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1/30/2016 Investment House Report
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MARKET ALERTS:
Targets hit: WYNN
Entry alerts: None issued
Trailing stops: ADBE; AMGN; AMZN
Stop alerts: LRCX; MA
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 REPORT 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
- Japan's NIRP policy triggers the second leg of the relief rally.
- Panic buying to end the week as no one wanted to be left behind.
- AMZN earnings sold similar to AAPL's, but market manages just fine.
- Q4 GDP a scintillating 0.69%. Positive reading saved by forced ACA healthcare expenditures.
- Why we view this rally as doomed to fail.
- Playing a further rally to resistance, mindful of the market and individual stock situations.
Friday the relief bounce healed itself as the stock indices finally received the next trigger to send them higher in more short covering. After four lateral sessions in a fairly tight range the setting was just right for the next leg, and it was solid.
AMZN missed its earnings but that was not the issue. It was for AMZN, but not for the overall market.
As is often the case in this Fed/Central Bank centric market (and markets around the globe), it was monetary policy that ginned up excitement and futures.
BOJ: After headlines proclaimed the BOJ was not going to change its monetary policy near term, it borrowed a page from the Alan Greenspan 'if you understand what I am saying I have not done my job' playbook and went negative. Negative as in Negative Interest Rate Policy (NIRP, aka No Idea Regarding Policy). You pay the banks to hold your money. The idea is to make holding money as unpalatable as possible so you will invest it . . . in financial instruments of course.
That is how QE worked in the US: cannot earn anything on your money in terms of interest, Fed prints free money for the big banks and corporations, that money is put into financial markets (not invested in their business), financial markets surge, people all jump in and push them even higher, and supposedly you feel wealthier.
Problem is, most people don't play that game because they lost their money in the financial crisis, job as well. The job they got only pays a fraction of the wages the one they had before, and thus with the ACA and other rising expenses, all of their money goes to surviving, not investing. Any so-called wealth effect thus only impacts a small segment of society. Voila, sickly, old-world style recovery.
But the market does not worry about that. Japan was doing more to encourage investing in financial markets. That is supposedly good for the US. How I am not sure, other than a stronger dollar versus yen. But the market loved it.
Stocks shot higher early in the morning and never looked back. Not pre-market despite a woeful US Q4 GDP initial read (0.69%) -- hey maybe that means stimulus in the US, right? -- not at the opening bell, and not anytime through the close. The Fed Futures Funds contract did show, after the GDP report, zero count them zero rate hikes for the rest of 2016. Wow.
The market got its trigger.
SP500 46.88, 2.48%
NASDAQ 107.27, 2.38%
DJ30 396.66, 2.47%
SP400 3.23%
RUTX 2.22%
SOX 4.57%
VOLUME: NYSE +54%, NASDAQ +9%
A/D: NYSE 8.1:1, NASDAQ 3.9:1
Indeed, Friday saw panic buying. You hear of panic selling of course. There is also panic buying, the fear of missing out on a move. You could almost hear the thoughts, and you did on the financial stations, that surely the market has bottomed -- just below the old highs set after a 6 year QE-induced surge. Oh yes, a major bottom just 15% off the all-time high as the economy heads into recession. That happens SO often (can you detect the sarcasm?).
But who cares the cause. The market is behaving as it typically behaves in these instances. It behaved as it forecast in September after that bottom was put in as we said was occurring. It didn't make the prior highs as we said it would not because of the top that was put it after QE ended and the economy was not strong enough to warrant further price increases. It tumbled to lower lows, pushed internals and sentiment to extremes, and now it is posting a relief bounce as it has done hundreds of times through history with this kind of selloff.
Now it is a matter of the upside running until it hits resistance that stalls the move. But where?
NEWS/ECONOMY
The US economic news was a backdrop Friday. Japan's NIRP, the market surge, the State Department now admitting 22 Clinton emails run through private servers (that would seem to be admitting per se liability). Lots of stories stealing headlines from what used to be the market's true driver, the economy.
Q4 GDP 1st report: 0.69% versus 0.9% expected versus 1.3% Q3
2015 Annual GDP: 1.82%. Holy crap. And all year were you not told by the Administration, but the Steve Liesman's on the financial stations, that the economy was just fine? 1.82%? As I said, we are now trained to think that 2%ish growth is great. We are Europe.
Consumer spending: 2.2% versus 1.8% expected. That looks impressive and was heralded as showing the consumer is keeping the economy afloat. If you break the spending down, however, the sickening truth hits you: this is not spending of discretionary income on consumer items during a time of prosperity, but FORCED spending on higher healthcare costs as a result of the ACA 'tax.' Forced to buy more expensive insurance, and when you do try to use it find that the healthcare you have to pay for out of your own pocket because of massively high deductibles costs a lot more.
What a cynical, perverse method of measuring the 'health' of the consumer, i.e. by measuring what they are forced to pay as a result of government edict and calling that 'impressive spending.' That is like saying a prisoner of war forced to smile for propaganda photos is truly happy.
Happy Soviet citizens waiting in line for bread. I guess it beats the millions purposefully starved to death by Stalin in the Ukraine. They love it so much thousands died each year trying to escape.
THE MARKET
Friday SP500 closed smack on 1940, the lower resistance point we cited, the one coincident with the mid-January micro bounce that failed. There is some price resistance there, but nothing major. The Friday move was too strong for that level to seriously hold back the move.
SP500 looks set to head up to the 1990 - 1995 level, the mid-September peak roughly coincident with the 50 day EMA. That peak was the last high before the November 2015 high, the last high hit before the January collapse. That makes the September peak a key level in the bigger picture sequence:
The 15 month top starting October 2014 when QE ended.
The all-time high hit May 2015.
The plunge lower in the summer 2015, the double bottom and recovery into November.
That was a strong rebound, but it failed to match or take out the old highs, putting in a lower high, even with stronger MACD than at the all-time high from May. That lower high proved the market top.
Stocks tumbled for the second major selloff after the top was in, putting in a lower low than the original October 2014 low. Now they are on the rebound after extreme technical and sentiment levels. With the economy faltering and stocks leading the move as always, they will not recover to new highs, they will not recover the November high. They will rise to a lower peak such as the 1995 level (2020 if you count the September intraday high) where there are several prior price resistance levels. That peak represents the left shoulder in a forming head and shoulders starting at the end of the August 2015 plunge. Thus it is a very logical point for a market relief rally to shoot for.
I know, some of you are saying 'Jon, you have said head and shoulders patterns are very unreliable. How is this different?' True, no pattern is a lock. A pattern can set up perfectly and still not work just as a bottom can set up perfectly but not yield a recovery due to a lack of leaders.
With patterns, however, timing is everything. You always have to respect them when they form, but if you see a triangle in a bearish market, the triangle can still breakout, but the likelihood is the breakout fails. We saw several head and shoulders patterns in stocks set up during the long rally, indeed even in the indices themselves, but they failed.
I went through the sequence of events above that demonstrates how this top set up and has progressed. It is that progression that indicates a head and shoulders pattern likely sets up and that it likely is completes and breaks down. It is the time of the market that controls. A major top is in according to our understanding of the market and economy over 30 of active participation and study.
Thus, the action since August 2015 does not suggest that the selling is over and the market has bottomed to continue higher and put in new highs. Instead it suggests it is part of a larger, longer term selloff as the QE false growth rally is unwound given the economy never recovered during the 'recovery.' A 15% decline doesn't do it.
Sure the scenario can be altered. Look at what Japan going NIRP did just on Friday: reversed weakness, caused panic buying, resulted in a massive short covering move into the close. If the Fed decides to admit that it hiked at possibly the worst possible time it could have started to tighten (AFTER the selling from the market top began and the economy is rolling over into recession) and moves back toward monetary easing, of course the market rallies. Again, just Japan announcing NIRP resulted in 2+% moves in US stock indices in one day.
Unfortunately, as on Wednesday with the FOMC announcement selling, the stock market is bound to the Fed as the Fed has provided the only source of buy side impetus since the financial crisis. Thus the Fed is always the disrupter, and sadly, over the past 20 years the Fed constantly intervenes not for economic reasons, but for market reasons. We used to never hear about the Fed or any of its members of other than the chairman when he gave his report to Congress. The Fed did very little back then; it let markets work except for times of extreme crisis.
Sadly, as a new generation has come to think 2% economic growth is great (another prediction we had), we have come to think central bank intervention is standard and ongoing procedure, necessary to rescue markets in any times of trouble or perceived trouble. Once a body grabs power, it is loathe to give it up without the power being wrested away. As the recent vote in Congress showed, our leaders do not even have the stomach to apprise themselves as to what the Fed is actually doing with our money. This is a sad state of affairs as leadership is now out of vogue.
CHARTS
Given the earlier discussion, no reason to go into too much detail. The market indices all surged Friday, resuming the relief move after a four session lateral consolidation. At this rate it won't take SP500 long to get to 1995ish.
SP500: Surged out of the four session lateral move, bounding to 1940. That is the first resistance point but likely won't hold it back.
NASDAQ: After the lower and lower highs below the 10 day EMA, NASDAQ ignited to the upside. Some resistance at 4635, but 4735 - 4745 at the lower gap from early January is more likely the serious test for NASDAQ. Of course it could try to fill some gaps up to 4900, the NASDAQ's September peak.
DJ30: Big surge, and similar to SP500 is near the early January failed bounce attempt (16,590; closed at 16,466). More likely resistance is 16750ish, the September closing peak.
RUTX: Surged out of its lateral consolidation to the 38% Fibonacci retracement of the selloff. Resistance at 1050 (closed at 1035).
SP400: Surged to the 50% Fibonacci retracement and the early January failed bounce point. 1355 is the key resistance (closed at 1317).
SOX: Gapped and rallied to the early January failed bounce point. Resistance at 630, then 642 (closed at 613.68).
LEADERSHIP
Most everything bounced. Some big names are trying to transform their patterns into something more bullish. Some chips have interesting short term bottoming patterns. There is some improvement, but of course after the kind of selling thus far, you would expect improvement.
Big Names: Continued their moves. FB was up to a higher all-time high. GOOG broke through the 50 day SMA; if an ABCD down is going to work it needs to do so rather soon. AMZN struggled after earnings but was bouncing from the open. AAPL bounced back into the gap zone from Wednesday after it flopped on earnings; nothing great. SBUX gapped over the 50 day SMA. MSFT gapped sharply higher, just below the December highs.
Financial: Big buys here after Japan went NIRP. JPM surged to the 38% Fibonacci retracement. MA gapped sharply lower then reversed sharply. GS gapped to the 20 day EMA. BAC surged through the 10 day EMA on strong volume. Looks like some near term bottoms here.
Energy: Similar to financials, posting some sharp bounces. HAL gapped off an interesting though short bottom. APC spent the week working up off a new low. GPOR enjoyed a big week. CVX rallied to the 50 day EMA for the second session.
Retail: Discount retailers surging: WMT, DLTR, DG. TSCO surged out of its three month downtrend, following a huge Thursday intraday reversal. TJX surged off the 50 day EMA. COST is holding the 200 day SMA, trying to put in a bounce. M has one of the best patterns, but it is struggling to get going.
Chips: Surged. MCHP looked heavy but jumped. AVGO gapped through the 200 day SMA. QRVO is coming off an interesting bottom attempt. XLNX blasted off again. NXPI has an interesting bottoming pattern. Many of the AAPL related chips surged with AAPL.
Consumer/Household products surged: PG, CLX, CL
MARKET STATISTICS
NASDAQ
Stats: +107.28 points (+2.38%) to close at 4613.95
Volume: 2.457B (+9.32%)
Up Volume: 2.24B (+1.1B)
Down Volume: 342.49M (-817.51M)
A/D and Hi/Lo: Advancers led 3.93 to 1
Previous Session: Advancers led 1.13 to 1
New Highs: 31 (+16)
New Lows: 110 (-65)
S&P
Stats: +46.88 points (+2.48%) to close at 1940.24
NYSE Volume: 1.62B (+54.29%)
A/D and Hi/Lo: Advancers led 8.1 to 1
Previous Session: Advancers led 2.03 to 1
New Highs: 56 (+27)
New Lows: 43 (-60)
DJ30
Stats: +396.66 points (+2.47%) to close at 16466.3
SENTIMENT INDICATORS
VIX: 20.2; -2.22
VXN: 23.64; -2.68
VXO: 21.1; -2.41
Put/Call Ratio (CBOE): 0.91; +0.04
Recent history: Fourth consecutive sub-1.00 session; you would expect that given the surge. Over 1.0 for 16 of the last 21 sessions.
Bulls and Bears: Bulls recovered some, bears slipped some, but no change regarding the crossover.
Bulls: 29.2 versus 26.8. Still well below 35%, but as the selling abated, confidence great a bit.
Bears: 35.4 versus 36.1. Holding above 35% is bullish. Bears did slide as the selling abated near term.
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: 29.2%
26.8% versus 28.6% versus 34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus 45.4% versus 43.3% versus 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 in 2015 since the 2008 and 2009 market plummet.
Bears: 35.4%
36.1% versus 35.7% versus 31.6% versus 29.6% versus 29.6% versus 27.6% versus 26.8% versus 26.8% versus 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. Both occurred in fall 2015.
OTHER MARKETS
Bonds (10 year): 1.93% versus 1.99%. Negative rates in Japan, negative rates in the US as the next QE? Rates are heading that way with the pace picking up this past week.
Historical: 1.99% versus 2.019% versus 2.01% versus 2.01% versus 2.05% versus 2.01% versus 1.99% versus 2.05% versus 2.03% versus 2.09% versus 2.07% versus 2.105% versus 2.17% versus 2.11% versus 2.15% versus 2.18% versus 2.25% versus 2.18% versus 2.24% versus 2.27% versus 2.30% versus 2.30% versus 2.23%
EUR/USD: 1.0836 versus 1.0939. Right back down after that one-session surge.
Historical: 1.0939 versus 1.0899 versus 1.0854 versus 1.0849 versus 1.0798 versus 1.0769 versus 1.0815 versus 1.0910 versus 1.0917 versus 1.0869 versus 1.0879 versus 1.0851 versus 1.0854 versus 1.0921 versus 1.0937 versus 1.0789 versus 1.0748 versus 1.0835 versus 1.0934 versus 1.0928 versus 1.0972 versus 1.0963 versus 1.0917 versus 1.0953 versus 1.0920 versus 1.0868 versus 1.0818 versus 1.08334 versus 1.0934 versus 1.0992 versus 1.0987 versus 1.0944 versus 1.1029 versus 1.0892 versus 1.0844 versus 1.0872 versus 1.0948 versus 1.0595
USD/JPY: 121.055 versus 118.27. Dollar surging of course as Japan goes full negative rates.
Historical: 118.27 versus 118.64 versus 118.48 versus 118.32 versus 118.78 versus 118.85 versus 116.99 versus 117.60 versus 117.02 versus 118.06 versus 117.72 versus 117.50 versus 117.73 versus 117.71 versus 117.24 versus 117.58 versus 118.25 versus 119.02 versus 119.397 versus 120.495 versus 120.45 versus 120.345 versus 120.295 versus 120.86 versus 121.01 versus 121.33 versus 122.30
Oil: 33.74, +0.52. The rebound continues from an oversold condition. A good week that saw that move resumed Tuesday. Approaching the 50 day EMA but still a long way to go.
Gold: 1118.40, +2.80. Up on the week though lost ground Thursday. Moved up off the 10 day EMA Friday, likely trying to figure out what the Japan NIRP means.
MONDAY
No FOMC meeting this week. Of course that doesn't mean Yellen's henchmen won't be out 'explaining' what the Fed meant Wednesday and what Japan's NIRP means to US policy. Always the overhang from the regulators to deal with.
Otherwise it looks as if the move is going as planned. Relief bounce started on extremes, paused, got back going Friday.
Now we play the upside move though these are not all that easy as they are fraught with pitfalls. The bounce is in place and proceeding but the Fed is out there. We are in full blown earnings season, and at some point the good news is all the good news that can be handled. Or in terms of the past week, the bad news can only generate so much upside.
We are looking at some more plays upside as the move makes its second run. Some chips look interesting, perhaps some financial stocks or retailers.
Be aware of the ABCD downside pattern. Now that the market has in our view topped and sold off, this pattern starts manifesting. It is a sharp selloff, a bounce, a test to a higher low, then a move to a higher high. It looks as if a bottom is put in, and it is, for the near term. Once the recovery hits the 50%, 61%, or the 78% Fibonacci retracement, however, it tends to roll over. Why? Because the downside momentum/trend is still in place. It is a negative market, the stock sold hard, it bounces back, but that bounce is now a counter trend move. It is prone to roll over.
So, if you look at NVDA, GOOG, AMZN, CMG, AVGO and many others, you see a move higher starting or already taking place. They look good, but you have to be aware of the pattern and the market circumstance. Indeed, how these stocks react will tell more about the overall market. If they keep on running to new highs, our whole market top theory is put into question. Hey, you always have to be open and reevaluate the action.
You can play those stocks, e.g. QRVO, but just know the situation and where the move has a probability of ending. We are going to play some more of these in addition to stocks such as WYNN where we banked some upside gain Friday. We play the move, get what we can, don't try to stretch a double into a triple, then see how the market fares.
