MARKETS
Bonds (10 year): 2.27% versus 2.26%. Started lower for a second session and once again moved to close higher. Moving higher but bonds are struggling to recover but did hold the September low on this pullback.
Historical: 2.26% versus 2.27% versus 2.28% versus 2.32% versus 2.32% versus 2.35% versus 2.33% versus 2.24% versus 2.23% versus 2.22% versus 2.19% versus 2.15% versus 2.17% versus 2.09% versus 2.03% versus 2.06% versus 2.09% versus 2.03% versus 2.07% versus 2.03% versus 2.03% versus 1.98% versus 2.04% versus 2.10%
Euro/$: 1.0659 versus 1.0642. Euro recovers some ground despite the Fed Minutes.
Historical: 1.0642 versus 1.0669 versus 1.0751 versus 1.0821 versus 1.0740 versus 1.0725 versus 1.0754 versus 1.0742 versus 1.0878 versus 1.0860 versus 1.0963 versus 1.1012 versus 1.1015 versus 1.10979 versus 1.1030 versus 1.1047 versus 1.1049 versus 1.1017 versus 1.1108 versus 1.1339 versus 1.1347 versus 1.1320 versus 1.1351
DXY0: After a strong three day surge off the 10 day EMA, a pause.
USD/JPY: 123.55 versus 123.44.
Historical: 123.44 versus 123.20 versus 122.67 versus 122.56 versus 122.85 versus 122.90 versus 123.16 versus 123.16 versus 121.76 versus 121.58 versus 120.98 versus 120.77 versus 120.62 versus 121.10 versus 120.34 versus 120.36 versus 121.10 versus 121.46 versus 120.71 versus 119.925 versus 119.897 versus 119.52 versus 118.87 versus 119.66
Oil: 40.75, +0.08. Still holding the lows of the week but unable to make the break higher.
Gold: 1068.70, -0.30. Pausing after the sharp break lower Tuesday to a new 2015 low.
THURSDAY
Wednesday saw more Fed talk that on the face supports that December rate hike. Thus financials rallied higher again. Of course so did the big names in growth. Rate hikes don't necessarily go with growth, but if there is a move to 'safety' with that is ongoing in Europe, well know brand names are soothing. Or, perhaps the Fed's talk of interest rate equilibrium deep in the minutes, again, leaves an opening for the Fed to keep stimulus alive. With the view that equilibrium rates, the rate at which a willing lender will lend to a willing borrower sans outside influence, is below zero, if the Fed doesn't want to go to negative rates perhaps it ramps up QE once again. Could the market be looking that far in the weeds in order to buy? The algos don't go that deep so . . not likely. But possible.
We didn't like the index look earlier in the week, but the big indices overcame the Tuesday doji and put in a good price move. The big names stepped in along with financials, China, some chips. Same names, but that has worked. If biotechs/drugs come back in, interesting things can happen.
Wednesday we focused on those in good patterns once again and thus bought into ETN, GS, GLOG, SOHU while Tuesday's upside buys QRVO, NFLX, YNDX, and SIMO moved well. Of course we had to close GOOG, AMZN and NXPI to the downside as they showed too much recovery strength. That happens and we remain more focused upside for now and have added some good movers and are looking at some more, e.g. BIDU, SBUX, FLR as this upside move to perhaps try the prior highs as a yearend holiday basket continues.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5075.20
Resistance:
5100 from the April peak and early May peak
5164 is the June 2015 peak
5232 is the July high
Support:
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
4999 is the October upper gap point
The June low at 4974
The 200 day SMA at 4960
The 50 day EMA at 4954
4920 is the lower gap point from mid-October
4912 the mid-April China dip
4910 is the July 2015 closing low
4837 is the late August 2015 rebound high
4828 is the late August peak
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
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 2014 low is giving way
4506 is the August 2015 selloff closing low
S&P 500: Closed at 2083.58
Resistance:
2094 is the December 2014 high, the prior all-time high
2115 is the late March lower high
2119.59 is the February intraday prior all-time high
2126 was the April prior all-time high
2130 is the June 2015 peak
2135 is the May 2015 all-time high
Support:
2079 is the intraday all-time high from November 2014
2076 is the all-time high from November
The 200 day SMA at 2065
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
The 50 day EMA at 2040
2011 is the September prior all-time high
1994 is the late August recovery peak
1991 is the July 2014 high
1989 is the last August closing high
1972 is the December 2014 low
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.
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
Dow: Closed at 17,734.32
Resistance:
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
The March low at 17,786
18,110 - 18,120 from December 2014, July 2015 peaks
18,289 from February 2015
18,351 from May 2015 and the all-time high
Support:
June low at 17,715
The 200 day SMA at 17,590
17,585 to 17,579, the March intraday lows, helping mark the bottom of the Dow's The February to July trading range.
17,351 is the September 2014 all-time high.
The 50 day EMA at 17,310
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery peak
16,736 is a prior all-time high from May 2014
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,665 is the late August 2015 closing high. Key, key level.
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
ECONOMIC CALENDAR
November 16 - Monday
Empire Manufacturing, November (8:30): -10.7 actual versus -6.0 expected, -11.4 prior (no revisions)
November 17 - Tuesday
CPI, October (8:30): 0.2% actual versus 0.2% expected, -0.2% prior (no revisions)
Core CPI, October (8:30): 0.2% actual versus 0.2% expected, 0.2% prior (no revisions)
Industrial Production, October (9:15): -0.2 actual versus 0.1% expected, -0.2% prior
Capacity Utilization, October (9:15): 77.5% actual versus 77.5% expected, 77.7% prior (revised from 77.5%)
NAHB Housing Market , November (10:00): 62.0 actual versus 64.5 expected, 65 prior (revised from 64)
Net Long-Term TIC Fl, September (16:00): $33.6B actual versus $20.8B prior (revised from $20.4B)
November 18 - Wednesday
MBA Mortgage Index, 11/14 (7:00): +6.2% actual versus -1.3% prior
Housing Starts, October (8:30): 1060K actual versus 1173K expected, 1191K prior (revised from 1206K)
Building Permits, October (8:30): 1150K actual versus 1137K expected, 1105K prior (revised from 1103K)
Crude Inventories, 11/14 (10:30): 0.252M actual versus 4.22M prior
FOMC Minutes, 10/28 (14:00)
November 19 - Thursday
Initial Claims, 11/14 (8:30): 272K expected, 276K prior
Continuing Claims, 11/07 (8:30): 2164K expected, 2174K prior
Philadelphia Fed, November (8:30): -1.0 expected, -4.5 prior
Leading Indicators, October (10:00): 0.6% expected, -0.2% prior
Natural Gas Inventories, 11/14 (10:30): 49 bcf prior
End part 1 of 3
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11/18/2015 Investment House Report
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MARKET SUMMARY
- Large cap indices move right past the Wednesday doji as all indices score good price gains.
- Once again the big names take the lead along with some other groups familiar with the upside rallies.
- Housing starts drop as economic data remains weaker.
- Fed gives no overt indication there is any change in a December rate hike. Discussion of equilibrium rates, however, opens the door for other kinds of stimulus.
- Rebound in progress and watching the peaks of the last move as stocks try to resurrect the yearend run.
SP500 and DJ30 patterns may have looked a bit weaker, but that didn't hinder a move higher, not at all. After the tombstone doji at potential resistance those indices blew right past Tuesday's high. SP500 shot through the 200 day SMA, DJ30 as well. Of the two better positioned indices, NASDAQ surged while SOX, though up, lagged a bit.
What about RUTX and SP400? Decent bounces. RUTX moved up off the 50 day SMA and broke over the 50 day EMA and the top of the October lateral consolidation. SP400 broke the 50 day EMA and is back at the top of that October consolidation. Better, but not convincing.
Of course, it would appear those indices don't need to be that convincing. The big names acted like big names. Financials worked well, aided by Fed-speak in the morning and Minutes in the afternoon. China stocks enjoyed the usual scattered good moves. Better leadership. Not convincing, blow away leadership, but the kind that drove the indices toward those prior highs, and they look to be doing it again.
The result was a day that saw the Tuesday laggards move to the fore, though some leaders such as NFLX were already were on the move earlier this week. Leaders lead, and NFLX had sold after its results and after a shakeout (that shook us out of our last positions -- full disclosure here) NFLX is surging higher.
SP500 33.14, 1.62%
NASDAQ 89.19, 1.79%
DJ30 247.66, 1.42%
SP400 1.68%
RUTX 1.61%
SOX 0.96%
VOLUME: NYSE -19%. NASDAQ +7%. NYSE rallied but volume faded back below average. Hmmm. NASDAQ showing solid volume, moving back above average as NASDAQ gapped and rallied. Mixed volume action, but leadership stocks on NASDAQ getting the volume again.
A/D: NYSE 3.4:1, NASDAQ 2:1. Broader on NYSE as RUTX, SP400 put in solid price gains. NASDAQ was more of a large cap move as discussed above and the breadth somewhat confirms.
Solid breaks higher by the indices. The large cap indices look pretty solid though outside of NASDAQ volume faded. SOX not bad but did not surge. Small and midcaps, up nicely but more work to do on their patterns after they fell back in the hole they tried to climb from. Hmmm. Sure seems like old times, i.e. during October when the large caps rallied while the small and midcaps flat-lined.
NEW/ECONOMY
Any catalysts? Yes and no. Housing starts flopped as multi units tanked 25.5% in October, hitting a 7 month low. Not great data for the Fed to chew on but with permits up 4.1% from -4.8% the Fed won't see an issue there.
Fed-Speak. Lacker took his still-warm chair on CNBC pre-market discussing the 'data' as he saw it to that point. As for the Paris attacks, Lacker sees a transitory impact on the economy. It had even a shorter half life on US stocks. In any event, they were not enough to change Lacker's thoughts on hiking interest rates.
In the afternoon the Fed minutes didn't do anything to change the December lift off, at least on the first few pages. On page 12, however, the Fed talked of equilibrium rates, something we have discussed before and something the Fed has raised. That is where a lender will lend to a borrower with no outside influences. That is perceived at less than 0%. Of course if the Fed feels it is too loose, it doesn't matter what the equilibrium rate or any other rate measure is; it will hike. But, the Fed mentions it and when it mentions things it is considering them. If the Fed won't go negative rates and indeed wants to hike, then how does it achieve a rate level where the economy still works given a negative equilibrium rate? QE. MStanley pointed out the equilibrium mentions by the Fed, we supply some analysis.
Remember, I made the recession call this past weekend. Nothing else to say, just reminding everyone.
Oh, Philly Fed is out Thursday and it will try to slow the contraction to -1.0 according to the experts. Negative PMI's; obviously a healthy, non-recessionary economy.
It is ironic how the data is poor, the retail sales are poor, and the retail charts stink. Of course, October is always a slower month in so-so economic times as people prepare for the holidays by cutting back on their pre-holiday spending to save up some cash. I noticed this every October in my house in the 1970's. My dad would get all stressed out about how slow work was. Every October. After a few years I noticed the trend and one October when my Dad was stressed I told him it slowed EVERY October and then business rallied year end and first of the year. He acknowledged that may be the case. But, he didn't stop stressing. The plight of a father.
Anyway, with weaker data but the denial things could be getting bad, you hear a bunch of bogus explanations. And you get tired of hearing the crapola.
