* * * *
2/27/2016 Investment House Report
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MARKET ALERTS:
Targets hit: KORS
Entry alerts: GRUB
Trailing stops: None issued
Stop alerts: None issued
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
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The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE 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 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
- The rally built on nothing continues for another week though Friday was mixed.
- The silent hand is quiet for Friday after another two 'assists' on the week.
- Economic data is purportedly better, but not.
- Stores closing as middle class decline cannot support them.
- Other areas attempting to join metals, retail moving higher.
- SP500 still at 1950, still low volume. NASDAQ at the prior recovery high. Now the move shows its hand.
The low volume rally built on nothing continued for a second week. A midweek selloff attempt almost disrupted the best laid plans of the Fed, other world central banks, the Treasury, and any other powers with a vested interest in keeping things status quo. At all cost, these institutions are set on avoiding a major global disruption, as that would threaten the carefully planned control systems.
Conspiracy theories, right? Hello, Bernie Sanders? After last week I don't know of any serious trader who believes there is not some behind the scenes manipulation going on in the US market. We know other markets are being manipulated, and the actions the past couple of weeks strongly suggests there is something going on in the US markets. So there is your conspiracy theory. After decades of trading the market, it is clear to me that something else is going on beyond program trading. It is the manipulation of the program trading that I and others are seeing.
So, we have a rally I call built on nothing. A false story regarding an OPEC production cut deal. Okay, perhaps the story was not false; perhaps its source was. The 'deal' has been thoroughly debunked by the principles. Then the Fed open market operations cancelled with a handy post on the FOMC site noting 'technical issues.' That panicked the algos and they bought. That turned the Wednesday selloff that was turning seriously into a new rollover. When that initial rebound was running out of gas, lo, the open market operations were reinstituted, glitch solved. That sparked a renewed round of buying. Thursday the market turned weak again as the Wednesday induced reversal was selling. The Treasury was engaged, cancelling the 7 year note auction 10 minutes before scheduled, noting its own technical issues. Even if you accept all as true, just what the hell is wrong with the government systems? That maneuver again tricked the algos and they bought, pushing the indices to higher highs on the rally.
Friday was not so generous, but the powers could take a day off. The large cap indices struggled, but the small and midcaps, the true surprises, performed quite well.
SP500 -3.65
NASDAQ 8.27, 0.18%
DJ30 -57.32, -0.34%
SP400 0.45%
RUTX 0.54%
SOX 0.58%
VOLUME: NYSE +12%. NASDAQ +3%
A/D: NYSE 1.6:1, NASDAQ 1.8:1
What about the economics? If you turn on the financial stations they are talking about how things are improving. After 6 years of recovery, if things are improving they must be roaring now.
So much so, Q4 GDP was revised up to all of 1% from the initial 0.7%. Setting aside the revision was due to less of an inventory decline and a drop in imports offsetting consumption written lower, 1.0% is in itself absurdly low growth rate. So low in fact, that it supports stock LOSSES, not stock gains. Indeed, the market is trying to give back more of those gains but the silent hand is there.
Friday we learned that spending and income were up, both rising a more than expected 0.5%. Ah, nothing like that forced 'tax' (thanks again John Roberts) requiring buying insurance or paying a fine to keep spending high for the government reports. And income gains can pay homage to increased hourly wages that ironically are going to bring about the automation of large portions of minimum wage jobs at a rapid pace.
We saw Durable goods orders rise though we also debunked the rise by showing the 442% adjustment made versus the prior 5 year average for January at 124% (a mere 3.5x average). Before that we saw retail sales up as well, using the same kind of abnormal adjustment, turning a loss of billions into a gain of millions. When you can turn a loss to a gain at will in the financial data AND the markets, that is very convenient.
Nonetheless the mantra continues how this will be the year of the recovery. The facts below the headlines are a serious inconvenience but the television pundits do not look at them. They are pandering, talking their book whenever possible.
There are obvious facts, however, even if they want to accept the massively and arbitrarily revised data, that they still ignore.
Retailers are closing stores at an alarming pace. Sears is closing 50 more. Sports Authority is set to file bankruptcy with reports of 200 of 450 stores closing. KSS is closing 18, TGT 13. BBY closed 30 in 2015 and more are coming. ODP will have closed 400 by year end. WMT closing 154 US stores, K-Mart 25 stores, JCP 47 stores (40 in 2015), M closing 36, GPS closing 175 stores, ARO 84 stores, FL 150 stores in the next few years.
Retail stock prices are rising but it is primarily for the same as what we have seen during the entire 'recovery': cost cutting versus intrinsic growth. Reduce costs (read personnel), buyback shares and you can drive your stock price higher even without increasing sales revenues.
Sure you can doctor up the numbers all you want and see what you want to see as our President is doing, but the fact is the middle class is shrinking. It is now less than 50% of the US population for first time since surpassing it after the industrial revolution. 51% of all US workers make less than $30K per year. When that is the case, metropolitan areas simply cannot support retail. It is not just AMZN and the internet: when people are struggling just to pay the mortgage or sub-prime auto loan. Perhaps some small retailers can return to service the smaller communities in the aftermath of WMT's and other's departure.
THE MARKET
CHARTS
SP500: After moving past the early February high Thursday, SP500 pushed higher but faded to a modest loss on slightly higher volume. Low volume all the way up, slightly higher Friday, but not enough to really suggest serious selling. Shockingly, SP500 closed below 1950, a key level for most traders.
DJ30: Faded after moving to 16,800 on the Friday high. Closed lower but still over the 50 day MA's as well as 16,500. DJ30 was selling off Wednesday but miraculously reversed as did SP500 and other indices. Above support, well below next resistance.
NASDAQ: Gapped to the 50 day EMA on the open, faded to a modest gain. The open took NASDAQ to the early February closing high. Key level. They other large caps broke this level, NASDAQ is still seeking. Still something of an inverted head and shoulders, a bullish pattern, trying to develop.
RUTX: Never really in danger on the week, RUTX reversed off the Wednesday low and continued higher to Friday, closing just below the 50 day MA's.
SP400: Similar to RUTX, SP400 tested the Monday gap higher, held, and rallied to a higher rally high. The midcaps, however, moved through the 50 day MA's. They are now at the August and September lows, recovering to a key level.
SOX: Big reversal off the Wednesday gap lower propelled SOX through the 50 day MA's and a new recovery high Friday as it gapped to a doji. New high, past the early February peak but still below the important 630-633 level.
LEADERSHIP
Metals, retail, industrials have turned off of long declines. Some drugs/biotechs/medical appliances are attempting to do the same. These stocks have struggled in long declines and are providing some help to the upside.
Metals: Rebounded off a midweek test, e.g. FCX, CENX, AKS.
Retail: Continues its run off the turn. DDS, TJX, KORS.
Drugs/Biotech: BIOD is turning off the low; if not so low priced we would consider it. If you want you can play it. CLDX is showing great volume. KITE is interesting though earnings are too close. Ditto HZNP. EYES looks very interesting.
Big Names: GOOG is testing the 50 day EMA again, still a weak pattern. SBUX is hanging on to the 50 day MA's. AMZN is trying to hold the move over the 200 day SMA. NFLX is off the lows. Recoveries but still some issues in key stocks.
Restaurants: CMG looks ready to move higher again. SHAK is setting up to make a turn. JACK is struggling, WEN is muddled.
Financial: Recovering from the weakness and at a critical juncture. BAC rallied to the 20 day EMA and the gap point and faded. GS gapped to the 20 day EMA as well and could not hold a move through it.
MARKET STATISTICS
NASDAQ
Stats: +8.27 points (+0.18%) to close at 4590.47
Volume: 1.829B (+2.66%)
Up Volume: 1.06B (-130M)
Down Volume: 690.27M (+222.48M)
A/D and Hi/Lo: Advancers led 1.79 to 1
Previous Session: Advancers led 1.56 to 1
New Highs: 42 (+11)
New Lows: 53 (+1)
S&P
Stats: -3.65 points (-0.19%) to close at 1948.05
NYSE Volume: 1.005B (+11.67%)
A/D and Hi/Lo: Advancers led 1.6 to 1
Previous Session: Advancers led 2.83 to 1
New Highs: 45 (-39)
New Lows: 27 (-11)
DJ30
Stats: -57.32 points (-0.34%) to close at 16639.97
SENTIMENT INDICATORS
VIX: 19.81; +0.7
VXN: 23.08; +0.46
VXO: 21.42; +0.71
Put/Call Ratio (CBOE): 1; +0.07
Recent history: 6 of 8 sessions over 1.0.
8 of 16 sessions below 1.0, 26 of the last 40 sessions above 1.0. This indicator is still running very high in terms of negative sentiment.
Bulls and Bears: Bulls recovered a bit of ground after falling the prior week from over 30. Bears remain very skeptical with their numbers rising despite a market bounce. Still in a crossover position. This indicator is strongly suggesting a bounce, but this is not a timing indicator.
Bulls: 34.7 versus 26.5. Wow, surging to the upside as a bit of low volume recovery has sentiment jumping back near the 35 threshold.
Bears: 35.7 versus 39.8. A bit more belief from the bears with a rather sizable move lower from a very high near 40 reading.
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: 34.7%
26.5% versus 24.7% 34.0% versus 29.2% versus 26.8% versus 28.6% versus 34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus 45.4%
Background: Bulls hit their lowest level in 2015 since the 2008 and 2009 market plummet.
Bears: 35.7%
39.8% versus 39.2% versus 38.1% versus 35.4% versus 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%
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): 1.757% versus 1.70%. Gapped back to the 20 day EMA for the third visit in two weeks. The move higher is struggling.
Historical: 1.70% versus 1.74% versus 1.74% versus 1.76% versus 1.75% versus 1.74% versus 1.81% versus 1.78% versus 1.75% versus 1.64% versus 1.69% versus 1.73% versus 1.76% versus 1.85% versus 1.85% versus 1.88% versus 1.86% versus 1.96% versus 1.93% versus 1.99% versus 2.019% versus 2.01% versus 2.01% versus 2.05%
EUR/USD: 1.0940 versus 1.102. Major break below the 50 day SMA by the euro.
Historical: 1.102 versus 1.1016 versus 1.1039 versus 1.1130 versus 1.1103 versus 1.1124 versus 1.1275 versus 1.1154 versus 1.1249 versus 1.1322 versus 1.1293 versus 1.1294 versus 1.1197 versus 1.1159 versus 1.1206 versus 1.1110 versus 1.0916 versus 1.0905 versus 1.0836 versus 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
USD/JPY: 113.965 versus 112.90. Dollar surging to the 20 day EMA off the double bottom.
Historical: 112.90 versus 112.11 versus 112.435 versus 112.65 versus 113.25 versus 114.04 versus 114.33 versus 114.747 versus 113.29 versus 112.39 versus 113.36 versus 115.085 versus 115.74 versus 116.83 versus 116.76 versus 117.88 versus 120.04 versus 121.014 versus 121.055 versus 118.27 versus 118.64 versus 118.48
Oil: 32.84, -0.24. Tried the breakout over the 50 day MA's after the weeklong handle, but could not hold the move Friday. Still in good position to give it a try.
Gold: 1222.80, -10.90. Faded but still holding over the 10 day EMA.
MONDAY
With all of the market movement, up and down and then back up, SP500 is still at the 1950 level. DJ30 jumped through 16,500 and is trying 16,800. The Russell is back to the prior recovery high and 50 day EMA while SP400 has blown through. NASDAQ is at the 50 day EMA and the recovery peak. That makes SP500 and NASDAQ critical players; will the other indices pull them or will they act as a drag on the leaders?
The move has less than strength, basically a low volume recovery move. It is one, however, that shows resilience and it has backing. The small and midcaps are showing strength and metals, industrials, retail, and now drugs/biotech/medical appliances are trying to turn and rally as well. Then, on top of that, there is the silent hand of the Fed and the feds. With that kind of backing, even with the low trade, you get a move that can stick, at least for this kind of rebound.
There are those who still voice concern about the move. We are one. There are others that threw in the towel and closed shorts, e.g. Gartman. After the move higher, we were not closing downside Friday, particularly with the SP500 at 1950 and NASDAQ still at its own resistance.
We want to see how this move plays out. While we see some areas moving higher and others setting up to move higher, the move has some issues and many stocks are still in very bearish patterns. It has attributes of both increasing strength and just a relief move. Given the overall market top, we still anticipate more downside while we acknowledge and play upside countertrend moves as they occur such as this one.
For new plays we have a split of upside and downside. Upside in groups turning the corner. Downside on more of those bearish patterns.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4590.47
Resistance:
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
The 50 day EMA at 4618
4620 is the February 1 closing high
4637 is the February intraday high
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 200 day SMA at 4899
4902 is the July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October
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
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
4425 is the late February intraday low
4363 is the February upper gap point
4352 is the March 2014 peak
4313 is the January 2016 intraday low
4292 is the August 2015 low
4212 is the February intraday low
4116 is the October 2014 low
S&P 500: Closed at 1948.05
Resistance:
1972 is the December 2014 low
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
The 200 day SMA at 2027
2040 is the March 2015 closing low
2046 is the July 2015 closing low
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:
1947 is the February 2016 intraday high, the late February peak
The 50 day SMA at 1944
1940 is the January 2016 recovery bounce peak closing high
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
1812 is the January 2016 intraday low
1772 are the Q4 2013 highs and lows
Dow: Closed at 16,639.97
Resistance:
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 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
The 200 day SMA at 17,217
17,351 is the September 2014 all-time high.
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:
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,665 is the late August 2015 closing high
16,632 is the April 2014 peak
16,621 is the late February 2016 peak
16,589 is the December 2013 former all-time high
The 50 day SMA at 16,585
16,526 is the early January resistance
16,511 is the January 2016 intraday high
16,506 is the March 2014 peak
16,466 is the January 2016 recovery closing peak.