Our overall strategy is still a market bounce on this second relief bounce leg, a move up to logical resistance, then a resumption of the downside.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4613.95
Resistance:
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4736 is the early January lower gap point downside, the last downside gap in the selloff.
4751 is the January 2015 lower high
4774 is the January 2-15 high
The 50 day EMA at 4790
4811 is the November 2014 peak (intraday)
4815 is the December 2014 peak
The March 2015 lows at 4843 and 4825
4902 is the July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October
The 200 day SMA at 4950
4894 is the September 2015 closing high
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
5162 is the early November peak, 5176 is the December intraday peak
5164 is the June 2015 peak, 5175 is the August intraday peak
5232 is the July high
Support:
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
4471 is the January 2016 closing low
4352 is the March 2014 peak
4313 is the January 2016 intraday low
4292 is the August 2015 low
S&P 500: Closed at 1940.24
Resistance:
1940 is the early January 2016 failed bounce peak
1972 is the December 2014 low
The 50 day EMA at 1979
1991 is the July 2014 high
1995 is the September 2015 recovery peak
2011 is the September prior all-time high
2020 is the September 2015 intraday high
2040 is the March 2015 closing low
2046 is the July 2015 closing low
The 200 day SMA at 2046
2062 is the January 2015 lower high
2079 is the intraday all-time high from November 2014
2094 is the December 2014 high, the prior all-time high
2104 is the December 2015 high
2116 is the November 2015 high
2119.59 is the February intraday prior all-time high
2126 was the April prior all-time high
2130 is the June 2015 peak
2135 is the May 2015 all-time high
Support:
1913 is the early September 2015 closing low testing the bounce from the August selling
1905 is the August 2014 low
1902 from early May was the intraday all-time high.
1897 is the prior all-time high hit in April 2014
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
1859 is the January 2016 closing low
1820 is the October 2014 intraday low
1815 is the April 2014 low
1772 are the Q4 2013 highs and lows
Dow: Closed at 16,466.30
Resistance:
16,506 is the March 2014 peak
16,589 is the December 2013 former all-time high
16,632 is the April 2014 peak
16,665 is the late August 2015 closing high
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,736 is a prior all-time high from May 2014
16,740 is the mid-September peak and potential apex for a right shoulder to a head and shoulders pattern
The 50 day EMA at 16,827
16,933 is the September 2015 recovery intraday peak
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
17067 is the December 2014 low
17,068 is the early July 2014 peak
17,152 is the mid-July post bear market high
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,381
June 2015 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
17,978 is the November 2015 peak
Support:
16,368 is the August 2014 low
16,117 is the October 2014 closing low
16,058 is the early September 2015 low
16,026 is the April 2014 low
15,855 is the October 2014 intraday low
15,766 is the January closing low
15,666 is the August 2015 closing low
15,450 is the January 2016 intraday low
15,372 is the February 2014 low
15,370 is the August 2015 low
ECONOMIC CALENDAR
January 29 - Friday
GDP-Adv., Q4 (8:30): 0.7% actual versus 0.9% expected, 2.0% prior (no revisions)
GDP Deflator, Q4 (8:30): 0.8% actual versus 0.9% expected, 1.3% prior (no revisions)
Employment Cost Index, Q4 (8:30): 0.6% actual versus 0.6% expected, 0.6% prior (no revisions)
Chicago PMI, January (9:45): 55.6 actual versus 45.0 expected, 42.9 prior
Michigan Sentiment - Final, January (10:00): 92.0 actual versus 93.2 expected, 93.3 prior
February 1 - Monday
PCE Prices, December (8:30): 0.1% prior
Personal Income, December (8:30): 0.2% expected, 0.3% prior
Personal Spending, December (8:30): 0.3% prior
Personal Spending, December (8:30): 0.2% expected, 0.3% prior
Core PCE Prices, December (8:30): 0.1% expected, 0.1% prior
Construction Spendin, December (10:00): 0.5% expected, -0.4% prior
ISM Index, January (10:00): 48.3 expected, 48.2 prior
February 2 - Tuesday
Auto Sales, January (14:00): 5.51M prior
Truck Sales, January (14:00): 8.34M prior
February 3 - Wednesday
MBA Mortgage Index, 01/30 (7:00): +8.8% prior
ADP Employment Chang, January (8:15): 190K expected, 257K prior
ISM Services, January (10:00): 55.0 expected, 55.3 prior
Crude Inventories, 01/30 (10:30): 8.383M prior
February 4 - Thursday
Challenger Job Cuts, January (7:30): -27.6% prior
Initial Claims, 01/30 (8:30): 275K expected, 278K prior
Continuing Claims, 01/23 (8:30): 2253K expected, 2268K prior
Productivity-Prel, Q4 (8:30): -1.7% expected, 2.2% prior
Unit Labor Costs-Pre, Q4 (8:30): 3.8% expected, 1.8% prior
Factory Orders, December (10:00): -2.6% expected, -0.2% prior
Natural Gas Inventor, 01/30 (10:30): -211 bcf prior
February 5 - Friday
Nonfarm Payrolls, January (8:30): 188K expected, 292K prior
Nonfarm Private Payr, January (8:30): 183K expected, 275K prior
Unemployment Rate, January (8:30): 5.0% expected, 5.0% prior
Hourly Earnings, January (8:30): 0.3% expected, 0.0% prior
Average Workweek, January (8:30): 34.5 expected, 34.5 prior
Trade Balance, December (8:30): -$43.5B expected, -$42.4B prior
Consumer Credit, December (15:00): $16.5B expected, $13.9B prior
End part 1 of 3
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Saturday, January 30, 2016
Thursday, January 28, 2016
The Daily, Part 1 of 3, 1-27-16
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1/27/2016 Investment House Report
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MARKET ALERTS:
Targets hit: None issued
Entry alerts: AMGN; AMZN
Trailing stops: AMZN
Stop alerts: SPY
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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
- Stocks work low to high then the FOMC flips them sharply lower.
- Indices stall and fall from the 10 day EMA. Afterhours earnings, however, trying to resurrect the relief bounce.
- FOMC still holds too much sway over the market, but nothing can be done. It grabbed the power to control the economy and it won't give it up without being forced.
- FB helps rebound stocks after hours and the indices will get to test the 10 day EMA again.
- Market still can continue the relief move, but not a lot of great patterns to buy on that move.
Have I said how I hate a market that is led by the Fed? Oh, it is okay if the Fed stays out of the way or at least has enough credibility to take a track and then have people believe it will stick to it. Then you can invest and trade in accord with that direction; you have some certainty whether you agree with the policy or not.
Starting with Greenspan, however, and really going full bore with Bernanke and now Yellen, the Fed has lost credibility because it has lost its aura of full economic knowledge. It acts as if it knows not what it is doing, saying one thing while doing another, and that lack of clear direction, whether imputed or actual, feeds anxiety from the markets to individuals who know full well the Fed controls their financial future.
Wednesday the market started softer but nothing major. China's Industrial Profits flopped 4.7% and of course that is not good. US profits fell last quarter and the quarter before, so China is not alone. It is, however, just another signal that China's miracle economy is more smoke and mirrors at this juncture.
AAPL missed on revenues and iPhones sold, posting the slowest sales in iPhones since their introduction in 2007. Indeed, under Cook, no new products introduced, just size variations of what a Jobs-led AAPL already created and the introduction of some peripheral services around those products.
I am reminded of Barry Switzer coaching the Dallas Cowboys the year after Jones fired Jimmy Johnson who already had 2 Super Bowls in the bank and likely had 2 to 3 more ahead. Switzer was hired, and all he had to do was stand on the sidelines, let the coaches coach, and watch a great team Johnson built win another Super Bowl. And the last Super Bowl. The peak was reached and Switzer was no Johnson. Dallas has only been arguably close to a championship one time since.
That was an interesting play. Wish I had called it. Wonder if they are going to turn on my headphones today? Oh, that reminds me: got to gets this hole in my pocket fixed.
Sales are slowing. Yes it has over $200B in cash and major cash cows bringing in tons of money. So does INTC, PG, MSFT and other former growth companies. They are in the process of maximizing profits from their hit products. What new product can AAPL come up with? Likely none. Those are derived from what AAPL used to be: a startup with a better idea. When sales peak, the end of growth mode peaks. Remember DELL, HPQ, INTC, MSFT.
In any event, AAPL's miss was another factor weighing on the market to start Wednesday. Stocks started lower but moved higher toward the open. The downside was nothing major. After a quick dip in the first hour the stock indices rallied into midday. They then went into standby mode for two hours, awaiting the FOMC meeting announcement.
The FOMC spoke. Some said it was more hawkish. Some said it was more dovish. Ah, obviously a very clear, transparent statement. It said the economic issues caused by lower oil prices were transitory (a favorite Fed word) and that the jobs market remained strong. Then the Fed added to that: "labor market conditions improved further even as economic growth slowed late in the year." Could it be the Fed is actually acknowledging that the jobs market is lagging? Wow, the Fed actually acknowledging one of the very well known economic truths? If that was the case, the Fed statement was more dovish.
The market didn't see it that way. Stocks jumped for a few seconds then rolled over and sold to lower lows. Much lower lows.
SP500 -20.68, -1.09%
NASDAQ -99.50, -2.18%
DJ30 -222.17, -1.38%
SP400 -1.02%
RUTX -1.50%
SOX -1.20%
VOLUME: NYSE +9.5%, NASDAQ +7%. Volume solidly back above average after fading on the relief move. NASDAQ moved up above average as well as its stocks struggled with a 2+% loss.
A/D: NYSE -1.7:1, NASDAQ -2.4:1. Very mild given the selling. That shows much of the weakness was in the big names, e.g. AAPL, BA.
The market looked good on its bounce move. Then the FOMC intervened and the index charts finished bearish. Of course with FOMC announcements the reaction can take a session or more to show the market's true view. We adjusted positions accordingly, closing SPY calls, taking the rest of the AMZN gain. The action was pretty bearish post-FOMC.
Then after hours FB really trounced earnings on the top and bottom line. PYPL was not bad. EBAY missed, but not everyone can hit. FB surged. GOOG, AMZN joined in as well as they too jumped after hours.
If the Fed was just out of the way, not making announcement, indeed not even acting UNLESS in a time of crisis such as a war. The Fed's role has morphed into an economic micromanagement position, prostrating itself before financial markets. And Congress cannot even pass a bill to allow an audit to see where the Fed is putting our money? That is the old government power grab ploy: how can we be independent if anyone has oversight? Well, the entire PURPOSE of our government under the Constitution is oversight and checks and balances. How one body that controls our finances and retirements can hoodwink people into thinking that any oversight whatsoever is bad for the country shows how far we have progressed down the road away from representative rule. But, of course, I digress.
So, the Fed causes markets to sell but then markets rebound when new facts emerge. Perhaps the move higher continues off of these earnings. The big names were higher after hours, but they were still below their Wednesday session highs. Once more we are waiting to see how stocks react after the Fed's latest pronouncement.
THE MARKET
TECHNICAL PICTURE
A pretty ugly afternoon rollover after a solid upside move. Rollovers at the 10 day EMA, the first resistance point in a rebound, and if it holds and pushes the indices lower that details a truly weak market. After hours big names were bouncing and they control the market. The indices will at least have a chance to test the 10 day EMA again, and with the catalyst of some good results may be able to turn the post-FOMC selling back upside for a continued relief move.
CHARTS
SP500: Rallied nicely through the 10 day EMA, moving from low to high. Then the FOMC result and SP500 sold back through the 10 day and lower. Manage to recover a bit to hold the recent lows, leaving SP500 with a chance at continuing the relief move. Not bad to hold this level, and if the big names throw in, the relief rally continues.
NASDAQ: Rather ugly with a fourth straight test of the 10 day EMA with a third consecutive lower intraday high. From their NASDAQ fell sharply. At least it filled the gap from the Friday upside surge. With the big names such as GOOG, AMZN moving higher after hours, NASDAQ will get another shot at the 10 day (4555).
DJ30: Similar action, moving up through the 10 day EMA intraday and then reversing to the downside. Okay, now it has to show it can hold and rebound versus hold and fold.
RUTX: Very similar to DJ30, working laterally in a fairly tight range just below the 10 day EMA. Up a day, down the next, repeat pattern, taking what was gained, regaining what was taken. Not a bad setup to make the continued upside break.
SP400: Just like SP500, the midcaps rallied to a higher high on this move then reversed to close below the 10 day.
SOX: Pretty nice action, moving through the 10 day EMA on the high, matching the Tuesday intraday high, then fading. Filled the Friday upside gap on the low, recovered decently. Despite all of the horrid patterns in the sector, SOX can still put in an oversold relief move after this test.
LEADERSHIP
Big Names: Some pretty ugly patterns on the close what with the intraday reversals, but the afterhours action is trying to wash that away. FB is trading at the late December peak near 106 after diving lower toward the 200 day SMA. AMZN rolled over on volume but is just over the 10 day EMA after hours. GOOG rolled over on higher trade but is near the intraday higher afterhours. NFLX is diving lower, no longer in leadership status. SBUX continues hanging rather nicely in its patterns. Ugly close, saved after the bell.
Energy: CVX surged but purged it all in a big intraday reversal. Ditto XOM, putting in a lower high after a lower low. SWN surged but faded much of the move though still quite nice. GPOR ripped higher. HAL continues trending lower. Still mixed with smaller issues performing a bit better.
Retail: DDS moving up to the 50 day SMA in a continued recovery. M holding at the 50 day SMA, posting a modest gain in a nice pattern. COST struggles. BBBY trying to put in a short term double bottom on rising MACD. COH moving well after earnings; a test of the move could be good. DG continued upside through the 200 day SMA. Still some improvement.
Chips: XLNX still holding its takeout gap. MCHP still in a bear flag but hasn't broken yet. ARMH broke sharply lower from its upside move. AVGO, NXPI fading but not diving. QRVO on the other hand is diving lower.
Financial: JPM showing a big tombstone doji at the 10 day EMA. MA bombed lower on strong volume. GS tried to rally, faded well off the high, but still likely tries a bounce.
Biotech/Drugs: AMGN and CELG both bombed lower from the bear flag.
Metals: FCX is actually bouncing, moving higher on strong volume. Interesting. AKS looks like crud. STLD took a breather after surging to the 50 day MA.
Industrials: MMM surged to the 50 day EMA, faded much of the move after hitting October interim peak; rollover? UTX trying to find some support but not doing much yet. DE bounced but gave most of it up in its four month trading range.
MARKET STATISTICS
NASDAQ
Stats: -99.51 points (-2.18%) to close at 4468.17
Volume: 2.046B (+6.65%)
Up Volume: 473.24M (-1.047B)
Down Volume: 1.62B (+1.169B)
A/D and Hi/Lo: Decliners led 2.34 to 1
Previous Session: Advancers led 2.44 to 1
New Highs: 10 (+4)
New Lows: 94 (+7)
S&P
Stats: -20.68 points (-1.09%) to close at 1882.95
NYSE Volume: 1.1B (+9.45%)
A/D and Hi/Lo: Decliners led 1.65 to 1
Previous Session: Advancers led 5.07 to 1
New Highs: 22 (+5)
New Lows: 50 (-25)
DJ30
Stats: -222.77 points (-1.38%) to close at 15944.46
SENTIMENT INDICATORS
VIX: 23.11; +0.61
VXN: 27.27; +0.85
VXO: 24.38; +0.66
Put/Call Ratio (CBOE): 0.95; +0.07
Recent history: Second straight sub-1.00 session, even on the rollover. Over 1.0 for 16 of the last 19 sessions. 30 of 43 sessions above 1.0.
Bulls and Bears: Bulls falling further below 35% and bears as bears continue to rise over 35%. Very bullish signal and the market is finally reacting a bit.
Bulls: 26.8 versus 28.6. Still well below 35%.
Bears: 36.1 versus 35.7. Above 35% is bullish.
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 26.8%
28.6% versus 34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus 45.4% versus 43.3% versus 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 in 2015 since the 2008 and 2009 market plummet.
Bears: 36.1%
35.7% versus 31.6% versus 29.6% versus 29.6% versus 27.6% versus 26.8% versus 26.8% versus 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. Both occurred in fall 2015.
OTHER MARKETS
Bonds (10 year): 2.019% versus 2.01%. After a good test TLT looks ready to rally again.
Historical: 2.01% versus 2.01% versus 2.05% versus 2.01% versus 1.99% versus 2.05% versus 2.03% versus 2.09% versus 2.07% versus 2.105% versus 2.17% versus 2.11% versus 2.15% versus 2.18% versus 2.25% versus 2.18% versus 2.24% versus 2.27% versus 2.30% versus 2.30% versus 2.23% versus 2.26% versus 2.24% versus 2.20% versus 2.19% versus 2.24% versus 2.29% versus 2.27% versus 2.23% versus 2.13% versus 2.23% versus 2.21% versus 2.23% versus 2.23% versus 2.27% versus 2.33% versus 2.18%
EUR/USD: 1.0899 versus 1.0854
Historical: 1.0854 versus 1.0849 versus 1.0798 versus 1.0769 versus 1.0815 versus 1.0910 versus 1.0917 versus 1.0869 versus 1.0879 versus 1.0851 versus 1.0854 versus 1.0921 versus 1.0937 versus 1.0789 versus 1.0748 versus 1.0835 versus 1.0934 versus 1.0928 versus 1.0972 versus 1.0963 versus 1.0917 versus 1.0953 versus 1.0920 versus 1.0868 versus 1.0818 versus 1.08334 versus 1.0934 versus 1.0992 versus 1.0987 versus 1.0944 versus 1.1029 versus 1.0892 versus 1.0844 versus 1.0872 versus 1.0948 versus 1.0595
USD/JPY: 118.64 versus 118.48. After a short test of the 10 day EMA it looks as if USD is ready to rise again and take back more of that December decline.
