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11/11/2015 Investment House Report
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A Veteran's Day thank you to all who have or are serving our country!
NOTE: WE APOLOGIZE BUT THERE IS NO VIDEO TONIGHT. WE UPGRADED TO WINDOWS 10 TODAY AND ONE SIDE EFFECT IS THAT WINDOWS 10 IS UNKIND TO SOUND AND MICROPHONES. WE ARE WORKING ON THE FIX AND WILL HAVE ONE TOMORROW. AGAIN, WE APOLOGIZE FOR THIS INCONVENIENCE.
Targets hit: MNST
Entry alerts: None issued
Trailing stops: CVX
Stop alerts: SMTC; UTX; WUBA
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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.
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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.
- Futures start higher, stocks finish lower, though modestly so.
- NASDAQ, DJ30 action not that reassuring, but SP400, RUTX, SP500 look fine.
- Energy drops leadership wannabe status but overall leaders are still in position. Still, however, have to resume the move.
- Just about time for the rally to show itself again.
Stock futures started higher as it looked possible the indices were going to bounce after testing lower again Tuesday then reversing to close near the session highs. Didn't happen. The early move lost traction quickly and stocks sold to midmorning. They rebounded, looked as if they might have put in the lows and were bouncing to gains, but midday they ran out of bids again and sold, this time to the close. In the end all that was left upside were some semiconductors but just fractionally so.
SP500 -6.72, -0.32%
NASDAQ -16.22, -0.32%
DJ30 -55.99, -0.32%
VOLUME: NYSE -1.3%, NASDAQ -11%. No rising volume on the back and forth action so no dumping of stocks. No flush out of the sellers either, but again, perhaps just a weak volume fade and bottom.
A/D: NYSE -1.3:1, NASDAQ -1.8:1. Pretty status quo, in line with the session.
As you can see from the percentage losses, it was not a major selloff and can be put in the category of more testing the last move. It is, however, getting a bit more uncomfortable as I indicated is often the case in these tests. The index patterns, while not showing rollovers, didn't show much inherent strength.
That doesn't mean they collapse from here; they could easily put on the brakes and rebound. It does suggest that they are struggling a bit to find enough bids to hold a move, the exact case Wednesday.
Further while the action was not terrible, it does not look that good on NASDAQ, SP500, and DJ30 with a bit of a gap higher then reversal to negative, struggling near the 10 day EMA.
It was enough that we closed some positions that were problematic and that we didn't want see turn ugly, e.g. some CVX, WUBA, UTX.
Again this does not mean the market sells off from here, but that the action is not clearly showing a lot of excellent setups. Stocks are fading a bit below near support. The pullback is now a week and still the indices are not all showing solid action.
This could all resolve upside in a session or even less as there is not much damage done. The action is just not as crisp as you want with some of the groups attempting to show some leadership, e.g. energy, suddenly again in the mire as oil closes at a lower level than the October low.
There are still plenty of stocks in position to move right back up and lead the indices back up to those prior highs. If they make that move we can move into those stocks taking the lead. That doesn't mean we have to sit in other positions that are raising concerns about their action. Hey, it may be that today was the day that enough sold out to help set a new bounce. Volume was light overall so there was no flush out to the downside, but perhaps after a week of drifting lower they have let out enough air from the move higher.
As you can take from the above, it could be this, it could be that, etc. While there is no overt threat to the downside, we lightened up to be ready if the pullback just continues on and on, and to be ready to move into those stocks that are ready to lead if in fact the market does move back up to try those old highs. Good move to the highs, testing a bit more than we want, so preserving what we have. If there is a new break, we have positions and we can play it with new ones.
There was not a ton of news but the news out of China is said to have given hope for more stimulus. Obviously the US is not coming with more stimulus without a big stock market crash; the Fed has set its steps in stone. It is the hope of more stimulus in China, Europe, India, Brazil, and on and on that raises stock investor hopes. More money sloshing around the world, the more to be direct deposited into financial asset prices.
China data was bad enough to promote ideas of new stimulus and thus futures are higher.
Industrial production: 5.6% vs 5.8% expected.
Retail Sales: 11.0% vs 10.9% expected
That was enough to advance futures after a week of pullbacks testing the last move near the large cap index highs. It just has not held.
Veteran's Day: Bond market closed. Thank you to all veterans for your service!
M&A: BUD buying SABMiller
Buybacks: SWKS buying $400M shares
Earnings: M misses on sales and Same Store Sales fall 3.9% versus -0.4% expected. That threw a wet blanket on the rest of the retailers, especially the department stores.
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As noted above, not crisp, solid action suggesting immediate upside, but a modest attempt higher that was undercut. Perhaps just a head fake before a new move upside; the pullback is certainly nothing that has undermined the upside move. After running close to the old highs, however, the sluggish action in the indices and in some of the groups that looked to contribute to leadership and the inability to sustain bids intraday warrants a bit of caution.
NASDAQ: With stocks such as AMZN and GOOG rallying higher yet again you would think NASDAQ is just fine, and there is nothing all that nefarious in the pattern. A rally up to the penultimate highs, a weeklong test back to the 10 day and 20 day EMA range. No big deal, and indeed through Tuesday no real questions regarding the action. Then Wednesday a gap higher followed by a reversal to negative. Nothing major, no surge in volume, but the inability to hold two moves upside and the deterioration of a few areas. Perhaps just the move that works out the rest of the near term sellers and rebounds. The action leaves enough questions given the move near the prior highs to be a bit cautious.
RUTX: Modest early gain, giving it up as well as the 10 day EMA. Holding at the late October high on the close. Gave up the 10 day EMA but still holding over the prior highs that preceded the last move. Still well off the prior highs with plenty of room to rally, and still in position to do so.