16,368 is the August 2014 low
The 20 day EMA 16,227
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
February 26 - Friday
GDP - Second, Q4 (8:30): 1.0% actual versus 0.4% expected, 0.7% prior
GDP Deflator - Second, Q4 (8:30): 0.9% actual versus 0.8% expected, 0.8% prior
Personal Income, January (10:00): 0.5% actual versus 0.4% expected, 0.3% prior
Personal Spending, January (10:00): 0.5% actual versus 0.3% expected, 0.1% prior (revised from 0.0%)
Michigan Sentiment -, February (10:00): 91.0 expected, 92.0 prior
Core PCE Prices, January (10:00): 0.3% actual versus 0.1% expected, 0.1% prior (revised from 0.0%)
Michigan Sentiment - Final, February (10:00): 91.7 actual versus 91.0 expected, 92.0 January final
February 29 - Monday
Chicago PMI, February (9:45): 52.0 expected, 55.6 prior
Pending Home Sales, January (10:00): 0.7% expected, 0.1% prior
March 1 - Tuesday
Construction Spendin, January (10:00): 0.5% expected, 0.1% prior
ISM Index, February (10:00): 49.0 expected, 48.2 prior
Auto Sales, February (14:00): 5.54M prior
Truck Sales, February (14:00): 8.62M prior
March 2 - Wednesday
MBA Mortgage Index, 02/27 (7:00): -4.3% prior
ADP Employment Chang, February (8:15): 190K expected, 205K prior
Crude Inventories, 02/27 (10:30): 3.502M prior
March 3 - Thursday
Challenger Job Cuts, February (7:30): 41.6% prior
Initial Claims, 02/27 (8:30): 270K expected, 272K prior
Continuing Claims, 02/27 (8:30): 2258K expected, 2253K prior
Productivity-Rev., Q4 (8:30): -3.3% expected, -3.0% prior
Unit Labor Costs-Rev, Q4 (8:30): 4.7% expected, 4.5% prior
Factory Orders, January (10:00): 2.0% expected, -2.9% prior
ISM Services, February (10:00): 53.1 expected, 53.5 prior
Natural Gas Inventor, 02/27 (10:30): -117 bcf prior
March 4 - Friday
Nonfarm Payrolls, February (8:30): 190K expected, 151K prior
Nonfarm Private Payr, February (8:30): 180K expected, 158K prior
Unemployment Rate, February (8:30): 4.9% expected, 4.9% prior
Hourly Earnings, February (8:30): 0.2% expected, 0.5% prior
Average Workweek, February (8:30): 34.6 expected, 34.6 prior
Trade Balance, January (8:30): -$44.0B expected, -$43.4B prior
End part 1 of 3
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Saturday, February 27, 2016
Sunday, February 21, 2016
The Daily, Part 1 of 3, 2-20-16
* * * *
2/20/2016 Investment House Report
* * * *
MARKET ALERTS:
Targets hit: CENX
Entry alerts: QRVO
Trailing stops: None issued
Stop alerts: SWN
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 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
- Quiet expiration as sellers don't try to exploit any weakness.
- Stock indices continue a test of the 3-day move.
- CPI core jumps over 2.2%
- Stocks reload for the new expiration to try and continue past the January recovery high.
Friday was expiration, but it was a pretty quiet one. All of the action took place early as stocks started lower and sold in the first hour. CPI for January was flat overall, but cores jumped 0.3% (0.1% expected), a 2.2% year/year gain. That was the highest since June 2012 and the biggest jump since August 2011. That had stocks a bit unnerved as it works to handcuff the Fed's options regarding renewing any monetary easing. As for the session, however, it was, to use one of the Fed's favorite words, transitory.
Indeed after the first hour of trade the selling was over. It took the indices lower in a second day of testing the prior Friday, Tuesday and Wednesday sharp rally, but by the end of the session the indices were in very good shape. Indeed, they were never really in bad shape even with the early lows. It was a day of further testing or consolidating the 3-day surge, and frankly, the action was not bad at all for the upside to try and consolidate the gains and try for more.
SP500 -0.05,
DJ30 16.89, 0.38%
NASDAQ 21.44, 0.13%
SP400 -0.01%
RUTX 0.53%
SOX 0.49%
VOLUME: NYSE 7.5%, NASDAQ -7%
A/D: NYSE decliners lead slightly, NASDAQ 1.2:1 advancers
This market is an interesting dichotomy. We know the big names led the move higher through year end while the majority of stocks had already engaged in selloffs, many down well over 20%, the level the pundit class calls a bear market.
When the big name leaders broke, many of the downtrodden, the oppressed areas longing for money to come their way did indeed start to recover. Industrial equipment, metals, department stores all have enjoyed money moving their way. Not huge, blowout moves, but some money fleeing the big names trying to find some place to go while staying in the market. These beaten up areas are getting some money parked in them. We saw that with good moves in FCX, CENX, AKS as they come off their lows.
The market now is at something of a crossroads. The stock indices set up big tops and broke lower, then set up a smaller topping pattern. They were breaking lower two Thursdays back when the OPEC production cut story hit, reversing oil from 26 to 34, and reversing the stock indices from new selloff lows. After a three-day move following the intraday reversal, the stock indices are testing the prior recovery high as is oil.
Will the indices fold or continue higher? Will the big names continue to recover or falter? If they falter, will money keep moving into the beaten down areas and thus keep the stock market from wholly rolling over even if the big names that move the needle on the indices again sell?
Overall we still view the stock market as in a major top. Fifteen months of putting in a rounded top, a breakdown, the formation of a head and shoulders pattern after the breakdown. Pretty negative, but the stock indices wanted to find a story to help them rally, and they did. Now they are trying to turn the selling back and continue a rebound move.
As of Friday, the upside move attempt is still alive. Three sharp days up, two very mild selling sessions that function as nice consolidations. The setup is still there to continue the move near term as money is put into those beaten down areas and the prior big name leaders try to continue their recoveries as well.
The indices are at the January recovery highs, and as discussed last week, that is the next major test of the rebound from the August, January, and February lows (in terms of DJ30, SP500, and more or less NASDAQ), and the Thursday and Friday consolidation action is a good way to digest the initial move and setup a continuation higher.
This week the indices will show if they can continue setting up. As noted, nothing as of Friday suggested they cannot, at least nothing technically. Oil is on everyone's radar, however, and it hit the 50 day MA's and the January high Thursday and stalled. If oil stumbles back down, those that are managing their funds via the price of oil will pressure the stock market as well.
THE MARKET
CHARTS
DJ30: The three day recovery took the Dow to its January recovery high as of Wednesday. Thursday and Friday DJ30 tested, but Friday showed a nice intraday recovery off the early low. Definitely no sellers trying to exploit the stall at the prior highs, at least not yet. This is pretty solid consolidation action, taking a breather after a strong three day surge, holding the gains and trying to set up a new move.
SP500: Similar action, though SP500 has not made it quite back to the January highs. Testing as well, reaching lower Friday early session, then rebounding to close flat. Holding over the August and September lows, digesting the gains, in great position to continue the move.
NASDAQ: Started lower than the NYSE indices, making it back to the September lows by the end of the week. still below the January recovery high that failed at the 20 day EMA, but over the 20 day EMA on the Wednesday move and held it to close out the week. As with DJ30, SP500, even though it is lower, this is a key test in the recovery for NASDAQ as the big names try to continue their recovery and thus push NASDAQ.
SOX: Looks a lot like SP500, rallying close to the January high but not quite there. Indeed it touched at the 50 day EMA on the Thursday high and faded, and showed similar action Friday. Not as clear in terms of a quality consolidation, but it is holding its recovery gains.
SP400: The midcaps are also very similar to SP500, testing the nice move to near the January highs, bouncing back from intraday weakness.
RUTX: More like NASDAQ, posting a recovery off the lower low, now trying to consolidate the move to take on the January high.
LEADERSHIP
Big Names: GOOG bounced to the 50 day EMA but appears to be stalling. AMZN touched the 200 day SMA Thursday then reversed, but Friday it rebounded close to that level. FB managed to close over the 50 day MA Friday after struggling there all week. AAPL rallied early week then faded it Thursday and Friday. Still looks as if it can continue higher, but showed this same action in late January right before it gapped lower. NFLX recovered to the 20 day EMA then reversed late week. MSFT rallied to the 50 day EMA Wednesday, tried to extend the move, faded late week. Still a good recovery off the 200 day SMA test.
Retail: Department stores in some cases are not bad, e.g. DDS, even with JWN earnings.
Metals: Solid week moving up off the lows, some testing nice moves to end the week, e.g. FCX. CENX surged and AKS remains solid.
Financial: Still in downtrends, e.g. GS, BAC. JPM is trying to hold a recovery off the January low, but choppy. MA and V are off the lows but are at the next step where they need to show they can continue.
Utilities: Still holding the line in some good tests of prior moves, e.g. AEP, PCG. Defensive group and that suggests there is still some downside worry.
Industrials: Testing after good moves from CAT, CMI. Others such as TEX are not even resting. Recovering off of the lows, trying to change the trend.
Chips: Still a struggle. NXPI faded from a 20 day EMA test. AVGO still below the 200 day SMA. MCHP, SWKS are trying to use the market pause to set up the next try at moving higher.
MARKET STATISTICS
NASDAQ
Stats: +16.89 points (+0.38%) to close at 4504.43
Volume: 2.076B (-7.16%)
Up Volume: 1.13B (+442.25M)
Down Volume: 741.44M (-508.56M)
A/D and Hi/Lo: Advancers led 1.25 to 1
Previous Session: Decliners led 1.51 to 1
New Highs: 20 (0)
New Lows: 57 (-6)
S&P
Stats: -0.05 points (0%) to close at 1917.78
NYSE Volume: 1.13B (+7.62%)
A/D and Hi/Lo: Decliners led 1.02 to 1
Previous Session: Advancers led 1.04 to 1
New Highs: 30 (-2)
New Lows: 41 (+10)
DJ30
Stats: -21.44 points (-0.13%) to close at 16391.99
SENTIMENT INDICATORS
VIX: 20.53; -1.11
VXN: 24.91; -1.69
VXO: 22.33; -0.69
Put/Call Ratio (CBOE): 1.06; -0.01
Three sessions back over 1.0 as the put action remained heavier on expiration after the market posted such a strong rebound. That has a lot of positions being rolled or closed.
Recent history: 6 of 12 sessions below 1.0, 23 of the last 35 sessions above 1.0, including the last three.
Bulls and Bears: Bulls recovered a bit of ground after falling the prior week from over 30. Bears remain very skeptical with their numbers rising despite a market bounce. Still in a crossover position. This indicator is strongly suggesting a bounce, but this is not a timing indicator.
Bulls: 26.5 versus 24.7. Some recovery from the plunge from over 30 three weeks back.
Bears: 39.8 versus 39.2. Still no faith in bears the market has bottomed.
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: 26.5%
24.7% 34.0% versus 29.2% versus 26.8% versus 28.6% versus 34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus 45.4%
Background: Bulls hit their lowest level in 2015 since the 2008 and 2009 market plummet.
Bears: 39.8%
39.2% versus 38.1% versus 35.4% versus 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%
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): 1.75% versus 1.74%. After a test of the 20 day EMA through Wednesday, a bounce Thursday, pause Friday. Big surge higher is now tested.
Historical: 1.74% versus 1.81% versus 1.78% versus 1.75% versus 1.64% versus 1.69% versus 1.73% versus 1.76% versus 1.85% versus 1.85% versus 1.88% versus 1.86% versus 1.96% versus 1.93% versus 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%
EUR/USD: 1.1130 versus 1.1103. EUR still testing the 20 day EMA after the big break higher. 7 session test, showing doji. EUR rallied when US stocks struggled.
Historical: 1.1103 versus 1.1124 versus 1.1275 versus 1.1154 versus 1.1249 versus 1.1322 versus 1.1293 versus 1.1294 versus 1.1197 versus 1.1159 versus 1.1206 versus 1.1110 versus 1.0916 versus 1.0905 versus 1.0836 versus 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
USD/JPY: 112.65 versus 113.25. Dollar touched the 10 day EMA early week, has sold since.
Historical: 113.25 versus 114.04 versus 114.33 versus 114.747 versus 113.29 versus 112.39 versus 113.36 versus 115.085 versus 115.74 versus 116.83 versus 116.76 versus 117.88 versus 120.04 versus 121.014 versus 121.055 versus 118.27 versus 118.64 versus 118.48
Oil: 31.75, -0.98. Gapped to the 50 day EMA Thursday but sold back. Friday oil filled the upside gap. Trying to change things up a bit, and did make it through the 20 day EMA this time.
Gold: 1231.30, 0.00. After the big surge Thursday off the 10 day EMA test, oil held steady.
MONDAY
The indices are sitting on a big three day push higher, testing Thursday and Friday. They held the moves and the shorts did not try to take new positions ahead of expiration. Now we see if DJ30, SP500 et al can push higher again to continue the advance. Key test of the move and prior levels as discussed earlier.
We have a balanced mix of upside downside plays for the start of the week. Some areas that are recovering could continue doing so. Others continue to struggle even after the bounce, setting up some possible downside plays. As we have seen, both can work in this market.
You have to acknowledge the overall negative market pattern yet defer to the recent strength until the sellers show up again. Given the overall top in the market, we feel they will show up, but perhaps not until there is more of a relief move upside.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4504.43
Resistance:
4517-4506 from the September 2015 and August 2015 closing lows
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4620 is the February 1 closing high
4637 is the February intraday high
The 50 day EMA at 4631
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
4902 is the July 2015 low
The 200 day SMA at 4909
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October
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
Support:
4485 are the twin July 2014 peaks
4471 is the January 2016 closing low
4363 is the February upper gap point
4352 is the March 2014 peak
4313 is the January 2016 intraday low
4292 is the August 2015 low
4212 is the February intraday low
4116 is the October 2014 low
S&P 500: Closed at 1917.78
Resistance:
1940 is the January 2016 recovery bounce peak closing high
The 50 day EMA at 1940
1947 is the February 2016 intraday high
1972 is the December 2014 low
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
The 200 day SMA at 2031
2040 is the March 2015 closing low
2046 is the July 2015 closing low
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
1812 is the January 2016 intraday low
1772 are the Q4 2013 highs and lows
Dow: Closed at 16,391.99
Resistance:
16,466 is the January 2016 recovery closing peak.
16,506 is the March 2014 peak
16,511 is the January 2016 intraday high
16,526 is the early January resistance
The 50 day EMA at 16,552
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 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
The 200 day SMA at 17,253
17,351 is the September 2014 all-time high.
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
The 20 day EMA 16,227
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
February 19 - Friday
CPI, January (8:30): 0.0% actual versus -0.1% expected, -0.1% prior
Core CPI, January (8:30): 0.3% actual versus 0.1% expected, 0.2% prior (revised from 0.1%)
February 23 - Tuesday
Case-Shiller 20-city, December (9:00): 5.8% expected, 5.8% prior
Consumer Confidence, February (10:00): 97.3 expected, 98.1 prior
Existing Home Sales, January (10:00): 5.30M expected, 5.46M prior
February 24 - Wednesday
MBA Mortgage Index, 02/20 (7:00): 8.2% prior
New Home Sales, January (10:00): 523K expected, 544K prior
Crude Inventories, 02/20 (10:30): 2.150M prior
February 25 - Thursday
Initial Claims, 02/20 (8:30): 270K expected, 262K prior
Continuing Claims, 02/13 (8:30): 2268K expected, 2273K prior
Durable Orders, January (8:30): 2.0% expected, -5.0% prior
Durable Goods -ex tr, January (8:30): 0.4% expected, -1.0% prior
FHFA Housing Price I, December (9:00): 0.5% prior
Natural Gas Inventor, 02/20 (10:30): -158 bcf prior
February 26 - Friday
GDP - Second Estimat, Q4 (8:30): 0.4% expected, 0.7% prior
GDP Deflator - Secon, Q4 (8:30): 0.8% expected, 0.8% prior
Personal Income, January (8:30): 0.4% expected, 0.3% prior
Personal Spending, January (8:30): 0.3% expected, 0.0% prior
Core PCE Prices, January (8:30): 0.1% expected, 0.0% prior
Michigan Sentiment -, February (10:00): 91.0 expected, 92.0 prior
End part 1 of 3
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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
- Quiet expiration as sellers don't try to exploit any weakness.
- Stock indices continue a test of the 3-day move.