Historical: 118.48 versus 118.32 versus 118.78 versus 118.85 versus 116.99 versus 117.60 versus 117.02 versus 118.06 versus 117.72 versus 117.50 versus 117.73 versus 117.71 versus 117.24 versus 117.58 versus 118.25 versus 119.02 versus 119.397 versus 120.495 versus 120.45 versus 120.345 versus 120.295 versus 120.86 versus 121.01 versus 121.33 versus 122.30 versus 122.68 versus 122.35 versus 121.64
Oil: 32.16, +0.71. After EIA reported an 8.3M bbl build and API an 11+M bbl build, oil still rose. Looks as if it has put in a near term bottom as it rose on bearish news. I suppose that is good for stocks.
Gold: 1124.90, +4.70. Continuing the run toward the 200 day SMA, but that still puts it well below the October high at 1188ish.
THURSDAY
Yes everyone is focused tomorrow morning on . . . Durable Goods Orders? They are out before the open and it will be interesting to see how many the government says were sold even as manufacturing has tanked the past six months.
The durables will be interesting but of course earnings has the stage. AAPL missed but afterhours FB beat handily and that has GOOG, AMZN and others sporting some solid afterhours gains, recovering back close to intraday highs lost post-FOMC.
We will have to see how the FOMC versus earnings battle plays out as the market digests what was in our view a fairly dovish statement even if it didn't say it would hold off hikes. It would look incredibly foolish if it did say that. Of course it will look even more foolish if the economy dives into a recession with the big corporations finally following most other companies already suffering. With, of course, the market leading the way. But, that is the Fed's cross to bear and they are big boys and girls. Heck, let them look absolutely foolish. That would only help in getting reforms made. Ha ha ha ha! Yea, that will happen.
As noted earlier, the indices likely get another shot at the 10 day EMA. SOX, RUTX look fully capable of taking it out. We will see. The market either continues its relief move after a pause or it rolls over. It will certainly let us know. What would be most instructive? A move higher early on the earnings and then another reversal. That would tell a pretty serious downside story. If so, this was a weak bounce and a strong selling episode is about to continue. Not sure it is ready to roll over just yet. Again, how it reacts to the afterhours earnings vis- -vis the Wednesday rollover tells a lot.
We see some upside possibilities, e.g. FCX . . . but not a lot more. So many stocks have bounced but in otherwise downside patterns. We see more downside possibilities at this juncture than upside, and that says a lot about the market unless there is a character change wrought by earnings. Examples: XOM, NVDA, V, CLX, MMM, STMP . . . rebounded decently enough but now at resistance and appear to be struggling. We will see which side wins out and move that way, though we will have more plays downside from the look of it.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4468.17
Resistance:
4485 are the twin July 2014 peaks
4517-4506 from the September 2015 and August 2015 closing lows
The 10 day EMA at 4555
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4736 is the early January lower gap point downside, the last downside gap in the selloff.
4751 is the January 2015 lower high
4774 is the January 2-15 high
The 50 day EMA at 4809
4811 is the November 2014 peak (intraday)
4815 is the December 2014 peak
The March 2015 lows at 4843 and 4825
4902 is the July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October
The 200 day SMA at 4955
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
5162 is the early November peak, 5176 is the December intraday peak
5164 is the June 2015 peak, 5175 is the August intraday peak
5232 is the July high
Support:
4471 is the January 2016 closing low
4352 is the March 2014 peak
4313 is the January 2016 intraday low
4292 is the August 2015 low
S&P 500: Closed at 1882.95
Resistance:
1897 is the prior all-time high hit in April 2014
1902 from early May was the intraday all-time high.
The 10 day EMA at 1899
1905 is the August 2014 low
1913 is the early September 2015 closing low testing the bounce from the August selling
1972 is the December 2014 low
The 50 day EMA at 1983
1991 is the July 2014 high
1995 is the September 2015 recovery peak
2011 is the September prior all-time high
2040 is the March 2015 closing low
2046 is the July 2015 closing low
The 200 day SMA at 2047
2062 is the January 2015 lower high
2079 is the intraday all-time high from November 2014
2094 is the December 2014 high, the prior all-time high
2104 is the December 2015 high
2116 is the November 2015 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:
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
1859 is the January 2016 closing low
1820 is the October 2014 intraday low
1815 is the April 2014 low
1772 are the Q4 2013 highs and lows
Dow: Closed at 15,944.46
Resistance:
16,026 is the April 2014 low
16,058 is the early September 2015 low
The 10 day EMA at 16,116
16,117 is the October 2014 closing low
16,368 is the August 2014 low
16,506 is the March 2014 peak
16,589 is the December 2013 former all-time high
16,632 is the April 2014 peak
16,665 is the late August 2015 closing high
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,736 is a prior all-time high from May 2014
16,740 is the mid-September peak and potential apex for a right shoulder to a head and shoulders pattern
The 50 day EMA at 16,873
16,933 is the September 2015 recovery peak
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
17067 is the December 2014 low
17,068 is the early July 2014 peak
17,152 is the mid-July post bear market high
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,399
June 2015 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
17,978 is the November 2015 peak
Support:
15,855 is the October 2014 intraday low
15,766 is the January closing low
15,666 is the August 2015 closing low
15,450 is the January 2016 intraday low
15,372 is the February 2014 low
15,370 is the August 2015 low
ECONOMIC CALENDAR
January 26 - Tuesday
Case-Shiller 20-city, November (9:00): 5.8% actual versus 5.8% expected, 5.5% prior
FHFA Housing Price I, November (9:00): 0.5% actual versus 0.5% prior
Consumer Confidence, January (10:00): 98.1 actual versus 96.8 expected, 96.3 prior (revised from 96.5)
January 27 - Wednesday
MBA Mortgage Index, 01/23 (7:00): +8.8% actual versus +9.0% prior
New Home Sales, December (10:00): 544K actual versus 506K expected, 491K prior (revised from 490K)
Crude Inventories, 01/23 (10:30): 8.383M actual versus 3.979M prior
FOMC Rate Decision, January (14:00): 0.5% expected, 0.5% prior
January 28 - Thursday
Initial Claims, 01/23 (8:30): 285K expected, 293K prior
Continuing Claims, 01/23 (8:30): 2230K expected,
Durable Orders, December (8:30): -0.5% expected, 0.0% prior
Durable Goods -ex tr, December (8:30): -0.1% expected, 0.0% prior
Pending Home Sales, December (10:00): 0.8% expected, -0.9% prior
Natural Gas Inventor, 01/23 (10:30): -178 bcf prior
January 29 - Friday
GDP-Adv., Q4 (8:30): 0.9% expected, 2.0% prior
GDP Deflator, Q4 (8:30): 0.9% expected, 1.3% prior
Employment Cost Index, Q4 (8:30): 0.6% expected, 0.6% prior
Chicago PMI, January (9:45): 45.0 expected, 42.9 prior
Michigan Sentiment - Final, January (10:00): 93.2 expected, 92.6 prior
End part 1 of 3
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1/27/2016 Investment House Report
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Trailing stops: AMZN
Stop alerts: SPY
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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
- Stocks work low to high then the FOMC flips them sharply lower.
- Indices stall and fall from the 10 day EMA. Afterhours earnings, however, trying to resurrect the relief bounce.
- FOMC still holds too much sway over the market, but nothing can be done. It grabbed the power to control the economy and it won't give it up without being forced.
- FB helps rebound stocks after hours and the indices will get to test the 10 day EMA again.
- Market still can continue the relief move, but not a lot of great patterns to buy on that move.
Have I said how I hate a market that is led by the Fed? Oh, it is okay if the Fed stays out of the way or at least has enough credibility to take a track and then have people believe it will stick to it. Then you can invest and trade in accord with that direction; you have some certainty whether you agree with the policy or not.
Starting with Greenspan, however, and really going full bore with Bernanke and now Yellen, the Fed has lost credibility because it has lost its aura of full economic knowledge. It acts as if it knows not what it is doing, saying one thing while doing another, and that lack of clear direction, whether imputed or actual, feeds anxiety from the markets to individuals who know full well the Fed controls their financial future.
Wednesday the market started softer but nothing major. China's Industrial Profits flopped 4.7% and of course that is not good. US profits fell last quarter and the quarter before, so China is not alone. It is, however, just another signal that China's miracle economy is more smoke and mirrors at this juncture.
AAPL missed on revenues and iPhones sold, posting the slowest sales in iPhones since their introduction in 2007. Indeed, under Cook, no new products introduced, just size variations of what a Jobs-led AAPL already created and the introduction of some peripheral services around those products.
I am reminded of Barry Switzer coaching the Dallas Cowboys the year after Jones fired Jimmy Johnson who already had 2 Super Bowls in the bank and likely had 2 to 3 more ahead. Switzer was hired, and all he had to do was stand on the sidelines, let the coaches coach, and watch a great team Johnson built win another Super Bowl. And the last Super Bowl. The peak was reached and Switzer was no Johnson. Dallas has only been arguably close to a championship one time since.
That was an interesting play. Wish I had called it. Wonder if they are going to turn on my headphones today? Oh, that reminds me: got to gets this hole in my pocket fixed.
Sales are slowing. Yes it has over $200B in cash and major cash cows bringing in tons of money. So does INTC, PG, MSFT and other former growth companies. They are in the process of maximizing profits from their hit products. What new product can AAPL come up with? Likely none. Those are derived from what AAPL used to be: a startup with a better idea. When sales peak, the end of growth mode peaks. Remember DELL, HPQ, INTC, MSFT.
In any event, AAPL's miss was another factor weighing on the market to start Wednesday. Stocks started lower but moved higher toward the open. The downside was nothing major. After a quick dip in the first hour the stock indices rallied into midday. They then went into standby mode for two hours, awaiting the FOMC meeting announcement.
The FOMC spoke. Some said it was more hawkish. Some said it was more dovish. Ah, obviously a very clear, transparent statement. It said the economic issues caused by lower oil prices were transitory (a favorite Fed word) and that the jobs market remained strong. Then the Fed added to that: "labor market conditions improved further even as economic growth slowed late in the year." Could it be the Fed is actually acknowledging that the jobs market is lagging? Wow, the Fed actually acknowledging one of the very well known economic truths? If that was the case, the Fed statement was more dovish.
The market didn't see it that way. Stocks jumped for a few seconds then rolled over and sold to lower lows. Much lower lows.
SP500 -20.68, -1.09%
NASDAQ -99.50, -2.18%
DJ30 -222.17, -1.38%
SP400 -1.02%
RUTX -1.50%
SOX -1.20%
VOLUME: NYSE +9.5%, NASDAQ +7%. Volume solidly back above average after fading on the relief move. NASDAQ moved up above average as well as its stocks struggled with a 2+% loss.
A/D: NYSE -1.7:1, NASDAQ -2.4:1. Very mild given the selling. That shows much of the weakness was in the big names, e.g. AAPL, BA.
The market looked good on its bounce move. Then the FOMC intervened and the index charts finished bearish. Of course with FOMC announcements the reaction can take a session or more to show the market's true view. We adjusted positions accordingly, closing SPY calls, taking the rest of the AMZN gain. The action was pretty bearish post-FOMC.
Then after hours FB really trounced earnings on the top and bottom line. PYPL was not bad. EBAY missed, but not everyone can hit. FB surged. GOOG, AMZN joined in as well as they too jumped after hours.
If the Fed was just out of the way, not making announcement, indeed not even acting UNLESS in a time of crisis such as a war. The Fed's role has morphed into an economic micromanagement position, prostrating itself before financial markets. And Congress cannot even pass a bill to allow an audit to see where the Fed is putting our money? That is the old government power grab ploy: how can we be independent if anyone has oversight? Well, the entire PURPOSE of our government under the Constitution is oversight and checks and balances. How one body that controls our finances and retirements can hoodwink people into thinking that any oversight whatsoever is bad for the country shows how far we have progressed down the road away from representative rule. But, of course, I digress.
So, the Fed causes markets to sell but then markets rebound when new facts emerge. Perhaps the move higher continues off of these earnings. The big names were higher after hours, but they were still below their Wednesday session highs. Once more we are waiting to see how stocks react after the Fed's latest pronouncement.
THE MARKET
TECHNICAL PICTURE
A pretty ugly afternoon rollover after a solid upside move. Rollovers at the 10 day EMA, the first resistance point in a rebound, and if it holds and pushes the indices lower that details a truly weak market. After hours big names were bouncing and they control the market. The indices will at least have a chance to test the 10 day EMA again, and with the catalyst of some good results may be able to turn the post-FOMC selling back upside for a continued relief move.
CHARTS
SP500: Rallied nicely through the 10 day EMA, moving from low to high. Then the FOMC result and SP500 sold back through the 10 day and lower. Manage to recover a bit to hold the recent lows, leaving SP500 with a chance at continuing the relief move. Not bad to hold this level, and if the big names throw in, the relief rally continues.
NASDAQ: Rather ugly with a fourth straight test of the 10 day EMA with a third consecutive lower intraday high. From their NASDAQ fell sharply. At least it filled the gap from the Friday upside surge. With the big names such as GOOG, AMZN moving higher after hours, NASDAQ will get another shot at the 10 day (4555).
DJ30: Similar action, moving up through the 10 day EMA intraday and then reversing to the downside. Okay, now it has to show it can hold and rebound versus hold and fold.
RUTX: Very similar to DJ30, working laterally in a fairly tight range just below the 10 day EMA. Up a day, down the next, repeat pattern, taking what was gained, regaining what was taken. Not a bad setup to make the continued upside break.
SP400: Just like SP500, the midcaps rallied to a higher high on this move then reversed to close below the 10 day.
SOX: Pretty nice action, moving through the 10 day EMA on the high, matching the Tuesday intraday high, then fading. Filled the Friday upside gap on the low, recovered decently. Despite all of the horrid patterns in the sector, SOX can still put in an oversold relief move after this test.
LEADERSHIP
Big Names: Some pretty ugly patterns on the close what with the intraday reversals, but the afterhours action is trying to wash that away. FB is trading at the late December peak near 106 after diving lower toward the 200 day SMA. AMZN rolled over on volume but is just over the 10 day EMA after hours. GOOG rolled over on higher trade but is near the intraday higher afterhours. NFLX is diving lower, no longer in leadership status. SBUX continues hanging rather nicely in its patterns. Ugly close, saved after the bell.
Energy: CVX surged but purged it all in a big intraday reversal. Ditto XOM, putting in a lower high after a lower low. SWN surged but faded much of the move though still quite nice. GPOR ripped higher. HAL continues trending lower. Still mixed with smaller issues performing a bit better.
Retail: DDS moving up to the 50 day SMA in a continued recovery. M holding at the 50 day SMA, posting a modest gain in a nice pattern. COST struggles. BBBY trying to put in a short term double bottom on rising MACD. COH moving well after earnings; a test of the move could be good. DG continued upside through the 200 day SMA. Still some improvement.
Chips: XLNX still holding its takeout gap. MCHP still in a bear flag but hasn't broken yet. ARMH broke sharply lower from its upside move. AVGO, NXPI fading but not diving. QRVO on the other hand is diving lower.
Financial: JPM showing a big tombstone doji at the 10 day EMA. MA bombed lower on strong volume. GS tried to rally, faded well off the high, but still likely tries a bounce.
Biotech/Drugs: AMGN and CELG both bombed lower from the bear flag.
Metals: FCX is actually bouncing, moving higher on strong volume. Interesting. AKS looks like crud. STLD took a breather after surging to the 50 day MA.
Industrials: MMM surged to the 50 day EMA, faded much of the move after hitting October interim peak; rollover? UTX trying to find some support but not doing much yet. DE bounced but gave most of it up in its four month trading range.
MARKET STATISTICS
NASDAQ
Stats: -99.51 points (-2.18%) to close at 4468.17
Volume: 2.046B (+6.65%)
Up Volume: 473.24M (-1.047B)
Down Volume: 1.62B (+1.169B)
A/D and Hi/Lo: Decliners led 2.34 to 1
Previous Session: Advancers led 2.44 to 1
New Highs: 10 (+4)
New Lows: 94 (+7)
S&P
Stats: -20.68 points (-1.09%) to close at 1882.95
NYSE Volume: 1.1B (+9.45%)
A/D and Hi/Lo: Decliners led 1.65 to 1
Previous Session: Advancers led 5.07 to 1
New Highs: 22 (+5)
New Lows: 50 (-25)
DJ30
Stats: -222.77 points (-1.38%) to close at 15944.46
SENTIMENT INDICATORS
VIX: 23.11; +0.61
VXN: 27.27; +0.85
VXO: 24.38; +0.66
Put/Call Ratio (CBOE): 0.95; +0.07
Recent history: Second straight sub-1.00 session, even on the rollover. Over 1.0 for 16 of the last 19 sessions. 30 of 43 sessions above 1.0.