Case in point: We are deep into the election process for 2016 with lots of candidates talking daily. Complaints about the economy, how it is handled, what needs to be done, etc. are quite common.
So is the status quo carping. Once again we are hearing how the politicians and their talk about the economy is causing an economic lag? The argument goes like this: candidates talk about the problems with the economy and country, it makes consumers think there are real problems, consumers stop buying, economy sags. The bald guy on CNBC was pushing this propaganda today, saying he was talking with CEO's who were blaming the political process for slowing business.
Utter nonsense. First, consider the source. These are the people who have had it MADE for the past 7 years after the stimulus and regulations that effectively eliminated their competition from upstarts or other smaller businesses. They have a vested interest in maintaining the status quo so of course they don't want anything to threaten their power. When some candidates talk common sense, get us back to free enterprise ideas, they have to take action to protect their monopolies. Second, WE get tired of THEM berating our country's political process that we hold dear. You can make money AND have freedom, individual and economic.
THE MARKET
CHARTS
NASDAQ: Gapped and rallied past the mid-October upper gap point. Volume moved back above average on the move through that resistance. Not bad. Of course with the breadth shown that means the big names were leading, and they were. Okay, on the way back to the June and August peaks, the last highs before the July 2015 high. If others can join NFLX in its move, those highs are the shot to shoot for.
SOX: Nice upside though lagged the overall market. Nice pattern remains in place with some chips moving well. Though it was not a day for SOX to lead, its pattern has improved quite a bit from a couple of weeks back with an ABCD using the 50 day EMA as the D point.
SP500: Blasted through the 200 day SMA and into the March to August range. Volume, not so great. It is working, however, and the financial stocks took strength from the Lacker comments as well as the FOMC minutes stating the Fed was good to go if the data remains solid. Of course many can argue, rationally so, that the data stinks. Never, however, let the facts get in the way. Working its way toward its November high, and it is an AA move: one day at a time.
DJ30: Through the 200 day SMA as well, back in the February to July range as well. Not awe inspiring but working.
RUTX: Continues its recovery move, up through the 50 day EMA and the top of the October three week range. 1080is the next resistance (closed at 1172). Working back, still not leading, but willing to follow.
SP400: Broke through the 50 day EMA and back to the top of the three week October range. Working on the recovery.
LEADERSHIP
Big Names: NFLX continued its surge. AMZN reversed its downside tendencies on rising volume. SBUX moving up off the 50 day EMA. GOOG moved to a new high though volume remains sketchy. FB gapped and rallied as well though volume was lower and below average as well. AAPL was upgraded and gapped through the 50 day EMA on rising, average volume. Once again the market finds its support from the big names. For the most part.
Financial: Solid moves on the 'rate hike is on' indications from the Fed Wednesday. JPM up 2%, V surged 2%, GS 1.5+%.
Chips: Still working in some areas (it is a broad category). QRVO, SIMO, XLNX, SLAB and others rallied. The FCS buyout by ON didn't hurt.
China: YNDX surged. BIDU is starting to break higher. SOHU moving well as is SINA.
Energy: Some moves trying to stir up, but there is work to do. ESV up on stronger volume. BHI up nicely but the pattern is questionable. Still hit or miss.
Drugs/Biotech: Starting to show life. MYL continues a strong move. BIIB jumping back toward the 50 day EMA but the pattern is not what it was. AMGN cleared the 200 day SMA, CELG rallied well, but the patterns are not huge. Getting some money however.
MARKET STATISTICS
NASDAQ
Stats: +89.19 points (+1.79%) to close at 5075.2
Volume: 1.924B (+6.7%)
Up Volume: 1.54B (+666.07M)
Down Volume: 461.14M (-475.72M)
A/D and Hi/Lo: Advancers led 2.1 to 1
Previous Session: Decliners led 1.16 to 1
New Highs: 57 (+2)
New Lows: 130 (-22)
S&P
Stats: +33.14 points (+1.62%) to close at 2083.58
NYSE Volume: 900M (-18.18%)
A/D and Hi/Lo: Advancers led 3.41 to 1
Previous Session: Decliners led 1.71 to 1
New Highs: 47 (+23)
New Lows: 134 (+12)
DJ30
Stats: +247.66 points (+1.42%) to close at 17737.16
SENTIMENT INDICATORS
VIX: 16.85; -1.99
VXN: 17.76; -1.58
VXO: 16.29; -2.32
Put/Call Ratio (CBOE): 1.02; +0.14
Recent history: Back above 1.0 after a week of below that level. Some covering of shorts on the strong move higher.
Bulls and Bears: Bulls paused for a week, backtracking a bit but still well over 35%. Bears resumed rising after a 1 week hiatus. Both bulls and bears are retracing after crossing over in September.
Bulls: 45.3 versus 46.9
Bears: 28.9 versus 28.1
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: 45.3%
46.9% versus 43.7% versus 37.5% versus 36.5% versus 30.2% versus 24.7% versus 26.0% versus 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
Background: Bulls hit their lowest level since the 2008 and 2009 market plummet.
Bears: 28.9%
28.1% versus 29.2% versus 31.3% versus 31.2% versus 34.4% versus 35.1% versus 30.2% versus 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. Done.
OTHER MARKETS
Bonds (10 year): 2.27% versus 2.26%. Started lower for a second session and once again moved to close higher. Moving higher but bonds are struggling to recover but did hold the September low on this pullback.
Historical: 2.26% versus 2.27% versus 2.28% versus 2.32% versus 2.32% versus 2.35% versus 2.33% versus 2.24% versus 2.23% versus 2.22% versus 2.19% versus 2.15% versus 2.17% versus 2.09% versus 2.03% versus 2.06% versus 2.09% versus 2.03% versus 2.07% versus 2.03% versus 2.03% versus 1.98% versus 2.04% versus 2.10%
Euro/$: 1.0659 versus 1.0642. Euro recovers some ground despite the Fed Minutes.
Historical: 1.0642 versus 1.0669 versus 1.0751 versus 1.0821 versus 1.0740 versus 1.0725 versus 1.0754 versus 1.0742 versus 1.0878 versus 1.0860 versus 1.0963 versus 1.1012 versus 1.1015 versus 1.10979 versus 1.1030 versus 1.1047 versus 1.1049 versus 1.1017 versus 1.1108 versus 1.1339 versus 1.1347 versus 1.1320 versus 1.1351
DXY0: After a strong three day surge off the 10 day EMA, a pause.
USD/JPY: 123.55 versus 123.44.
Historical: 123.44 versus 123.20 versus 122.67 versus 122.56 versus 122.85 versus 122.90 versus 123.16 versus 123.16 versus 121.76 versus 121.58 versus 120.98 versus 120.77 versus 120.62 versus 121.10 versus 120.34 versus 120.36 versus 121.10 versus 121.46 versus 120.71 versus 119.925 versus 119.897 versus 119.52 versus 118.87 versus 119.66
Oil: 40.75, +0.08. Still holding the lows of the week but unable to make the break higher.
Gold: 1068.70, -0.30. Pausing after the sharp break lower Tuesday to a new 2015 low.
THURSDAY
Wednesday saw more Fed talk that on the face supports that December rate hike. Thus financials rallied higher again. Of course so did the big names in growth. Rate hikes don't necessarily go with growth, but if there is a move to 'safety' with that is ongoing in Europe, well know brand names are soothing. Or, perhaps the Fed's talk of interest rate equilibrium deep in the minutes, again, leaves an opening for the Fed to keep stimulus alive. With the view that equilibrium rates, the rate at which a willing lender will lend to a willing borrower sans outside influence, is below zero, if the Fed doesn't want to go to negative rates perhaps it ramps up QE once again. Could the market be looking that far in the weeds in order to buy? The algos don't go that deep so . . not likely. But possible.
We didn't like the index look earlier in the week, but the big indices overcame the Tuesday doji and put in a good price move. The big names stepped in along with financials, China, some chips. Same names, but that has worked. If biotechs/drugs come back in, interesting things can happen.
Wednesday we focused on those in good patterns once again and thus bought into ETN, GS, GLOG, SOHU while Tuesday's upside buys QRVO, NFLX, YNDX, and SIMO moved well. Of course we had to close GOOG, AMZN and NXPI to the downside as they showed too much recovery strength. That happens and we remain more focused upside for now and have added some good movers and are looking at some more, e.g. BIDU, SBUX, FLR as this upside move to perhaps try the prior highs as a yearend holiday basket continues.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5075.20
Resistance:
5100 from the April peak and early May peak
5164 is the June 2015 peak
5232 is the July high
Support:
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
4999 is the October upper gap point
The June low at 4974
The 200 day SMA at 4960
The 50 day EMA at 4954
4920 is the lower gap point from mid-October
4912 the mid-April China dip
4910 is the July 2015 closing low
4837 is the late August 2015 rebound high
4828 is the late August peak
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
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 2014 low is giving way
4506 is the August 2015 selloff closing low
S&P 500: Closed at 2083.58
Resistance:
2094 is the December 2014 high, the prior all-time high
2115 is the late March lower high
2119.59 is the February intraday prior all-time high
2126 was the April prior all-time high
2130 is the June 2015 peak
2135 is the May 2015 all-time high
Support:
2079 is the intraday all-time high from November 2014
2076 is the all-time high from November
The 200 day SMA at 2065
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
The 50 day EMA at 2040
2011 is the September prior all-time high
1994 is the late August recovery peak
1991 is the July 2014 high
1989 is the last August closing high
1972 is the December 2014 low
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.
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
Dow: Closed at 17,734.32
Resistance:
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
The March low at 17,786
18,110 - 18,120 from December 2014, July 2015 peaks
18,289 from February 2015
18,351 from May 2015 and the all-time high
Support:
June low at 17,715
The 200 day SMA at 17,590
17,585 to 17,579, the March intraday lows, helping mark the bottom of the Dow's The February to July trading range.
17,351 is the September 2014 all-time high.
The 50 day EMA at 17,310
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery peak
16,736 is a prior all-time high from May 2014
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,665 is the late August 2015 closing high. Key, key level.
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
ECONOMIC CALENDAR
November 16 - Monday
Empire Manufacturing, November (8:30): -10.7 actual versus -6.0 expected, -11.4 prior (no revisions)
November 17 - Tuesday
CPI, October (8:30): 0.2% actual versus 0.2% expected, -0.2% prior (no revisions)
Core CPI, October (8:30): 0.2% actual versus 0.2% expected, 0.2% prior (no revisions)
Industrial Production, October (9:15): -0.2 actual versus 0.1% expected, -0.2% prior
Capacity Utilization, October (9:15): 77.5% actual versus 77.5% expected, 77.7% prior (revised from 77.5%)
NAHB Housing Market , November (10:00): 62.0 actual versus 64.5 expected, 65 prior (revised from 64)
Net Long-Term TIC Fl, September (16:00): $33.6B actual versus $20.8B prior (revised from $20.4B)
November 18 - Wednesday
MBA Mortgage Index, 11/14 (7:00): +6.2% actual versus -1.3% prior
Housing Starts, October (8:30): 1060K actual versus 1173K expected, 1191K prior (revised from 1206K)
Building Permits, October (8:30): 1150K actual versus 1137K expected, 1105K prior (revised from 1103K)
Crude Inventories, 11/14 (10:30): 0.252M actual versus 4.22M prior
FOMC Minutes, 10/28 (14:00)
November 19 - Thursday
Initial Claims, 11/14 (8:30): 272K expected, 276K prior
Continuing Claims, 11/07 (8:30): 2164K expected, 2174K prior
Philadelphia Fed, November (8:30): -1.0 expected, -4.5 prior
Leading Indicators, October (10:00): 0.6% expected, -0.2% prior
Natural Gas Inventories, 11/14 (10:30): 49 bcf prior
End part 1 of 3
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Monday, November 16, 2015
The Daily, Part 1 of 3, 11-16-15
* * * *
11/16/2015 Investment House Report
* * * *
Targets hit: None issued
Entry alerts: AMZN; JPM; MXWL; UNT
Trailing stops: None issued
Stop alerts: None issued
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Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
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
- Oversold, rebound, triggered by weaker economic data. In Japan. And here.