- CPI core jumps over 2.2%
- Stocks reload for the new expiration to try and continue past the January recovery high.
Friday was expiration, but it was a pretty quiet one. All of the action took place early as stocks started lower and sold in the first hour. CPI for January was flat overall, but cores jumped 0.3% (0.1% expected), a 2.2% year/year gain. That was the highest since June 2012 and the biggest jump since August 2011. That had stocks a bit unnerved as it works to handcuff the Fed's options regarding renewing any monetary easing. As for the session, however, it was, to use one of the Fed's favorite words, transitory.
Indeed after the first hour of trade the selling was over. It took the indices lower in a second day of testing the prior Friday, Tuesday and Wednesday sharp rally, but by the end of the session the indices were in very good shape. Indeed, they were never really in bad shape even with the early lows. It was a day of further testing or consolidating the 3-day surge, and frankly, the action was not bad at all for the upside to try and consolidate the gains and try for more.
SP500 -0.05,
DJ30 16.89, 0.38%
NASDAQ 21.44, 0.13%
SP400 -0.01%
RUTX 0.53%
SOX 0.49%
VOLUME: NYSE 7.5%, NASDAQ -7%
A/D: NYSE decliners lead slightly, NASDAQ 1.2:1 advancers
This market is an interesting dichotomy. We know the big names led the move higher through year end while the majority of stocks had already engaged in selloffs, many down well over 20%, the level the pundit class calls a bear market.
When the big name leaders broke, many of the downtrodden, the oppressed areas longing for money to come their way did indeed start to recover. Industrial equipment, metals, department stores all have enjoyed money moving their way. Not huge, blowout moves, but some money fleeing the big names trying to find some place to go while staying in the market. These beaten up areas are getting some money parked in them. We saw that with good moves in FCX, CENX, AKS as they come off their lows.
The market now is at something of a crossroads. The stock indices set up big tops and broke lower, then set up a smaller topping pattern. They were breaking lower two Thursdays back when the OPEC production cut story hit, reversing oil from 26 to 34, and reversing the stock indices from new selloff lows. After a three-day move following the intraday reversal, the stock indices are testing the prior recovery high as is oil.
Will the indices fold or continue higher? Will the big names continue to recover or falter? If they falter, will money keep moving into the beaten down areas and thus keep the stock market from wholly rolling over even if the big names that move the needle on the indices again sell?
Overall we still view the stock market as in a major top. Fifteen months of putting in a rounded top, a breakdown, the formation of a head and shoulders pattern after the breakdown. Pretty negative, but the stock indices wanted to find a story to help them rally, and they did. Now they are trying to turn the selling back and continue a rebound move.
As of Friday, the upside move attempt is still alive. Three sharp days up, two very mild selling sessions that function as nice consolidations. The setup is still there to continue the move near term as money is put into those beaten down areas and the prior big name leaders try to continue their recoveries as well.
The indices are at the January recovery highs, and as discussed last week, that is the next major test of the rebound from the August, January, and February lows (in terms of DJ30, SP500, and more or less NASDAQ), and the Thursday and Friday consolidation action is a good way to digest the initial move and setup a continuation higher.
This week the indices will show if they can continue setting up. As noted, nothing as of Friday suggested they cannot, at least nothing technically. Oil is on everyone's radar, however, and it hit the 50 day MA's and the January high Thursday and stalled. If oil stumbles back down, those that are managing their funds via the price of oil will pressure the stock market as well.
THE MARKET
CHARTS
DJ30: The three day recovery took the Dow to its January recovery high as of Wednesday. Thursday and Friday DJ30 tested, but Friday showed a nice intraday recovery off the early low. Definitely no sellers trying to exploit the stall at the prior highs, at least not yet. This is pretty solid consolidation action, taking a breather after a strong three day surge, holding the gains and trying to set up a new move.
SP500: Similar action, though SP500 has not made it quite back to the January highs. Testing as well, reaching lower Friday early session, then rebounding to close flat. Holding over the August and September lows, digesting the gains, in great position to continue the move.
NASDAQ: Started lower than the NYSE indices, making it back to the September lows by the end of the week. still below the January recovery high that failed at the 20 day EMA, but over the 20 day EMA on the Wednesday move and held it to close out the week. As with DJ30, SP500, even though it is lower, this is a key test in the recovery for NASDAQ as the big names try to continue their recovery and thus push NASDAQ.
SOX: Looks a lot like SP500, rallying close to the January high but not quite there. Indeed it touched at the 50 day EMA on the Thursday high and faded, and showed similar action Friday. Not as clear in terms of a quality consolidation, but it is holding its recovery gains.
SP400: The midcaps are also very similar to SP500, testing the nice move to near the January highs, bouncing back from intraday weakness.
RUTX: More like NASDAQ, posting a recovery off the lower low, now trying to consolidate the move to take on the January high.
LEADERSHIP
Big Names: GOOG bounced to the 50 day EMA but appears to be stalling. AMZN touched the 200 day SMA Thursday then reversed, but Friday it rebounded close to that level. FB managed to close over the 50 day MA Friday after struggling there all week. AAPL rallied early week then faded it Thursday and Friday. Still looks as if it can continue higher, but showed this same action in late January right before it gapped lower. NFLX recovered to the 20 day EMA then reversed late week. MSFT rallied to the 50 day EMA Wednesday, tried to extend the move, faded late week. Still a good recovery off the 200 day SMA test.
Retail: Department stores in some cases are not bad, e.g. DDS, even with JWN earnings.
Metals: Solid week moving up off the lows, some testing nice moves to end the week, e.g. FCX. CENX surged and AKS remains solid.
Financial: Still in downtrends, e.g. GS, BAC. JPM is trying to hold a recovery off the January low, but choppy. MA and V are off the lows but are at the next step where they need to show they can continue.
Utilities: Still holding the line in some good tests of prior moves, e.g. AEP, PCG. Defensive group and that suggests there is still some downside worry.
Industrials: Testing after good moves from CAT, CMI. Others such as TEX are not even resting. Recovering off of the lows, trying to change the trend.
Chips: Still a struggle. NXPI faded from a 20 day EMA test. AVGO still below the 200 day SMA. MCHP, SWKS are trying to use the market pause to set up the next try at moving higher.
MARKET STATISTICS
NASDAQ
Stats: +16.89 points (+0.38%) to close at 4504.43
Volume: 2.076B (-7.16%)
Up Volume: 1.13B (+442.25M)
Down Volume: 741.44M (-508.56M)
A/D and Hi/Lo: Advancers led 1.25 to 1
Previous Session: Decliners led 1.51 to 1
New Highs: 20 (0)
New Lows: 57 (-6)
S&P
Stats: -0.05 points (0%) to close at 1917.78
NYSE Volume: 1.13B (+7.62%)
A/D and Hi/Lo: Decliners led 1.02 to 1
Previous Session: Advancers led 1.04 to 1
New Highs: 30 (-2)
New Lows: 41 (+10)
DJ30
Stats: -21.44 points (-0.13%) to close at 16391.99
SENTIMENT INDICATORS
VIX: 20.53; -1.11
VXN: 24.91; -1.69
VXO: 22.33; -0.69
Put/Call Ratio (CBOE): 1.06; -0.01
Three sessions back over 1.0 as the put action remained heavier on expiration after the market posted such a strong rebound. That has a lot of positions being rolled or closed.
Recent history: 6 of 12 sessions below 1.0, 23 of the last 35 sessions above 1.0, including the last three.
Bulls and Bears: Bulls recovered a bit of ground after falling the prior week from over 30. Bears remain very skeptical with their numbers rising despite a market bounce. Still in a crossover position. This indicator is strongly suggesting a bounce, but this is not a timing indicator.
Bulls: 26.5 versus 24.7. Some recovery from the plunge from over 30 three weeks back.
Bears: 39.8 versus 39.2. Still no faith in bears the market has bottomed.
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: 26.5%
24.7% 34.0% versus 29.2% versus 26.8% versus 28.6% versus 34.7% versus 36.7% versus 37.8% versus 44.9% versus 41.2% versus 45.4%
Background: Bulls hit their lowest level in 2015 since the 2008 and 2009 market plummet.
Bears: 39.8%
39.2% versus 38.1% versus 35.4% versus 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%
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): 1.75% versus 1.74%. After a test of the 20 day EMA through Wednesday, a bounce Thursday, pause Friday. Big surge higher is now tested.
Historical: 1.74% versus 1.81% versus 1.78% versus 1.75% versus 1.64% versus 1.69% versus 1.73% versus 1.76% versus 1.85% versus 1.85% versus 1.88% versus 1.86% versus 1.96% versus 1.93% versus 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%
EUR/USD: 1.1130 versus 1.1103. EUR still testing the 20 day EMA after the big break higher. 7 session test, showing doji. EUR rallied when US stocks struggled.
Historical: 1.1103 versus 1.1124 versus 1.1275 versus 1.1154 versus 1.1249 versus 1.1322 versus 1.1293 versus 1.1294 versus 1.1197 versus 1.1159 versus 1.1206 versus 1.1110 versus 1.0916 versus 1.0905 versus 1.0836 versus 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
USD/JPY: 112.65 versus 113.25. Dollar touched the 10 day EMA early week, has sold since.
Historical: 113.25 versus 114.04 versus 114.33 versus 114.747 versus 113.29 versus 112.39 versus 113.36 versus 115.085 versus 115.74 versus 116.83 versus 116.76 versus 117.88 versus 120.04 versus 121.014 versus 121.055 versus 118.27 versus 118.64 versus 118.48
Oil: 31.75, -0.98. Gapped to the 50 day EMA Thursday but sold back. Friday oil filled the upside gap. Trying to change things up a bit, and did make it through the 20 day EMA this time.
Gold: 1231.30, 0.00. After the big surge Thursday off the 10 day EMA test, oil held steady.
MONDAY
The indices are sitting on a big three day push higher, testing Thursday and Friday. They held the moves and the shorts did not try to take new positions ahead of expiration. Now we see if DJ30, SP500 et al can push higher again to continue the advance. Key test of the move and prior levels as discussed earlier.
We have a balanced mix of upside downside plays for the start of the week. Some areas that are recovering could continue doing so. Others continue to struggle even after the bounce, setting up some possible downside plays. As we have seen, both can work in this market.
You have to acknowledge the overall negative market pattern yet defer to the recent strength until the sellers show up again. Given the overall top in the market, we feel they will show up, but perhaps not until there is more of a relief move upside.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4504.43
Resistance:
4517-4506 from the September 2015 and August 2015 closing lows
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4620 is the February 1 closing high
4637 is the February intraday high
The 50 day EMA at 4631
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
4902 is the July 2015 low
The 200 day SMA at 4909
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October
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
Support:
4485 are the twin July 2014 peaks
4471 is the January 2016 closing low
4363 is the February upper gap point
4352 is the March 2014 peak
4313 is the January 2016 intraday low
4292 is the August 2015 low
4212 is the February intraday low
4116 is the October 2014 low
S&P 500: Closed at 1917.78
Resistance:
1940 is the January 2016 recovery bounce peak closing high
The 50 day EMA at 1940
1947 is the February 2016 intraday high
1972 is the December 2014 low
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
The 200 day SMA at 2031
2040 is the March 2015 closing low
2046 is the July 2015 closing low
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
1812 is the January 2016 intraday low
1772 are the Q4 2013 highs and lows
Dow: Closed at 16,391.99
Resistance:
16,466 is the January 2016 recovery closing peak.
16,506 is the March 2014 peak
16,511 is the January 2016 intraday high
16,526 is the early January resistance
The 50 day EMA at 16,552
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 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
The 200 day SMA at 17,253
17,351 is the September 2014 all-time high.
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
The 20 day EMA 16,227
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
February 19 - Friday
CPI, January (8:30): 0.0% actual versus -0.1% expected, -0.1% prior
Core CPI, January (8:30): 0.3% actual versus 0.1% expected, 0.2% prior (revised from 0.1%)
February 23 - Tuesday
Case-Shiller 20-city, December (9:00): 5.8% expected, 5.8% prior
Consumer Confidence, February (10:00): 97.3 expected, 98.1 prior
Existing Home Sales, January (10:00): 5.30M expected, 5.46M prior
February 24 - Wednesday
MBA Mortgage Index, 02/20 (7:00): 8.2% prior
New Home Sales, January (10:00): 523K expected, 544K prior
Crude Inventories, 02/20 (10:30): 2.150M prior
February 25 - Thursday
Initial Claims, 02/20 (8:30): 270K expected, 262K prior
Continuing Claims, 02/13 (8:30): 2268K expected, 2273K prior
Durable Orders, January (8:30): 2.0% expected, -5.0% prior
Durable Goods -ex tr, January (8:30): 0.4% expected, -1.0% prior
FHFA Housing Price I, December (9:00): 0.5% prior
Natural Gas Inventor, 02/20 (10:30): -158 bcf prior
February 26 - Friday
GDP - Second Estimat, Q4 (8:30): 0.4% expected, 0.7% prior
GDP Deflator - Secon, Q4 (8:30): 0.8% expected, 0.8% prior
Personal Income, January (8:30): 0.4% expected, 0.3% prior
Personal Spending, January (8:30): 0.3% expected, 0.0% prior
Core PCE Prices, January (8:30): 0.1% expected, 0.0% prior
Michigan Sentiment -, February (10:00): 91.0 expected, 92.0 prior
End part 1 of 3
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Saturday, February 13, 2016
The Daily, Part 1 of 3, 2-13-16
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2/13/2016 Investment House Report
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Stop alerts: None issued
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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
- Stocks, bonds, currencies retrench, backfill their previous trend for the week ahead of a 3-day weekend.
- Three stories combine to get shorts to cover ahead of the weekend.
- Mixed data? Retail Sales stronger, Business Inventories weak, but look at the huge upward adjustment on retail sales.
- Experts and pundits all think the economy is better than the markets indicate. In other words, prepare for a recession.
- Big names bounced, but they did not change their trends one bit.
Friday stocks bounced as all major asset markets retrenched some of the move on the week. Stocks rose, bonds sold, the dollar gained, oil bounced from its latest selloff, and gold backtracked some of its surge.
SP500 35.70, 1.95%
NADSAQ 70.67, 1.66%
DJ30 313.66, 2.00%
SP400 1.86%
RUTX 1.92%
SOX 2.27%
VOLUME: NYSE trade fell 15% and back near average. NASDAQ volume tumbled to below average (-29%). Lower and light volume on a Friday rebound. Where have we seen this before? More aptly, how many times have we seen this before?
A/D: Quite solid. NYSE 3.8:1, NASDAQ 3:1. Very respectable, but then again, almost all stocks sold across the board, and in that case, when you get this kind of bounce, they all bounce.
A reversal with legs, a new bull run to come? Doubtful. A confluence of events set up the bounce. It started first with the selloff, already a strong one heading into Friday. But that was not the issue: stocks were ready to go lower before the first of the events hits.
First, there was the WSJ story on the UAE claiming a deal was in the offing to cut OPEC production. That halted a dive in stocks and oil, indeed just as stocks where breaking again to lower lows. Second, DB announced overnight a huge $5B+ buy back of its bonds. Third, Jamie Dimon of JPM showed his confidence in the market and JPM, announcing he was using a year's salary to buy JPM stock. Surely, surely the bottom was in.