Bulls and Bears: Bulls falling further below 35% and bears as bears continue to rise over 35%. Very bullish signal and the market is finally reacting a bit.
Bulls: 26.8 versus 28.6. Still well below 35%.
Bears: 36.1 versus 35.7. Above 35% is bullish.
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 26.8%
28.6% versus 34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus 45.4% versus 43.3% versus 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 in 2015 since the 2008 and 2009 market plummet.
Bears: 36.1%
35.7% versus 31.6% versus 29.6% versus 29.6% versus 27.6% versus 26.8% versus 26.8% versus 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. Both occurred in fall 2015.
OTHER MARKETS
Bonds (10 year): 2.019% versus 2.01%. After a good test TLT looks ready to rally again.
Historical: 2.01% versus 2.01% versus 2.05% versus 2.01% versus 1.99% versus 2.05% versus 2.03% versus 2.09% versus 2.07% versus 2.105% versus 2.17% versus 2.11% versus 2.15% versus 2.18% versus 2.25% versus 2.18% versus 2.24% versus 2.27% versus 2.30% versus 2.30% versus 2.23% versus 2.26% versus 2.24% versus 2.20% versus 2.19% versus 2.24% versus 2.29% versus 2.27% versus 2.23% versus 2.13% versus 2.23% versus 2.21% versus 2.23% versus 2.23% versus 2.27% versus 2.33% versus 2.18%
EUR/USD: 1.0899 versus 1.0854
Historical: 1.0854 versus 1.0849 versus 1.0798 versus 1.0769 versus 1.0815 versus 1.0910 versus 1.0917 versus 1.0869 versus 1.0879 versus 1.0851 versus 1.0854 versus 1.0921 versus 1.0937 versus 1.0789 versus 1.0748 versus 1.0835 versus 1.0934 versus 1.0928 versus 1.0972 versus 1.0963 versus 1.0917 versus 1.0953 versus 1.0920 versus 1.0868 versus 1.0818 versus 1.08334 versus 1.0934 versus 1.0992 versus 1.0987 versus 1.0944 versus 1.1029 versus 1.0892 versus 1.0844 versus 1.0872 versus 1.0948 versus 1.0595
USD/JPY: 118.64 versus 118.48. After a short test of the 10 day EMA it looks as if USD is ready to rise again and take back more of that December decline.
Historical: 118.48 versus 118.32 versus 118.78 versus 118.85 versus 116.99 versus 117.60 versus 117.02 versus 118.06 versus 117.72 versus 117.50 versus 117.73 versus 117.71 versus 117.24 versus 117.58 versus 118.25 versus 119.02 versus 119.397 versus 120.495 versus 120.45 versus 120.345 versus 120.295 versus 120.86 versus 121.01 versus 121.33 versus 122.30 versus 122.68 versus 122.35 versus 121.64
Oil: 32.16, +0.71. After EIA reported an 8.3M bbl build and API an 11+M bbl build, oil still rose. Looks as if it has put in a near term bottom as it rose on bearish news. I suppose that is good for stocks.
Gold: 1124.90, +4.70. Continuing the run toward the 200 day SMA, but that still puts it well below the October high at 1188ish.
THURSDAY
Yes everyone is focused tomorrow morning on . . . Durable Goods Orders? They are out before the open and it will be interesting to see how many the government says were sold even as manufacturing has tanked the past six months.
The durables will be interesting but of course earnings has the stage. AAPL missed but afterhours FB beat handily and that has GOOG, AMZN and others sporting some solid afterhours gains, recovering back close to intraday highs lost post-FOMC.
We will have to see how the FOMC versus earnings battle plays out as the market digests what was in our view a fairly dovish statement even if it didn't say it would hold off hikes. It would look incredibly foolish if it did say that. Of course it will look even more foolish if the economy dives into a recession with the big corporations finally following most other companies already suffering. With, of course, the market leading the way. But, that is the Fed's cross to bear and they are big boys and girls. Heck, let them look absolutely foolish. That would only help in getting reforms made. Ha ha ha ha! Yea, that will happen.
As noted earlier, the indices likely get another shot at the 10 day EMA. SOX, RUTX look fully capable of taking it out. We will see. The market either continues its relief move after a pause or it rolls over. It will certainly let us know. What would be most instructive? A move higher early on the earnings and then another reversal. That would tell a pretty serious downside story. If so, this was a weak bounce and a strong selling episode is about to continue. Not sure it is ready to roll over just yet. Again, how it reacts to the afterhours earnings vis- -vis the Wednesday rollover tells a lot.
We see some upside possibilities, e.g. FCX . . . but not a lot more. So many stocks have bounced but in otherwise downside patterns. We see more downside possibilities at this juncture than upside, and that says a lot about the market unless there is a character change wrought by earnings. Examples: XOM, NVDA, V, CLX, MMM, STMP . . . rebounded decently enough but now at resistance and appear to be struggling. We will see which side wins out and move that way, though we will have more plays downside from the look of it.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4468.17
Resistance:
4485 are the twin July 2014 peaks
4517-4506 from the September 2015 and August 2015 closing lows
The 10 day EMA at 4555
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4736 is the early January lower gap point downside, the last downside gap in the selloff.
4751 is the January 2015 lower high
4774 is the January 2-15 high
The 50 day EMA at 4809
4811 is the November 2014 peak (intraday)
4815 is the December 2014 peak
The March 2015 lows at 4843 and 4825
4902 is the July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October
The 200 day SMA at 4955
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
5162 is the early November peak, 5176 is the December intraday peak
5164 is the June 2015 peak, 5175 is the August intraday peak
5232 is the July high
Support:
4471 is the January 2016 closing low
4352 is the March 2014 peak
4313 is the January 2016 intraday low
4292 is the August 2015 low
S&P 500: Closed at 1882.95
Resistance:
1897 is the prior all-time high hit in April 2014
1902 from early May was the intraday all-time high.
The 10 day EMA at 1899
1905 is the August 2014 low
1913 is the early September 2015 closing low testing the bounce from the August selling
1972 is the December 2014 low
The 50 day EMA at 1983
1991 is the July 2014 high
1995 is the September 2015 recovery peak
2011 is the September prior all-time high
2040 is the March 2015 closing low
2046 is the July 2015 closing low
The 200 day SMA at 2047
2062 is the January 2015 lower high
2079 is the intraday all-time high from November 2014
2094 is the December 2014 high, the prior all-time high
2104 is the December 2015 high
2116 is the November 2015 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:
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
1859 is the January 2016 closing low
1820 is the October 2014 intraday low
1815 is the April 2014 low
1772 are the Q4 2013 highs and lows
Dow: Closed at 15,944.46
Resistance:
16,026 is the April 2014 low
16,058 is the early September 2015 low
The 10 day EMA at 16,116
16,117 is the October 2014 closing low
16,368 is the August 2014 low
16,506 is the March 2014 peak
16,589 is the December 2013 former all-time high
16,632 is the April 2014 peak
16,665 is the late August 2015 closing high
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,736 is a prior all-time high from May 2014
16,740 is the mid-September peak and potential apex for a right shoulder to a head and shoulders pattern
The 50 day EMA at 16,873
16,933 is the September 2015 recovery peak
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
17067 is the December 2014 low
17,068 is the early July 2014 peak
17,152 is the mid-July post bear market high
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,399
June 2015 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
17,978 is the November 2015 peak
Support:
15,855 is the October 2014 intraday low
15,766 is the January closing low
15,666 is the August 2015 closing low
15,450 is the January 2016 intraday low
15,372 is the February 2014 low
15,370 is the August 2015 low
ECONOMIC CALENDAR
January 26 - Tuesday
Case-Shiller 20-city, November (9:00): 5.8% actual versus 5.8% expected, 5.5% prior
FHFA Housing Price I, November (9:00): 0.5% actual versus 0.5% prior
Consumer Confidence, January (10:00): 98.1 actual versus 96.8 expected, 96.3 prior (revised from 96.5)
January 27 - Wednesday
MBA Mortgage Index, 01/23 (7:00): +8.8% actual versus +9.0% prior
New Home Sales, December (10:00): 544K actual versus 506K expected, 491K prior (revised from 490K)
Crude Inventories, 01/23 (10:30): 8.383M actual versus 3.979M prior
FOMC Rate Decision, January (14:00): 0.5% expected, 0.5% prior
January 28 - Thursday
Initial Claims, 01/23 (8:30): 285K expected, 293K prior
Continuing Claims, 01/23 (8:30): 2230K expected,
Durable Orders, December (8:30): -0.5% expected, 0.0% prior
Durable Goods -ex tr, December (8:30): -0.1% expected, 0.0% prior
Pending Home Sales, December (10:00): 0.8% expected, -0.9% prior
Natural Gas Inventor, 01/23 (10:30): -178 bcf prior
January 29 - Friday
GDP-Adv., Q4 (8:30): 0.9% expected, 2.0% prior
GDP Deflator, Q4 (8:30): 0.9% expected, 1.3% prior
Employment Cost Index, Q4 (8:30): 0.6% expected, 0.6% prior
Chicago PMI, January (9:45): 45.0 expected, 42.9 prior
Michigan Sentiment - Final, January (10:00): 93.2 expected, 92.6 prior
End part 1 of 3
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Monday, January 25, 2016
The Daily, Part 1 of 3, 1-25-16
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1/25/2016 Investment House Report
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Entry alerts: CVX; LRCX; MA
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.
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MARKET SUMMARY
- Post-stimulus speculation is not that bounce worthy.
- Two days up in a bounce to the 10 day EMA now a test.
- Just a pause in the bounce or a new rollover?
- Economic data continues to stink as Dallas Fed Survey bombs lower again.
- Some stocks look ready to rebound after tests, suggesting the market may bounce as well.
Oh no, stocks did not rise to start the week after a Thursday and Friday rally off a huge intraday reach lower and reversal. It would appear Friday's speculation/rumor/hope of more stimulus from the BOJ, PBOC, and maybe some conciliatory language from the FOMC had the half life of Scott Walker's presidential run.
That must mean the bounce attempt is over. Well, it could, particularly given the indices tested the 10 day EMA, the first level of resistance after any significant plunge, and fell back. Index losses ranged from -1.3% to -2.3%, and indices such as SP500 just don't look all that great.
SP500 -29.82, -1.56%
NASDAQ -77.69, -1.58%
DJ30 -208.29, -1.29%
SP400 -2.05%
RUTX -2.28%
SOX -1.44%
VOLUME: NYSE -8.7%, NASDAQ -10.2%. The price action was weak all session, but volume faded to average on NASDAQ while NYSE trade managed to hold just above average. The key is volume did not expand on this downside day after a couple of good advances off the Wednesday reversal. Not the same kind of high volume dumping seen ahead of the Wednesday reversal. That leaves the door open that Monday was more of a pause in the relief rally versus a return to the downside for good without any additional recovery.
A/D: NYSE -5.5:1, NASDAQ -2.9:1. Pretty salty downside breadth for sure.
Okay, so the percentage losses were ugly but volume was relatively much lighter than either the downside or upside of late. Surely the look of the indices with the bounce to the 10 day EMA and then the reversal is not good. SP500 seems to stand out to us as weak.
That said, often a tradable relief move will show a strong initial surge and then pause. That pause acts as something of an additional shakeout, the 'oh no here we go again' move that gets the rest of the sellers out near term. That sets the stage for a continuation move.
Coupled with the massively negative internals, 12+% losses on this leg alone, and the negative sentiment with bulls crossing down through bears (and vice versa), the stage for a move was set. More of a move than the two days shown thus far.
That is why, while we did move into some downside on Monday (CVX, LRCX, MA), we didn't wholesale move back in on the downside. Oh we have plays ready to go and will have more (e.g. AMZN, perhaps AAPL, perhaps more GOOG), but a low volume pause off of a good setup and start to a relief move will need to show it is serious. Monday was pretty serious -- 1.3% to 2.3% losses are not chicken feed -- if it continues, we play the downside again, a bit earlier than we anticipated.
NEWS/ECONOMY
Not a lot of new news to start the week, but what was out there was impressive.
Dallas Fed Survey, January: -34.0 versus -14.5 expected versus -20.1 December.
Thirteenth month of contraction, and the move is only picking up speed to the downside. To find a reading this low you have to, not surprisingly, go back into the teeth of the Great Recession. It would appear that the oil crash is doing just what it did to Texas and other oil producing states and regions in the early to mid-1980's: crush the new wealth creation, thus plunging the housing and commercial real estate markets into a black hole (how long will 'Texas Flip and Sale' and all of those other HGTV/DIY Network property reality shows based in Texas stay on the air?). It could once again be a great time to buy real property in Texas -- in a few years.
Jobs: Sprint throws its hat into the layoff ring, firing 2,500 employees or 8% of its total workforce. SLB cans 10K, Wall Street firms have already announced layoffs. Hundreds of thousands more still to come as many companies in the oil regions go out of business. Good times ahead as the rest of the economy joins the rest of the country already in recession.
M&A: JCI and TYC agree to an inversion deal. Congress may have thought it did away with those. Oh no, better go in front of the cameras, bluster and posture about your outrage, then pass some bill that is supposed to block these deals (versus fixing the issues that make them lucrative to US companies) but of course has some pork in it for your favorite companies that provide Congressmen with inside information to make their fortunes while in Congress. Isn't that what it is all about? Go to DC, get great healthcare and benefits for life, get a pension, and make yourself rich on insider information when you didn't have the ability to do that on your own in the private sector? Oh, but I digress and just perhaps show some anger at our leaders. That must make me a bitter clinger.
THE MARKET
TECHNICAL PICTURE
Critical juncture for the stock indices after a reversal and move to first resistance at the 10 day EMA. All faded back from that level Monday. It was not much through early afternoon, but then the selling ramped up, pushing stocks sharply lower into the close.
An oversold bounce with internals this extreme generally yields more than a 2-day bounce. Again, a critical juncture for the bounce move after the Monday selling.
CHARTS
SP500: After touching the 10 day EMA on the Friday close SP500 gave up the majority of that rally. Volume was lower, still above average but the lowest in three weeks. No major share dumping, closing right at the upper gap point from Friday. This is where SP500 shows us it is still ready to move higher or not.
NASDAQ: Tried higher above the 10 day EMA then turned lower and sold into the Friday gap point. Volume fell to average, also the lowest in three weeks for NASDAQ. No heavy dumping here either. Good surge higher, fading on low volume. As with SP500 we will see if this is just NASDAQ making a low volume test of the initial relief bounce move.
DJ30: Same action, turning lower after coming close ot the 10 day EMA Friday. Very low volume on the fade, again showing more a lack of buyers than new sellers rushing in.
RUTX: Same action as DJ30, falling back from the 10 day EMA after the bounce from the lows.
SP400: Also turning down from the 10 day EMA. Same story as the other indices.
SOX: After gapping up through the 10 day EMA Friday, SOX fell below it to start the week, Almost filled the gap from Friday. Not a bad test of the move, that is an island reversal: gapped lower 6 sessions back, gapped back upside Thursday and Friday. Now testing that move, and looks as if SOX wants to move back up despite the Monday drop.
LEADERSHIP
Energy: Did not look all that anxious to move upside Monday. CVX gapped lower, tried higher but failed. SLB failed at the 20 day EMA for the second session after gapping to that level Friday. GPOR is in a nice test of its break over the 50 day EMA. Ditto SWN; nice test. XEC on the other hand is bombing to a lower low.
Big Names: AMZN surged to the 20 day EMA then reversed to flat. Good move higher, now decision time. GOOG rallied a bit higher then reversed below the 50 day MA; looks weak, lighter trade. AAPL Sold back from the 20 day EMA. Still in position to move higher but earnings after the close; could be interesting. FB faded ot the 10 day EMA, still in position to continue higher. SBUX faded from the 50 day EMA but on lower volume.
Retail: Some tests of the move higher. M fell through the 50 day EMA but to the 10 day EMA. JWN testing on lower volume. DDS looks very good, holding the move off the lows. WMT rallied on higher volume. LOW gapped higher then reversed to close lower. Might be a new leg down coming.
Chips: Some sold hard such as LRCX, falling lower on rising, above average volume. Others are holding the bounce decently, e.g. ARMH. A very mixed bag.
Financial: Look like crud. JPM sells lower form the modest bounce. GS Flopped, giving up all the Friday move. BAC bombed lower on high volume. MA sold off from the 10 day EMA on rising trade.
Biotech/Drugs: AMGN still looks interesting downside, tapping the 200 day SMA and flipping negative on rising trade. CELG struggling at the 20 day EMA though volume fall back to average. BIIB sold down from the 10 day EMA, still likely in a bottoming process.
Utilities. EQT in a nice test of the move higher, looking for a new entry. Electric utilities are falling again, e.g. PCG, AEP.
Materials: LPX falls hard on rising, above average volume. CX continues its trend lower.