- Another weak Empire manufacturing report on top of weak retail reports, weak retail charts, Factory Orders, etc.
- Some big names bounce, chips still look good, but everything has to prove itself upside right now.
The stock market turned a negative to a positive, though the positive turn was not necessarily the Paris terrorist attacks and the 'this is bad as it gets' mentality as many opined. Perhaps those attacks could prompt the Fed to take its finger off the December rate hike button. Perhaps. With Merkel still saying damn the terrorist bullets and bombs, full speed ahead re the 'refugee' influx, the Fed has some cover to do what it said it would do, i.e. ignore events elsewhere in the world re its rate hike decision. Ironic that the Fed is adopting a domestic only view similar to the Administration and today's 'there's nothing we can do about ISIS' comments (okay, so I paraphrased), so let's allow entry to many more thousands of 'carefully vetted' refugees. 'Carefully vetted?' By who? Isis? But, I digress.
The real trigger maybe was Japan's fifth dip into recession in its ongoing depression. I would call it a malaise but I don't want to give malaise a bad name. Yes, after Paul Krugman met with the Japanese PM and BOJ officials over a year ago advising more and more yen printing, it seems the Japanese economy just hasn't quite found traction. Maybe print some more yen and that will do the trick. And there you have it: more stimulus needed to go along with China's 'needed' stimulus. Where there is stimulus, there is hope for financial asset inflation. Voila, a reason to rally.
Okay, you have Japan in recession as the trigger to set off some upside in a near term oversold market. Prior to Monday SP500 fell 7 of 8 sessions down to the 38% Fibonacci retracement. DJ30, NASDAQ, and SOX also sat at that near potential support level. After getting rattled post-close on Friday and the weekend, stocks appeared to absorb the bad news, and with the Japan stimulus-begging data, buyers opted to step in with new bids.
After slightly higher futures started fading toward the open, stocks found some bids and rallied, tested midmorning, then rallied quite impressively to the close. It was an impressive uptrend: not once did SPY close below the 10 minute moving average from midmorning to close. Impressive intraday trend higher.
SP500 30.15, 1.49%
NASDAQ 56.74, 1.15%
DJ30 237.77, 1.38%
SP400 1.23%
RUTX 0.83%
SOX 1.29%
VOLUME: NYSE -6%, NASDAQ -10%. Lower, below average NASDAQ volume shows not a lot of upside power. NYSE trade remained below average and actually fell further. New buying yes, but not powerful new buying as volume faded.
A/D: NYSE 2.6:1, NASDAQ 1.6:1. Fairly solid breadth on the rebound, but the RUTX and SP400 charts are not that comforting in terms of their bounces.
NEWS/ECONOMY
Over the weekend I opined the US was already in recession or on the cusp. Surely many think that is an insane proposition, particularly those on the financial stations who 'know' these kind of things. So much for getting back on CNBC and Bloomberg. Okay, CNBC.
Seriously, there are areas of the economy that are doing very well. That is the problem: only CERTAIN areas are doing well, those that were and are the beneficiaries of the regulatory structure put in place ever since the stimulus. Those companies have performed very well. All other areas are decimated. Moreover, those areas benefitting are not producing any kind of serious jobs. Many jobs but thanks to the regulations, again, mostly low-paying hourly jobs.
Time has caught up with this economy that cannot produce real jobs and rewards those protected by regulation versus ingenuity, guile, ability, and work ethic. Retail stocks are diving lower, this just ahead of the holiday season. They are forecasting worse times. I saw worse because the retail sales released last week were on life support. Retail earnings are past life support, flopping around with the dying quivers. Monday DDS reported a bottom line miss after M, JWN and others stunk the place up last week.
Wages were up but that was due to minimum wage hikes that will 1) eat into profits more, or 2) reduce jobs numbers by the mechanization of low end tasks. It will quickly become an imperative for companies to automate or lose out.
Manufacturing: The ISM is hanging on by a thread, but it typically lags the regions by a couple of months. Now the regions are two months (at least) into contraction. The overall ISM is likely ready to follow. Factory orders and durables already stink.
Empire State PMI, November: -10.7 versus -6.0 expected versus -11.4 October.
Hey, better in November! Just not falling as fast, however, and this is the fourth straight month of contraction. Not improving.
THE MARKET
CHARTS
As noted, the large cap indices including SOX all bounced off their 38% Fibonacci retracement tests. Good hold at a near support level, a good indication of continuing momentum . . . if they can continue the move; with the lower volume, that is a question.
Both SP400 and RUTX bounced as well, but their moves were not that convincing. Friday SP400 broke below the bottom of its three week October lateral range. It bounced back up to the lows on Monday, but lower NYSE volume doesn't lend the move a lot of credence.
RUTX reversed at the October lateral range lows in a decent hold of support. Held where it had to hold and perhaps it can bring SP400 back up with it, but I still don't like the RUTX pattern either, at least for more than a modest bounce.
Of course the market will show us if there is any staying power in the move The large caps led the move all along and just recently the small and midcaps joined in. The latter are falling off pace again but the large caps are attempting to lead higher once more without backup.
LEADERSHIP:
Ah, leadership. Can the large caps go it alone again?
Big Names: NFLX jumped nicely. AMZN sold nicely but then reversed off the 20 day EMA in the afternoon, posting a decent rebound. GOOG tested lower and reversed to a 1.7% gain. SBUX bounced off the 50 day MA. PCLN bombed lower but bounced off the 200 day SMA on the low. FB dipped to October gap point and rebounded. They are trying to rebound and lead. In some cases volume is big, e.g. FB, AMZN. Others not so much, e.g. GOOG, SBUX.
Financial: Bouncing with some decent moves. GS sold and reversed at the 50 day EMA on rising, above average volume. JPM bounced off near support though volume lagged.
China: Some good moves off of last week's test. SOHU surged off the 20 day EMA on volume. SINA surged off the 50 day EMA. BIDU looks good to move again. Overall while some are stretched (e.g. CTRP), many are bouncing back after tests.
Energy: Some rebounds, but can they hold? CVX surged off the 50 day EMA on rising volume. HAL bounced off the bottom of its 6 week lateral range. XEC posting a nice move off the 200 day SMA where there is a double bottom the past three weeks.
Industrial: UTX Bouncing modestly on low volume. MMM jumped off its two week 200 day SMA test. CAT bouncing on weak volume to the 50 day SMA; looks like a rollover.
Retail: DDS missed earnings and gapped lower and rebounded. M still no bounce. JWN still in the trash. FL, WSM rebounding some, but relief moves after a huge dive last week.
Chips: Holding up well. XLNX moving up off its three week test. SLAB still looks good. NVDA holding the 10 day EMA in its flag that tests the last surge. AMAT breaking nicely higher. Still a lot of solid patterns. MXWL bounced on the best volume in two weeks.
MARKET STATISTICS
NASDAQ
Stats: +56.73 points (+1.15%) to close at 4984.62
Volume: 1.756B (-9.52%)
Up Volume: 1.25B (+749.74M)
Down Volume: 557.1M (-932.9M)
A/D and Hi/Lo: Advancers led 1.55 to 1
Previous Session: Decliners led 1.69 to 1
New Highs: 21 (-6)
New Lows: 179 (-21)
S&P
Stats: +30.15 points (+1.49%) to close at 2053.19
NYSE Volume: 865.9M (-6.39%)
A/D and Hi/Lo: Advancers led 2.61 to 1
Previous Session: Decliners led 1.6 to 1
New Highs: 11 (+1)
New Lows: 129 (-88)
DJ30
Stats: +237.77 points (+1.38%) to close at 17483.01
SENTIMENT INDICATORS
VIX: 18.16; -1.92
VXN: 18.79; -2.45
VXO: 17.69; -2.88
Put/Call Ratio (CBOE): 0.88; -0.28
Recent history: 7 of 8 above 1.0. Still quite interesting how this correlated with the indices topping near term.
Bulls and Bears: Bulls paused for a week, backtracking a bit but still well over 35%. Bears resumed rising after a 1 week hiatus. Both bulls and bears are retracing after crossing over in September.
Bulls: 45.3 versus 46.9
Bears: 28.9 versus 28.1
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: 45.3%
46.9% versus 43.7% versus 37.5% versus 36.5% versus 30.2% versus 24.7% versus 26.0% versus 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
Background: Bulls hit their lowest level since the 2008 and 2009 market plummet.
Bears: 28.9%
28.1% versus 29.2% versus 31.3% versus 31.2% versus 34.4% versus 35.1% versus 30.2% versus 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. Done.
OTHER MARKETS
Bonds (10 year): 2.27% versus 2.28%. Doji and a bear flag at the 10 day EMA. Ready to fall further, suggesting a hike is still on for December.
Historical: 2.28% versus 2.32% versus 2.32% versus 2.35% versus 2.33% versus 2.24% versus 2.23% versus 2.22% versus 2.19% versus 2.15% versus 2.17% versus 2.09% versus 2.03% versus 2.06% versus 2.09% versus 2.03% versus 2.07% versus 2.03% versus 2.03% versus 1.98% versus 2.04% versus 2.10%
Euro/$: 1.0669 versus 1.0751. Euro resumes lower, undercutting last week's lows for the move lower since October.
Historical: 1.0751 versus 1.0821 versus 1.0740 versus 1.0725 versus 1.0754 versus 1.0742 versus 1.0878 versus 1.0860 versus 1.0963 versus 1.1012 versus 1.1015 versus 1.10979 versus 1.1030 versus 1.1047 versus 1.1049 versus 1.1017 versus 1.1108 versus 1.1339 versus 1.1347 versus 1.1320 versus 1.1351
DXY0: Breaking higher after the 10 day EMA test to end last week. Higher closing high on this move.
USD/JPY: 123.20 versus 122.67. Surging upside off the weeklong 10 day EMA test.
Historical: 122.67 versus 122.56 versus 122.85 versus 122.90 versus 123.16 versus 123.16 versus 121.76 versus 121.58 versus 120.98 versus 120.77 versus 120.62 versus 121.10 versus 120.34 versus 120.36 versus 121.10 versus 121.46 versus 120.71 versus 119.925 versus 119.897 versus 119.52 versus 118.87 versus 119.66
Oil: 41.74, +1.00. Finally moving higher after a two week drop to a lower low on this pullback. A bit of an oversold bounce aided by the events in Paris. Likely does not last with all of those tankers parked around the world, filled to the brim with crude.
Gold: 1083.60, +2.10. Trying to get off the mat after selling to the July consolidation range last week.