Frankly, those stories just show how bad things are. That the WSJ rushed out a story of one OPEC member speculating about a coming production cut, a claim that the story itself doubted, shows how desperate the oil situation is. Also, why did DB need to buy back its debt? To show the de facto sovereign bank of Germany CAN buy back its debt and thus put on the trappings of strength? JPM has its head spend 2.5% of his net worth to buy some stock and that shows the bank's strength? I remember back in the crash of 2000 and 2001 how tech company CEO's, CFO's and any other officer they could force buy shares of company stock to show just how much confidence they had in the company's future. Not many of those companies are around anymore, and I dare say that if the CEO's, etc. had to do it over, the LAST thing they would do is buy shares but indeed dump whatever shares they had while they could. No, it shows how bombed the sector is.
I don't mean to sound cynical, but with a sharply lower market, a 3-day weekend, and lots of shorts with gain built in, those three stories gave reason to cover heading into a long weekend. Some say that OPEC and Russia 'blinked' re oil production. Not Saudi Arabia; it knows its plan works and it will stay with it until it does. Not some sudden vote of confidence by DB and JPM. Again, those are signs of almost desperation, that things are NOT well. They are also likely very transient, working ahead of a 3-day weekend but have very little probability of catalyzing a major reversal beyond Friday.
On the session we didn't do much. We did close JPM just because it was so strong on the Dimon purchase announcement. Otherwise we left things as they are and the hardest decision was whether to buy more SBUX, AMZN puts ahead of the weekend (we opted not) or close VRSN after it bounced on earnings but could not get past the recent highs.
The indices such as DJ30, SP500 are bouncing off the January lows while NASDAQ and SOX still struggle; higher Friday but still struggling in weak patterns. Perhaps the head and shoulders does not produce a big break lower, but it will have to show it. Indeed, many 'names' were up but just bouncing in their downtrends. The session left many stocks off the recent lows and up at resistance. GOOG gapped near the 10 day EMA and gave it all up. AMZN showed a doji just below the 10 day EMA, SBUX is testing its 10 day EMA on low volume. PCLN has rebounded but is at similar resistance. Again, this looks like a bounce ahead of the weekend and not a lot more.
NEWS/ECONOMY
Some important economic reports received some splash Friday though outshined by the DB, DIMON, UAE stories. Once again the data was mixed with retail sales stronger than expected while business inventories were weak, particularly sales. But if you look below the headlines, once again you find rather curious handling of the data. That is a nice way of putting some absolutely amazing rewriting of the actual data. Sometimes you feel as if you live in the former Soviet Union and Pravda is reporting the daily communist line.
Retail Sales, January: It's all in the numbers, but what numbers?
0.2% versus 0.2% expected versus 0.2% December (from -0.1%)
Ex Autos and gas: 0.1% versus 0.0%
Control Group: 0.6% versus 0.3% expected versus -0.3% prior. Best since May 2015 at 0.8%.
Okay, looks solid. On the headline. How they got those headlines makes you realize we are being fed crapola.
When you look at the government's underlying data you see how the swing occurred.
It goes back, as it often does, to seasonal adjustments. Those are supposed to smooth out swings in the data based upon the different sales seasons through the year, taking out any unusual gyrations.
In January there were no unusual gyrations. It was pretty much an easy month without any major disruptions. The unadjusted sales fell $112.7B. Adjusted they rose $800M. Billion versus million.
Okay so they raw data and the adjusted data were $113.5B apart. Adjustments are normal. Was this one normal? Again, there were no major events in January to cause it to differ significantly from prior Januarys, specifically nothing negative that would require a sharp upward adjustment.
From 2011 to 2015 the average upward adjustment is 101%. Why so much in January? Winter storms, a natural slowdown following the holiday season are typical reasons. So, what was January 2016's revision?
+239%.
No significant negative events, particularly compared to major winter storms in a few of those Januarys the prior five years, yet the government applied an adjustment 2.4 times the average of those prior five years. What the heck is going on? It is called ends driven data reporting, a.k.a. your government is lying to you to make you doubt what you are experiencing in your life, to make you think that YOU are an outlier, that most are enjoying a 'great' economic recovery.
The Results are in and the Experts all agree -- the market has it wrong.
Add on top of that the commentary of the Federal reserve, leaders in the financial sector, and of course the Administration and President as to how great things are, and you start to think you are a failure.
Friday the Fed's Dudley stated he saw absolutely nothing wrong with the economy that would warrant any cessation of rate hikes, nothing the market was roiled over nothing significant. Also Friday one of JPM's economic analysts appeared on CNBC to discuss the economy versus the market. He termed the market selloff the 'immaculate correction' as he believes there is "absolutely no sign of the labor market or consumer" supporting the market's fall. The President declared economic victory after the last jobs report though the raw unadjusted data, as with retail sales, showed a decline of almost 700K jobs.
Whew, I thought we might have to go full QE . . .
Thursday Chairman Yellen gave her second testimony to Congress on the state of monetary policy. She did not alter the Fed's stance after its January statement at all. One reason: the Federal Advisory Council, made up of twelve banking CEO's, told her "the economy is stronger than the recent negative market sentiment would imply."
This dovetails exactly with the Blackstone CEO's outburst in Davos as to his total confusion at why there was so much anger from most of the populace given the current economic condition.
There you have it, the hubris of those doing very well in the status quo. I have called it the Let them Eat Cake moments of the 21st century. They are truly so far removed from reality they cannot comprehend how the middle class has suffered and how shredded the finances and prospects are for the majority of the middle class.
History shows when views of prosperity are so bifurcated among socio-economic groups that major upheaval is not far away. Hence the dominance of the primary season by those perceived as outside the DC power structure.
Business Inventories tick higher, sales plunge.
Inventories: 0.1% . Year/year +1.7%. Retail inventories +5.4% year/year.
Sales: -0.6%. Year/year -2.4%. Manufacturers -5.1% year/year.
Inventories to Sales Ratio: 1.39. This is the highest since the spike in 2008 when there was recession and in 2001 when there was a previous recession.
Once again another economic data point hits recession levels.
Rome is burning, the economy is being gutted from the middle and killing the middle class, but those in power, those in charge, have no idea of their plight.
THE MARKET
CHARTS
Bounces on Friday but the indices are still below the 10 day EMA. That will be an important test because they all failed at or near the 10 day EMA before the last selloff, and if they do so again that shows the downtrend's strength.
SP500: After touching to a lower low Thursday then reversing on a well-timed 'OPEC has a deal!' report, SP500 continued upside Friday with a gap and rally. Falling, near average volume. Closed out at session highs with an impressive bear market rally. Yes I called it a bear market because that is what we have entered. It was a relief move ahead of a 3-day weekend after a solid two weeks downside to a prior low. Sure it can continue higher and perhaps this was a bottom; the odds of that are less than 10%. This very much looks to be nothing more than a Friday short covering bounce triggered by a likely bogus story and some desperate moves by a couple of banks. While the Fed thinks the economic issues are transitory, we believe this market bounce is transitory, if not contrived.
NASDAQ: Gapped higher with the other indices and closed out at the session high. First below average volume since the December holiday season. Impressive. NASDAQ is still below the January lows, still below the 10 day EMA. We anticipate a move back up to the 10 day EMA (4372) and then to stumble. Looking at AMZN, GOOG, SBUX and others on the Friday session, you get an idea that NASDAQ's move was not that strong.
DJ30: After dipping near the January intraday low Thursday, even DJ30 gapped upside. Rallied to the close on impressively light volume. With the bank stocks jumping, DJ30 jumped, but there was not a lot of internal power.
SOX: After gapping lower Thursday, SOX gapped upside Friday and filled the gap early. Below the January closing levels and the 10 day EMA. Key test at 577.
RUTX: After a lower low Thursday and doji with tail, RUTX rallied to fill the gap and past the Tuesday and Wednesday closes. Still below the 10 day EMA, and as noted above, that test is an important one in determining how strong the downtrend is.
SP400: Gapped and rallied Friday after testing the January lows Thursday. Closed 6 points off the 10 day EMA.
LEADERSHIP
News flash: Still no leaders. To all of those pundits out there calling for a bottom or how the market is just not cognizant of how great the economy is, the market is going to have a hard time rallying with no leaders. Oh you can have some utilities bounce and other sectors capture some confused money, but that is not leadership. Without it, any bounce is doomed.
Big Names: The NASDAQ big names struggled even with the market surge. AMZN was up but it gapped to a doji, just tapping at the 10 day EMA on the high. GOOG gapped to near the 10 day EMA and reversed the entire move. AAPL never sold much over the past two weeks as it led the downside earlier. It didn't bounce much Friday but it could be prepping for a new move. FB gapped over the 50 day MA's but then sold below them; bear flag here as well. MSFT was up, bouncing off the 200 day SMA after four days there. Hit the 10 day EMA, showed a doji. Struggled.
Energy: So back and forth but perhaps this rumor-driven rally can break them out. XOM is back over the 200 day SMA. It crossed that level three times in the past five sessions. CVX gapped up off the bottom trendline, still in the wedge. Smaller issues were not bad: SWN jumped upside, GPOR jumped off the 50 day EMA. Service companies are struggling, e.g. HAL. SLB, however, jumped higher.
Financial: JPM and DB helped gin up the sector. GS gapped off the Thursday new low but is in a pernicious downtrend now. BAC gapped and filled the Thursday gap lower, but still well below the 10 day EMA. MA is moving up to the 20 day EMA on low volume, its resistance in its downtrend. V gapped and rallied to the 10 day EMA on very low volume; perhaps a downside play is at hand. Still an ugly downtrend and as these stocks recover to the 10 day EMA we can look to play them on the next leg lower.
Utilities: Struggled to end the week, but overall decent, an indication of a still weak bias in the market. AEP fell Thursday and Friday, falling below the 20 day EMA Friday. PCG is not bad, tapping at the 20 day EMA on the low, bouncing to flat and a doji. EQT is getting it back together.
Metals: Not a bad day, not bad setups. FCX broke higher off the 20 day EMA after a 5 day test; not any volume, but we will see if it can continue next week. STLD gapped off the 50 day EMA test. SCHN surged. AKS jumped off of its 50 day EMA test.
Retail: Recovered some ground lost Wednesday and Thursday. M managed to move up off the 50 day EMA but on very low trade. LOW is bouncing off of an utter gutting. COST is trying to set up something at the 200 day SMA. WSM is still trying to build something. KORS is still in a pretty nice 10 day EMA test after its big earnings gap breakout.
Chips: Relief bounce after a gutting. AVGO hit a new low and bounced but on pitifully low trade. Ditto NXPI. QRVO bounced on stronger, average volume; interesting. MCHP bounced off a doji low Thursday but no volume; none. MLNX moved up through the 200 day SMA, still showing relative strength to the group. CAVM is jumping off the lows. Many bounces off a tail kicking, but for the most part you have to wait for them to setup again.
MARKET STATISTICS
NASDAQ
Stats: +70.67 points (+1.66%) to close at 4337.51
Volume: 1.924B (-29.14%)
Up Volume: 1.62B (+836.45M)
Down Volume: 345.09M (-1.665B)
A/D and Hi/Lo: Advancers led 3.06 to 1
Previous Session: Decliners led 2.3 to 1
New Highs: 10 (+3)
New Lows: 147 (-357)
S&P
Stats: +35.7 points (+1.95%) to close at 1864.78
NYSE Volume: 1.12B (-15.15%)
A/D and Hi/Lo: Advancers led 3.83 to 1
Previous Session: Decliners led 4.32 to 1
New Highs: 21 (-16)
New Lows: 122 (-479)
DJ30
Stats: +313.66 points (+2%) to close at 15973.84
SENTIMENT INDICATORS
VIX: 25.4; -2.74. Gapped higher Thursday but only matched the January highs before fading to the 10 day EMA Friday. Not enough to bounce the market before, not enough now. Again, however, it is setting up for a breakout and that will push stocks lower and may finally set up a serious relief rally.
VXN: 29.74; -2.13
VXO: 26.9; -3.88
Put/Call Ratio (CBOE): 0.92; -0.04
Recent history: 5 of 8 sessions below 1.0, 20 of the last 31 sessions above 1.0.
Bulls and Bears: Bulls post a massive plunge after a big surge. Bulls hold mostly steady, rising modestly. Still a major crossover. This indicator is screaming rally, but it is an indicator that definitely precedes a move, and timing is not its specialty. Another big selloff that spikes VIX might do the trick for a serious tradable relief move. Without leaders, that is all it would be.
Bulls: 24.7 versus 34.0. What a plunge.
Bears: 39.2 versus 38.1
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 24.7%
34.0% versus 29.2% versus 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%
Background: Bulls hit their lowest level in 2015 since the 2008 and 2009 market plummet.
Bears: 39.2%
38.1% versus 35.4% versus 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%
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
A bit of retrenchment after some pretty strong moves.
Bonds (10 year): 1.75% versus 1.64%. Gapped lower after gapping Thursday. Kind of island reversal-like after clearing the March 2015 high and taking aim at the January 2015 peak. Tremendous move the past six weeks, so some retrenchment makes sense.
Historical: 1.64% versus 1.69% versus 1.73% versus 1.76% versus 1.85% versus 1.85% versus 1.88% versus 1.86% versus 1.96% versus 1.93% versus 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%
EUR/USD: 1.1249 versus 1.1322. The euro actually fell a bit after a two week break higher that tested the May to October 2015 tops of the trading range.
Historical: 1.1322 versus 1.1293 versus 1.1294 versus 1.1197 versus 1.1159 versus 1.1206 versus 1.1110 versus 1.0916 versus 1.0905 versus 1.0836 versus 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
USD/JPY: 113.29 versus 112.39. The dollar actually bounced after a two-week tail kicking. What a plunge. If it didn't bounce the dollar would need to be converted to gold immediately.
Historical: 112.39 versus 113.36 versus 115.085 versus 115.74 versus 116.83 versus 116.76 versus 117.88 versus 120.04 versus 121.014 versus 121.055 versus 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
Oil: 29.02, 1.72, +6.30%. It took a rank rumor to get oil off its hind end and bounce. 6.3% and that got oil to tap at the 10 day EMA on the high. Maybe it can make more upside here but it is still in the nasty downtrend that renewed after an 8 week bounce attempt. At some point it needs to do that again, and oil has sold in four rotations down the 10 and 20 day EMA. Perhaps time for a base.
Gold: 1238.50, -8.50. After a huge rally the past two weeks on top of the prior three weeks, gold may have hit the apex for just a bit. What a surge Thursday then a pause Friday, still 65 points or so off of the January 2015 peak. A bit of consolidation makes sense.
TUESDAY
Market closed Monday for the aggregation of all the Presidents' birthdays. That is what helped the market bounce Friday when those short covering triggers started to hit from OPEC deals to banks and their votes of confidence.
Of course there are those saying this is a new rally time for the market and of course there is always the possibility they are correct. Looking at the stock charts, however, they do not suggest that is the case. The market was ready to plunge Thursday when the OPEC report/rumor/wish hit. After the weekend is through, China opens, and those upside catalysts dissipate, if nothing new hits we anticipate the downside to resume.