MARKET STATISTICS
NASDAQ
Stats: -72.69 points (-1.58%) to close at 4518.49
Volume: 1.876B (-10.17%)
Up Volume: 353.2M (-1.487B)
Down Volume: 1.58B (+1.279B)
A/D and Hi/Lo: Decliners led 2.91 to 1
Previous Session: Advancers led 4.29 to 1
New Highs: 10 (-6)
New Lows: 119 (+56)
S&P
Stats: -29.82 points (-1.56%) to close at 1877.08
NYSE Volume: 1.05B (-8.7%)
A/D and Hi/Lo: Decliners led 5.45 to 1
Previous Session: Advancers led 8.36 to 1
New Highs: 16 (+6)
New Lows: 97 (+69)
DJ30
Stats: -208.29 points (-1.29%) to close at 15885.22
SENTIMENT INDICATORS
VIX: 24.15; +1.81
VXN: 27.54; +1.8
VXO: 24.47; +1.29
Put/Call Ratio (CBOE): 1.03; -0.08
Recent history: Over 1.0 for 16 of the last 17 sessions. 30 of 41 sessions above 1.0.
Bulls and Bears: Bulls falling further below 35% and bears as bears continue to rise over 35%. Very bullish signal and the market is finally reacting a bit.
Bulls: 26.8 versus 28.6. Still well below 35%.
Bears: 36.1 versus 35.7. Above 35% is bullish.
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 26.8%
28.6% versus 34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus 45.4% versus 43.3% versus 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 in 2015 since the 2008 and 2009 market plummet.
Bears: 36.1%
35.7% versus 31.6% versus 29.6% versus 29.6% versus 27.6% versus 26.8% versus 26.8% versus 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. Both occurred in fall 2015.
OTHER MARKETS
Bonds (10 year): 2.01% versus 2.05%. Gapped to a doji off the 10 day EMA test to end last week. Strong run, test of near support, starting to bounce.
Historical: 2.05% versus 2.01% versus 1.99% versus 2.05% versus 2.03% versus 2.09% versus 2.07% versus 2.105% versus 2.17% versus 2.11% versus 2.15% versus 2.18% versus 2.25% versus 2.18% versus 2.24% versus 2.27% versus 2.30% versus 2.30% versus 2.23% versus 2.26% versus 2.24% versus 2.20% versus 2.19% versus 2.24% versus 2.29% versus 2.27% versus 2.23% versus 2.13% versus 2.23% versus 2.21% versus 2.23% versus 2.23% versus 2.27% versus 2.33% versus 2.18%
EUR/USD: 1.0849 versus 1.0798. Trying to bounce off the bottom of the two month range.
Historical: 1.0798 versus 1.0769 versus 1.0815 versus 1.0910 versus 1.0917 versus 1.0869 versus 1.0879 versus 1.0851 versus 1.0854 versus 1.0921 versus 1.0937 versus 1.0789 versus 1.0748 versus 1.0835 versus 1.0934 versus 1.0928 versus 1.0972 versus 1.0963 versus 1.0917 versus 1.0953 versus 1.0920 versus 1.0868 versus 1.0818 versus 1.08334 versus 1.0934 versus 1.0992 versus 1.0987 versus 1.0944 versus 1.1029 versus 1.0892 versus 1.0844 versus 1.0872 versus 1.0948 versus 1.0595
USD/JPY: 118.32 versus 118.78. Faded to the 10 day EMA after the surge last week. Normal test thus far.
Historical: 118.78 versus 118.85 versus 116.99 versus 117.60 versus 117.02 versus 118.06 versus 117.72 versus 117.50 versus 117.73 versus 117.71 versus 117.24 versus 117.58 versus 118.25 versus 119.02 versus 119.397 versus 120.495 versus 120.45 versus 120.345 versus 120.295 versus 120.86 versus 121.01 versus 121.33 versus 122.30 versus 122.68 versus 122.35 versus 121.64
Oil: 30.34, -1.85. touched the 20 day EMA on the high, reversed much of the move. The 20 day EMA acted as resistance in late November, late December. Now late January?
Gold: 1108.10, +11.80. Still working well, moving back up to the early January peak. Still quite solid.
TUESDAY
Okay, rebound off of extreme readings and new session lows. Bounce up to the 10 day EMA. A lower volume, but rather large, fade off of that move. Just a pause in a continuing relief bounce or a resumption of the downside?
Lots of stocks lower Monday, many falling from the near resistance, some quite hard. A pause is normal before a resumption of the move, but of course there is no guarantee the relief move continues. Often it does, particularly off of such nastily extreme internals and sentiment.
So, we watch for the oversold bounce to continue, and it likely tests nerves before it does, i.e. a further drop in the morning. The key at that point is if the shorts cover once more.
There are some upside plays we see setting up off of tests of recent moves; that is one reason we feel the market has more upside. For example, SWN, GPOR, EQT, VRSN, COG, CYBR, SAVE. Not the old market leaders, of course, but money is moving into some beaten up areas and some stocks that actually have decent patterns versus just getting clubbed and then lurching back up.
We will prep with some upside and some downside and let the market show us. Again, it looks as if the market remains a bit weaker early on this evening, but we are not going to assume that early weakness absolutely means the stock market remains lower. In short, we anticipate a move back up once more to continue the relief bounce. It is good to anticipate and prepare, but don't assume anything has to be.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4518.49
Resistance:
The 10 day EMA at 4575
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4736 is the early January lower gap point downside, the last downside gap in the selloff.
4751 is the January 2015 lower high
4774 is the January 2-15 high
4811 is the November 2014 peak (intraday)
4815 is the December 2014 peak
The March 2015 lows at 4843 and 4825
The 50 day EMA at 4833
4902 is the July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October
The 200 day SMA at 4959
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
5162 is the early November peak, 5176 is the December intraday peak
5164 is the June 2015 peak, 5175 is the August intraday peak
5232 is the July high
Support:
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
4352 is the March 2014 peak
4292 is the August 2015 low
S&P 500: Closed at 1877.08
Resistance:
1897 is the prior all-time high hit in April 2014
1902 from early May was the intraday all-time high.
The 10 day EMA at 1902
1905 is the August 2014 low
1913 is the early September 2015 closing low testing the bounce from the August selling
1972 is the December 2014 low
The 50 day EMA at 1990
1991 is the July 2014 high
1995 is the September 2015 recovery peak
2011 is the September prior all-time high
2040 is the March 2015 closing low
2046 is the July 2015 closing low
The 200 day SMA at 2049
2062 is the January 2015 lower high
2079 is the intraday all-time high from November 2014
2094 is the December 2014 high, the prior all-time high
2104 is the December 2015 high
2116 is the November 2015 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:
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
1820 is the October 2014 intraday low
1815 is the April 2014 low
1772 are the Q4 2013 highs and lows
Dow: Closed at 15,887.63
Resistance:
16,026 is the April 2014 low
16,058 is the early September 2015 low
16,117 is the October 2014 closing low
The 10 day EMA at 16,151
16,368 is the August 2014 low
16,506 is the March 2014 peak
16,589 is the December 2013 former all-time high
16,632 is the April 2014 peak
16,665 is the late August 2015 closing high
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,736 is a prior all-time high from May 2014
16,740 is the mid-September peak and potential apex for a right shoulder to a head and shoulders pattern
16,933 is the September 2015 recovery peak
The 50 day EMA at 16,941
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
17067 is the December 2014 low
17,068 is the early July 2014 peak
17,152 is the mid-July post bear market high
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,418
June 2015 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
17,978 is the November 2015 peak
Support:
15,855 is the October 2014 intraday low
15,666 is the August 2015 closing low
15,372 is the February 2014 low
15,370 is the August 2015 low
ECONOMIC CALENDAR
January 26 - Tuesday
Case-Shiller 20-city, November (9:00): 5.8% expected, 5.5% prior
FHFA Housing Price I, November (9:00): 0.5% prior
Consumer Confidence, January (10:00): 96.8 expected, 96.5 prior
January 27 - Wednesday
MBA Mortgage Index, 01/23 (7:00): +9.0% prior
New Home Sales, December (10:00): 506K expected, 490K prior
Crude Inventories, 01/23 (10:30): 3.979M prior
FOMC Rate Decision, January (14:00): 0.5% expected, 0.5% prior
January 28 - Thursday
Initial Claims, 01/23 (8:30): 285K expected, 293K prior
Continuing Claims, 01/23 (8:30): 2230K expected,
Durable Orders, December (8:30): -0.5% expected, 0.0% prior
Durable Goods -ex tr, December (8:30): -0.1% expected, 0.0% prior
Pending Home Sales, December (10:00): 0.8% expected, -0.9% prior
Natural Gas Inventor, 01/23 (10:30): -178 bcf prior
January 29 - Friday
GDP-Adv., Q4 (8:30): 0.9% expected, 2.0% prior
GDP Deflator, Q4 (8:30): 0.9% expected, 1.3% prior
Employment Cost Index, Q4 (8:30): 0.6% expected, 0.6% prior
Chicago PMI, January (9:45): 45.0 expected, 42.9 prior
Michigan Sentiment - Final, January (10:00): 93.2 expected, 92.6 prior
End part 1 of 3
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1/25/2016 Investment House Report
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MARKET ALERTS:
Targets hit: AMZN
Entry alerts: CVX; LRCX; MA
Trailing stops: None issued
Stop alerts: None issued
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The REPORTS SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- Post-stimulus speculation is not that bounce worthy.
- Two days up in a bounce to the 10 day EMA now a test.
- Just a pause in the bounce or a new rollover?
- Economic data continues to stink as Dallas Fed Survey bombs lower again.
- Some stocks look ready to rebound after tests, suggesting the market may bounce as well.
Oh no, stocks did not rise to start the week after a Thursday and Friday rally off a huge intraday reach lower and reversal. It would appear Friday's speculation/rumor/hope of more stimulus from the BOJ, PBOC, and maybe some conciliatory language from the FOMC had the half life of Scott Walker's presidential run.
That must mean the bounce attempt is over. Well, it could, particularly given the indices tested the 10 day EMA, the first level of resistance after any significant plunge, and fell back. Index losses ranged from -1.3% to -2.3%, and indices such as SP500 just don't look all that great.
SP500 -29.82, -1.56%
NASDAQ -77.69, -1.58%
DJ30 -208.29, -1.29%
SP400 -2.05%
RUTX -2.28%
SOX -1.44%
VOLUME: NYSE -8.7%, NASDAQ -10.2%. The price action was weak all session, but volume faded to average on NASDAQ while NYSE trade managed to hold just above average. The key is volume did not expand on this downside day after a couple of good advances off the Wednesday reversal. Not the same kind of high volume dumping seen ahead of the Wednesday reversal. That leaves the door open that Monday was more of a pause in the relief rally versus a return to the downside for good without any additional recovery.
A/D: NYSE -5.5:1, NASDAQ -2.9:1. Pretty salty downside breadth for sure.
Okay, so the percentage losses were ugly but volume was relatively much lighter than either the downside or upside of late. Surely the look of the indices with the bounce to the 10 day EMA and then the reversal is not good. SP500 seems to stand out to us as weak.
That said, often a tradable relief move will show a strong initial surge and then pause. That pause acts as something of an additional shakeout, the 'oh no here we go again' move that gets the rest of the sellers out near term. That sets the stage for a continuation move.
Coupled with the massively negative internals, 12+% losses on this leg alone, and the negative sentiment with bulls crossing down through bears (and vice versa), the stage for a move was set. More of a move than the two days shown thus far.
That is why, while we did move into some downside on Monday (CVX, LRCX, MA), we didn't wholesale move back in on the downside. Oh we have plays ready to go and will have more (e.g. AMZN, perhaps AAPL, perhaps more GOOG), but a low volume pause off of a good setup and start to a relief move will need to show it is serious. Monday was pretty serious -- 1.3% to 2.3% losses are not chicken feed -- if it continues, we play the downside again, a bit earlier than we anticipated.
NEWS/ECONOMY
Not a lot of new news to start the week, but what was out there was impressive.
Dallas Fed Survey, January: -34.0 versus -14.5 expected versus -20.1 December.
Thirteenth month of contraction, and the move is only picking up speed to the downside. To find a reading this low you have to, not surprisingly, go back into the teeth of the Great Recession. It would appear that the oil crash is doing just what it did to Texas and other oil producing states and regions in the early to mid-1980's: crush the new wealth creation, thus plunging the housing and commercial real estate markets into a black hole (how long will 'Texas Flip and Sale' and all of those other HGTV/DIY Network property reality shows based in Texas stay on the air?). It could once again be a great time to buy real property in Texas -- in a few years.
Jobs: Sprint throws its hat into the layoff ring, firing 2,500 employees or 8% of its total workforce. SLB cans 10K, Wall Street firms have already announced layoffs. Hundreds of thousands more still to come as many companies in the oil regions go out of business. Good times ahead as the rest of the economy joins the rest of the country already in recession.
M&A: JCI and TYC agree to an inversion deal. Congress may have thought it did away with those. Oh no, better go in front of the cameras, bluster and posture about your outrage, then pass some bill that is supposed to block these deals (versus fixing the issues that make them lucrative to US companies) but of course has some pork in it for your favorite companies that provide Congressmen with inside information to make their fortunes while in Congress. Isn't that what it is all about? Go to DC, get great healthcare and benefits for life, get a pension, and make yourself rich on insider information when you didn't have the ability to do that on your own in the private sector? Oh, but I digress and just perhaps show some anger at our leaders. That must make me a bitter clinger.
THE MARKET
TECHNICAL PICTURE
Critical juncture for the stock indices after a reversal and move to first resistance at the 10 day EMA. All faded back from that level Monday. It was not much through early afternoon, but then the selling ramped up, pushing stocks sharply lower into the close.
An oversold bounce with internals this extreme generally yields more than a 2-day bounce. Again, a critical juncture for the bounce move after the Monday selling.
CHARTS
SP500: After touching the 10 day EMA on the Friday close SP500 gave up the majority of that rally. Volume was lower, still above average but the lowest in three weeks. No major share dumping, closing right at the upper gap point from Friday. This is where SP500 shows us it is still ready to move higher or not.
NASDAQ: Tried higher above the 10 day EMA then turned lower and sold into the Friday gap point. Volume fell to average, also the lowest in three weeks for NASDAQ. No heavy dumping here either. Good surge higher, fading on low volume. As with SP500 we will see if this is just NASDAQ making a low volume test of the initial relief bounce move.
DJ30: Same action, turning lower after coming close ot the 10 day EMA Friday. Very low volume on the fade, again showing more a lack of buyers than new sellers rushing in.
RUTX: Same action as DJ30, falling back from the 10 day EMA after the bounce from the lows.
SP400: Also turning down from the 10 day EMA. Same story as the other indices.
SOX: After gapping up through the 10 day EMA Friday, SOX fell below it to start the week, Almost filled the gap from Friday. Not a bad test of the move, that is an island reversal: gapped lower 6 sessions back, gapped back upside Thursday and Friday. Now testing that move, and looks as if SOX wants to move back up despite the Monday drop.
LEADERSHIP
Energy: Did not look all that anxious to move upside Monday. CVX gapped lower, tried higher but failed. SLB failed at the 20 day EMA for the second session after gapping to that level Friday. GPOR is in a nice test of its break over the 50 day EMA. Ditto SWN; nice test. XEC on the other hand is bombing to a lower low.
Big Names: AMZN surged to the 20 day EMA then reversed to flat. Good move higher, now decision time. GOOG rallied a bit higher then reversed below the 50 day MA; looks weak, lighter trade. AAPL Sold back from the 20 day EMA. Still in position to move higher but earnings after the close; could be interesting. FB faded ot the 10 day EMA, still in position to continue higher. SBUX faded from the 50 day EMA but on lower volume.
Retail: Some tests of the move higher. M fell through the 50 day EMA but to the 10 day EMA. JWN testing on lower volume. DDS looks very good, holding the move off the lows. WMT rallied on higher volume. LOW gapped higher then reversed to close lower. Might be a new leg down coming.
Chips: Some sold hard such as LRCX, falling lower on rising, above average volume. Others are holding the bounce decently, e.g. ARMH. A very mixed bag.
Financial: Look like crud. JPM sells lower form the modest bounce. GS Flopped, giving up all the Friday move. BAC bombed lower on high volume. MA sold off from the 10 day EMA on rising trade.
Biotech/Drugs: AMGN still looks interesting downside, tapping the 200 day SMA and flipping negative on rising trade. CELG struggling at the 20 day EMA though volume fall back to average. BIIB sold down from the 10 day EMA, still likely in a bottoming process.
Utilities. EQT in a nice test of the move higher, looking for a new entry. Electric utilities are falling again, e.g. PCG, AEP.
Materials: LPX falls hard on rising, above average volume. CX continues its trend lower.
