Wednesday, November 11, 2015

The Daily, Part 1 of 3, 11-10-15

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11/10/2015 Investment House Report
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Targets hit: None issued
Entry alerts: None issued
Trailing stops: SINA; SOHU
Stop alerts: None issued

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- Stocks sleepwalk through another session, weighed down by AAPL.
- Small caps, midcaps offset NASDAQ weakness, a bit, trying to lead back up.
- Questions about AAPL supplier orders hound NASDAQ, SOX.
- Leaders, indices about as low as you want to see them fall and still have a good shot at the prior highs.

Another day of not terrible action, but definitely not great action. Futures started lower and remained lower into the open. Not horribly beaten down though NASDAQ was the laggard along with chips.

Yes there is a relation there. Credit Suisse reported that AAPL component orders to its suppliers were down 10% due to weak iPhone 6s demand. AAPL dropped 3% on the session, gapping to the 50 day EMA on the open and planting itself there through the close. Stocks that were recovering as AAPL recovered were thumped as AAPL was thumped: AVGO (and by extension BRCM), SWKS, CRUS.

AAPL's selling, given its heavy weighting, put a wet blanket on NASDAQ and really hit SOX.

Outside of AAPL and its supplicants, the action was not bad. Not great, but at least there was recovery. RUTX posted a quarter percent gain, the midcaps a half percent; if tech/chip growth areas cannot lead, good to see the small and midcaps say to heck with it and lead themselves.

SP500 3.14, 0.15%
NASDAQ -12.06, -0.24%
DJ30 27.73, 0.16%
SP400 0.48%
RUTX 0.28%
SOX -1.79%

VOLUME: NYSE -16%, NASDAQ +2%. NYSE trade much lower and still below average as those indices test, still, near support. NASDAQ trade moved up but still below average thanks to AAPL and its band of merry men raising the volume a bit when everything else was content to do nothing.

A/D: NYSE +1.3:1, NASDAQ -1.04:1. The small caps and midcaps were up and breadth wasn't bad. Wasn't great but plus arrows on a cruddy session is not bad.


Another rather slow day of data, but there was data. And earnings. And debates.

Import Prices, October: -0.5% month/month and -10.5% year/year (from -9.5%)

Export Price, October: -0.2% month/month, -11.3% year/year (from -10.7%)

Lower prices flowing to and from all countries in the world.

Wholesale Inventories, September: 0.5% month/month, 4.7% year/year

Wholesale Sales: 0.5% month/month, 3.9% year/year

Inventory/Sales: 1.31:1. That is the high on this cycle and the highest since the midpoint of the last recession. Not enough sales versus the inventory build. Either a lot of sales need to show up or there will be a new round of large write-downs.

Sales? One would hope so. GS thinks there could be too much growth that overheats the economy in late 2016 and in 2017. Others cite the data heading the other direction that would work toward recession and thus make sales, already hard to come by (just look at the still burgeoning revenues misses reported) even scarcer.

Lower prices all around the world, inventories rising faster.


Something incredible is happening on the Fox Business debates tonight. The candidates are actually getting questions on substantive issues asked in a way to elicit what the candidate's specific actions would be. Wow.

You know what the cool thing about that is? You get to see which candidates have . . . substance. Their answers tell you if they get it or not. They are not attacking one another. No, they are putting out their policies and then other candidates compare and contrast their policies. They either get the issue or not.

Minimum wage: Trump took the first question and it was on this topic. I don't mind Trump and indeed I want to hear what they all have to say. He just didn't deal with the question. He did not discuss how hiking the wage impacts job numbers, the mechanization of lower paying jobs as a result, etc. Instead he stated his pre-made, three-part response: 1) we are getting beat by other countries; 2) we need to be great again, and 3) we can't be great if _______________ (fill in the issue he is against).

Rubio: He discussed the issue regarding the impact on jobs, the mechanization of jobs as a result, how the ACA impacts those jobs, etc. A telling exchange.

Import/Export bank: Mr. Santorum argued he was for the EX/IM bank because it helped the average citizen with jobs.

His example: GE was 'forced' to lose jobs in the US and instead create them overseas just to compete. To me that shows he totally does not understand job creation AND the very policies of the current Administration he says he is against. To wit, GE is not a jobs creator. Its days of large scale jobs creation is over, even with the massive aid GE received in the stimulus and in the closed markets it became the monopoly in thanks to the Administration rules and regulations shutting out competition. Then, after receiving ALL of that aid from the taxpayers GE whines it has to have the Ex/IM bank, funded by those same taxpayers, to give GE virtually no cost loans to get subsidized overseas as well. Lofty words from Santorum, but they show he really does not understand WHO creates jobs and HOW they are created.