TUESDAY
Pretty good relief move for most of the market. Volume lower on the move but solid breadth. Some stocks moving very well, e.g. NFLX. Many just rebounding. Chips look pretty solid overall, one of the few groups that is holding the upside look together. Not a lot to hang your hat on, but a move higher with some good patterns breaking higher.
We picked up some upside positions on the reversal rebound as they showed the moves we were looking for: JPM; MXWL; UNT. Perhaps the market overall cannot muster much of a move after the selling, i.e. just a relief bounce. We like the individual moves so we entered but we will keep a fairly tight leash on them until the overall market move shows some staying power. We also picked up some AMZN puts at the stock dove lower intraday. Perhaps we should have banked some of that gain because AMZN bounced back to close positive.
Stocks such as AMZN with that kind of move will tell a lot of the tale of this attempt at selling by the market. Or attempt to bounce. On Monday the rebound won but the volume was not convincing and the small and midcaps don't appear to be 100% committed to the upside. There are still several very solid plays in position to move higher, e.g. FSLR, CLDX, GLOG, QRVO, YNDX. Others look good, e.g. NFLX, BIDU, GS, SOHU. There is life out there. Question is, will it survive after this initial bounce to start the week.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4984.62
Resistance:
4999 is the October upper gap point
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high
5100 from the April peak and early May peak
5164 is the June 2015 peak
5232 is the July high
Support:
The 200 day SMA at 4957
The June low at 4974
The 50 day EMA at 4947
4920 is the lower gap point from mid-October
4912 the mid-April China dip
4910 is the July 2015 closing low
4837 is the late August 2015 rebound high
4828 is the late August peak
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
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 2014 low is giving way
4506 is the August 2015 selloff closing low
S&P 500: Closed at 2053.19
Resistance:
2062 is the January 2015 lower high
The 200 day SMA at 2064
2076 is the all-time high from November
2079 is the intraday all-time high from November 2014
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:
2046 is the July 2015 closing low
2040 is the March 2015 closing low
The 50 day EMA at 2038
2011 is the September prior all-time high
1994 is the late August recovery peak
1991 is the July 2014 high
1989 is the last August closing high
1972 is the December 2014 low
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.
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
Dow: Closed at 17,483.01
Resistance:
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 200 day SMA at 17,590
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
The March low at 17,786
18,110 - 18,120 from December 2014, July 2015 peaks
18,289 from February 2015
18,351 from May 2015 and the all-time high
Support:
17,351 is the September 2014 all-time high.
The 50 day EMA at 17,284
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery peak
16,736 is a prior all-time high from May 2014
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,665 is the late August 2015 closing high. Key, key level.
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
ECONOMIC CALENDAR
November 16 - Monday
Empire Manufacturing, November (8:30): -10.7 actual versus -6.0 expected, -11.4 prior (no revisions)
November 17 - Tuesday
CPI, October (8:30): 0.2% expected, -0.2% prior
Core CPI, October (8:30): 0.2% expected, 0.2% prior
Industrial Productio, October (9:15): 0.1% expected, -0.2% prior
Capacity Utilization, October (9:15): 77.5% expected, 77.5% prior
NAHB Housing Market , November (10:00): 64.5 expected, 64 prior
Net Long-Term TIC Fl, September (16:00): $20.4B prior
November 18 - Wednesday
MBA Mortgage Index, 11/14 (7:00): -1.3% prior
Housing Starts, October (8:30): 1173K expected, 1206K prior
Building Permits, October (8:30): 1137K expected, 1103K prior
Crude Inventories, 11/14 (10:30): 4.22M prior
FOMC Minutes, 10/28 (14:00)
November 19 - Thursday
Initial Claims, 11/14 (8:30): 272K expected, 276K prior
Continuing Claims, 11/07 (8:30): 2164K expected, 2174K prior
Philadelphia Fed, November (8:30): -1.0 expected, -4.5 prior
Philadelphia Fed, November (10:00): -4.5 prior
Leading Indicators, October (10:00): 0.6% expected, -0.2% prior
Natural Gas Inventories, 11/14 (10:30): 49 bcf prior
End part 1 of 3
_______________________________________________________
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11/16/2015 Investment House Report
* * * *
Targets hit: None issued
Entry alerts: AMZN; JPM; MXWL; UNT
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 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
- Oversold, rebound, triggered by weaker economic data. In Japan. And here.
- Another weak Empire manufacturing report on top of weak retail reports, weak retail charts, Factory Orders, etc.
- Some big names bounce, chips still look good, but everything has to prove itself upside right now.
The stock market turned a negative to a positive, though the positive turn was not necessarily the Paris terrorist attacks and the 'this is bad as it gets' mentality as many opined. Perhaps those attacks could prompt the Fed to take its finger off the December rate hike button. Perhaps. With Merkel still saying damn the terrorist bullets and bombs, full speed ahead re the 'refugee' influx, the Fed has some cover to do what it said it would do, i.e. ignore events elsewhere in the world re its rate hike decision. Ironic that the Fed is adopting a domestic only view similar to the Administration and today's 'there's nothing we can do about ISIS' comments (okay, so I paraphrased), so let's allow entry to many more thousands of 'carefully vetted' refugees. 'Carefully vetted?' By who? Isis? But, I digress.
The real trigger maybe was Japan's fifth dip into recession in its ongoing depression. I would call it a malaise but I don't want to give malaise a bad name. Yes, after Paul Krugman met with the Japanese PM and BOJ officials over a year ago advising more and more yen printing, it seems the Japanese economy just hasn't quite found traction. Maybe print some more yen and that will do the trick. And there you have it: more stimulus needed to go along with China's 'needed' stimulus. Where there is stimulus, there is hope for financial asset inflation. Voila, a reason to rally.
Okay, you have Japan in recession as the trigger to set off some upside in a near term oversold market. Prior to Monday SP500 fell 7 of 8 sessions down to the 38% Fibonacci retracement. DJ30, NASDAQ, and SOX also sat at that near potential support level. After getting rattled post-close on Friday and the weekend, stocks appeared to absorb the bad news, and with the Japan stimulus-begging data, buyers opted to step in with new bids.
After slightly higher futures started fading toward the open, stocks found some bids and rallied, tested midmorning, then rallied quite impressively to the close. It was an impressive uptrend: not once did SPY close below the 10 minute moving average from midmorning to close. Impressive intraday trend higher.
SP500 30.15, 1.49%
NASDAQ 56.74, 1.15%
DJ30 237.77, 1.38%
SP400 1.23%
RUTX 0.83%
SOX 1.29%
VOLUME: NYSE -6%, NASDAQ -10%. Lower, below average NASDAQ volume shows not a lot of upside power. NYSE trade remained below average and actually fell further. New buying yes, but not powerful new buying as volume faded.
A/D: NYSE 2.6:1, NASDAQ 1.6:1. Fairly solid breadth on the rebound, but the RUTX and SP400 charts are not that comforting in terms of their bounces.
NEWS/ECONOMY
Over the weekend I opined the US was already in recession or on the cusp. Surely many think that is an insane proposition, particularly those on the financial stations who 'know' these kind of things. So much for getting back on CNBC and Bloomberg. Okay, CNBC.
Seriously, there are areas of the economy that are doing very well. That is the problem: only CERTAIN areas are doing well, those that were and are the beneficiaries of the regulatory structure put in place ever since the stimulus. Those companies have performed very well. All other areas are decimated. Moreover, those areas benefitting are not producing any kind of serious jobs. Many jobs but thanks to the regulations, again, mostly low-paying hourly jobs.
Time has caught up with this economy that cannot produce real jobs and rewards those protected by regulation versus ingenuity, guile, ability, and work ethic. Retail stocks are diving lower, this just ahead of the holiday season. They are forecasting worse times. I saw worse because the retail sales released last week were on life support. Retail earnings are past life support, flopping around with the dying quivers. Monday DDS reported a bottom line miss after M, JWN and others stunk the place up last week.
Wages were up but that was due to minimum wage hikes that will 1) eat into profits more, or 2) reduce jobs numbers by the mechanization of low end tasks. It will quickly become an imperative for companies to automate or lose out.
Manufacturing: The ISM is hanging on by a thread, but it typically lags the regions by a couple of months. Now the regions are two months (at least) into contraction. The overall ISM is likely ready to follow. Factory orders and durables already stink.
Empire State PMI, November: -10.7 versus -6.0 expected versus -11.4 October.
Hey, better in November! Just not falling as fast, however, and this is the fourth straight month of contraction. Not improving.
THE MARKET
CHARTS
As noted, the large cap indices including SOX all bounced off their 38% Fibonacci retracement tests. Good hold at a near support level, a good indication of continuing momentum . . . if they can continue the move; with the lower volume, that is a question.
Both SP400 and RUTX bounced as well, but their moves were not that convincing. Friday SP400 broke below the bottom of its three week October lateral range. It bounced back up to the lows on Monday, but lower NYSE volume doesn't lend the move a lot of credence.
RUTX reversed at the October lateral range lows in a decent hold of support. Held where it had to hold and perhaps it can bring SP400 back up with it, but I still don't like the RUTX pattern either, at least for more than a modest bounce.
Of course the market will show us if there is any staying power in the move The large caps led the move all along and just recently the small and midcaps joined in. The latter are falling off pace again but the large caps are attempting to lead higher once more without backup.
LEADERSHIP:
Ah, leadership. Can the large caps go it alone again?
Big Names: NFLX jumped nicely. AMZN sold nicely but then reversed off the 20 day EMA in the afternoon, posting a decent rebound. GOOG tested lower and reversed to a 1.7% gain. SBUX bounced off the 50 day MA. PCLN bombed lower but bounced off the 200 day SMA on the low. FB dipped to October gap point and rebounded. They are trying to rebound and lead. In some cases volume is big, e.g. FB, AMZN. Others not so much, e.g. GOOG, SBUX.
Financial: Bouncing with some decent moves. GS sold and reversed at the 50 day EMA on rising, above average volume. JPM bounced off near support though volume lagged.
China: Some good moves off of last week's test. SOHU surged off the 20 day EMA on volume. SINA surged off the 50 day EMA. BIDU looks good to move again. Overall while some are stretched (e.g. CTRP), many are bouncing back after tests.
Energy: Some rebounds, but can they hold? CVX surged off the 50 day EMA on rising volume. HAL bounced off the bottom of its 6 week lateral range. XEC posting a nice move off the 200 day SMA where there is a double bottom the past three weeks.
Industrial: UTX Bouncing modestly on low volume. MMM jumped off its two week 200 day SMA test. CAT bouncing on weak volume to the 50 day SMA; looks like a rollover.
Retail: DDS missed earnings and gapped lower and rebounded. M still no bounce. JWN still in the trash. FL, WSM rebounding some, but relief moves after a huge dive last week.
Chips: Holding up well. XLNX moving up off its three week test. SLAB still looks good. NVDA holding the 10 day EMA in its flag that tests the last surge. AMAT breaking nicely higher. Still a lot of solid patterns. MXWL bounced on the best volume in two weeks.