MARKET STATISTICS
NASDAQ
Stats: -72.69 points (-1.58%) to close at 4518.49
Volume: 1.876B (-10.17%)
Up Volume: 353.2M (-1.487B)
Down Volume: 1.58B (+1.279B)
A/D and Hi/Lo: Decliners led 2.91 to 1
Previous Session: Advancers led 4.29 to 1
New Highs: 10 (-6)
New Lows: 119 (+56)
S&P
Stats: -29.82 points (-1.56%) to close at 1877.08
NYSE Volume: 1.05B (-8.7%)
A/D and Hi/Lo: Decliners led 5.45 to 1
Previous Session: Advancers led 8.36 to 1
New Highs: 16 (+6)
New Lows: 97 (+69)
DJ30
Stats: -208.29 points (-1.29%) to close at 15885.22
SENTIMENT INDICATORS
VIX: 24.15; +1.81
VXN: 27.54; +1.8
VXO: 24.47; +1.29
Put/Call Ratio (CBOE): 1.03; -0.08
Recent history: Over 1.0 for 16 of the last 17 sessions. 30 of 41 sessions above 1.0.
Bulls and Bears: Bulls falling further below 35% and bears as bears continue to rise over 35%. Very bullish signal and the market is finally reacting a bit.
Bulls: 26.8 versus 28.6. Still well below 35%.
Bears: 36.1 versus 35.7. Above 35% is bullish.
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 26.8%
28.6% versus 34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus 45.4% versus 43.3% versus 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 in 2015 since the 2008 and 2009 market plummet.
Bears: 36.1%
35.7% versus 31.6% versus 29.6% versus 29.6% versus 27.6% versus 26.8% versus 26.8% versus 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. Both occurred in fall 2015.
OTHER MARKETS
Bonds (10 year): 2.01% versus 2.05%. Gapped to a doji off the 10 day EMA test to end last week. Strong run, test of near support, starting to bounce.
Historical: 2.05% versus 2.01% versus 1.99% versus 2.05% versus 2.03% versus 2.09% versus 2.07% versus 2.105% versus 2.17% versus 2.11% versus 2.15% versus 2.18% versus 2.25% versus 2.18% versus 2.24% versus 2.27% versus 2.30% versus 2.30% versus 2.23% versus 2.26% versus 2.24% versus 2.20% versus 2.19% versus 2.24% versus 2.29% versus 2.27% versus 2.23% versus 2.13% versus 2.23% versus 2.21% versus 2.23% versus 2.23% versus 2.27% versus 2.33% versus 2.18%
EUR/USD: 1.0849 versus 1.0798. Trying to bounce off the bottom of the two month range.
Historical: 1.0798 versus 1.0769 versus 1.0815 versus 1.0910 versus 1.0917 versus 1.0869 versus 1.0879 versus 1.0851 versus 1.0854 versus 1.0921 versus 1.0937 versus 1.0789 versus 1.0748 versus 1.0835 versus 1.0934 versus 1.0928 versus 1.0972 versus 1.0963 versus 1.0917 versus 1.0953 versus 1.0920 versus 1.0868 versus 1.0818 versus 1.08334 versus 1.0934 versus 1.0992 versus 1.0987 versus 1.0944 versus 1.1029 versus 1.0892 versus 1.0844 versus 1.0872 versus 1.0948 versus 1.0595
USD/JPY: 118.32 versus 118.78. Faded to the 10 day EMA after the surge last week. Normal test thus far.
Historical: 118.78 versus 118.85 versus 116.99 versus 117.60 versus 117.02 versus 118.06 versus 117.72 versus 117.50 versus 117.73 versus 117.71 versus 117.24 versus 117.58 versus 118.25 versus 119.02 versus 119.397 versus 120.495 versus 120.45 versus 120.345 versus 120.295 versus 120.86 versus 121.01 versus 121.33 versus 122.30 versus 122.68 versus 122.35 versus 121.64
Oil: 30.34, -1.85. touched the 20 day EMA on the high, reversed much of the move. The 20 day EMA acted as resistance in late November, late December. Now late January?
Gold: 1108.10, +11.80. Still working well, moving back up to the early January peak. Still quite solid.
TUESDAY
Okay, rebound off of extreme readings and new session lows. Bounce up to the 10 day EMA. A lower volume, but rather large, fade off of that move. Just a pause in a continuing relief bounce or a resumption of the downside?
Lots of stocks lower Monday, many falling from the near resistance, some quite hard. A pause is normal before a resumption of the move, but of course there is no guarantee the relief move continues. Often it does, particularly off of such nastily extreme internals and sentiment.
So, we watch for the oversold bounce to continue, and it likely tests nerves before it does, i.e. a further drop in the morning. The key at that point is if the shorts cover once more.
There are some upside plays we see setting up off of tests of recent moves; that is one reason we feel the market has more upside. For example, SWN, GPOR, EQT, VRSN, COG, CYBR, SAVE. Not the old market leaders, of course, but money is moving into some beaten up areas and some stocks that actually have decent patterns versus just getting clubbed and then lurching back up.
We will prep with some upside and some downside and let the market show us. Again, it looks as if the market remains a bit weaker early on this evening, but we are not going to assume that early weakness absolutely means the stock market remains lower. In short, we anticipate a move back up once more to continue the relief bounce. It is good to anticipate and prepare, but don't assume anything has to be.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4518.49
Resistance:
The 10 day EMA at 4575
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4736 is the early January lower gap point downside, the last downside gap in the selloff.
4751 is the January 2015 lower high
4774 is the January 2-15 high
4811 is the November 2014 peak (intraday)
4815 is the December 2014 peak
The March 2015 lows at 4843 and 4825
The 50 day EMA at 4833
4902 is the July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October
The 200 day SMA at 4959
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
5162 is the early November peak, 5176 is the December intraday peak
5164 is the June 2015 peak, 5175 is the August intraday peak
5232 is the July high
Support:
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
4352 is the March 2014 peak
4292 is the August 2015 low
S&P 500: Closed at 1877.08
Resistance:
1897 is the prior all-time high hit in April 2014
1902 from early May was the intraday all-time high.
The 10 day EMA at 1902
1905 is the August 2014 low
1913 is the early September 2015 closing low testing the bounce from the August selling
1972 is the December 2014 low
The 50 day EMA at 1990
1991 is the July 2014 high
1995 is the September 2015 recovery peak
2011 is the September prior all-time high
2040 is the March 2015 closing low
2046 is the July 2015 closing low
The 200 day SMA at 2049
2062 is the January 2015 lower high
2079 is the intraday all-time high from November 2014
2094 is the December 2014 high, the prior all-time high
2104 is the December 2015 high
2116 is the November 2015 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:
1872 is the September 2015 test low of the August low
1867 is the August 2015 low
1862 is the October 2014 closing low
1820 is the October 2014 intraday low
1815 is the April 2014 low
1772 are the Q4 2013 highs and lows
Dow: Closed at 15,887.63
Resistance:
16,026 is the April 2014 low
16,058 is the early September 2015 low
16,117 is the October 2014 closing low
The 10 day EMA at 16,151
16,368 is the August 2014 low
16,506 is the March 2014 peak
16,589 is the December 2013 former all-time high
16,632 is the April 2014 peak
16,665 is the late August 2015 closing high
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,736 is a prior all-time high from May 2014
16,740 is the mid-September peak and potential apex for a right shoulder to a head and shoulders pattern
16,933 is the September 2015 recovery peak
The 50 day EMA at 16,941
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
17067 is the December 2014 low
17,068 is the early July 2014 peak
17,152 is the mid-July post bear market high
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,418
June 2015 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
17,978 is the November 2015 peak
Support:
15,855 is the October 2014 intraday low
15,666 is the August 2015 closing low
15,372 is the February 2014 low
15,370 is the August 2015 low
ECONOMIC CALENDAR
January 26 - Tuesday
Case-Shiller 20-city, November (9:00): 5.8% expected, 5.5% prior
FHFA Housing Price I, November (9:00): 0.5% prior
Consumer Confidence, January (10:00): 96.8 expected, 96.5 prior
January 27 - Wednesday
MBA Mortgage Index, 01/23 (7:00): +9.0% prior
New Home Sales, December (10:00): 506K expected, 490K prior
Crude Inventories, 01/23 (10:30): 3.979M prior
FOMC Rate Decision, January (14:00): 0.5% expected, 0.5% prior
January 28 - Thursday
Initial Claims, 01/23 (8:30): 285K expected, 293K prior
Continuing Claims, 01/23 (8:30): 2230K expected,
Durable Orders, December (8:30): -0.5% expected, 0.0% prior
Durable Goods -ex tr, December (8:30): -0.1% expected, 0.0% prior
Pending Home Sales, December (10:00): 0.8% expected, -0.9% prior
Natural Gas Inventor, 01/23 (10:30): -178 bcf prior
January 29 - Friday
GDP-Adv., Q4 (8:30): 0.9% expected, 2.0% prior
GDP Deflator, Q4 (8:30): 0.9% expected, 1.3% prior
Employment Cost Index, Q4 (8:30): 0.6% expected, 0.6% prior
Chicago PMI, January (9:45): 45.0 expected, 42.9 prior
Michigan Sentiment - Final, January (10:00): 93.2 expected, 92.6 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
Sunday, January 24, 2016
The Daily, Part 1 of 3, 1-23-16
* * * *
1/23/2016 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: None issued
Entry alerts: SPY
Trailing stops: AMZN; FB
Stop alerts: COST
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
The REPORTS SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- Second day of the bounce holds as the relief move firms.
- Hope of further stimulus in Japan, China, and even the US (really?) has the market bounce working for now.
- Davos elites' words show their lack of understanding of what they tell us they understand.
- Lack of leadership in good patterns still points to just a relief move but that works.
The Wednesday reversal and the extreme internals and sentiment finally started yielding results. Thursday's gain was mostly frittered away. Friday, however, futures rallied very early and held the moves to the open. Stocks gapped higher and pretty much held the moves to the close. Oh there was a midday fade but it was really not that bad, just coming back to the pre-market levels. Stocks rallied back to near session highs at the close.
SP500 37.91, 2.03%
NASDAQ 119.12, 2.66%
DJ30 210.83, 1.33%
SP400 2.46%
RUTX 2.34%
SOX 1.85%
VOLUME: NYSE flat; NASDAQ -12%. NYSE trade was more or less flat, still holding above average. NASDAQ trade fell to the lowest in 12 sessions, still slightly above average. Lower volume on the rallies is characteristic of a relief move. No surprise there.
A/D: 8.4:1 NYSE, 43:1 NASDAQ. Impressive breadth, not typically characteristic of a relief move. Of course all stocks have been hammered lower so more stocks can rebound on an oversold bounce.
For once a strong price move following a reversal held. Okay, not the first time a good move higher occurred during the last could of weeks; 6 sessions back a strong reversal off a strong drop looked quite promising. The promise was broken the next session with a massive drop. Now the market has two upside days following the reversal. That is also not new in rebound attempts during this selling, but thus far this move is acting more like the rebound we were looking for, the one that bounces SP500 toward that mid-September high at 1990ish. Extremely negative internals, sentiment, and down 12+% from the late December low. It was ripe and Thursday and Friday were a good start.
Okay, so the stage was set. What was the trigger, or in common stock market 'analysis' on the financial stations, what was the cause?
What has caused all of the stock market moves since March 2009? Stimulus or the hope of stimulus. Friday speculation of more stimulus from around the world, from Kuroda in Japan this coming week, from China at any time, and even some conciliatory language from Chairman Yellen at this week's FOMC meeting.
It worked for the session, but will it work beyond a market bounce? Speculation, that is. It will take more than stimulus speculation to right the market such that new highs are reached. The economic condition is bad and worsening and won't change without major policy changes. That will take an election and then the right policies. If that is done, the next President could preside over a major economic expansion, a real one, as small business returns to the US. If anything were to happen before that, it would take more Fed easy money such as a return to QE. There is a lot of talk of negative rates, but negative rates will not have the same effect. It will force the rest of the money supply out of time assets (e.g. interest accounts), but it won't have the same impact as wanton QE.
So where does that leave this bounce? In the bounce category. Without a serious driver from the economy or the Fed's free money there is not much to push stocks upside. The large corporations did better thanks to QE and free money, but they are not doing as well now that QE ended 15 months ago and the economy continues to slide. Of course the small business climate remains horrid as the US still loses more businesses than it creates in this sixth year of this great recovery. Lower wages, poor job quality, higher costs (e.g. healthcare thanks to the Affordable Care Act) has pushed the middle class below 50% for the first time since the industrial revolution. Despite the glowing self-praise heard at the State of the Union Address a couple of weeks back, the state is not good.
That is extraordinarily perplexing to the ultra-wealthy class. Friday Blackstone's billionaire CEO Steven Schwartzman, in Davos of course skiing and carousing between 'hard-hitting' meetings regarding world affairs, expressed exasperation at the psyche of the average citizen: "I find the whole thing astonishing and what's remarkable is the amount of anger whether it's on the republican or democratic side. Bernie Sanders, to me, is almost more stunning than some of what's going on in the republican side. How is that happening? Why is that happening?"
If there was EVER a "let them eat cake" Marie Antoinette moment for modern times, that was it. Nothing at all against wealth, but wealth coupled with a lack of understanding of the real world issues that inhibits others from creating wealth and joining the wealthier classes IS a real problem. It is the fallacy of Davos where elites gather not to discuss solutions to class division, access to markets, etc., but to maintain their relative rank in the world wealth and power order.
Why are people angry? Look at the facts below the headlines and you will see the issues. I see the current average American mindset much like that of revolutionary times: we are being set upon by all form of regulation (EPA, ACA), taxation, limitation, confiscation (zero tolerance, IRS levy, asset forfeiture, eminent domain) even as we elect, both democrats and republicans, representatives to effect specific policies. Yet, neither side is acting once in DC, at least not acting pursuant to the positions taken to get elected. What is this? Taxation (and confiscation, regulation, incarceration) without representation. There is a revolt taking place in America. Thus far it is contained mostly to the primary selection process, but it is also erupting elsewhere, e.g. Black Lives Matter, militia actions in Oregon, Nevada, and elsewhere, Occupy movement, the Tea Party. The change of this administration has spawned massive counter-movement for change in different directions.
Some of the Schwartzman homes: St. Tropez, Palm Beach, Water Mill. Nice places, good for Schwartzman, but his comments show a complete lack of understanding regarding the plight of the average citizen.
End part 1 of 3
_______________________________________________________
Member: tweet@investbilling.com
Customer Support: http://www.InvestBilling.com
1153 Bergen Pkwy - Suite I #502 - Evergreen, CO 80439
1/23/2016 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: None issued
Entry alerts: SPY
Trailing stops: AMZN; FB
Stop alerts: COST
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
The REPORTS SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- Second day of the bounce holds as the relief move firms.
- Hope of further stimulus in Japan, China, and even the US (really?) has the market bounce working for now.
- Davos elites' words show their lack of understanding of what they tell us they understand.
- Lack of leadership in good patterns still points to just a relief move but that works.
The Wednesday reversal and the extreme internals and sentiment finally started yielding results. Thursday's gain was mostly frittered away. Friday, however, futures rallied very early and held the moves to the open. Stocks gapped higher and pretty much held the moves to the close. Oh there was a midday fade but it was really not that bad, just coming back to the pre-market levels. Stocks rallied back to near session highs at the close.
SP500 37.91, 2.03%
NASDAQ 119.12, 2.66%
DJ30 210.83, 1.33%
SP400 2.46%
RUTX 2.34%
SOX 1.85%
VOLUME: NYSE flat; NASDAQ -12%. NYSE trade was more or less flat, still holding above average. NASDAQ trade fell to the lowest in 12 sessions, still slightly above average. Lower volume on the rallies is characteristic of a relief move. No surprise there.
A/D: 8.4:1 NYSE, 43:1 NASDAQ. Impressive breadth, not typically characteristic of a relief move. Of course all stocks have been hammered lower so more stocks can rebound on an oversold bounce.
For once a strong price move following a reversal held. Okay, not the first time a good move higher occurred during the last could of weeks; 6 sessions back a strong reversal off a strong drop looked quite promising. The promise was broken the next session with a massive drop. Now the market has two upside days following the reversal. That is also not new in rebound attempts during this selling, but thus far this move is acting more like the rebound we were looking for, the one that bounces SP500 toward that mid-September high at 1990ish. Extremely negative internals, sentiment, and down 12+% from the late December low. It was ripe and Thursday and Friday were a good start.
Okay, so the stage was set. What was the trigger, or in common stock market 'analysis' on the financial stations, what was the cause?
What has caused all of the stock market moves since March 2009? Stimulus or the hope of stimulus. Friday speculation of more stimulus from around the world, from Kuroda in Japan this coming week, from China at any time, and even some conciliatory language from Chairman Yellen at this week's FOMC meeting.
It worked for the session, but will it work beyond a market bounce? Speculation, that is. It will take more than stimulus speculation to right the market such that new highs are reached. The economic condition is bad and worsening and won't change without major policy changes. That will take an election and then the right policies. If that is done, the next President could preside over a major economic expansion, a real one, as small business returns to the US. If anything were to happen before that, it would take more Fed easy money such as a return to QE. There is a lot of talk of negative rates, but negative rates will not have the same effect. It will force the rest of the money supply out of time assets (e.g. interest accounts), but it won't have the same impact as wanton QE.