Just some examples, but with decent questions fostering good give and take, you can see how much substance there is.



So, after another session of overall weakness, just where are the indices in their look at the prior highs and the pullback after approaching them?

NASDAQ: If you look at the NASDAQ chart, easy to see this is a pretty critical juncture. NASDAQ bumped the twin penultimate highs last week and is down 4 of the next 5 sessions. Tuesday NASDAQ gapped to some minor support, rebounded to cut the losses even with AAPL laying all over the action. The 5050-5025 range is just about as far down as you want to see NASDAQ fall and still maintain the kind of momentum needed to make a serious run and move through the June and late August peaks on the way toward the July peak near 5225. Thus the test Tuesday is about all you want to see downside if still looking at a run at the prior highs.

RUTX: Tested below the 10 day EMA to a high from mid-October, recovered to a modest gain. Hung on and that was good to see after RUTX tossed the Friday gain aside, selling that entire move. Has held the 10 day EMA, managed to avoid taking the Monday selling lower, and is in position where it needs to find some support and keep the breakout move moving higher.

SOX: Gapped lower, closing at the low from late October, part of the three week move after rallying through the 200 day SMA. Was a pretty decent pennant setting up, now back at the bottom of the range and more of a lateral trading range similar to what SP400, RUTX showed in October as everyone else rallied.

SP500: Tapped at the 200 day SMA on the low for the second session, rebounded off that tap. Modest gain, lower volume, not convincing SP500 is ready to move higher from here. Needs to hold here to make a run at those prior highs, but may not quite be ready to do it.

SP400: Not bad action, bouncing up off the 20 day EMA after a four session fade of the breakout move. Excellent position to move higher, and kind of like a frog in the ecosystem: if SP400 lives and flourishes, the market is likely okay. You can say that for the RUTX and SOX as well, though SOX does go to hibernation sometimes.

DJ30: Decent doji closing right at the 10 day EMA. Rather contained pullback to test and not bad action at all.


Big Names: AAPL gapped lower on the CS report. GOOG moved up off the 10 day EMA test; not bad, not that strong. SBUX started bouncing off its test; very interesting and could be very important for the move. AMZN bounced off some selling. PCLN bounced, but not much comparatively.

Tech: Weaker overall. AAPL of course. MSFT sold to the 10 day EMA. INTC showed a doji with tail, perhaps now tired of a 2.5 week pullback. CSCO is down for two weeks but a slow fade and now at the 200 day SMA.

China: Remains hot and cold, great or not. SINA sold back. VIPS sold back. SOHU sold a bit but looks good. BIDU bounced off a 200 day SMA test after breaking through it. CTRP, NTES remain in uptrends. Again, very hot and cold.

Financial: Looking as if they are ready to recover after the test of the big moves. JPM may be ready for a buy again, GS perhaps as well.

Energy: Very mixed, APC dove lower. ESV looks good, OIS looks good to bounce, WLL ditto. CVX, XOM (big boys) have sold back, bounced some, but don't look convincing.

Industrial: Some nice action. CAT looks as if it could bounce from a weeklong test. FLR showing a nice doji with tail at the 10 day EMA. UTX gapped to a doji at the 20 day EMA and the lows in the range form two weeks back; time to bounce if it can.

Chips: AAPL-related struggled: SWKS, AVGO, BRCM, CRUS. Others were down in sympathy, e.g. SMTC, CY, but not damaged goods. Not: SLAB, QRVO looks really nice on this test of that Friday scream higher. NXPI looks like horse apples; hmmm, AAPL as well?

Software: Interesting. EBIX tested the strong Monday move. ORCL has a great looking 10 day EMA test. RHT in a nice test of its break past prior highs.

Summary: Leaders are still holding up but there is some discord in the ranks on this test. Most holding up, some selling a bit more aggressively than is comfortable, others are imploding as that mini-sub in 'The Abyss' where it lost power slipped over the deep ledge into the 'abyss' and pancaked the military man inside.

Lt. Coffey meets his demise after he lost a battle of mini-subs. 'The Abyss'

Overall there are good enough patterns to lead higher once more. It is just a matter of the patterns and the indices getting the bids and moving back up.