MARKET STATISTICS
NASDAQ
Stats: +56.73 points (+1.15%) to close at 4984.62
Volume: 1.756B (-9.52%)
Up Volume: 1.25B (+749.74M)
Down Volume: 557.1M (-932.9M)
A/D and Hi/Lo: Advancers led 1.55 to 1
Previous Session: Decliners led 1.69 to 1
New Highs: 21 (-6)
New Lows: 179 (-21)
S&P
Stats: +30.15 points (+1.49%) to close at 2053.19
NYSE Volume: 865.9M (-6.39%)
A/D and Hi/Lo: Advancers led 2.61 to 1
Previous Session: Decliners led 1.6 to 1
New Highs: 11 (+1)
New Lows: 129 (-88)
DJ30
Stats: +237.77 points (+1.38%) to close at 17483.01
SENTIMENT INDICATORS
VIX: 18.16; -1.92
VXN: 18.79; -2.45
VXO: 17.69; -2.88
Put/Call Ratio (CBOE): 0.88; -0.28
Recent history: 7 of 8 above 1.0. Still quite interesting how this correlated with the indices topping near term.
Bulls and Bears: Bulls paused for a week, backtracking a bit but still well over 35%. Bears resumed rising after a 1 week hiatus. Both bulls and bears are retracing after crossing over in September.
Bulls: 45.3 versus 46.9
Bears: 28.9 versus 28.1
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: 45.3%
46.9% versus 43.7% versus 37.5% versus 36.5% versus 30.2% versus 24.7% versus 26.0% versus 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
Background: Bulls hit their lowest level since the 2008 and 2009 market plummet.
Bears: 28.9%
28.1% versus 29.2% versus 31.3% versus 31.2% versus 34.4% versus 35.1% versus 30.2% versus 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. Done.
OTHER MARKETS
Bonds (10 year): 2.27% versus 2.28%. Doji and a bear flag at the 10 day EMA. Ready to fall further, suggesting a hike is still on for December.
Historical: 2.28% versus 2.32% versus 2.32% versus 2.35% versus 2.33% versus 2.24% versus 2.23% versus 2.22% versus 2.19% versus 2.15% versus 2.17% versus 2.09% versus 2.03% versus 2.06% versus 2.09% versus 2.03% versus 2.07% versus 2.03% versus 2.03% versus 1.98% versus 2.04% versus 2.10%
Euro/$: 1.0669 versus 1.0751. Euro resumes lower, undercutting last week's lows for the move lower since October.
Historical: 1.0751 versus 1.0821 versus 1.0740 versus 1.0725 versus 1.0754 versus 1.0742 versus 1.0878 versus 1.0860 versus 1.0963 versus 1.1012 versus 1.1015 versus 1.10979 versus 1.1030 versus 1.1047 versus 1.1049 versus 1.1017 versus 1.1108 versus 1.1339 versus 1.1347 versus 1.1320 versus 1.1351
DXY0: Breaking higher after the 10 day EMA test to end last week. Higher closing high on this move.
USD/JPY: 123.20 versus 122.67. Surging upside off the weeklong 10 day EMA test.
Historical: 122.67 versus 122.56 versus 122.85 versus 122.90 versus 123.16 versus 123.16 versus 121.76 versus 121.58 versus 120.98 versus 120.77 versus 120.62 versus 121.10 versus 120.34 versus 120.36 versus 121.10 versus 121.46 versus 120.71 versus 119.925 versus 119.897 versus 119.52 versus 118.87 versus 119.66
Oil: 41.74, +1.00. Finally moving higher after a two week drop to a lower low on this pullback. A bit of an oversold bounce aided by the events in Paris. Likely does not last with all of those tankers parked around the world, filled to the brim with crude.
Gold: 1083.60, +2.10. Trying to get off the mat after selling to the July consolidation range last week.
TUESDAY
Pretty good relief move for most of the market. Volume lower on the move but solid breadth. Some stocks moving very well, e.g. NFLX. Many just rebounding. Chips look pretty solid overall, one of the few groups that is holding the upside look together. Not a lot to hang your hat on, but a move higher with some good patterns breaking higher.
We picked up some upside positions on the reversal rebound as they showed the moves we were looking for: JPM; MXWL; UNT. Perhaps the market overall cannot muster much of a move after the selling, i.e. just a relief bounce. We like the individual moves so we entered but we will keep a fairly tight leash on them until the overall market move shows some staying power. We also picked up some AMZN puts at the stock dove lower intraday. Perhaps we should have banked some of that gain because AMZN bounced back to close positive.
Stocks such as AMZN with that kind of move will tell a lot of the tale of this attempt at selling by the market. Or attempt to bounce. On Monday the rebound won but the volume was not convincing and the small and midcaps don't appear to be 100% committed to the upside. There are still several very solid plays in position to move higher, e.g. FSLR, CLDX, GLOG, QRVO, YNDX. Others look good, e.g. NFLX, BIDU, GS, SOHU. There is life out there. Question is, will it survive after this initial bounce to start the week.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4984.62
Resistance:
4999 is the October upper gap point
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high
5100 from the April peak and early May peak
5164 is the June 2015 peak
5232 is the July high
Support:
The 200 day SMA at 4957
The June low at 4974
The 50 day EMA at 4947
4920 is the lower gap point from mid-October
4912 the mid-April China dip
4910 is the July 2015 closing low
4837 is the late August 2015 rebound high
4828 is the late August peak
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
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 2014 low is giving way
4506 is the August 2015 selloff closing low
S&P 500: Closed at 2053.19
Resistance:
2062 is the January 2015 lower high
The 200 day SMA at 2064
2076 is the all-time high from November
2079 is the intraday all-time high from November 2014
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:
2046 is the July 2015 closing low
2040 is the March 2015 closing low
The 50 day EMA at 2038
2011 is the September prior all-time high
1994 is the late August recovery peak
1991 is the July 2014 high
1989 is the last August closing high
1972 is the December 2014 low
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.
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
Dow: Closed at 17,483.01
Resistance:
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 200 day SMA at 17,590
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
The March low at 17,786
18,110 - 18,120 from December 2014, July 2015 peaks
18,289 from February 2015
18,351 from May 2015 and the all-time high
Support:
17,351 is the September 2014 all-time high.
The 50 day EMA at 17,284
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery peak
16,736 is a prior all-time high from May 2014
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,665 is the late August 2015 closing high. Key, key level.
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
ECONOMIC CALENDAR
November 16 - Monday
Empire Manufacturing, November (8:30): -10.7 actual versus -6.0 expected, -11.4 prior (no revisions)
November 17 - Tuesday
CPI, October (8:30): 0.2% expected, -0.2% prior
Core CPI, October (8:30): 0.2% expected, 0.2% prior
Industrial Productio, October (9:15): 0.1% expected, -0.2% prior
Capacity Utilization, October (9:15): 77.5% expected, 77.5% prior
NAHB Housing Market , November (10:00): 64.5 expected, 64 prior
Net Long-Term TIC Fl, September (16:00): $20.4B prior
November 18 - Wednesday
MBA Mortgage Index, 11/14 (7:00): -1.3% prior
Housing Starts, October (8:30): 1173K expected, 1206K prior
Building Permits, October (8:30): 1137K expected, 1103K prior
Crude Inventories, 11/14 (10:30): 4.22M prior
FOMC Minutes, 10/28 (14:00)
November 19 - Thursday
Initial Claims, 11/14 (8:30): 272K expected, 276K prior
Continuing Claims, 11/07 (8:30): 2164K expected, 2174K prior
Philadelphia Fed, November (8:30): -1.0 expected, -4.5 prior
Philadelphia Fed, November (10:00): -4.5 prior
Leading Indicators, October (10:00): 0.6% expected, -0.2% prior
Natural Gas Inventories, 11/14 (10:30): 49 bcf prior
End part 1 of 3
_______________________________________________________
Member: tweet@investbilling.com
Customer Support: http://www.InvestBilling.com
1153 Bergen Pkwy - Suite I #502 - Evergreen, CO 80439
Saturday, November 14, 2015
The Daily, Part 1 of 3, 11-14-15
* * * *
11/14/2015 Investment House Report
* * * *
Targets hit: None issued
Entry alerts: GOOG; NXPI
Trailing stops: AMZN
Stop alerts: NFLX
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 REPORTS SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- Stocks continue selling Friday, futures point to more selling after Paris attacks.
- Large cap selling still fairly ordinary, but small and midcaps are leaving the building.
- Leaders thinning as groups that were trying to set up falter.
- Retail sales weak, retail stocks tank.
- US likely in or falling into recession.
- Paris attacks have futures lower, stocks likely sell more.
The selling did not slow Friday as the indices started the session negative and closed the session even lower. What started the week as a rather orderly continuation of the pullback to test the last leg of the October to November rally ended causing technical damage at least to the near term prospects of a short test and new advance.
If you look at the charts of the large cap indices, while of course suffering a round of significant losses Thursday and Friday, the pullbacks are rather ordinary, at least for now.
SP500, DJ30, NASDAQ and SOX are all at or just over the 38% Fibonacci retracement after 8 days of pulling back from the highs hit early November. That does not mean they will necessarily hold at that nearest significant Fibonacci retracement level, but it does help quantify just where the indices are at this stage of the pullback.
As for RUTX and SP400, the great hopes to provide support and new leadership blood to the move, they broke through the 38% Fibonacci retracement and are at the 50% retracement or farther. Indeed, SP400 broke below its 3 week lateral consolidation in October, a clear sign of dumping of this group.
SP500 -22.93, -1.12%
NASDAQ -77.20, -1.54%
DJ30 -202.83, -1.16%
SP400 -0.88%
RUTX -0.72%
SOX -0.93%
VOLUME: NYSE +9%, NASDAQ +10%. Higher volume on the Friday selling indicates sellers ramping up their selling, but the overall levels are not blowout, coming average on NYSE and just above average on NASDAQ.
Advance/Decline: NYSE -1.6:1, NASDAQ -1.7:1. Quite modest negative breadth on losses of 1+% on the large cap indices. The mid and small caps suffered less and thus the milder breadth, but the index losses were still significant.
In sum, the stock indices failed to hold the nearest support for a new run at the prior 2015 highs. The selling Thursday and Friday was sharper, but in terms of the large cap indices, as noted above is still in the upper reaches of the rally. They can hold near this level and continue. Of course, they have to hold. With RUTX and SP400 breaking lower through their consolidation ranges, however, the market is losing what could have been a solid support group for the large cap indices.
That leaves two scenarios. First, the large cap indices go it alone without the small and midcaps as in October. Second, the collapse of the small and midcaps is the precursor to a deeper selloff by the large cap indices.
What about the year end run? Well we noted that the usual fall pattern was a month ahead this year given the bottom was completed in September instead of October. So it could be argued that the year end run has come and possibly concluded with a move up near the 2015 highs.
For now the pullback is on and with some intensity. For now the assumption is downside though after 7 of 8 days lower there is an oversold condition that might yield a relief bounce. You don't want to forget there are still several stocks in very good position to move higher even through the selling this past week. As soon as you assume a move is over it resurrects, particularly if it has stocks that are in position to help resurrect and there is an oversold condition. Keep that in mind, but for now the bias is downside until it shows otherwise.
NEWS/ECONOMY
Friday another round of at best mediocre data was released, ironically as the FOMC prepared for its first rate hike in 10 years.
October Retail Sales again missed with the year/year reading at its second weakest level since the financial crisis.
Retail Sales: 0.1% versus 0.3% expected versus 0.0% September (from 0.1%)
Control group: 0.2% versus 0.4% expected versus 0.1% prior (revised from -0.1%).
What was down? Everything. Even autos. That is why Sales less autos was 0.2% versus the 0.1% overall move.
Autos, electronics, food and beverages, gasoline, general merchandise. All lower.