So where does that leave this bounce? In the bounce category. Without a serious driver from the economy or the Fed's free money there is not much to push stocks upside. The large corporations did better thanks to QE and free money, but they are not doing as well now that QE ended 15 months ago and the economy continues to slide. Of course the small business climate remains horrid as the US still loses more businesses than it creates in this sixth year of this great recovery. Lower wages, poor job quality, higher costs (e.g. healthcare thanks to the Affordable Care Act) has pushed the middle class below 50% for the first time since the industrial revolution. Despite the glowing self-praise heard at the State of the Union Address a couple of weeks back, the state is not good.
That is extraordinarily perplexing to the ultra-wealthy class. Friday Blackstone's billionaire CEO Steven Schwartzman, in Davos of course skiing and carousing between 'hard-hitting' meetings regarding world affairs, expressed exasperation at the psyche of the average citizen: "I find the whole thing astonishing and what's remarkable is the amount of anger whether it's on the republican or democratic side. Bernie Sanders, to me, is almost more stunning than some of what's going on in the republican side. How is that happening? Why is that happening?"
If there was EVER a "let them eat cake" Marie Antoinette moment for modern times, that was it. Nothing at all against wealth, but wealth coupled with a lack of understanding of the real world issues that inhibits others from creating wealth and joining the wealthier classes IS a real problem. It is the fallacy of Davos where elites gather not to discuss solutions to class division, access to markets, etc., but to maintain their relative rank in the world wealth and power order.
Why are people angry? Look at the facts below the headlines and you will see the issues. I see the current average American mindset much like that of revolutionary times: we are being set upon by all form of regulation (EPA, ACA), taxation, limitation, confiscation (zero tolerance, IRS levy, asset forfeiture, eminent domain) even as we elect, both democrats and republicans, representatives to effect specific policies. Yet, neither side is acting once in DC, at least not acting pursuant to the positions taken to get elected. What is this? Taxation (and confiscation, regulation, incarceration) without representation. There is a revolt taking place in America. Thus far it is contained mostly to the primary selection process, but it is also erupting elsewhere, e.g. Black Lives Matter, militia actions in Oregon, Nevada, and elsewhere, Occupy movement, the Tea Party. The change of this administration has spawned massive counter-movement for change in different directions.
Some of the Schwartzman homes: St. Tropez, Palm Beach, Water Mill. Nice places, good for Schwartzman, but his comments show a complete lack of understanding regarding the plight of the average citizen.
End part 1 of 3
_______________________________________________________
Member: tweet@investbilling.com
Customer Support: http://www.InvestBilling.com
1153 Bergen Pkwy - Suite I #502 - Evergreen, CO 80439
Wednesday, January 20, 2016
The Daily, Part 1 of 3, 1-20-16
* * * *
1/20/2016 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: AAPL; COST; FB
Entry alerts: ADBE; GOOG
Trailing stops: None issued
Stop alerts: SPNC
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
The REPORTS SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- After a weak bounce attempt stocks bomb to lower lows. Stocks roar back, and of course, that sets up another bounce possibility.
- Some retail, some big names look ready to try a bounce.
Once again a bounce attempt one session was met with a bomb lower the next session. It would appear just enough selling pressure was released Tuesday to push Dow futures lower 300 points early morning.
It got worse. And worse. DJ30 opened lower and sold 565 points on the low. NASDAQ 164 points lost on the low. Things became so bad, however, that they got better. At 12:00ET the low was hit. The indices put in a 25 minute bottoming move and took off upside. But for a last half hour dip NASDAQ would have closed positive.
That rather dramatic reversal could have, yet again, set a relief move. After that kind of drop that saw SP500 undercut the August lows and hit 1812 (as in the War of 1812?), breadth hit -30:1 on NYSE, new lows at 1291 and 918 on NYSE, NASDAQ, respectively, and VIX cracking to a higher high over the early September peak, you would THINK that a relief move was set. The deal sealer? Goldman Sachs voiced its concern that the current selling would be worse than in August. You know what? It was! After that comment floated out in the morning, of course stocks had to reverse. Kind of like a bear appearing on TIME magazine appears pretty much after the selling is finished.
NASDAQ 211 points low to high before backing off some on the close. DJ30 539 points low to high. SP500 64 points. Impressive volatility yet again.
SP500 -22.00, -1.17%
NASDAQ -5.26, -0.12%
DJ30 -249.28, -1.56%
SP400 -0.65%
RUTX 0.45%
SOX 0.65%
VOLUME: NYSE trade +30%, basically matching the high of 2016. NASDAQ +36%, and at 3.1B, the highest of 2016 and indeed for the past 5 months, only surpassed by expiration Fridays.
A/D: Finished at -2.5:1 NYSE, -1.2:1 NASDAQ, but that does not tell the tale. At the lows, NYSE breadth registered a shocking -30:1, coming as close as in 2008 to all stocks turning negative. Honey, that's extreme breadth.
New Lows: NYSE showed a mere 1291, NASDAQ 918. Pretty much off the scale extreme.
This action likely sets a relief move (he again says) given the impressive intraday recoveries in many stocks. The programs were selling and the indices were down lockstep. For example, I recall looking at the downside percentages intraday and saw SP500 and DJ30 down 2.77% each. It was that way much of the session. That tells you the programs are selling equally across the board. Then when they turned, they turned to the upside buys in a big way.
NASDAQ made it to positive in the last hour but could not quite hold it. Only SOX and RUTX made it positive and held. That is the preferred action for a key reversal: a reach to a lower low at or below support, a reversal, heavy volume, positive close. I guess you could say close but no cigar, but for me a move like this, whether it finishes positive or is damn close, is typically good enough.
What happens in Asia tonight and the US in the morning (particularly if the US gaps upside) will tell a lot of the tale of a rebound move. The relief move certainly looks a reality, but it did on Friday, Thursday before that, and Monday before that. But not at these lows and not as dramatic.
THE MARKET
TECHNICAL PICTURE
SP500 hit 1812 on the low and that worked a reversal. Massively oversold, massively extreme sentiment and internals. Big reach lower and big recovery. Once again it looks as if the stage is set for a serious relief move with a key reversal session of sorts. An SP500 rally to the mid-September peak (1990-1995) is a very respectable 7%ish relief move. That MAY be reaching a bit for the stars. A move to 1942, the peaks from a bounce attempt six sessions back, may be all it can muster.
CHARTS
SP500: A big reach lower to 1812, undercutting the August lows as well as the October 2014 Ebola flash crash lows, then a reversal. Still hanging around those summer lows on the close, good place to bounce after a 12.8% plunge from the late December lower high, quite a fall in just 14 sessions. Just about keeping that 1% per session loss rate. Time for a bounce and would love to see it up to 1980-1995, but watching 1940 as potential resistance as that is where SP500 tried to hold and bounce before the last bounce attempt failed. It is also the 38% Fibonacci retracement of the selloff and where NASDAQ gapped lower.
NASDAQ: Reached to within 21 points of the August intraday low and reversed. Almost made it positive, and indeed it did in the last hour before a late fade closed it negative. Kind of a key reversal session, definitely enough to bounce. Where to on a rebound? 4736 is the lower gap point from 1/7 and where SP500 hit when it tried its simultaneous bounce attempt.
DJ30: On the low just 120 points off the August intraday low and then a reversal. Never made it to positive but did close over the August closing low. Massive losses here as well, reversing at the prior low after a 13% loss from the last December lower peak.
RUTX: Lowest price since mid-2013 but as with last week, no support in particular. RUTX broke lower from a head and shoulders pattern and has tumbled. As for a bounce, look for the 38% Fibonacci retracement (1035, closed at 999.3).
SOX: Holding at the late September lows. If the market bounces, SOX is bouncing. After a 17% clubbing from the late December peak, that makes sense.
SP400: Massive reach lower to a Q3 2013 low, then a reversal. The 38% Fibonacci retracement is 1295 (closed at 1254).
LEADERHIP
Leadership? Well, how about leading bouncers? Sure some patterns held up and the moves higher are solid, e.g. EQT, ROVI, but most were hammered and are bouncing.
Utilities: Most stunk the place up, e.g. PCG, AEP, but those are electric. Our natural gas utility EQT surged 4%.
Big Names: Some potential interesting bounces setting up. AMZN looks quite good for a bounce. FB as well. VRSN looks great at the 200 day SMA. NFLX . . . maybe, but not ready to move in at this juncture. CMG, a former leader/big name, looks ready to make a move higher. GOOG sold further into the gap zone but recovered.
Industrials: MMM still looks ready to bounce after a doji at the summer lows. UTX is similar. EMR is at the September low with rising MACD.
Retail: Trying some bounces. DDS is finally making an upside bounce. M breaking through the 50 day MA. DLTR, DG the discount retailers held support and are not in the tank, but are not great patterns. HD and LOW, the home improvement companies, are in the tank.
Chips: Struggling as a group, and indeed XLNX looks ready to fall; right now.
MARKET STATISTICS
NASDAQ
Stats: -5.26 points (-0.12%) to close at 4471.69
Volume: 3.124B (+36.1%)
Up Volume: 1.34B (+416.05M)
Down Volume: 1.84B (+450M)
A/D and Hi/Lo: Decliners led 1.18 to 1
Previous Session: Decliners led 1.93 to 1
New Highs: 6 (-1)
New Lows: 918 (+440)
S&P
Stats: -22 points (-1.17%) to close at 1859.33
NYSE Volume: 1.45B (+31.82%)
A/D and Hi/Lo: Decliners led 2.55 to 1
Previous Session: Decliners led 2.07 to 1
New Highs: 2 (-9)
New Lows: 1291 (+631)
DJ30
Stats: -249.28 points (-1.56%) to close at 15766.74
SENTIMENT INDICATORS
VIX: 27.59; +1.54
VXN: 30.84; +1.52
VXO: 28.47; +2.59
Put/Call Ratio (CBOE): 1.18; +0.28
Recent history: Back over 1.0 after a one-day hiatus. Over 1.0 for 13 of the last 14 sessions. 27 of 38 sessions above 1.0.
Bulls and Bears: Bulls plunged far below 35% while bears surged to 35.7%. A double bonus. Bears are over 35%, a bullish signals the same as bulls below 35%. In addition, bulls and bears crossed over, a very powerful upside signal. Last week we wondered if a crossover would come this week and it certainly did.
Bulls: 28.6 versus 34.7. Below 35% is bullish.
Bears: 35.7 versus 31.6. Above 35% is bullish.
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: 28.6%
34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus 45.4% versus 43.3% versus 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 in 2015 since the 2008 and 2009 market plummet.
Bears: 35.7%
31.6% versus 29.6% versus 29.6% versus 27.6% versus 26.8% versus 26.8% versus 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. Both occurred in fall 2015.
OTHER MARKETS
Bonds (10 year): 1.99% versus 2.05%. Massive gap upside to test the late August peak (the last big selloff) and backed off as the market recovered.
Historical: 2.05% versus 2.03% versus 2.09% versus 2.07% versus 2.105% versus 2.17% versus 2.11% versus 2.15% versus 2.18% versus 2.25% versus 2.18% versus 2.24% versus 2.27% versus 2.30% versus 2.30% versus 2.23% versus 2.26% versus 2.24% versus 2.20% versus 2.19% versus 2.24% versus 2.29% versus 2.27% versus 2.23% versus 2.13% versus 2.23% versus 2.21% versus 2.23% versus 2.23% versus 2.27% versus 2.33% versus 2.18%
EUR/USD: 1.0815 versus 1.0910. Still in the 8 week lateral move.
Historical: 1.0910 versus 1.0917 versus 1.0869 versus 1.0879 versus 1.0851 versus 1.0854 versus 1.0921 versus 1.0937 versus 1.0789 versus 1.0748 versus 1.0835 versus 1.0934 versus 1.0928 versus 1.0972 versus 1.0963 versus 1.0917 versus 1.0953 versus 1.0920 versus 1.0868 versus 1.0818 versus 1.08334 versus 1.0934 versus 1.0992 versus 1.0987 versus 1.0944 versus 1.1029 versus 1.0892 versus 1.0844 versus 1.0872 versus 1.0948 versus 1.0595
USD/JPY: 116.99 versus 117.60. Reached lower to the August low and a recovery to positive. Still trending lower below the 10 day EMA and will see if the dollar can break the downtrend.
Historical: 117.60 versus 117.02 versus 118.06 versus 117.72 versus 117.50 versus 117.73 versus 117.71 versus 117.24 versus 117.58 versus 118.25 versus 119.02 versus 119.397 versus 120.495 versus 120.45 versus 120.345 versus 120.295 versus 120.86 versus 121.01 versus 121.33 versus 122.30 versus 122.68 versus 122.35 versus 121.64 versus 120.85 versus 121.64 versus 121.40 versus 122.97 versus 123.28 versus 123.15 versus 122.49
Oil: 28.35, -1.22. Diving lower still. That is all. Showing no signs of recovery. Oh yes, and why then did the stock market bounce if oil did not?
Gold: 1106.20, +17.10. Impressive upside break, matching the high from two week's back. 1110 is a key level to clear.
THURSDAY
Again, what happens overnight sets the stage, but the main event in the US. If it gaps higher it will be instructive how sellers/shorts react: will they try it again or feel the heat and cover, thus adding upside pressure? If there is a lower open we would actually view that as a positive, allowing some head clearing after the madcap dash to the close Wednesday, and giving the buyers a chance to come in if they want. Of course, it is likely too early for serious buyers to get up the nerve to buy, so it will be up to the shorts worrying the downside is over for now and start covering again, forming that snowball that rolls the stock market uphill in a relief move.
Remember, even if there is a continued move, this is just likely a high velocity relief rally inside the downtrend and we use it for all we can on the upside and then reload the downside at perhaps 1990 on SP500, a mere 130 points hither.
We took some gain on COST, AAPL, FB. We picked up some GOOG and ADBE puts and likely should have sold them intraday on their drops. GOOG still has not filled the gap so that is still going to happen and we still feel comfortable enough letting those work. FB came close to the target intraday . . . should have, could have . . . we will get the shot.
Now, as for new plays, we like some upside here. FB, AMZN, VRSN, CMG, DDS, M. As per above, not long term buy 'em to marry 'em, but trades, taking what they give and dumping them. No time for romance in this market.
There are still downside plays ready to go after all of this, but of course if the market bounces they like don't just open up to the downside. XLNX looks weak in a bear flag. PNRA bombed through the 200 day SMA Wednesday; on a bounce to test it could be a great entry.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4471.69
Resistance:
4517-4506 from the September 2015 and August 2015 closing lows
The 10 day EMA at 4613
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4736 is the early January lower gap point downside, the last downside gap in the selloff.
4751 is the January 2015 lower high
4774 is the January high
4811 is the November 2014 peak (intraday)
4814 is the gap point from last week.
4815 is the December 2014 prior market peak
The March lows at 4843 and 4825
4828 is the late August peak
4837 is the late August 2015 rebound high
The 50 day EMA at 4872
4902 is the July 2015 low
4912 the mid-April China dip
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October
The 200 day SMA at 4966
The June low at 4974
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
5162 is the early November peak, 5176 is the December intraday peak
5164 is the June 2015 peak, 5175 is the August intraday peak
5232 is the July high
Support:
4485 are the twin July 2014 peaks
4352 is the March 2014 peak
4292 is the August 2015 low
S&P 500: Closed at 1859.33
Resistance:
1862 is the October 2014 closing low
1867 is the August 2015 low
1872 is the September 2015 test low of the August low
1883.57 is the early March high.
1897 is the prior all-time high hit in April 2014
1902 from early May was the intraday all-time high.
1905 is the August 2014 low
1913 is the early September 2015 closing low testing the bounce from the August selling
The 10 day EMA at 1917
1972 is the December 2014 low
1989 is the last August closing high
1991 is the July 2014 high
1995 is the September 2015 recovery peak
The 50 day EMA at 2004
2011 is the September prior all-time high
2040 is the March 2015 closing low
2046 is the July 2015 closing low
The 200 day SMA at 2052
2062 is the January 2015 lower high
2079 is the intraday all-time high from November 2014
2094 is the December 2014 high, the prior all-time high
2104 is the December 2015 high
2116 is the November 2015 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:
1820 is the October 2014 intraday low
1815 is the April 2014 low
1772 are the Q4 2013 highs and lows
Dow: Closed at 15,766.74
Resistance:
15,855 is the October 2014 intraday low
16,026 is the April 2014 low
16,058 is the early September 2015 low
16,117 is the October 2014 closing low
16,368 is the August 2014 low
The 10 day EMA at 16,436
16,506 is the March 2014 peak
16,589 is the December 2013 all-time high
16,632 is the April 2014 all-time high
16,665 is the late August 2015 closing high. Key, key level.