SP500: Rallied up to the 10 day EMA, putting in a slightly higher high, but failed a the 10 day EMA and faded. Low volume, still holding over the 200 day SMA, still a rather normal pullback. Financial stocks faded but are still holding up, energy is not helping that much, but again, a pretty normal pullback.
SP400: Gapped upside then reversed to a loss. Still holding the 20 day EMA, lower volume, still in great shape to move higher. Indeed, well off the prior highs, SP400 and RUTX are in much better position to make a break higher.
SOX: Doji at the bottom of the three week range, stretching the move laterally at the July consolidation. Decent enough action, at where it needs to hold in the range. As with most of the indices.
DJ30: Gapped upside through the 10 day EMA then reversed to close lower. Still above the lows of the week, a hint of rollover action similar to NASDAQ. Definitely watching it.
Big Names: As noted above, AMZN continues its remarkable run, GOOG up as well. FB added some upside. SBUX gapped upside and reversed negative but on very low trade. AAPL showing a doji at the 50 day EMA; perhaps it can rebound and help the move back up. CMG, PCLN, BWLD are fallen leaders as the number of 'names' holds steady but they are separating more and more and we are watching AAPL and SBUX to see how they test.
Tech/Software: MSFT is testing and holding the 10 day EMA. ORCL slipped a bit lower in its test. CSCO is still testing, fading to the 50 day EMA. RHT not bad, gapping upside. BLKB is working laterally in a two week range, perhaps forming a handle to what may be a cup with handle forming. Not bad. VDSI working decently, bouncing up off the 50 day EMA.
China: Still quite divergent and volatile. SINA fell to the 20 day EMA. VIPS continued to test down to the 50 day SMA. SOHU showing a nice doji at the 10 day EMA in its pullback. WUBA still struggling below the 200 day SMA. NTES still climbing and CTRP holding its big gains.
Financial: GS still working laterally after its move over the 200 day SMA, looking good as it sets up for a new move higher. JPM working laterally at 67.25. STT in a nice 10 day EMA test after rallying to the 200 day SMA then falling.
Energy: With oil falling, energy is not that solid. CVX is holding where it should and on low volume but heavy so we closed the newer positions. XOM is breaking lower. APC and APA could not agree to get together and both are falling. HAL is struggling. ESV broke sharply out of its tight consolidation. Struggling.
Industrial: CAT still looks good enough. UTX faded back to the 20 day EMA. FLR looks good at the 10 day EMA. MMM jumped upside on volume; nice move. HON trying to break higher. Mixed here but some nice action remains.
Chips: SWKS announced a stock buy back and still managed to fall further. AVGO is struggling still. QRVO held steady, however. MU remains lower but trying to firm. INTC looks as if it is not done heading lower. NVDA still solid as it tests the gap upside from Friday. CY and SMTC are not bad but we were a bit uncomfortable with the action.
Summary: Energy is struggling to add to leadership but financial, some industrial, and even some tech (software) is holding ups well.
Stats: -16.22 points (-0.32%) to close at 5067.02
Volume: 1.639B (-10.98%)
Up Volume: 516.84M (-250.99M)
Down Volume: 1.13B (+10M)
A/D and Hi/Lo: Decliners led 1.81 to 1
Previous Session: Decliners led 1.04 to 1
New Highs: 96 (+10)
New Lows: 122 (+18)
Stats: -6.72 points (-0.32%) to close at 2075
NYSE Volume: 809.2M (-1.32%)
A/D and Hi/Lo: Decliners led 1.34 to 1
Previous Session: Advancers led 1.31 to 1
New Highs: 47 (+21)
New Lows: 110 (+23)
Stats: -55.99 points (-0.32%) to close at 17702.22
VIX: 16.06; +0.77
VXN: 17.72; +0.4
VXO: 15.85; +0.65
Put/Call Ratio (CBOE): 0.88; -0.12
Recent history: Below 1.0 after 5 straight above 1.0. This follows 15+ consecutive below 1.0.
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.
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.
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): Bond market closed for Veteran's Day.
Historical: 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% versus 2.11% versus 2.07% versus 2.04% versus 1.98% versus 2.04%
Euro/$: 1.0740 versus 1.0725. Four sessions working laterally after a three week drop. Trying to set up for a new break higher.
Historical: 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 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: Dollar index fading after that big surge Friday that capped a three week upside surge. Testing the move past the July highs.
USD/JPY: 122.85 versus 122.90. As with the dollar overall, a modest 3-day pullback to test the big upside surge.
Historical: 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: 42.93, -0.70. At the lick log, testing the late October low in the 2.5 month range formed after jumping off the late August lows. This is where it holds or folds back to the late August low at 38.
Gold: 1084.90, -3.80. After the plunge lower, working laterally for the past three sessions, holding at the July consolidation level.
Initial Jobless Claims, JOLTS are up for Thursday to be followed Friday by October retail sales.
The indices are still in the weeklong pullback on the heels of the last run. Not the best action Wednesday on NASDAQ and DJ30 but not fatal either. SP400, RUTX, SP500 are not bad at all. Indeed, all of the indices can easily hold and then resume a move higher. They just have to do it. It is that time to make the move.
We have some nice plays to implement if the market holds and the new break upside resumes. Don't want to fear heights here, that is, you don't want to avoid good plays just because the market is near the highs. New highs have to come from somewhere, right?
Thus we watch the good setups and see if they can make the breaks higher and if those that have pulled back can follow or lead back upside as well. The market is also a week to the downside with stocks in an oversold condition. Plenty of upside room to move if the bids return. Right now the market has to show the bids can return.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5067.02
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 4952
The 50 day EMA at 4944
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 2075.00
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
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 2037
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 17,702.22
June low at 17,715
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
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 17,271
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
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