The experts keep saying the consumer is strong and will get stronger with the 'gasoline bonus,' that they have not spent thus far. As one commentator put it, if you don't have a job and don't have to drive to work, lower gasoline prices don't mean that much.
Retail sales disappointed overall. They also disappointed specifically, e.g. M with its earnings miss, JWN with its top and bottom line miss, PRTY with its miss, LOCO missing the top line, FOSL also missing the top line. It was not a banner week for retail stocks as they reported a less than banner Q3.
The consumer is not getting stronger. The wage gains from Q3? Increased minimum wages, an artificial rise in wages that is unsustainable because other areas are cut in order to raise them (e.g. WMT cutting management jobs), and more basic, the economics don't support it. Plus, when all of the machines take over the tasks of menial jobs there will be even less income as those jobs disappear. Yes the consumer is buzzing.
Recession.
Here is our take. Given the data showing up across the board with sustained weakness, I am making the call that the US is in recession already or just starting one. This as the Fed, the master of bad timing, is going to raise rates in December.
Actually, that is perfect timing. The Fed needs to hike and could even pop off a 50BP move. Then it doesn't have to do anything in 2016 as it has hiked rates and the economy hits recession. In an election year. Or perhaps it sees the deterioration in the numbers outside its jobs report and balks at hiking rates, fearing causing a recession in an election year and handing the election to those who actually have the temerity to seek a more serious audit of what the Fed does with our money. Poor Fed. Tough decisions brought on by its inability to act when it should have acted.
THE MARKET
Still selling into Friday, moving to the 38% Fibonacci retracement levels on the large cap indices. The midcaps broke to a lower low below its trading range while the small caps look ready to break their October consolidation range. The large caps are still in a normal test while the small and midcaps are breaking down. Typically in this situation over the past few years, when this happens the downside ends up winning the move, forcing the rest of the market to form up again.
CHARTS
SP500: After attempting to hold and bounce at the 200 day SMA, SP500 broke lower Thursday and again Friday, taking out the 200 day SMA and the 50 day EMA along the way. Friday SP500 closed at the 38% Fibonacci retracement, but no doji, just a flop to that level. Still in position where it could hold and hold a lot of its momentum, but the Friday price action does not suggest a bounce. A bit oversold the past 8 sessions but nothing major.
NASDAQ: Gapped and sold Friday, moving through the 200 day SMA and the 50 day EMA in one move. NASDAQ is bent on filling the mid-October upside gap. Rising above average volume as it does. At the September high and gap point as well, a logical point to hold, but nothing yet suggesting NASDAQ is ready to rebound. Indeed, many of the big name NASDAQ leaders just started to sell. Might be more downside to come.
RUTX: The small caps sold back to the three week October range, fell into it Thursday, and sold to the bottom of it Friday. The upside showed very little staying power and we will see if RUTX can start over once more.
SP400: While we see if RUTX can hold, consider the midcap SP400. It sold hard Thursday, gapping into the three week consolidation range. Friday SP400 sold again, undercutting the consolidation range that set up the move higher. The breach of the consolidation lows is a sign of weakness.
SOX: Down but rather modestly, undercutting the 50 day EMA but holding the 38% Fibonacci retracement similar to the large cap indices. Has set up an ABCD consolidation to that near support in what is not a bad pattern. Not saying it is going to lead a new move higher from here, but by itself it is not in bad shape.
DJ30: Similar to SP500 the industrials fell hard Thursday and Friday, selling Friday on rising volume. Just cracking the 50 day EMA and still above the 38% Fibonacci retracement, DJ30 still has decent momentum though on Friday it was showing no signs of slowing the decline.
LEADERSHIP
Energy failed its attempt to assume some leadership, running out of . . energy? Industrials don't look so industrious, may be giving up their shot. Software softened. Financials trying to hold the line but struggling. Big names not looking so big. Leadership has some work to do, or is that, as Senator Schumer said, the Fed Chairman has work to do? Leadership is in question. There are some solid patterns on the report, but the great patterns are farther apart.
Big Names: AMZN broke sharply lower on volume. GOOG started to roll over from its low volume new high. SBUX fell to the 50 day EMA. AAPL broke sharply lower below the 50 day SMA. FB is making its first serious test, filling the early November upside gap. Former leaders look as if they will remain former leaders, e.g. PCLN, CMG.
Tech/Software: Mixed results. MSFT is holding three week lateral move. BLKB gapped lower, RHT plunged to the 50 day EMA. CSCO gapped sharply lower, off 5.8%, on its earnings. VDSI still looks solid but it is something of a minority.
China: And yes, still mixed. SOHU is in a great 20 day EMA test of its rally. SINA dove lower. CTRP is slowing its move as is BIDU, but both remain strong. YNDX has set up a nice ABCD test. Still promise here as the world looks to China for more stimulus, not from a strong economy, but from the government.
Financial: Struggling. JPM not bad at the 20 day EMA. GS continued lower to the 20 day EMA. BAC gapped to the 20 day EMA, giving up all of the gap move from the Jobs Report Friday. TCBI (regional) did the same. Not so cock sure of a rate hike from the lok of the patterns.
Energy: Oil rolled over the past two weeks and oil stocks with it. The patterns say they are not dead, but they have work ahead of them. CVX landed at the 50 day EMA to end the week. OIS is still very nice with a tight doji at the 50 day SMA.
Industrial: UTX is trying to hang on at the 50 day EMA. FLR is trying the same with an ABCD. MMM trying to hold near the 200 day SMA. HON broke the 200 day SMA and is at the 50 day EMA. Problematic at this point.
Retail: Tough week with department stores falling apart: DDS, M, JWN. KIRK imploded. WSM is diving to lower lows. FL, JCP, FOSL, CHS. Death row.
Chips: Actually holding up better than most. NVDA in a nice flag test. SLAB recovered after a deep test Friday. QRVO looks super in its test. AMAT beat on earnings and gapped to a higher high over last week's recovery high. There is promise here.
MARKET STATISTICS
NASDAQ
Stats: -77.2 points (-1.54%) to close at 4927.88
Volume: 1.941B (+9.87%)
Up Volume: 500.26M (+73.68M)
Down Volume: 1.49B (+120M)
A/D and Hi/Lo: Decliners led 1.69 to 1
Previous Session: Decliners led 3.43 to 1
New Highs: 27 (-8)
New Lows: 200 (+47)
S&P
Stats: -22.93 points (-1.12%) to close at 2023.04
NYSE Volume: 925M (+8.82%)
A/D and Hi/Lo: Decliners led 1.6 to 1
Previous Session: Decliners led 4.31 to 1
New Highs: 10 (-6)
New Lows: 217 (+36)
DJ30
Stats: -202.83 points (-1.16%) to close at 17245.24
SENTIMENT INDICATORS
VIX: 20.08; +1.71
VXN: 21.24; +2.32
VXO: 20.57; +2.15
Put/Call Ratio (CBOE): 1.16; -0.06
Recent history: 7 of 8 above 1.0. Still quite interesting how this correlated with the indices topping near term.
Bulls and Bears: Bulls paused for a week, backtracking a bit but still well over 35%. Bears resumed rising after a 1 week hiatus. Both bulls and bears are retracing after crossing over in September.
Bulls: 45.3 versus 46.9
Bears: 28.9 versus 28.1
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: 45.3%
46.9% versus 43.7% versus 37.5% versus 36.5% versus 30.2% versus 24.7% versus 26.0% versus 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
Background: Bulls hit their lowest level since the 2008 and 2009 market plummet.
Bears: 28.9%
28.1% versus 29.2% versus 31.3% versus 31.2% versus 34.4% versus 35.1% versus 30.2% versus 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. Done.
OTHER MARKETS
Bonds (10 year): 2.28% versus 2.32%. Rebounding all week from the two week plunge to the September low. Trying to bounce off that support.
Historical: 2.32% versus 2.32% versus 2.35% versus 2.33% versus 2.24% versus 2.23% versus 2.22% versus 2.19% versus 2.15% versus 2.17% versus 2.09% versus 2.03% versus 2.06% versus 2.09% versus 2.03% versus 2.07% versus 2.03% versus 2.03% versus 1.98% versus 2.04% versus 2.10%
Euro/$: 1.0751 versus 1.0821. Not much traction trying to move higher form a weeklong consolidation.
Historical: 1.0821 versus 1.0740 versus 1.0725 versus 1.0754 versus 1.0742 versus 1.0878 versus 1.0860 versus 1.0963 versus 1.1012 versus 1.1015 versus 1.10979 versus 1.1030 versus 1.1047 versus 1.1049 versus 1.1017 versus 1.1108 versus 1.1339 versus 1.1347 versus 1.1320 versus 1.1351
DXY0: Still in a nice weeklong test of the 10 day EMA after breaking to a higher high over the July and August twin peaks.
USD/JPY: 122.67 versus 122.56. Very excellent flag test of the 10 day EMA, showing a tight doji Friday. Nice break higher, nice test, in great position to continue upside.
Historical: 122.56 versus 122.85 versus 122.90 versus 123.16 versus 123.16 versus 121.76 versus 121.58 versus 120.98 versus 120.77 versus 120.62 versus 121.10 versus 120.34 versus 120.36 versus 121.10 versus 121.46 versus 120.71 versus 119.925 versus 119.897 versus 119.52 versus 118.87 versus 119.66
Oil: 40.74, -1.01. Still diving lower after undercutting the October low. Heading back toward the August low near 37.80. 30M bbls sitting in tankers outside of Galveston, Texas. You can drive along the Bolivar Peninsula, east of Galveston and slightly up the coast, and see the lines of tankers parked, nowhere to offload. This is the same situation in ports all over the world. How many barrels? 100M+? Easily. Cargos with no home right now.
Gold: 1081.50, +0.50. Sold to the July low on the week, a point where we will see if gold has any guts left in it at all.
MONDAY
Over the past two weeks we started closing positions as the market rallied nicely, hitting targets, and then started to backslide. That backslide was a normal test at first and for some stocks it still is. Many others, however, are doing more than testing near support,. More leaders are giving up their moves, notably some of the 'name' stocks that clearly led the move higher. With their struggles, the indices started breaking lower with RUTX and SP400 breaking back down into or below the October lateral trading range.
Given the downside bias and the absolute lack of any bounce, short covering or otherwise, we closed many of our positions over the past two weeks, taking upside gain on the moves to the highs, and afterward as stocks faded through near support. Friday we picked up some downside positions on GOOG and NXPI as well as closing our last AMZN position for a big gain. Now we watch for an oversold bounce as a possibility to close some additional upside if that bounce stalls and then pick up some more downside positions as well if the move does stall.
Not the best week for the stock market in recent times, but not terrible either. The large cap indices are at the 38% Fibonacci retracement as noted, still in very normal and decent tests of solid breaks higher. Weaker of course but still holding good patterns. That keeps open the door for a resumption of the year end move.
The horrendous terror attacks in Paris after the Friday close may have a further negative impact on stocks this coming week. What other events occur this weekend will bear more on that possibility. If the French have the attackers in custody, dead or otherwise, as they claim, that is a start to getting past this in terms of market action. Don't mean to appear callous, just have to deal with the market we get.
The bias remains negative at the Friday close, and the terror attacks do not help. We will look at some upside plays holding up well, but also downside even if the market is oversold for now. NXPI and GOOG were hardly oversold but are showing rollover patterns we want to ride for gains.