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,736 is a prior all-time high from May 2014
16,740 is the mid-September peak and potential apex for a right shoulder to a head and shoulders pattern
16,933 is the September 2015 recovery peak
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
17067 is the December 2014 low
17,068 is the early July 2014 peak
The 50 day EMA at 17,120
17,152 is the mid-July post bear market high
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,458
June 2015 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
17,978 is the November 2015 peak
Support:
15,666 is the August 2015 closing low
15,372 is the February 2014 low
15,370 is the August 2015 low
ECONOMIC CALENDAR
January 19 - Tuesday
NAHB Housing Market , January (10:00): 60 actual versus 61 expected, 60 prior (revised from 61)
Net Long-Term TIC Fl, November (16:00): $31.4B actual versus -$17.7B prior (revised from -$16.6B)
January 20 - Wednesday
MBA Mortgage Index, 01/16 (7:00): +9.0% actual versus +21.3% prior
CPI, December (8:30): -0.1% actual versus 0.0% expected, 0.0% prior (no revisions)
Core CPI, December (8:30): 0.1% actual versus 0.2% expected, 0.2% prior (no revisions)
Housing Starts, December (8:30): 1149K actual versus 1197K expected, 1179K prior (revised from 1173K)
Building Permits, December (8:30): 1232K actual versus 1200K expected, 1282K prior (revised from 1289K)
Crude Inventories, 01/16 (10:30): 0.234M prior
January 21 - Thursday
Initial Claims, 01/16 (8:30): 280K expected, 284K prior
Continuing Claims, 01/09 (8:30): 2263K prior
Philadelphia Fed, January (8:30): -4.0 expected, -5.9 prior
Natural Gas Inventor, 01/16 (10:30): -168 bcf prior
January 22 - Friday
Existing Home Sales, December (10:00): 5.12M expected, 4.76M prior
Leading Indicators, December (10:00): -0.1% expected, 0.4% prior
End part 1 of 3
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1/20/2016 Investment House Report
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Targets hit: AAPL; COST; FB
Entry alerts: ADBE; GOOG
Trailing stops: None issued
Stop alerts: SPNC
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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
- After a weak bounce attempt stocks bomb to lower lows. Stocks roar back, and of course, that sets up another bounce possibility.
- Some retail, some big names look ready to try a bounce.
Once again a bounce attempt one session was met with a bomb lower the next session. It would appear just enough selling pressure was released Tuesday to push Dow futures lower 300 points early morning.
It got worse. And worse. DJ30 opened lower and sold 565 points on the low. NASDAQ 164 points lost on the low. Things became so bad, however, that they got better. At 12:00ET the low was hit. The indices put in a 25 minute bottoming move and took off upside. But for a last half hour dip NASDAQ would have closed positive.
That rather dramatic reversal could have, yet again, set a relief move. After that kind of drop that saw SP500 undercut the August lows and hit 1812 (as in the War of 1812?), breadth hit -30:1 on NYSE, new lows at 1291 and 918 on NYSE, NASDAQ, respectively, and VIX cracking to a higher high over the early September peak, you would THINK that a relief move was set. The deal sealer? Goldman Sachs voiced its concern that the current selling would be worse than in August. You know what? It was! After that comment floated out in the morning, of course stocks had to reverse. Kind of like a bear appearing on TIME magazine appears pretty much after the selling is finished.
NASDAQ 211 points low to high before backing off some on the close. DJ30 539 points low to high. SP500 64 points. Impressive volatility yet again.
SP500 -22.00, -1.17%
NASDAQ -5.26, -0.12%
DJ30 -249.28, -1.56%
SP400 -0.65%
RUTX 0.45%
SOX 0.65%
VOLUME: NYSE trade +30%, basically matching the high of 2016. NASDAQ +36%, and at 3.1B, the highest of 2016 and indeed for the past 5 months, only surpassed by expiration Fridays.
A/D: Finished at -2.5:1 NYSE, -1.2:1 NASDAQ, but that does not tell the tale. At the lows, NYSE breadth registered a shocking -30:1, coming as close as in 2008 to all stocks turning negative. Honey, that's extreme breadth.
New Lows: NYSE showed a mere 1291, NASDAQ 918. Pretty much off the scale extreme.
This action likely sets a relief move (he again says) given the impressive intraday recoveries in many stocks. The programs were selling and the indices were down lockstep. For example, I recall looking at the downside percentages intraday and saw SP500 and DJ30 down 2.77% each. It was that way much of the session. That tells you the programs are selling equally across the board. Then when they turned, they turned to the upside buys in a big way.
NASDAQ made it to positive in the last hour but could not quite hold it. Only SOX and RUTX made it positive and held. That is the preferred action for a key reversal: a reach to a lower low at or below support, a reversal, heavy volume, positive close. I guess you could say close but no cigar, but for me a move like this, whether it finishes positive or is damn close, is typically good enough.
What happens in Asia tonight and the US in the morning (particularly if the US gaps upside) will tell a lot of the tale of a rebound move. The relief move certainly looks a reality, but it did on Friday, Thursday before that, and Monday before that. But not at these lows and not as dramatic.
THE MARKET
TECHNICAL PICTURE
SP500 hit 1812 on the low and that worked a reversal. Massively oversold, massively extreme sentiment and internals. Big reach lower and big recovery. Once again it looks as if the stage is set for a serious relief move with a key reversal session of sorts. An SP500 rally to the mid-September peak (1990-1995) is a very respectable 7%ish relief move. That MAY be reaching a bit for the stars. A move to 1942, the peaks from a bounce attempt six sessions back, may be all it can muster.
CHARTS
SP500: A big reach lower to 1812, undercutting the August lows as well as the October 2014 Ebola flash crash lows, then a reversal. Still hanging around those summer lows on the close, good place to bounce after a 12.8% plunge from the late December lower high, quite a fall in just 14 sessions. Just about keeping that 1% per session loss rate. Time for a bounce and would love to see it up to 1980-1995, but watching 1940 as potential resistance as that is where SP500 tried to hold and bounce before the last bounce attempt failed. It is also the 38% Fibonacci retracement of the selloff and where NASDAQ gapped lower.
NASDAQ: Reached to within 21 points of the August intraday low and reversed. Almost made it positive, and indeed it did in the last hour before a late fade closed it negative. Kind of a key reversal session, definitely enough to bounce. Where to on a rebound? 4736 is the lower gap point from 1/7 and where SP500 hit when it tried its simultaneous bounce attempt.
DJ30: On the low just 120 points off the August intraday low and then a reversal. Never made it to positive but did close over the August closing low. Massive losses here as well, reversing at the prior low after a 13% loss from the last December lower peak.
RUTX: Lowest price since mid-2013 but as with last week, no support in particular. RUTX broke lower from a head and shoulders pattern and has tumbled. As for a bounce, look for the 38% Fibonacci retracement (1035, closed at 999.3).
SOX: Holding at the late September lows. If the market bounces, SOX is bouncing. After a 17% clubbing from the late December peak, that makes sense.
SP400: Massive reach lower to a Q3 2013 low, then a reversal. The 38% Fibonacci retracement is 1295 (closed at 1254).
LEADERHIP
Leadership? Well, how about leading bouncers? Sure some patterns held up and the moves higher are solid, e.g. EQT, ROVI, but most were hammered and are bouncing.
Utilities: Most stunk the place up, e.g. PCG, AEP, but those are electric. Our natural gas utility EQT surged 4%.
Big Names: Some potential interesting bounces setting up. AMZN looks quite good for a bounce. FB as well. VRSN looks great at the 200 day SMA. NFLX . . . maybe, but not ready to move in at this juncture. CMG, a former leader/big name, looks ready to make a move higher. GOOG sold further into the gap zone but recovered.
Industrials: MMM still looks ready to bounce after a doji at the summer lows. UTX is similar. EMR is at the September low with rising MACD.
Retail: Trying some bounces. DDS is finally making an upside bounce. M breaking through the 50 day MA. DLTR, DG the discount retailers held support and are not in the tank, but are not great patterns. HD and LOW, the home improvement companies, are in the tank.
Chips: Struggling as a group, and indeed XLNX looks ready to fall; right now.
MARKET STATISTICS
NASDAQ
Stats: -5.26 points (-0.12%) to close at 4471.69
Volume: 3.124B (+36.1%)
Up Volume: 1.34B (+416.05M)
Down Volume: 1.84B (+450M)
A/D and Hi/Lo: Decliners led 1.18 to 1
Previous Session: Decliners led 1.93 to 1
New Highs: 6 (-1)
New Lows: 918 (+440)
S&P
Stats: -22 points (-1.17%) to close at 1859.33
NYSE Volume: 1.45B (+31.82%)
A/D and Hi/Lo: Decliners led 2.55 to 1
Previous Session: Decliners led 2.07 to 1
New Highs: 2 (-9)
New Lows: 1291 (+631)
DJ30
Stats: -249.28 points (-1.56%) to close at 15766.74
SENTIMENT INDICATORS
VIX: 27.59; +1.54
VXN: 30.84; +1.52
VXO: 28.47; +2.59
Put/Call Ratio (CBOE): 1.18; +0.28
Recent history: Back over 1.0 after a one-day hiatus. Over 1.0 for 13 of the last 14 sessions. 27 of 38 sessions above 1.0.
Bulls and Bears: Bulls plunged far below 35% while bears surged to 35.7%. A double bonus. Bears are over 35%, a bullish signals the same as bulls below 35%. In addition, bulls and bears crossed over, a very powerful upside signal. Last week we wondered if a crossover would come this week and it certainly did.
Bulls: 28.6 versus 34.7. Below 35% is bullish.
Bears: 35.7 versus 31.6. Above 35% is bullish.
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: 28.6%
34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus 45.4% versus 43.3% versus 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 in 2015 since the 2008 and 2009 market plummet.
Bears: 35.7%
31.6% versus 29.6% versus 29.6% versus 27.6% versus 26.8% versus 26.8% versus 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. Both occurred in fall 2015.
OTHER MARKETS
Bonds (10 year): 1.99% versus 2.05%. Massive gap upside to test the late August peak (the last big selloff) and backed off as the market recovered.
Historical: 2.05% versus 2.03% versus 2.09% versus 2.07% versus 2.105% versus 2.17% versus 2.11% versus 2.15% versus 2.18% versus 2.25% versus 2.18% versus 2.24% versus 2.27% versus 2.30% versus 2.30% versus 2.23% versus 2.26% versus 2.24% versus 2.20% versus 2.19% versus 2.24% versus 2.29% versus 2.27% versus 2.23% versus 2.13% versus 2.23% versus 2.21% versus 2.23% versus 2.23% versus 2.27% versus 2.33% versus 2.18%
EUR/USD: 1.0815 versus 1.0910. Still in the 8 week lateral move.
Historical: 1.0910 versus 1.0917 versus 1.0869 versus 1.0879 versus 1.0851 versus 1.0854 versus 1.0921 versus 1.0937 versus 1.0789 versus 1.0748 versus 1.0835 versus 1.0934 versus 1.0928 versus 1.0972 versus 1.0963 versus 1.0917 versus 1.0953 versus 1.0920 versus 1.0868 versus 1.0818 versus 1.08334 versus 1.0934 versus 1.0992 versus 1.0987 versus 1.0944 versus 1.1029 versus 1.0892 versus 1.0844 versus 1.0872 versus 1.0948 versus 1.0595
USD/JPY: 116.99 versus 117.60. Reached lower to the August low and a recovery to positive. Still trending lower below the 10 day EMA and will see if the dollar can break the downtrend.
Historical: 117.60 versus 117.02 versus 118.06 versus 117.72 versus 117.50 versus 117.73 versus 117.71 versus 117.24 versus 117.58 versus 118.25 versus 119.02 versus 119.397 versus 120.495 versus 120.45 versus 120.345 versus 120.295 versus 120.86 versus 121.01 versus 121.33 versus 122.30 versus 122.68 versus 122.35 versus 121.64 versus 120.85 versus 121.64 versus 121.40 versus 122.97 versus 123.28 versus 123.15 versus 122.49
Oil: 28.35, -1.22. Diving lower still. That is all. Showing no signs of recovery. Oh yes, and why then did the stock market bounce if oil did not?
Gold: 1106.20, +17.10. Impressive upside break, matching the high from two week's back. 1110 is a key level to clear.
THURSDAY
Again, what happens overnight sets the stage, but the main event in the US. If it gaps higher it will be instructive how sellers/shorts react: will they try it again or feel the heat and cover, thus adding upside pressure? If there is a lower open we would actually view that as a positive, allowing some head clearing after the madcap dash to the close Wednesday, and giving the buyers a chance to come in if they want. Of course, it is likely too early for serious buyers to get up the nerve to buy, so it will be up to the shorts worrying the downside is over for now and start covering again, forming that snowball that rolls the stock market uphill in a relief move.
Remember, even if there is a continued move, this is just likely a high velocity relief rally inside the downtrend and we use it for all we can on the upside and then reload the downside at perhaps 1990 on SP500, a mere 130 points hither.
We took some gain on COST, AAPL, FB. We picked up some GOOG and ADBE puts and likely should have sold them intraday on their drops. GOOG still has not filled the gap so that is still going to happen and we still feel comfortable enough letting those work. FB came close to the target intraday . . . should have, could have . . . we will get the shot.
Now, as for new plays, we like some upside here. FB, AMZN, VRSN, CMG, DDS, M. As per above, not long term buy 'em to marry 'em, but trades, taking what they give and dumping them. No time for romance in this market.
There are still downside plays ready to go after all of this, but of course if the market bounces they like don't just open up to the downside. XLNX looks weak in a bear flag. PNRA bombed through the 200 day SMA Wednesday; on a bounce to test it could be a great entry.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4471.69
Resistance:
4517-4506 from the September 2015 and August 2015 closing lows
The 10 day EMA at 4613
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4736 is the early January lower gap point downside, the last downside gap in the selloff.
4751 is the January 2015 lower high
4774 is the January high
4811 is the November 2014 peak (intraday)
4814 is the gap point from last week.
4815 is the December 2014 prior market peak
The March lows at 4843 and 4825
4828 is the late August peak
4837 is the late August 2015 rebound high
The 50 day EMA at 4872
4902 is the July 2015 low
4912 the mid-April China dip
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October
The 200 day SMA at 4966
The June low at 4974
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
5162 is the early November peak, 5176 is the December intraday peak
5164 is the June 2015 peak, 5175 is the August intraday peak
5232 is the July high
Support:
4485 are the twin July 2014 peaks
4352 is the March 2014 peak
4292 is the August 2015 low
S&P 500: Closed at 1859.33
Resistance:
1862 is the October 2014 closing low
1867 is the August 2015 low
1872 is the September 2015 test low of the August low
1883.57 is the early March high.
1897 is the prior all-time high hit in April 2014
1902 from early May was the intraday all-time high.
1905 is the August 2014 low
1913 is the early September 2015 closing low testing the bounce from the August selling
The 10 day EMA at 1917
1972 is the December 2014 low
1989 is the last August closing high
1991 is the July 2014 high
1995 is the September 2015 recovery peak
The 50 day EMA at 2004
2011 is the September prior all-time high
2040 is the March 2015 closing low
2046 is the July 2015 closing low
The 200 day SMA at 2052
2062 is the January 2015 lower high
2079 is the intraday all-time high from November 2014
2094 is the December 2014 high, the prior all-time high
2104 is the December 2015 high
2116 is the November 2015 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:
1820 is the October 2014 intraday low
1815 is the April 2014 low
1772 are the Q4 2013 highs and lows
Dow: Closed at 15,766.74
Resistance:
15,855 is the October 2014 intraday low
16,026 is the April 2014 low
16,058 is the early September 2015 low
16,117 is the October 2014 closing low
16,368 is the August 2014 low
The 10 day EMA at 16,436
16,506 is the March 2014 peak
16,589 is the December 2013 all-time high
16,632 is the April 2014 all-time high
16,665 is the late August 2015 closing high. Key, key level.
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,736 is a prior all-time high from May 2014
16,740 is the mid-September peak and potential apex for a right shoulder to a head and shoulders pattern
16,933 is the September 2015 recovery peak
16,946 is the June 2014 peak
16,970 is the June 2014 former all-time high
17067 is the December 2014 low
17,068 is the early July 2014 peak
The 50 day EMA at 17,120
17,152 is the mid-July post bear market high
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,458
June 2015 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
17,978 is the November 2015 peak
Support:
15,666 is the August 2015 closing low
15,372 is the February 2014 low
15,370 is the August 2015 low
ECONOMIC CALENDAR
January 19 - Tuesday
NAHB Housing Market , January (10:00): 60 actual versus 61 expected, 60 prior (revised from 61)
Net Long-Term TIC Fl, November (16:00): $31.4B actual versus -$17.7B prior (revised from -$16.6B)
January 20 - Wednesday
MBA Mortgage Index, 01/16 (7:00): +9.0% actual versus +21.3% prior
CPI, December (8:30): -0.1% actual versus 0.0% expected, 0.0% prior (no revisions)
Core CPI, December (8:30): 0.1% actual versus 0.2% expected, 0.2% prior (no revisions)
Housing Starts, December (8:30): 1149K actual versus 1197K expected, 1179K prior (revised from 1173K)
Building Permits, December (8:30): 1232K actual versus 1200K expected, 1282K prior (revised from 1289K)
Crude Inventories, 01/16 (10:30): 0.234M prior
January 21 - Thursday
Initial Claims, 01/16 (8:30): 280K expected, 284K prior
Continuing Claims, 01/09 (8:30): 2263K prior
Philadelphia Fed, January (8:30): -4.0 expected, -5.9 prior
Natural Gas Inventor, 01/16 (10:30): -168 bcf prior
January 22 - Friday
Existing Home Sales, December (10:00): 5.12M expected, 4.76M prior
Leading Indicators, December (10:00): -0.1% expected, 0.4% prior
End part 1 of 3
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