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11/16/2015 Investment House Report
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Targets hit: None issued
Entry alerts: AMZN; JPM; MXWL; UNT
Trailing stops: None issued
Stop alerts: None issued
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- 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%
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.
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.
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.
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.
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)
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)
Stats: +237.77 points (+1.38%) to close at 17483.01
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.
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.
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.
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.
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
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
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
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
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
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
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
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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