Indeed, some of the setups already look great even as Friday closed out. Perhaps they are just a head fake on a continued move higher, but until they show that move we are going to look for the downside plays. The downside is the trend, the setups are there, and there just are not that many great looking upside plays ready to go. And, of course, the experts and pundits are talking about value, and buying into stocks. Indeed, late Friday we heard that David Tepper went long a huge number of S&P 500 calls on the week. Tepper is rich and makes a lot of money, but he has made some huge misses. One in 2013 when he came on CNBC and said he was worried even as we saw great setups in AMZN, GOOG, etc. That day was THE bottom in that selling. He has also made bullish calls at tops. This could be one.
That is interesting in terms of market psychology, the old 'it's got to be better now because it has been so bad' mentality. They cite better valuations, but of course valuations always get better on any significant selling. But values don't turn markets; they are part of the setup after a big selloff, but it takes stocks under accumulation to produce a sustained move. Not enough of those right now.
Therefore we will look for downside plays, for the most part, and we see quite a few. We will not forget the upside; they can still produce gains, and if the market defies the probabilities and keeps rallying, it is of course good to have those in the pocket, ready to go. There are some bounces and some stocks moving upside. Some chips are showing stronger moves. KORS is set up for a bounce higher again. NVDA can bounce but earnings are 2/17. CAKE is trying to rise from a cup with handle but its earnings are 2/16. Utilities still decent but they are utilities.
So now we wait and see how China performs for a couple of days while the US is closed. It may allow China to catch down and give the US markets a clean slate by Tuesday. We will see, but overall the trend is still down and nothing thus far has changed that because there is no change in fiscal or monetary policy, and judging from Chairman Yellen's testimony and Dudley's Friday comments, the Fed is not even near the idea of stopping rate hikes, a much lower standard than reversing course.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4337.51
Resistance:
4352 is the March 2014 peak
4363 is the February upper gap point
The 10 day EMA at 4372
4471 is the January 2016 closing low
4485 are the twin July 2014 peaks
4517-4506 from the September 2015 and August 2015 closing lows
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4635 is the February peak
The 50 day EMA at 4656
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
4902 is the July 2015 low
4916 is the mid-November 2015 low
The 200 day SMA at 4919
4920 is the lower gap point from mid-October
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
Support:
4313 is the January 2016 intraday low
4292 is the August 2015 low
4212 is the February intraday low
4116 is the October 2014 low
S&P 500: Closed at 1864.78
Resistance:
1867 is the August 2015 low
The 10 day EMA at 1871
1872 is the September 2015 test low of the August low
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
1940 is the early January 2016 failed bounce peak
The 50 day EMA at 1945
1972 is the December 2014 low
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
The 200 day SMA at 2034
2040 is the March 2015 closing low
2046 is the July 2015 closing low
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:
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
1812 is the January 2016 intraday low
1772 are the Q4 2013 highs and lows
Dow: Closed at 15,968.77
Resistance:
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
16,466 is the January 2016 recovery attempt closing peak.
16,506 is the March 2014 peak
16,526 is the early January resistance
The 50 day EMA at 16,584
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 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
The 200 day SMA at 17,285
17,351 is the September 2014 all-time high.
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
February 12 - Friday
Export Prices ex-ag., January (8:30): -0.8% actual versus -1.1% prior (revised from -1.0%)
Import Prices ex-oil, January (8:30): -0.2% actual versus -0.3% prior (no revisions)
Retail Sales, January (8:30): 0.2% actual versus 0.2% expected, 0.2% prior (revised from -0.1%)
Retail Sales ex-auto, January (8:30): 0.1% actual versus 0.0% expected, 0.1% prior (revised from -0.1%)
Business Inventories, December (10:00): 0.1% actual versus 0.1% expected, -0.1% prior (revised from -0.2%)
Michigan Sentiment Preliminary, February (10:00): 90.7 actual versus 92.7 expected, 92.0 prior (January Final)
February 16 - Tuesday
Empire Manufacturing, February (8:30): -9.9 expected, -19.4 prior
NAHB Housing Market , February (10:00): 60 expected, 60 prior
Net Long-Term TIC Fl, December (16:00): $31.4B prior
February 17 - Wednesday
MBA Mortgage Index, 02/13 (7:00): 9.3% prior
PPI, January (8:30): -0.2% expected, -0.2% prior
Core PPI, January (8:30): 0.0% expected, 0.1% prior
Housing Starts, January (8:30): 1171K expected, 1149K prior
Building Permits, January (8:30): 1200K expected, 1232K prior
Industrial Productio, January (9:15): 0.3% expected, -0.4% prior
Capacity Utilization, January (9:15): 76.6% expected, 76.5% prior
Crude Inventories, 02/13 (10:30): -0.754M prior
FOMC Minutes, January 27 (14:00)
February 18 - Thursday
Initial Claims, 02/13 (8:30): 274K expected, 269K prior
Continuing Claims, 02/06 (8:30): 2237K expected, 2239K prior
Philadelphia Fed, February (8:30): -2.9 expected, -3.5 prior
Natural Gas Inventor, 02/13 (10:30): -70 bcf prior
February 19 - Friday
CPI, January (8:30): -0.1% expected, -0.1% prior
Core CPI, January (8:30): 0.1% expected, 0.1% prior
End part 1 of 3
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2/13/2016 Investment House Report
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Stop alerts: None issued
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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
- Stocks, bonds, currencies retrench, backfill their previous trend for the week ahead of a 3-day weekend.
- Three stories combine to get shorts to cover ahead of the weekend.
- Mixed data? Retail Sales stronger, Business Inventories weak, but look at the huge upward adjustment on retail sales.
- Experts and pundits all think the economy is better than the markets indicate. In other words, prepare for a recession.
- Big names bounced, but they did not change their trends one bit.
Friday stocks bounced as all major asset markets retrenched some of the move on the week. Stocks rose, bonds sold, the dollar gained, oil bounced from its latest selloff, and gold backtracked some of its surge.
SP500 35.70, 1.95%
NADSAQ 70.67, 1.66%
DJ30 313.66, 2.00%
SP400 1.86%
RUTX 1.92%
SOX 2.27%
VOLUME: NYSE trade fell 15% and back near average. NASDAQ volume tumbled to below average (-29%). Lower and light volume on a Friday rebound. Where have we seen this before? More aptly, how many times have we seen this before?
A/D: Quite solid. NYSE 3.8:1, NASDAQ 3:1. Very respectable, but then again, almost all stocks sold across the board, and in that case, when you get this kind of bounce, they all bounce.
A reversal with legs, a new bull run to come? Doubtful. A confluence of events set up the bounce. It started first with the selloff, already a strong one heading into Friday. But that was not the issue: stocks were ready to go lower before the first of the events hits.
First, there was the WSJ story on the UAE claiming a deal was in the offing to cut OPEC production. That halted a dive in stocks and oil, indeed just as stocks where breaking again to lower lows. Second, DB announced overnight a huge $5B+ buy back of its bonds. Third, Jamie Dimon of JPM showed his confidence in the market and JPM, announcing he was using a year's salary to buy JPM stock. Surely, surely the bottom was in.
Frankly, those stories just show how bad things are. That the WSJ rushed out a story of one OPEC member speculating about a coming production cut, a claim that the story itself doubted, shows how desperate the oil situation is. Also, why did DB need to buy back its debt? To show the de facto sovereign bank of Germany CAN buy back its debt and thus put on the trappings of strength? JPM has its head spend 2.5% of his net worth to buy some stock and that shows the bank's strength? I remember back in the crash of 2000 and 2001 how tech company CEO's, CFO's and any other officer they could force buy shares of company stock to show just how much confidence they had in the company's future. Not many of those companies are around anymore, and I dare say that if the CEO's, etc. had to do it over, the LAST thing they would do is buy shares but indeed dump whatever shares they had while they could. No, it shows how bombed the sector is.
I don't mean to sound cynical, but with a sharply lower market, a 3-day weekend, and lots of shorts with gain built in, those three stories gave reason to cover heading into a long weekend. Some say that OPEC and Russia 'blinked' re oil production. Not Saudi Arabia; it knows its plan works and it will stay with it until it does. Not some sudden vote of confidence by DB and JPM. Again, those are signs of almost desperation, that things are NOT well. They are also likely very transient, working ahead of a 3-day weekend but have very little probability of catalyzing a major reversal beyond Friday.
On the session we didn't do much. We did close JPM just because it was so strong on the Dimon purchase announcement. Otherwise we left things as they are and the hardest decision was whether to buy more SBUX, AMZN puts ahead of the weekend (we opted not) or close VRSN after it bounced on earnings but could not get past the recent highs.
The indices such as DJ30, SP500 are bouncing off the January lows while NASDAQ and SOX still struggle; higher Friday but still struggling in weak patterns. Perhaps the head and shoulders does not produce a big break lower, but it will have to show it. Indeed, many 'names' were up but just bouncing in their downtrends. The session left many stocks off the recent lows and up at resistance. GOOG gapped near the 10 day EMA and gave it all up. AMZN showed a doji just below the 10 day EMA, SBUX is testing its 10 day EMA on low volume. PCLN has rebounded but is at similar resistance. Again, this looks like a bounce ahead of the weekend and not a lot more.
NEWS/ECONOMY
Some important economic reports received some splash Friday though outshined by the DB, DIMON, UAE stories. Once again the data was mixed with retail sales stronger than expected while business inventories were weak, particularly sales. But if you look below the headlines, once again you find rather curious handling of the data. That is a nice way of putting some absolutely amazing rewriting of the actual data. Sometimes you feel as if you live in the former Soviet Union and Pravda is reporting the daily communist line.
Retail Sales, January: It's all in the numbers, but what numbers?
0.2% versus 0.2% expected versus 0.2% December (from -0.1%)
Ex Autos and gas: 0.1% versus 0.0%
Control Group: 0.6% versus 0.3% expected versus -0.3% prior. Best since May 2015 at 0.8%.
Okay, looks solid. On the headline. How they got those headlines makes you realize we are being fed crapola.
When you look at the government's underlying data you see how the swing occurred.
It goes back, as it often does, to seasonal adjustments. Those are supposed to smooth out swings in the data based upon the different sales seasons through the year, taking out any unusual gyrations.
In January there were no unusual gyrations. It was pretty much an easy month without any major disruptions. The unadjusted sales fell $112.7B. Adjusted they rose $800M. Billion versus million.
Okay so they raw data and the adjusted data were $113.5B apart. Adjustments are normal. Was this one normal? Again, there were no major events in January to cause it to differ significantly from prior Januarys, specifically nothing negative that would require a sharp upward adjustment.
From 2011 to 2015 the average upward adjustment is 101%. Why so much in January? Winter storms, a natural slowdown following the holiday season are typical reasons. So, what was January 2016's revision?
+239%.
No significant negative events, particularly compared to major winter storms in a few of those Januarys the prior five years, yet the government applied an adjustment 2.4 times the average of those prior five years. What the heck is going on? It is called ends driven data reporting, a.k.a. your government is lying to you to make you doubt what you are experiencing in your life, to make you think that YOU are an outlier, that most are enjoying a 'great' economic recovery.
The Results are in and the Experts all agree -- the market has it wrong.
Add on top of that the commentary of the Federal reserve, leaders in the financial sector, and of course the Administration and President as to how great things are, and you start to think you are a failure.
Friday the Fed's Dudley stated he saw absolutely nothing wrong with the economy that would warrant any cessation of rate hikes, nothing the market was roiled over nothing significant. Also Friday one of JPM's economic analysts appeared on CNBC to discuss the economy versus the market. He termed the market selloff the 'immaculate correction' as he believes there is "absolutely no sign of the labor market or consumer" supporting the market's fall. The President declared economic victory after the last jobs report though the raw unadjusted data, as with retail sales, showed a decline of almost 700K jobs.
Whew, I thought we might have to go full QE . . .
Thursday Chairman Yellen gave her second testimony to Congress on the state of monetary policy. She did not alter the Fed's stance after its January statement at all. One reason: the Federal Advisory Council, made up of twelve banking CEO's, told her "the economy is stronger than the recent negative market sentiment would imply."
This dovetails exactly with the Blackstone CEO's outburst in Davos as to his total confusion at why there was so much anger from most of the populace given the current economic condition.
There you have it, the hubris of those doing very well in the status quo. I have called it the Let them Eat Cake moments of the 21st century. They are truly so far removed from reality they cannot comprehend how the middle class has suffered and how shredded the finances and prospects are for the majority of the middle class.
History shows when views of prosperity are so bifurcated among socio-economic groups that major upheaval is not far away. Hence the dominance of the primary season by those perceived as outside the DC power structure.
Business Inventories tick higher, sales plunge.
Inventories: 0.1% . Year/year +1.7%. Retail inventories +5.4% year/year.
Sales: -0.6%. Year/year -2.4%. Manufacturers -5.1% year/year.
Inventories to Sales Ratio: 1.39. This is the highest since the spike in 2008 when there was recession and in 2001 when there was a previous recession.
Once again another economic data point hits recession levels.
Rome is burning, the economy is being gutted from the middle and killing the middle class, but those in power, those in charge, have no idea of their plight.
THE MARKET
CHARTS
Bounces on Friday but the indices are still below the 10 day EMA. That will be an important test because they all failed at or near the 10 day EMA before the last selloff, and if they do so again that shows the downtrend's strength.
SP500: After touching to a lower low Thursday then reversing on a well-timed 'OPEC has a deal!' report, SP500 continued upside Friday with a gap and rally. Falling, near average volume. Closed out at session highs with an impressive bear market rally. Yes I called it a bear market because that is what we have entered. It was a relief move ahead of a 3-day weekend after a solid two weeks downside to a prior low. Sure it can continue higher and perhaps this was a bottom; the odds of that are less than 10%. This very much looks to be nothing more than a Friday short covering bounce triggered by a likely bogus story and some desperate moves by a couple of banks. While the Fed thinks the economic issues are transitory, we believe this market bounce is transitory, if not contrived.
NASDAQ: Gapped higher with the other indices and closed out at the session high. First below average volume since the December holiday season. Impressive. NASDAQ is still below the January lows, still below the 10 day EMA. We anticipate a move back up to the 10 day EMA (4372) and then to stumble. Looking at AMZN, GOOG, SBUX and others on the Friday session, you get an idea that NASDAQ's move was not that strong.
DJ30: After dipping near the January intraday low Thursday, even DJ30 gapped upside. Rallied to the close on impressively light volume. With the bank stocks jumping, DJ30 jumped, but there was not a lot of internal power.
SOX: After gapping lower Thursday, SOX gapped upside Friday and filled the gap early. Below the January closing levels and the 10 day EMA. Key test at 577.
RUTX: After a lower low Thursday and doji with tail, RUTX rallied to fill the gap and past the Tuesday and Wednesday closes. Still below the 10 day EMA, and as noted above, that test is an important one in determining how strong the downtrend is.
SP400: Gapped and rallied Friday after testing the January lows Thursday. Closed 6 points off the 10 day EMA.