Pray for those in Paris who are not going home and steel yourself for what will need to be done ahead as a result.
Have a great weekend and let's truly appreciate what we have while we still have it.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4927.88
Resistance:
The 50 day EMA at 4946
The June low at 4974
The 200 day SMA at 4956
4999 is the October upper gap point
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high
5100 from the April peak and early May peak
5164 is the June 2015 peak
5232 is the July high
Support:
4920 is the lower gap point from mid-October
4912 the mid-April China dip
4910 is the July 2015 closing low
4837 is the late August 2015 rebound high
4828 is the late August peak
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
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 2014 low is giving way
4506 is the August 2015 selloff closing low
S&P 500: Closed at 2023.04
Resistance:
The 50 day EMA at 2037
2040 is the March 2015 closing low
2046 is the July 2015 closing low
2062 is the January 2015 lower high
The 200 day SMA at 2064
2076 is the all-time high from November
2079 is the intraday all-time high from November 2014
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:
2011 is the September prior all-time high
1994 is the late August recovery peak
1991 is the July 2014 high
1989 is the last August closing high
1972 is the December 2014 low
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.
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
Dow: Closed at 17,245.24
Resistance:
The 50 day EMA at 17,277
17,351 is the September 2014 all-time high.
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 200 day SMA at 17,590
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
The March low at 17,786
18,110 - 18,120 from December 2014, July 2015 peaks
18,289 from February 2015
18,351 from May 2015 and the all-time high
Support:
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery peak
16,736 is a prior all-time high from May 2014
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,665 is the late August 2015 closing high. Key, key level.
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
ECONOMIC CALENDAR
November 13 - Friday
PPI, October (8:30): -0.4% actual versus 0.1% expected, -0.5% prior (no revisions)
Core PPI, October (8:30): -0.3% actual versus 0.1% expected, -0.3% prior (no revisions)
Retail Sales, October (8:30): 0.1% actual versus 0.3% expected, 0.0% prior (revised from 0.1%)
Retail Sales ex-auto, October (8:30): 0.2% actual versus 0.4% expected, -0.4% prior (revised from -0.3%)
Michigan Sentiment, November (10:00): 93.1 actual versus 92.0 expected, 90.0 prior (no revisions)
Business Inventories, September (10:00): 0.3% actual versus 0.0% expected, 0.1% prior (revised from 0.0%)
Natural Gas Inventor, 11/07 (10:30): 49 bcf actual versus 52 bcf prior
November 16 - Monday
Empire Manufacturing, November (8:30): -6.0 expected, -11.4 prior
November 17 - Tuesday
CPI, October (8:30): 0.2% expected, -0.2% prior
Core CPI, October (8:30): 0.2% expected, 0.2% prior
Industrial Productio, October (9:15): 0.1% expected, -0.2% prior
Capacity Utilization, October (9:15): 77.5% expected, 77.5% prior
NAHB Housing Market , November (10:00): 64.5 expected, 64 prior
Net Long-Term TIC Fl, September (16:00): $20.4B prior
November 18 - Wednesday
MBA Mortgage Index, 11/14 (7:00): -1.3% prior
Housing Starts, October (8:30): 1173K expected, 1206K prior
Building Permits, October (8:30): 1137K expected, 1103K prior
Crude Inventories, 11/14 (10:30): 4.22M prior
FOMC Minutes, 10/28 (14:00)
November 19 - Thursday
Initial Claims, 11/14 (8:30): 272K expected, 276K prior
Continuing Claims, 11/07 (8:30): 2164K expected, 2174K prior
Philadelphia Fed, November (8:30): -1.0 expected, -4.5 prior
Philadelphia Fed, November (10:00): -4.5 prior
Leading Indicators, October (10:00): 0.6% expected, -0.2% prior
Natural Gas Inventories, 11/14 (10:30): 49 bcf prior
End part 1 of 3
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11/14/2015 Investment House Report
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Stop alerts: NFLX
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Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- Stocks continue selling Friday, futures point to more selling after Paris attacks.
- Large cap selling still fairly ordinary, but small and midcaps are leaving the building.
- Leaders thinning as groups that were trying to set up falter.
- Retail sales weak, retail stocks tank.
- US likely in or falling into recession.
- Paris attacks have futures lower, stocks likely sell more.
The selling did not slow Friday as the indices started the session negative and closed the session even lower. What started the week as a rather orderly continuation of the pullback to test the last leg of the October to November rally ended causing technical damage at least to the near term prospects of a short test and new advance.
If you look at the charts of the large cap indices, while of course suffering a round of significant losses Thursday and Friday, the pullbacks are rather ordinary, at least for now.
SP500, DJ30, NASDAQ and SOX are all at or just over the 38% Fibonacci retracement after 8 days of pulling back from the highs hit early November. That does not mean they will necessarily hold at that nearest significant Fibonacci retracement level, but it does help quantify just where the indices are at this stage of the pullback.
As for RUTX and SP400, the great hopes to provide support and new leadership blood to the move, they broke through the 38% Fibonacci retracement and are at the 50% retracement or farther. Indeed, SP400 broke below its 3 week lateral consolidation in October, a clear sign of dumping of this group.
SP500 -22.93, -1.12%
NASDAQ -77.20, -1.54%
DJ30 -202.83, -1.16%
SP400 -0.88%
RUTX -0.72%
SOX -0.93%
VOLUME: NYSE +9%, NASDAQ +10%. Higher volume on the Friday selling indicates sellers ramping up their selling, but the overall levels are not blowout, coming average on NYSE and just above average on NASDAQ.
Advance/Decline: NYSE -1.6:1, NASDAQ -1.7:1. Quite modest negative breadth on losses of 1+% on the large cap indices. The mid and small caps suffered less and thus the milder breadth, but the index losses were still significant.
In sum, the stock indices failed to hold the nearest support for a new run at the prior 2015 highs. The selling Thursday and Friday was sharper, but in terms of the large cap indices, as noted above is still in the upper reaches of the rally. They can hold near this level and continue. Of course, they have to hold. With RUTX and SP400 breaking lower through their consolidation ranges, however, the market is losing what could have been a solid support group for the large cap indices.
That leaves two scenarios. First, the large cap indices go it alone without the small and midcaps as in October. Second, the collapse of the small and midcaps is the precursor to a deeper selloff by the large cap indices.
What about the year end run? Well we noted that the usual fall pattern was a month ahead this year given the bottom was completed in September instead of October. So it could be argued that the year end run has come and possibly concluded with a move up near the 2015 highs.
For now the pullback is on and with some intensity. For now the assumption is downside though after 7 of 8 days lower there is an oversold condition that might yield a relief bounce. You don't want to forget there are still several stocks in very good position to move higher even through the selling this past week. As soon as you assume a move is over it resurrects, particularly if it has stocks that are in position to help resurrect and there is an oversold condition. Keep that in mind, but for now the bias is downside until it shows otherwise.
NEWS/ECONOMY
Friday another round of at best mediocre data was released, ironically as the FOMC prepared for its first rate hike in 10 years.
October Retail Sales again missed with the year/year reading at its second weakest level since the financial crisis.
Retail Sales: 0.1% versus 0.3% expected versus 0.0% September (from 0.1%)
Control group: 0.2% versus 0.4% expected versus 0.1% prior (revised from -0.1%).
What was down? Everything. Even autos. That is why Sales less autos was 0.2% versus the 0.1% overall move.
Autos, electronics, food and beverages, gasoline, general merchandise. All lower.
The experts keep saying the consumer is strong and will get stronger with the 'gasoline bonus,' that they have not spent thus far. As one commentator put it, if you don't have a job and don't have to drive to work, lower gasoline prices don't mean that much.
Retail sales disappointed overall. They also disappointed specifically, e.g. M with its earnings miss, JWN with its top and bottom line miss, PRTY with its miss, LOCO missing the top line, FOSL also missing the top line. It was not a banner week for retail stocks as they reported a less than banner Q3.
The consumer is not getting stronger. The wage gains from Q3? Increased minimum wages, an artificial rise in wages that is unsustainable because other areas are cut in order to raise them (e.g. WMT cutting management jobs), and more basic, the economics don't support it. Plus, when all of the machines take over the tasks of menial jobs there will be even less income as those jobs disappear. Yes the consumer is buzzing.
Recession.
Here is our take. Given the data showing up across the board with sustained weakness, I am making the call that the US is in recession already or just starting one. This as the Fed, the master of bad timing, is going to raise rates in December.
Actually, that is perfect timing. The Fed needs to hike and could even pop off a 50BP move. Then it doesn't have to do anything in 2016 as it has hiked rates and the economy hits recession. In an election year. Or perhaps it sees the deterioration in the numbers outside its jobs report and balks at hiking rates, fearing causing a recession in an election year and handing the election to those who actually have the temerity to seek a more serious audit of what the Fed does with our money. Poor Fed. Tough decisions brought on by its inability to act when it should have acted.
THE MARKET
Still selling into Friday, moving to the 38% Fibonacci retracement levels on the large cap indices. The midcaps broke to a lower low below its trading range while the small caps look ready to break their October consolidation range. The large caps are still in a normal test while the small and midcaps are breaking down. Typically in this situation over the past few years, when this happens the downside ends up winning the move, forcing the rest of the market to form up again.
CHARTS
SP500: After attempting to hold and bounce at the 200 day SMA, SP500 broke lower Thursday and again Friday, taking out the 200 day SMA and the 50 day EMA along the way. Friday SP500 closed at the 38% Fibonacci retracement, but no doji, just a flop to that level. Still in position where it could hold and hold a lot of its momentum, but the Friday price action does not suggest a bounce. A bit oversold the past 8 sessions but nothing major.
NASDAQ: Gapped and sold Friday, moving through the 200 day SMA and the 50 day EMA in one move. NASDAQ is bent on filling the mid-October upside gap. Rising above average volume as it does. At the September high and gap point as well, a logical point to hold, but nothing yet suggesting NASDAQ is ready to rebound. Indeed, many of the big name NASDAQ leaders just started to sell. Might be more downside to come.
RUTX: The small caps sold back to the three week October range, fell into it Thursday, and sold to the bottom of it Friday. The upside showed very little staying power and we will see if RUTX can start over once more.
SP400: While we see if RUTX can hold, consider the midcap SP400. It sold hard Thursday, gapping into the three week consolidation range. Friday SP400 sold again, undercutting the consolidation range that set up the move higher. The breach of the consolidation lows is a sign of weakness.
SOX: Down but rather modestly, undercutting the 50 day EMA but holding the 38% Fibonacci retracement similar to the large cap indices. Has set up an ABCD consolidation to that near support in what is not a bad pattern. Not saying it is going to lead a new move higher from here, but by itself it is not in bad shape.
DJ30: Similar to SP500 the industrials fell hard Thursday and Friday, selling Friday on rising volume. Just cracking the 50 day EMA and still above the 38% Fibonacci retracement, DJ30 still has decent momentum though on Friday it was showing no signs of slowing the decline.
LEADERSHIP
Energy failed its attempt to assume some leadership, running out of . . energy? Industrials don't look so industrious, may be giving up their shot. Software softened. Financials trying to hold the line but struggling. Big names not looking so big. Leadership has some work to do, or is that, as Senator Schumer said, the Fed Chairman has work to do? Leadership is in question. There are some solid patterns on the report, but the great patterns are farther apart.