Stats: -12.06 points (-0.24%) to close at 5083.24
Volume: 1.841B (+2.07%)

Up Volume: 767.83M (+281.39M)
Down Volume: 1.12B (-210M)

A/D and Hi/Lo: Decliners led 1.04 to 1
Previous Session: Decliners led 2.3 to 1

New Highs: 86 (-26)
New Lows: 104 (+32)

Stats: +3.14 points (+0.15%) to close at 2081.72
NYSE Volume: 820M (-15.9%)

A/D and Hi/Lo: Advancers led 1.31 to 1
Previous Session: Decliners led 3.8 to 1

New Highs: 26 (-1)
New Lows: 87 (+4)

Stats: +27.73 points (+0.16%) to close at 17758.21


VIX: 15.29; -1.23
VXN: 17.32; -0.71
VXO: 15.2; -0.67

Put/Call Ratio (CBOE): 1; -0.1

Recent history: 5 straight above 1.0 after 15+ consecutive below 1.0. Getting interesting in the number of days of speculation to the downside. This is an inverse indicator; the more that are negative the more you start looking to positive.

Bulls and Bears: Bulls continue rising and bears continue to decline, but both after their surge below and above 35% and crossing over.

Bulls: 46.9 versus 43.7

Bears: 28.1 versus 29.2

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: 46.9%
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: 28.1%
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.


Bonds (10 year): 2.32% versus 2.35%. Bouncing back modestly after the two week gutting took TLT down to the mid-September lows.

Historical: 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% versus 2.11% versus 2.07% versus 2.04% versus 1.98% versus 2.04% versus 2.05% versus 2.05% versus 2.09% versus 2.17%

Euro/$: 1.0725 versus 1.0754. Third session at the same level, reversing off a selloff. Looks as if the euro wants to bounce a bit higher.

Historical: 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 versus 1.13793 versus 1.1387 versus 1.1387 versus 1.1352 versus 1.1358 versus 1.1289 versus 1.1250 versus 1.1269 versus 1.12106 versus 1.1190 versus 1.1167 versus 1.1254

DXY0: After pausing Tuesday, Wednesday the dollar started higher, but it struggled to hold the move.

USD/JPY: 122.90 versus 123.16. Fading a strong surge through Friday.

Historical: 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: 43.63, -0.24. Another day downside, making it 5 straight. Back at the September range lows and likely bounces back up in the two month range.

Gold: 1088.70, +0.60. Second straight doji at the July support. Massive selloff, a rebound from here is likely.


As of the Tuesday close, the indices have faded off the last run higher, setting up a run at the prior highs. At least that is what they are doing if they don't drop too much farther. The move lower thus far is not bad but getting a bit uncomfortable in some quarters. There is usually some pain and then the move is made -- or not. It is time for the leaders to start moving back up and taking the indices with them.

It is a good indication that RUTX and SP400 looked to lead on Tuesday even as NASDAQ and SOX had to deal with AAPL. As I have said before about RUTX, SP400 and some laggard groups trying to become non-laggards, the key is in their hands, the ball in their court, (insert own trite phrase here). If the bids return, the market makes the move. The test is in progress, should be getting near its end, and the small and midcaps are trying to start back up. Looks promising, but has to show the move.

Have a great evening!


NASDAQ: Closed at 5083.24

5100 from the April peak and early May peak
5164 is the June 2015 peak
5232 is the July high

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 4950
The 50 day EMA at 4939
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 2081.71

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

2079 is the intraday all-time high from November
2076 is the all-time high from November
The 200 day SMA at 2063
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 2036
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 17,758.21

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

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 17,586
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 17,253
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


November 10 - Tuesday
Export Prices ex-ag., October (8:30): -0.3% actual versus -0.5% prior (revised from -0.6%)
Import Prices ex-oil, October (8:30): -0.3% actual versus -0.2% prior (revised from -0.3%)
Wholesale Inventories, September (10:00): 0.5% actual versus 0.1% expected, 0.3% prior (revised from 0.1%)

November 12 - Thursday
MBA Mortgage Index, 11/07 (7:00): -0.8% prior
Initial Claims, 11/07 (8:30): 269K expected,
Continuing Claims, 10/31 (8:30): 2155K expected,
JOLTS - Job Openings, September (10:00): 5.4M prior
Crude Inventories, 11/07 (11:00): 2.85M prior
Treasury Budget, October (14:00): -$130.0B expected, -$121.7B prior

November 13 - Friday
PPI, October (8:30): 0.1% expected, -0.5% prior
Core PPI, October (8:30): 0.1% expected, -0.3% prior
Retail Sales, October (8:30): 0.3% expected, 0.1% prior
Retail Sales ex-auto, October (8:30): 0.4% expected, -0.3% prior
Michigan Sentiment, November (10:00): 92.0 expected,
Business Inventories, September (10:00): 0.0% expected, 0.0% prior
Natural Gas Inventories, 11/07 (10:30): 52 bcf prior

End part 1 of 3
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