LEADERSHIP
News flash: Still no leaders. To all of those pundits out there calling for a bottom or how the market is just not cognizant of how great the economy is, the market is going to have a hard time rallying with no leaders. Oh you can have some utilities bounce and other sectors capture some confused money, but that is not leadership. Without it, any bounce is doomed.
Big Names: The NASDAQ big names struggled even with the market surge. AMZN was up but it gapped to a doji, just tapping at the 10 day EMA on the high. GOOG gapped to near the 10 day EMA and reversed the entire move. AAPL never sold much over the past two weeks as it led the downside earlier. It didn't bounce much Friday but it could be prepping for a new move. FB gapped over the 50 day MA's but then sold below them; bear flag here as well. MSFT was up, bouncing off the 200 day SMA after four days there. Hit the 10 day EMA, showed a doji. Struggled.
Energy: So back and forth but perhaps this rumor-driven rally can break them out. XOM is back over the 200 day SMA. It crossed that level three times in the past five sessions. CVX gapped up off the bottom trendline, still in the wedge. Smaller issues were not bad: SWN jumped upside, GPOR jumped off the 50 day EMA. Service companies are struggling, e.g. HAL. SLB, however, jumped higher.
Financial: JPM and DB helped gin up the sector. GS gapped off the Thursday new low but is in a pernicious downtrend now. BAC gapped and filled the Thursday gap lower, but still well below the 10 day EMA. MA is moving up to the 20 day EMA on low volume, its resistance in its downtrend. V gapped and rallied to the 10 day EMA on very low volume; perhaps a downside play is at hand. Still an ugly downtrend and as these stocks recover to the 10 day EMA we can look to play them on the next leg lower.
Utilities: Struggled to end the week, but overall decent, an indication of a still weak bias in the market. AEP fell Thursday and Friday, falling below the 20 day EMA Friday. PCG is not bad, tapping at the 20 day EMA on the low, bouncing to flat and a doji. EQT is getting it back together.
Metals: Not a bad day, not bad setups. FCX broke higher off the 20 day EMA after a 5 day test; not any volume, but we will see if it can continue next week. STLD gapped off the 50 day EMA test. SCHN surged. AKS jumped off of its 50 day EMA test.
Retail: Recovered some ground lost Wednesday and Thursday. M managed to move up off the 50 day EMA but on very low trade. LOW is bouncing off of an utter gutting. COST is trying to set up something at the 200 day SMA. WSM is still trying to build something. KORS is still in a pretty nice 10 day EMA test after its big earnings gap breakout.
Chips: Relief bounce after a gutting. AVGO hit a new low and bounced but on pitifully low trade. Ditto NXPI. QRVO bounced on stronger, average volume; interesting. MCHP bounced off a doji low Thursday but no volume; none. MLNX moved up through the 200 day SMA, still showing relative strength to the group. CAVM is jumping off the lows. Many bounces off a tail kicking, but for the most part you have to wait for them to setup again.
MARKET STATISTICS
NASDAQ
Stats: +70.67 points (+1.66%) to close at 4337.51
Volume: 1.924B (-29.14%)
Up Volume: 1.62B (+836.45M)
Down Volume: 345.09M (-1.665B)
A/D and Hi/Lo: Advancers led 3.06 to 1
Previous Session: Decliners led 2.3 to 1
New Highs: 10 (+3)
New Lows: 147 (-357)
S&P
Stats: +35.7 points (+1.95%) to close at 1864.78
NYSE Volume: 1.12B (-15.15%)
A/D and Hi/Lo: Advancers led 3.83 to 1
Previous Session: Decliners led 4.32 to 1
New Highs: 21 (-16)
New Lows: 122 (-479)
DJ30
Stats: +313.66 points (+2%) to close at 15973.84
SENTIMENT INDICATORS
VIX: 25.4; -2.74. Gapped higher Thursday but only matched the January highs before fading to the 10 day EMA Friday. Not enough to bounce the market before, not enough now. Again, however, it is setting up for a breakout and that will push stocks lower and may finally set up a serious relief rally.
VXN: 29.74; -2.13
VXO: 26.9; -3.88
Put/Call Ratio (CBOE): 0.92; -0.04
Recent history: 5 of 8 sessions below 1.0, 20 of the last 31 sessions above 1.0.
Bulls and Bears: Bulls post a massive plunge after a big surge. Bulls hold mostly steady, rising modestly. Still a major crossover. This indicator is screaming rally, but it is an indicator that definitely precedes a move, and timing is not its specialty. Another big selloff that spikes VIX might do the trick for a serious tradable relief move. Without leaders, that is all it would be.
Bulls: 24.7 versus 34.0. What a plunge.
Bears: 39.2 versus 38.1
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 24.7%
34.0% versus 29.2% versus 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%
Background: Bulls hit their lowest level in 2015 since the 2008 and 2009 market plummet.
Bears: 39.2%
38.1% versus 35.4% versus 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%
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
A bit of retrenchment after some pretty strong moves.
Bonds (10 year): 1.75% versus 1.64%. Gapped lower after gapping Thursday. Kind of island reversal-like after clearing the March 2015 high and taking aim at the January 2015 peak. Tremendous move the past six weeks, so some retrenchment makes sense.
Historical: 1.64% versus 1.69% versus 1.73% versus 1.76% versus 1.85% versus 1.85% versus 1.88% versus 1.86% versus 1.96% versus 1.93% versus 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%
EUR/USD: 1.1249 versus 1.1322. The euro actually fell a bit after a two week break higher that tested the May to October 2015 tops of the trading range.
Historical: 1.1322 versus 1.1293 versus 1.1294 versus 1.1197 versus 1.1159 versus 1.1206 versus 1.1110 versus 1.0916 versus 1.0905 versus 1.0836 versus 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
USD/JPY: 113.29 versus 112.39. The dollar actually bounced after a two-week tail kicking. What a plunge. If it didn't bounce the dollar would need to be converted to gold immediately.
Historical: 112.39 versus 113.36 versus 115.085 versus 115.74 versus 116.83 versus 116.76 versus 117.88 versus 120.04 versus 121.014 versus 121.055 versus 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
Oil: 29.02, 1.72, +6.30%. It took a rank rumor to get oil off its hind end and bounce. 6.3% and that got oil to tap at the 10 day EMA on the high. Maybe it can make more upside here but it is still in the nasty downtrend that renewed after an 8 week bounce attempt. At some point it needs to do that again, and oil has sold in four rotations down the 10 and 20 day EMA. Perhaps time for a base.
Gold: 1238.50, -8.50. After a huge rally the past two weeks on top of the prior three weeks, gold may have hit the apex for just a bit. What a surge Thursday then a pause Friday, still 65 points or so off of the January 2015 peak. A bit of consolidation makes sense.
TUESDAY
Market closed Monday for the aggregation of all the Presidents' birthdays. That is what helped the market bounce Friday when those short covering triggers started to hit from OPEC deals to banks and their votes of confidence.
Of course there are those saying this is a new rally time for the market and of course there is always the possibility they are correct. Looking at the stock charts, however, they do not suggest that is the case. The market was ready to plunge Thursday when the OPEC report/rumor/wish hit. After the weekend is through, China opens, and those upside catalysts dissipate, if nothing new hits we anticipate the downside to resume.
Indeed, some of the setups already look great even as Friday closed out. Perhaps they are just a head fake on a continued move higher, but until they show that move we are going to look for the downside plays. The downside is the trend, the setups are there, and there just are not that many great looking upside plays ready to go. And, of course, the experts and pundits are talking about value, and buying into stocks. Indeed, late Friday we heard that David Tepper went long a huge number of S&P 500 calls on the week. Tepper is rich and makes a lot of money, but he has made some huge misses. One in 2013 when he came on CNBC and said he was worried even as we saw great setups in AMZN, GOOG, etc. That day was THE bottom in that selling. He has also made bullish calls at tops. This could be one.
That is interesting in terms of market psychology, the old 'it's got to be better now because it has been so bad' mentality. They cite better valuations, but of course valuations always get better on any significant selling. But values don't turn markets; they are part of the setup after a big selloff, but it takes stocks under accumulation to produce a sustained move. Not enough of those right now.
Therefore we will look for downside plays, for the most part, and we see quite a few. We will not forget the upside; they can still produce gains, and if the market defies the probabilities and keeps rallying, it is of course good to have those in the pocket, ready to go. There are some bounces and some stocks moving upside. Some chips are showing stronger moves. KORS is set up for a bounce higher again. NVDA can bounce but earnings are 2/17. CAKE is trying to rise from a cup with handle but its earnings are 2/16. Utilities still decent but they are utilities.
So now we wait and see how China performs for a couple of days while the US is closed. It may allow China to catch down and give the US markets a clean slate by Tuesday. We will see, but overall the trend is still down and nothing thus far has changed that because there is no change in fiscal or monetary policy, and judging from Chairman Yellen's testimony and Dudley's Friday comments, the Fed is not even near the idea of stopping rate hikes, a much lower standard than reversing course.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4337.51
Resistance:
4352 is the March 2014 peak
4363 is the February upper gap point
The 10 day EMA at 4372
4471 is the January 2016 closing low
4485 are the twin July 2014 peaks
4517-4506 from the September 2015 and August 2015 closing lows
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4635 is the February peak
The 50 day EMA at 4656
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
4902 is the July 2015 low
4916 is the mid-November 2015 low
The 200 day SMA at 4919
4920 is the lower gap point from mid-October
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
Support:
4313 is the January 2016 intraday low
4292 is the August 2015 low
4212 is the February intraday low
4116 is the October 2014 low
S&P 500: Closed at 1864.78
Resistance:
1867 is the August 2015 low
The 10 day EMA at 1871
1872 is the September 2015 test low of the August low
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
1940 is the early January 2016 failed bounce peak
The 50 day EMA at 1945
1972 is the December 2014 low
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
The 200 day SMA at 2034
2040 is the March 2015 closing low
2046 is the July 2015 closing low
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:
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
1812 is the January 2016 intraday low
1772 are the Q4 2013 highs and lows
Dow: Closed at 15,968.77
Resistance:
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
16,466 is the January 2016 recovery attempt closing peak.
16,506 is the March 2014 peak
16,526 is the early January resistance
The 50 day EMA at 16,584
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 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
The 200 day SMA at 17,285
17,351 is the September 2014 all-time high.
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
February 12 - Friday
Export Prices ex-ag., January (8:30): -0.8% actual versus -1.1% prior (revised from -1.0%)
Import Prices ex-oil, January (8:30): -0.2% actual versus -0.3% prior (no revisions)
Retail Sales, January (8:30): 0.2% actual versus 0.2% expected, 0.2% prior (revised from -0.1%)
Retail Sales ex-auto, January (8:30): 0.1% actual versus 0.0% expected, 0.1% prior (revised from -0.1%)
Business Inventories, December (10:00): 0.1% actual versus 0.1% expected, -0.1% prior (revised from -0.2%)
Michigan Sentiment Preliminary, February (10:00): 90.7 actual versus 92.7 expected, 92.0 prior (January Final)
February 16 - Tuesday
Empire Manufacturing, February (8:30): -9.9 expected, -19.4 prior
NAHB Housing Market , February (10:00): 60 expected, 60 prior
Net Long-Term TIC Fl, December (16:00): $31.4B prior
February 17 - Wednesday
MBA Mortgage Index, 02/13 (7:00): 9.3% prior
PPI, January (8:30): -0.2% expected, -0.2% prior
Core PPI, January (8:30): 0.0% expected, 0.1% prior
Housing Starts, January (8:30): 1171K expected, 1149K prior
Building Permits, January (8:30): 1200K expected, 1232K prior
Industrial Productio, January (9:15): 0.3% expected, -0.4% prior
Capacity Utilization, January (9:15): 76.6% expected, 76.5% prior
Crude Inventories, 02/13 (10:30): -0.754M prior
FOMC Minutes, January 27 (14:00)
February 18 - Thursday
Initial Claims, 02/13 (8:30): 274K expected, 269K prior
Continuing Claims, 02/06 (8:30): 2237K expected, 2239K prior
Philadelphia Fed, February (8:30): -2.9 expected, -3.5 prior
Natural Gas Inventor, 02/13 (10:30): -70 bcf prior
February 19 - Friday
CPI, January (8:30): -0.1% expected, -0.1% prior
Core CPI, January (8:30): 0.1% expected, 0.1% prior
End part 1 of 3
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MARKET ALERTS:
Targets hit: FB
Entry alerts: EDU; MCHP
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Stop alerts: None issued
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The REPORTS SCHEDULE is as follows:
MONDAY, WEDNESDAY and the WEEKEND reports contain NEW PLAYS, Market Summary Video, Play Videos, and Play Tables with play annotations.
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
- Jobs miss, unemployment below 5%, victory declared, but the same old problems are present and more. And the market knows it.
- Foreign workers are not taking your jobs, but they are.
- A low pay, hourly job does not equal a middle class salaried breadwinner job.
- NASDAQ now at its post QE3 lowest
- DJ30 hanging in thanks to money moving to beaten down areas, but it won't be a refuge forever.
- Sharp Friday selloff can lead to a relief bounce or more downside, but overall a downtrend is now in place.
Friday robust (using euphemisms early this report) selling in NASDAQ stocks thwarted any SP500 run at the 1940 resistance level. NASDAQ broke to lower closing lows below the January closed and the August 2015 close. RUTX broke to a new 2016 and the lowest close since mid-2013. All indices lost more than 1% with NASDAQ sporting a rather startling 3.25% decline with NASDAQ 100 falling 3.44%.
SP500 -35.40, -1.85%
NASDAQ -146.42, -3.25%
DJ30 -211.61, -1.29%
SP400 -2.21%
RUTX -2.87%
SOX -3.53%
VOLUME: NYSE -5%, NASDAQ +13%. NASDAQ volume jumps well above average as the NASDAQ stocks get sold heavily.
A/D: NYSE -3.2:1, NASDAQ -4.4:1.
Friday looked bad, but while SP500 did not make a run at 1940 and sold 1.85%, it did hold over the January consolidation lows that formed after the initial rally off that selling. DJ30 hardly flinched, holding near its rebound highs. SP400 showed similar action while SOX performed similar to SP500, holding at the initial consolidation lows off the first January bounce.
What that shows is the continued rotation in the market from the big tech and NASDAQ names to older school names in metals, industrials, energy, utilities -- beaten down areas that are viewed as values. Values for now.
Money is still leaving the market because all indices are heading lower in an ongoing downtrend formed off of the big top from 2014 through 2016. You know all of that about the top if you have been watching and reading. The top is still in place, and indeed, SP500 cannot even get over the first resistance level on a recovery move. That looks pretty weak.
So will the 'value' areas rescue the market? They are what is keeping a full-fledged crash from occurring right here, right now. Some are still seeking places to put money. They are not in the 'buy on the dip' mode as they are avoiding the big names are burning up in freefall as they reenter the atmosphere after stratospheric runs. In buying the beaten down areas, however, they show they still consider the market a place to invest.
Frankly, we don't. The market is in a major top and while it has sold off it has nowhere near priced in what is ahead for the economy. The economy is rolling over, and despite the President Friday declaring economic victory it is not. The Fed staked its claim on the jobs market in setting its policy. The President declared that 4.9% unemployment and millions of hourly low pay jobs as economic nirvana.