Big Names: AMZN broke sharply lower on volume. GOOG started to roll over from its low volume new high. SBUX fell to the 50 day EMA. AAPL broke sharply lower below the 50 day SMA. FB is making its first serious test, filling the early November upside gap. Former leaders look as if they will remain former leaders, e.g. PCLN, CMG.
Tech/Software: Mixed results. MSFT is holding three week lateral move. BLKB gapped lower, RHT plunged to the 50 day EMA. CSCO gapped sharply lower, off 5.8%, on its earnings. VDSI still looks solid but it is something of a minority.
China: And yes, still mixed. SOHU is in a great 20 day EMA test of its rally. SINA dove lower. CTRP is slowing its move as is BIDU, but both remain strong. YNDX has set up a nice ABCD test. Still promise here as the world looks to China for more stimulus, not from a strong economy, but from the government.
Financial: Struggling. JPM not bad at the 20 day EMA. GS continued lower to the 20 day EMA. BAC gapped to the 20 day EMA, giving up all of the gap move from the Jobs Report Friday. TCBI (regional) did the same. Not so cock sure of a rate hike from the lok of the patterns.
Energy: Oil rolled over the past two weeks and oil stocks with it. The patterns say they are not dead, but they have work ahead of them. CVX landed at the 50 day EMA to end the week. OIS is still very nice with a tight doji at the 50 day SMA.
Industrial: UTX is trying to hang on at the 50 day EMA. FLR is trying the same with an ABCD. MMM trying to hold near the 200 day SMA. HON broke the 200 day SMA and is at the 50 day EMA. Problematic at this point.
Retail: Tough week with department stores falling apart: DDS, M, JWN. KIRK imploded. WSM is diving to lower lows. FL, JCP, FOSL, CHS. Death row.
Chips: Actually holding up better than most. NVDA in a nice flag test. SLAB recovered after a deep test Friday. QRVO looks super in its test. AMAT beat on earnings and gapped to a higher high over last week's recovery high. There is promise here.
MARKET STATISTICS
NASDAQ
Stats: -77.2 points (-1.54%) to close at 4927.88
Volume: 1.941B (+9.87%)
Up Volume: 500.26M (+73.68M)
Down Volume: 1.49B (+120M)
A/D and Hi/Lo: Decliners led 1.69 to 1
Previous Session: Decliners led 3.43 to 1
New Highs: 27 (-8)
New Lows: 200 (+47)
S&P
Stats: -22.93 points (-1.12%) to close at 2023.04
NYSE Volume: 925M (+8.82%)
A/D and Hi/Lo: Decliners led 1.6 to 1
Previous Session: Decliners led 4.31 to 1
New Highs: 10 (-6)
New Lows: 217 (+36)
DJ30
Stats: -202.83 points (-1.16%) to close at 17245.24
SENTIMENT INDICATORS
VIX: 20.08; +1.71
VXN: 21.24; +2.32
VXO: 20.57; +2.15
Put/Call Ratio (CBOE): 1.16; -0.06
Recent history: 7 of 8 above 1.0. Still quite interesting how this correlated with the indices topping near term.
Bulls and Bears: Bulls paused for a week, backtracking a bit but still well over 35%. Bears resumed rising after a 1 week hiatus. Both bulls and bears are retracing after crossing over in September.
Bulls: 45.3 versus 46.9
Bears: 28.9 versus 28.1
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: 45.3%
46.9% versus 43.7% versus 37.5% versus 36.5% versus 30.2% versus 24.7% versus 26.0% versus 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
Background: Bulls hit their lowest level since the 2008 and 2009 market plummet.
Bears: 28.9%
28.1% versus 29.2% versus 31.3% versus 31.2% versus 34.4% versus 35.1% versus 30.2% versus 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. Done.
OTHER MARKETS
Bonds (10 year): 2.28% versus 2.32%. Rebounding all week from the two week plunge to the September low. Trying to bounce off that support.
Historical: 2.32% versus 2.32% versus 2.35% versus 2.33% versus 2.24% versus 2.23% versus 2.22% versus 2.19% versus 2.15% versus 2.17% versus 2.09% versus 2.03% versus 2.06% versus 2.09% versus 2.03% versus 2.07% versus 2.03% versus 2.03% versus 1.98% versus 2.04% versus 2.10%
Euro/$: 1.0751 versus 1.0821. Not much traction trying to move higher form a weeklong consolidation.
Historical: 1.0821 versus 1.0740 versus 1.0725 versus 1.0754 versus 1.0742 versus 1.0878 versus 1.0860 versus 1.0963 versus 1.1012 versus 1.1015 versus 1.10979 versus 1.1030 versus 1.1047 versus 1.1049 versus 1.1017 versus 1.1108 versus 1.1339 versus 1.1347 versus 1.1320 versus 1.1351
DXY0: Still in a nice weeklong test of the 10 day EMA after breaking to a higher high over the July and August twin peaks.
USD/JPY: 122.67 versus 122.56. Very excellent flag test of the 10 day EMA, showing a tight doji Friday. Nice break higher, nice test, in great position to continue upside.
Historical: 122.56 versus 122.85 versus 122.90 versus 123.16 versus 123.16 versus 121.76 versus 121.58 versus 120.98 versus 120.77 versus 120.62 versus 121.10 versus 120.34 versus 120.36 versus 121.10 versus 121.46 versus 120.71 versus 119.925 versus 119.897 versus 119.52 versus 118.87 versus 119.66
Oil: 40.74, -1.01. Still diving lower after undercutting the October low. Heading back toward the August low near 37.80. 30M bbls sitting in tankers outside of Galveston, Texas. You can drive along the Bolivar Peninsula, east of Galveston and slightly up the coast, and see the lines of tankers parked, nowhere to offload. This is the same situation in ports all over the world. How many barrels? 100M+? Easily. Cargos with no home right now.
Gold: 1081.50, +0.50. Sold to the July low on the week, a point where we will see if gold has any guts left in it at all.
MONDAY
Over the past two weeks we started closing positions as the market rallied nicely, hitting targets, and then started to backslide. That backslide was a normal test at first and for some stocks it still is. Many others, however, are doing more than testing near support,. More leaders are giving up their moves, notably some of the 'name' stocks that clearly led the move higher. With their struggles, the indices started breaking lower with RUTX and SP400 breaking back down into or below the October lateral trading range.
Given the downside bias and the absolute lack of any bounce, short covering or otherwise, we closed many of our positions over the past two weeks, taking upside gain on the moves to the highs, and afterward as stocks faded through near support. Friday we picked up some downside positions on GOOG and NXPI as well as closing our last AMZN position for a big gain. Now we watch for an oversold bounce as a possibility to close some additional upside if that bounce stalls and then pick up some more downside positions as well if the move does stall.
Not the best week for the stock market in recent times, but not terrible either. The large cap indices are at the 38% Fibonacci retracement as noted, still in very normal and decent tests of solid breaks higher. Weaker of course but still holding good patterns. That keeps open the door for a resumption of the year end move.
The horrendous terror attacks in Paris after the Friday close may have a further negative impact on stocks this coming week. What other events occur this weekend will bear more on that possibility. If the French have the attackers in custody, dead or otherwise, as they claim, that is a start to getting past this in terms of market action. Don't mean to appear callous, just have to deal with the market we get.
The bias remains negative at the Friday close, and the terror attacks do not help. We will look at some upside plays holding up well, but also downside even if the market is oversold for now. NXPI and GOOG were hardly oversold but are showing rollover patterns we want to ride for gains.
Pray for those in Paris who are not going home and steel yourself for what will need to be done ahead as a result.
Have a great weekend and let's truly appreciate what we have while we still have it.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4927.88
Resistance:
The 50 day EMA at 4946
The June low at 4974
The 200 day SMA at 4956
4999 is the October upper gap point
5008.57 is the early March 2015 post-bear market high
5042 is the March 2015 high
5100 from the April peak and early May peak
5164 is the June 2015 peak
5232 is the July high
Support:
4920 is the lower gap point from mid-October
4912 the mid-April China dip
4910 is the July 2015 closing low
4837 is the late August 2015 rebound high
4828 is the late August peak
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
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 2014 low is giving way
4506 is the August 2015 selloff closing low
S&P 500: Closed at 2023.04
Resistance:
The 50 day EMA at 2037
2040 is the March 2015 closing low
2046 is the July 2015 closing low
2062 is the January 2015 lower high
The 200 day SMA at 2064
2076 is the all-time high from November
2079 is the intraday all-time high from November 2014
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:
2011 is the September prior all-time high
1994 is the late August recovery peak
1991 is the July 2014 high
1989 is the last August closing high
1972 is the December 2014 low
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.
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
Dow: Closed at 17,245.24
Resistance:
The 50 day EMA at 17,277
17,351 is the September 2014 all-time high.
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 200 day SMA at 17,590
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
The March low at 17,786
18,110 - 18,120 from December 2014, July 2015 peaks
18,289 from February 2015
18,351 from May 2015 and the all-time high
Support:
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery peak
16,736 is a prior all-time high from May 2014
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,665 is the late August 2015 closing high. Key, key level.
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
ECONOMIC CALENDAR
November 13 - Friday
PPI, October (8:30): -0.4% actual versus 0.1% expected, -0.5% prior (no revisions)
Core PPI, October (8:30): -0.3% actual versus 0.1% expected, -0.3% prior (no revisions)
Retail Sales, October (8:30): 0.1% actual versus 0.3% expected, 0.0% prior (revised from 0.1%)
Retail Sales ex-auto, October (8:30): 0.2% actual versus 0.4% expected, -0.4% prior (revised from -0.3%)
Michigan Sentiment, November (10:00): 93.1 actual versus 92.0 expected, 90.0 prior (no revisions)
Business Inventories, September (10:00): 0.3% actual versus 0.0% expected, 0.1% prior (revised from 0.0%)
Natural Gas Inventor, 11/07 (10:30): 49 bcf actual versus 52 bcf prior
November 16 - Monday
Empire Manufacturing, November (8:30): -6.0 expected, -11.4 prior
November 17 - Tuesday
CPI, October (8:30): 0.2% expected, -0.2% prior
Core CPI, October (8:30): 0.2% expected, 0.2% prior
Industrial Productio, October (9:15): 0.1% expected, -0.2% prior
Capacity Utilization, October (9:15): 77.5% expected, 77.5% prior
NAHB Housing Market , November (10:00): 64.5 expected, 64 prior
Net Long-Term TIC Fl, September (16:00): $20.4B prior
November 18 - Wednesday
MBA Mortgage Index, 11/14 (7:00): -1.3% prior
Housing Starts, October (8:30): 1173K expected, 1206K prior
Building Permits, October (8:30): 1137K expected, 1103K prior
Crude Inventories, 11/14 (10:30): 4.22M prior
FOMC Minutes, 10/28 (14:00)
November 19 - Thursday
Initial Claims, 11/14 (8:30): 272K expected, 276K prior
Continuing Claims, 11/07 (8:30): 2164K expected, 2174K prior
Philadelphia Fed, November (8:30): -1.0 expected, -4.5 prior
Philadelphia Fed, November (10:00): -4.5 prior
Leading Indicators, October (10:00): 0.6% expected, -0.2% prior
Natural Gas Inventories, 11/14 (10:30): 49 bcf prior
End part 1 of 3
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