The sad irony is that jobs are the most lagging economic indicator and the more leading initial claims are pushing to a year high, foretelling a drop in jobs creation to come (in addition to the rollover in the other economic data). Their reliance on jobs as proof of a strong economy even in the face of recession readings in durable orders, factory orders, manufacturing, etc. is like Bill Cosby thinking an oral agreement with a DA could keep dozens of other cases against him from prosecution, like Nixon thinking he could make another comeback after Ford pardoned him, like Rick Moranis in 'Ghostbusters' thinking he has a chance with Sigourney Weaver, like Jeb Bush still thinking he can win the republican nomination. A sad, misguided, pathetic quality about it all. It would be funny but for so many millions suffering as victims of the delusion.
Dozens of women must I am not a crook We'll play Twister. . . Please clap . . .
be believes, H. Clinton
Thus while some money moves their way and is helping hold up DJ30 and to a lesser extent SP500, ultimately those moves will not last as the money will eventually move out of those as the economy continues to fall into recession. Thus we are traders now versus investors, though you can 'invest' in QID, SDS and other inverse ETF's that rise as the market falls.
The sum of the day and week: NASDAQ rolled over as the selling of the big names continues. DJ30, SP400 show relative strength as money shifts to 'old economy' stocks that sold hard in the market's 'other' bear market. SP500 failing the 1940 level but not totally out of the hunt. DJ30 still looks solid as it houses many of the weaker areas that are now getting money pushed their way. For now there are upside buys as the market still seeks 'value' in beaten down sectors. By nature, however, they have to be short term plays. The overriding trend, however, is down, and thus while we can play some areas receiving money, the overall focus will be on downside plays where the trend works for us and does not require perfection.
Now, with that market analysis there is also the wild card, the X factor, the . . . Fed. Sadly, the backdrop to all market moves is when will the Fed intervene to once again try and save the market from the economy. If the market declines far enough the Fed knows that the Administration's and its economy won't rescue it and the question is whether the Fed is going to try and play white knight once more and create another wealth effect. Another question is whether it CAN create the same effect with more QE, negative rates, or whatever. The point, however, is the Fed is always out there and can act again to try and rescue the market. Does it wait until a 20% decline? Before? Or, will Yellen realize the failure of past policy and just let the market find its lows? Oh, THAT is a good one!
That backdrop can occur at any time and at least near term disrupt the downside. It is out there, it is something to be aware of, but it is also something you cannot predict. Just be ready to bail, go neutral when it happens, then take it from there depending upon the market setup after the initial move.
NEWS/ECONOMY
Jobs Report Redux
Non-Farm: 151K versus 188K expected versus 262K December (from 292K)
Unemployment Rate: 4.9% versus 5.0% versus 5.0%
Hourly wages: 0.5% versus 0.3% versus 0.0% December (highest since January 2015). Obviously yearly waged adjustments as well as the start of $15 minimum wages in some states. Of course Oregon is already going back on its mandate in many areas, realizing it is pushing businesses, and thus jobs and tax money, out of business and out of the state.
Participation rate: 62.7%, ticking higher again as more people try to find work.
Household Survey: +615K jobs as +409K employed and +284K entering the workforce.
Average workweek: 34.6 versus 34.5 expected versus 34.5 prior.
Definitely some improvement in areas but again, the problems remain the same and will remain the same until policies are changed.
The issues:
70% of the jobs created were in the food service and retail areas, the lowest paying jobs among the lowest paying jobs.
Manufacturing jobs rose 29K according to the BLS, but the ISM manufacturing report shows manufacturing jobs falling to cycle lows. How? Oh yes, adjustments. The BLS is using double seasonal adjustments now, and that turns jobs losses into miraculous (and also nonexistent) job increases.
Manufacturing versus Food Service since the recession: Food service +1.6M, Manufacturing -1.4M.
Net Foreign Born workers versus US born: The President says immigrants are not taking jobs from US citizens. As with most bold statements the President makes, they are in best light overlooking the facts, in the worst light they are outright lies.
Foreign born workers since 12/2007: +2.5M
US born workers: +186K
Productivity declines: Since 2011 productivity has been virtually 0% in what is called the best jobs market ever. Productivity directly correlates to GDP growth, and the nonexistent productivity and weak GDP go hand in hand.
More than that, when you tie in the TYPES of jobs created in the economy it is fully understandable why productivity, AND THUS STANDARD OF LIVING, are flat to declining. Recall the story of the famous economist Milton Friedman who visited a communist country where the leaders proudly showed him thousands of workers building a canal. When Friedman inquired why the workers were using shovels versus much more efficient earth moving equipment, the leaders boasted that by using shovels they were able to employ thousands versus hundreds. Friedman, in his ever quick grasp of economic idiocy, quipped why not have the workers use spoons?
The point: you can have zero productivity and plenty of people working, but the jobs will be for unskilled laborers earning the lowest possible wage. Standard of living must fall just as it has been doing as there is no capital investment and thus none of the new inventions, technologies, etc. that drive millions of the new breadwinner jobs that raise the overall standard of living. If we want to have the output of socialist/communist governments, we are on the path and well on the way. As the GDP numbers from last week show, our GDP growth is no longer what we considered average at 3%, but 'great' at less than 2%.
What it means.
It has become almost trite to compare the disconnect in the Administration and in DC regarding the true economy and the plight of the middle class to Orwell's '1984.' But it is apropos.
We hear the economy described as 'great' by those who are purported to know, those on the financial stations, in the White House, in Congress. Yet we do know math (even if it is at remedial levels), and an economy growing at 0.69% quarter/quarter and less than 2% annually does not equal what, prior to 2008, the economy's 'speed limit' was per the Fed, i.e. 3%. That was the average, the perfect growth level. Not one quarter, but average for the year.
We also know that all jobs are not equal. We learned that in high school working for fast food restaurants or other retail businesses that paid low end hourly wages. We learned how to be on time, work a schedule, work a routine, AND that we wanted a better job. Millions of low-paying hourly jobs in the service sector DO NOT equal millions of high paying, standard of living raising, family supporting, upward mobility assisting, breadwinner jobs. The President and all his men and women can try to brainwash into this month after month, but we are not stupid. Again, remedial math, the kind taught up through twelfth grade in most Department of Education funded schools, comes into play. A job making $75K - $100K salary beats a $15/hour (the new minimum wage) $31K service sector job. Period.
The thing is, we are told the economy is producing jobs, but frankly we DON'T KNOW because the numbers the government reports are internally inconsistent. We are told the household survey says 615K jobs were added in January. Yet, the unadjusted numbers from the BLS show 665K people LOST jobs. Hell, I CAN CREATE 615K jobs if I can adjust the numbers anyway I see fit.
Indeed, the lack of jobs is what most feel and why those who do not speak the company government line are leading or showing remarkable equality with the candidates identified with the establishment.
Never have so many struggled so hard for so little in supposedly such a great economy. It is as if you are looking at alternate realities based upon your position in America. The President speaks of economic victory, the CEO billionaire of a large real estate hedge fund is flabbergasted that as to why people are upset and angry. Once again it is a let them eat cake moment. And now it is resulting in a market drop as the metrics by which the Fed and the powers gauge of the economy and what the rest of the people see and feel are at complete opposites. The market, however, appears to once again be the clear arbiter of the true economic situation.
THE MARKET
Technical Picture
Sharp selloffs in the indices but not all have broken to lower lows. That means they could still hold the rally and continue higher, but we know how that works. In a falling economy and a topped market, the upside does not drag the laggards with it, but the laggards actually drag the upside leaders to the downside. Thus while the Dow and SP500 can work counter the downtrend for a bit of time, if the overall economic slide continues and the index top remains in place (and it is firmly in place), then even the holdouts will fall.
CHARTS
Money is leaving technology and growth and moving into the downtrodden industrials, materials, metals, as well as continuing to work in retail, utilities.
NASDAQ: New closing lows for 2016/2015 and indeed now negative since the end of QE in October 2014. The attempt to bounce to end January and start February has utterly failed. It closed at the March 2014 high formed ahead of that summer's selloff and the upper gap point from October 2014 as NASDAQ gapped higher off of the Ebola scare selloff. The August low (4292), the lower gap point from October 2014 (4316), the October low (4116) are all potential support for what they are worth. For now their worth is factoring in bounce points to close out near term downside plays, let a bounce occur, then pick up more.
SP500: Sold to the recent consolidation lows and held. That matches roughly the August and September lows. Still keeps it in the rally possibility mode to try 1940, but that has become a longer shot.
DJ30: Sold but just off the recent highs and resistance at the early January bounce peak at 16,500. Not in trouble, but it could be at the apex of the right shoulder to a head and shoulders pattern. Held higher by certain groups where value seekers are buying, but in an overall market top, that won't last.
SP400: Very similar to DJ30, backing off modestly from the rally off the last January low. Overall, a very sharp drop, a bounce to the 50% Fibonacci retracement, and struggling there.
RUTX: The small caps rallied up off the lows to the 38% Fibonacci retracement and have rolled over. Very weak action failing at the 38% Fibonacci retracement.
SOX: Rolled over from an ABCD downside pattern that peaked 5 sessions back. Never put much of a dent in the selloff, rebounding between the 38% and 50% Fibonacci retracement then rolling over.
LEADERSHIP
The metals, industrials, and energy recovery keeps the DJ30 holding its gains. They took a breather Friday but are holding well. Others are getting chucked overboard as money flees them to other areas, and leaves the market overall.
Big Names: More massive selling. GOOG -3.45%. AMZN -6.3%. FB -5.8%. NFLX -7.7%. MSFT -3.5%. Total flight.
Metals: Holding up very well. SID off modestly. STLD, CENX testing but nothing huge. Just testing the recent moves.
Financial: Hitting some resistance in the rebounds, e.g. JPM. GS rallied again but stalled at the 20 day EMA and reversed to flat. BAC gapped and rolled to negative. MA plunged. V broke below the 200 day SMA.
Energy: XOM up to the 200 day SMA. HAL gapped lower to the 20 day EMA. SWN posting a nice 5.6% move. GPOR making a nice 10 day EMA after its surge.
Retail: Again very mixed. LOW and HD are crashing. DLTR trying to hold after a sharp selloff. DDS, M (department stores) are testing but holding up well. KSS, another department store, bombed lower on the week. WSM looks interesting for an upside trade. RL was hammered. NKE broke the 200 day SMA, UA may have a gap to fill.
Utilities: Testing solid moves, e.g. EQT, PCG, AEP.
Software: Slaughtered. BLKB, RHT, SPLK, CALD, PANW and on and on. ORCL hasn't broken but will see if it plays. On the other hand, ROVI remains solid enough, AVID posted a gain Friday. Wish we could have caught some of these.
Chips: Down hard Friday but still trying to consolidate. Not ready to buy. NXPI, AVGO. AMD breaking lower. MU stalled at the 20 day EMA but looks as if it wants to move higher off the January lows.
Industrials: CMI still rallying, CAT taking a pause.
MARKET STATISTICS
NASDAQ
Stats: -146.42 points (-3.25%) to close at 4363.14
Volume: 2.412B (+12.69%)
Up Volume: 344.08M (-1.096B)
Down Volume: 2.14B (+1.398B)
A/D and Hi/Lo: Decliners led 4.37 to 1
Previous Session: Advancers led 1.46 to 1
New Highs: 3 (-11)
New Lows: 209 (+119)
S&P
Stats: -35.4 points (-1.85%) to close at 1880.05
NYSE Volume: 1.19B (-4.8%)
A/D and Hi/Lo: Decliners led 3.24 to 1
Previous Session: Advancers led 1.76 to 1
New Highs: 57 (+9)
New Lows: 153 (+85)
DJ30
Stats: -211.61 points (-1.29%) to close at 16204.97
SENTIMENT INDICATORS
VIX: 23.38; +1.54. VIX is going nowhere despite the selling. This indicator is lagging until it spikes the market likely has nothing but downside. Recall this was the one holdout in all of the sentiment and internal indicators we watched during the market selloff.
VXN: 27.65; +2.3. Even the NASDAQ volatility index is not moving, at least not nearly commensurate to the NASDAQ selloff.
VXO: 25.99; +2.78
Put/Call Ratio (CBOE): 0.97; +0.03
Recent history: Below 1.00 for the past four sessions. Over 1.0 for 18 of the last 26 sessions.
Bulls and Bears: Bulls jumped but so did bears, and with bears jumping the crossover held. Still bullish but thus far the reaction is not there.
Bulls: 34.0 versus 29.2. A rather absurd jump to 34%. Still below 35% threshold and still more bears that bulls.
Bears: 38.1 versus 35.4.
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%
29.2% versus 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%
Background: Bulls hit their lowest level in 2015 since the 2008 and 2009 market plummet.
Bears: 38.1%
35.4% versus 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%
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): 1.85% versus 1.85%. Lowest weekly close since 4/2015.
Historical: 1.85% versus 1.88% versus 1.86% versus 1.96% versus 1.93% versus 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%
EUR/USD: 1.1159 versus 1.1206. Paused the surge higher through the 200 day SMA and the December peak. Big move and now just below the August to October treble highs.
Historical: 1.1206 versus 1.1110 versus 1.0916 versus 1.0905 versus 1.0836 versus 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
USD/JPY: 116.83 versus 116.76. Dollar sold off hard to the January low, showing a tight doji Friday. We will see if it bounces, but the dollar bombed versus the yen after those NIRP's in Japan.
Historical: 116.76 versus 117.88 versus 120.04 versus 121.014 versus 121.055 versus 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: 30.89, -0.80%. Still in the 4 week move up off the January low, but the downtrend is not broken.
Gold: 1157.70, +1.70. Doji after a blistering week higher on top of more than a month of rallying.
MONDAY
A Friday bomb lower has often meant a Monday recovery of some degree. Of course now the market is in a downtrend and that can dull bounce attempts, and at worst lead to more selling with no bounce.
That said, there is still money seeking other areas of the market as discussed earlier, the 'value' areas. Thus after such a selloff you are hearing talk of opportunity to step in and buy. Perfect. We believe that opportunity will lead to our opportunity for more downside plays. We will be watching for some of these stocks to rebound and give us a better entry point for the downside.
Indeed, we see several plays, despite the Friday selling, that are in position to pick up of the market continues lower. If it wants to bounce a bit, okay, they give us a better entry point. We can go either way. Not sure how that came out, but you get the meaning.
Upside? Yes there are some we see as possibilities in addition to the SWN, EQT we already have. WSM, CENT -- there are a few where money is still moving that can make us money. If they continue rallying, great. But, remain vigilant as the market is now in a downtrend, and if a stock becomes too conspicuous in its advance the sellers may start shooting at it.
Overall the market is now in a downtrend and we act accordingly. Play some upside in areas showing money flow as long as they work, playing shorter moves with options or stock as the case allows, bank some gain, repeat when we can. Play the downside as the predominant play with short term single moves as well as longer term options and non-option plays (e.g. SDS, QID) to play many rotations to the downside, thus using short term and long term plays to provide our best possible returns with as little headache as possible.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4363.14
Resistance:
4471 is the January 2016 closing low
4485 are the twin July 2014 peaks
4517-4506 from the September 2015 and August 2015 closing lows
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4635 is the February peak
4736 is the early January lower gap point downside, the last downside gap in the selloff.
4751 is the January 2015 lower high
The 50 day EMA at 4752
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
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 4941
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:
4352 is the March 2014 peak
4313 is the January 2016 intraday low
4292 is the August 2015 low
4116 is the October 2014 low
S&P 500: Closed at 1880.05
Resistance:
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
1940 is the early January 2016 failed bounce peak
The 50 day EMA at 1969
1972 is the December 2014 low
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
The 200 day SMA at 2042
2046 is the July 2015 closing low
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
1812 is the January 2016 intraday low
1772 are the Q4 2013 highs and lows
Dow: Closed at 16,204.97
Resistance:
16,368 is the August 2014 low
16,506 is the March 2014 peak
16,526 is the early January resistance
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.
The 50 day EMA at 16,733
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 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
The 200 day SMA at 17,339
17,351 is the September 2014 all-time high.
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:
16,117 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
February 5 - Friday
Nonfarm Payrolls, January (8:30): 151K actual versus 188K expected, 262K prior (revised from 292K)
Nonfarm Private Payr, January (8:30): 158K actual versus 183K expected, 251K prior (revised from 275K)
Unemployment Rate, January (8:30): 4.9% actual versus 5.0% expected, 5.0% prior
Hourly Earnings, January (8:30): 0.5% actual versus 0.3% expected, 0.0% prior
Average Workweek, January (8:30): 34.6 actual versus 34.5 expected, 34.5 prior
Trade Balance, December (8:30): -$43.4B actual versus -$43.5B expected, -$42.2B prior (revised from -$42.4B)
Consumer Credit, December (15:00): $21.3B actual versus $16.5B expected, $14.0B prior (revised from $13.9B)
February 9 - Tuesday
Wholesale Inventories, December (10:00): 0.0% expected, -0.3% prior
February 10 - Wednesday
MBA Mortgage Index, 02/06 (7:00): -2.6% prior
Crude Inventories, 02/06 (10:30): +7.79M prior
Treasury Budget, January (14:00): -$14.4B prior
February 11 - Thursday
Continuing Claims, 01/30 (8:30): 2255K prior
Initial Claims, 02/06 (8:30): 280K expected, 277K prior
Natural Gas Inventor, 02/06 (10:30): -152 bcf prior
February 12 - Friday
Export Prices ex-ag., January (8:30): -1.0% prior
Import Prices ex-oil, January (8:30): -0.4% prior
Retail Sales, January (8:30): +0.2% expected, -0.1% prior
Retail Sales ex-auto, January (8:30): 0.0% expected, -0.1% prior
Business Inventories, December (10:00): +0.1% expected, -0.2% prior
Mich Sentiment, February (10:00): 92.7 expected, 93.3 prior
By: Jon Johnson, Editor
Copyright 2015 | All Rights Reserved Jon Johnson is the Editor of The Daily at InvestmentHouse.com Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com
Targets hit: FB
Entry alerts: EDU; MCHP
Trailing stops: None issued
Stop alerts: None issued
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the TTR alert service you can sign up at the following link:
http://www.investmenthouse.com/alertttr.html
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The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE Economic SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
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The REPORTS SCHEDULE is as follows:
MONDAY, WEDNESDAY and the WEEKEND reports contain NEW PLAYS, Market Summary Video, Play Videos, and Play Tables with play annotations.
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
- Jobs miss, unemployment below 5%, victory declared, but the same old problems are present and more. And the market knows it.
- Foreign workers are not taking your jobs, but they are.
- A low pay, hourly job does not equal a middle class salaried breadwinner job.
- NASDAQ now at its post QE3 lowest
- DJ30 hanging in thanks to money moving to beaten down areas, but it won't be a refuge forever.
- Sharp Friday selloff can lead to a relief bounce or more downside, but overall a downtrend is now in place.
Friday robust (using euphemisms early this report) selling in NASDAQ stocks thwarted any SP500 run at the 1940 resistance level. NASDAQ broke to lower closing lows below the January closed and the August 2015 close. RUTX broke to a new 2016 and the lowest close since mid-2013. All indices lost more than 1% with NASDAQ sporting a rather startling 3.25% decline with NASDAQ 100 falling 3.44%.
SP500 -35.40, -1.85%
NASDAQ -146.42, -3.25%
DJ30 -211.61, -1.29%
SP400 -2.21%
RUTX -2.87%
SOX -3.53%
VOLUME: NYSE -5%, NASDAQ +13%. NASDAQ volume jumps well above average as the NASDAQ stocks get sold heavily.
A/D: NYSE -3.2:1, NASDAQ -4.4:1.
Friday looked bad, but while SP500 did not make a run at 1940 and sold 1.85%, it did hold over the January consolidation lows that formed after the initial rally off that selling. DJ30 hardly flinched, holding near its rebound highs. SP400 showed similar action while SOX performed similar to SP500, holding at the initial consolidation lows off the first January bounce.
What that shows is the continued rotation in the market from the big tech and NASDAQ names to older school names in metals, industrials, energy, utilities -- beaten down areas that are viewed as values. Values for now.
Money is still leaving the market because all indices are heading lower in an ongoing downtrend formed off of the big top from 2014 through 2016. You know all of that about the top if you have been watching and reading. The top is still in place, and indeed, SP500 cannot even get over the first resistance level on a recovery move. That looks pretty weak.
So will the 'value' areas rescue the market? They are what is keeping a full-fledged crash from occurring right here, right now. Some are still seeking places to put money. They are not in the 'buy on the dip' mode as they are avoiding the big names are burning up in freefall as they reenter the atmosphere after stratospheric runs. In buying the beaten down areas, however, they show they still consider the market a place to invest.
Frankly, we don't. The market is in a major top and while it has sold off it has nowhere near priced in what is ahead for the economy. The economy is rolling over, and despite the President Friday declaring economic victory it is not. The Fed staked its claim on the jobs market in setting its policy. The President declared that 4.9% unemployment and millions of hourly low pay jobs as economic nirvana.
The sad irony is that jobs are the most lagging economic indicator and the more leading initial claims are pushing to a year high, foretelling a drop in jobs creation to come (in addition to the rollover in the other economic data). Their reliance on jobs as proof of a strong economy even in the face of recession readings in durable orders, factory orders, manufacturing, etc. is like Bill Cosby thinking an oral agreement with a DA could keep dozens of other cases against him from prosecution, like Nixon thinking he could make another comeback after Ford pardoned him, like Rick Moranis in 'Ghostbusters' thinking he has a chance with Sigourney Weaver, like Jeb Bush still thinking he can win the republican nomination. A sad, misguided, pathetic quality about it all. It would be funny but for so many millions suffering as victims of the delusion.
Dozens of women must I am not a crook We'll play Twister. . . Please clap . . .
be believes, H. Clinton
Thus while some money moves their way and is helping hold up DJ30 and to a lesser extent SP500, ultimately those moves will not last as the money will eventually move out of those as the economy continues to fall into recession. Thus we are traders now versus investors, though you can 'invest' in QID, SDS and other inverse ETF's that rise as the market falls.
The sum of the day and week: NASDAQ rolled over as the selling of the big names continues. DJ30, SP400 show relative strength as money shifts to 'old economy' stocks that sold hard in the market's 'other' bear market. SP500 failing the 1940 level but not totally out of the hunt. DJ30 still looks solid as it houses many of the weaker areas that are now getting money pushed their way. For now there are upside buys as the market still seeks 'value' in beaten down sectors. By nature, however, they have to be short term plays. The overriding trend, however, is down, and thus while we can play some areas receiving money, the overall focus will be on downside plays where the trend works for us and does not require perfection.
Now, with that market analysis there is also the wild card, the X factor, the . . . Fed. Sadly, the backdrop to all market moves is when will the Fed intervene to once again try and save the market from the economy. If the market declines far enough the Fed knows that the Administration's and its economy won't rescue it and the question is whether the Fed is going to try and play white knight once more and create another wealth effect. Another question is whether it CAN create the same effect with more QE, negative rates, or whatever. The point, however, is the Fed is always out there and can act again to try and rescue the market. Does it wait until a 20% decline? Before? Or, will Yellen realize the failure of past policy and just let the market find its lows? Oh, THAT is a good one!
That backdrop can occur at any time and at least near term disrupt the downside. It is out there, it is something to be aware of, but it is also something you cannot predict. Just be ready to bail, go neutral when it happens, then take it from there depending upon the market setup after the initial move.
NEWS/ECONOMY
Jobs Report Redux
Non-Farm: 151K versus 188K expected versus 262K December (from 292K)
Unemployment Rate: 4.9% versus 5.0% versus 5.0%
Hourly wages: 0.5% versus 0.3% versus 0.0% December (highest since January 2015). Obviously yearly waged adjustments as well as the start of $15 minimum wages in some states. Of course Oregon is already going back on its mandate in many areas, realizing it is pushing businesses, and thus jobs and tax money, out of business and out of the state.
Participation rate: 62.7%, ticking higher again as more people try to find work.
Household Survey: +615K jobs as +409K employed and +284K entering the workforce.
Average workweek: 34.6 versus 34.5 expected versus 34.5 prior.
Definitely some improvement in areas but again, the problems remain the same and will remain the same until policies are changed.
The issues:
70% of the jobs created were in the food service and retail areas, the lowest paying jobs among the lowest paying jobs.
Manufacturing jobs rose 29K according to the BLS, but the ISM manufacturing report shows manufacturing jobs falling to cycle lows. How? Oh yes, adjustments. The BLS is using double seasonal adjustments now, and that turns jobs losses into miraculous (and also nonexistent) job increases.
Manufacturing versus Food Service since the recession: Food service +1.6M, Manufacturing -1.4M.
Net Foreign Born workers versus US born: The President says immigrants are not taking jobs from US citizens. As with most bold statements the President makes, they are in best light overlooking the facts, in the worst light they are outright lies.
Foreign born workers since 12/2007: +2.5M
US born workers: +186K
Productivity declines: Since 2011 productivity has been virtually 0% in what is called the best jobs market ever. Productivity directly correlates to GDP growth, and the nonexistent productivity and weak GDP go hand in hand.
More than that, when you tie in the TYPES of jobs created in the economy it is fully understandable why productivity, AND THUS STANDARD OF LIVING, are flat to declining. Recall the story of the famous economist Milton Friedman who visited a communist country where the leaders proudly showed him thousands of workers building a canal. When Friedman inquired why the workers were using shovels versus much more efficient earth moving equipment, the leaders boasted that by using shovels they were able to employ thousands versus hundreds. Friedman, in his ever quick grasp of economic idiocy, quipped why not have the workers use spoons?
The point: you can have zero productivity and plenty of people working, but the jobs will be for unskilled laborers earning the lowest possible wage. Standard of living must fall just as it has been doing as there is no capital investment and thus none of the new inventions, technologies, etc. that drive millions of the new breadwinner jobs that raise the overall standard of living. If we want to have the output of socialist/communist governments, we are on the path and well on the way. As the GDP numbers from last week show, our GDP growth is no longer what we considered average at 3%, but 'great' at less than 2%.
What it means.
It has become almost trite to compare the disconnect in the Administration and in DC regarding the true economy and the plight of the middle class to Orwell's '1984.' But it is apropos.
We hear the economy described as 'great' by those who are purported to know, those on the financial stations, in the White House, in Congress. Yet we do know math (even if it is at remedial levels), and an economy growing at 0.69% quarter/quarter and less than 2% annually does not equal what, prior to 2008, the economy's 'speed limit' was per the Fed, i.e. 3%. That was the average, the perfect growth level. Not one quarter, but average for the year.
We also know that all jobs are not equal. We learned that in high school working for fast food restaurants or other retail businesses that paid low end hourly wages. We learned how to be on time, work a schedule, work a routine, AND that we wanted a better job. Millions of low-paying hourly jobs in the service sector DO NOT equal millions of high paying, standard of living raising, family supporting, upward mobility assisting, breadwinner jobs. The President and all his men and women can try to brainwash into this month after month, but we are not stupid. Again, remedial math, the kind taught up through twelfth grade in most Department of Education funded schools, comes into play. A job making $75K - $100K salary beats a $15/hour (the new minimum wage) $31K service sector job. Period.
The thing is, we are told the economy is producing jobs, but frankly we DON'T KNOW because the numbers the government reports are internally inconsistent. We are told the household survey says 615K jobs were added in January. Yet, the unadjusted numbers from the BLS show 665K people LOST jobs. Hell, I CAN CREATE 615K jobs if I can adjust the numbers anyway I see fit.
Indeed, the lack of jobs is what most feel and why those who do not speak the company government line are leading or showing remarkable equality with the candidates identified with the establishment.
Never have so many struggled so hard for so little in supposedly such a great economy. It is as if you are looking at alternate realities based upon your position in America. The President speaks of economic victory, the CEO billionaire of a large real estate hedge fund is flabbergasted that as to why people are upset and angry. Once again it is a let them eat cake moment. And now it is resulting in a market drop as the metrics by which the Fed and the powers gauge of the economy and what the rest of the people see and feel are at complete opposites. The market, however, appears to once again be the clear arbiter of the true economic situation.
THE MARKET
Technical Picture
Sharp selloffs in the indices but not all have broken to lower lows. That means they could still hold the rally and continue higher, but we know how that works. In a falling economy and a topped market, the upside does not drag the laggards with it, but the laggards actually drag the upside leaders to the downside. Thus while the Dow and SP500 can work counter the downtrend for a bit of time, if the overall economic slide continues and the index top remains in place (and it is firmly in place), then even the holdouts will fall.
CHARTS
Money is leaving technology and growth and moving into the downtrodden industrials, materials, metals, as well as continuing to work in retail, utilities.
NASDAQ: New closing lows for 2016/2015 and indeed now negative since the end of QE in October 2014. The attempt to bounce to end January and start February has utterly failed. It closed at the March 2014 high formed ahead of that summer's selloff and the upper gap point from October 2014 as NASDAQ gapped higher off of the Ebola scare selloff. The August low (4292), the lower gap point from October 2014 (4316), the October low (4116) are all potential support for what they are worth. For now their worth is factoring in bounce points to close out near term downside plays, let a bounce occur, then pick up more.
SP500: Sold to the recent consolidation lows and held. That matches roughly the August and September lows. Still keeps it in the rally possibility mode to try 1940, but that has become a longer shot.
DJ30: Sold but just off the recent highs and resistance at the early January bounce peak at 16,500. Not in trouble, but it could be at the apex of the right shoulder to a head and shoulders pattern. Held higher by certain groups where value seekers are buying, but in an overall market top, that won't last.
SP400: Very similar to DJ30, backing off modestly from the rally off the last January low. Overall, a very sharp drop, a bounce to the 50% Fibonacci retracement, and struggling there.
RUTX: The small caps rallied up off the lows to the 38% Fibonacci retracement and have rolled over. Very weak action failing at the 38% Fibonacci retracement.
SOX: Rolled over from an ABCD downside pattern that peaked 5 sessions back. Never put much of a dent in the selloff, rebounding between the 38% and 50% Fibonacci retracement then rolling over.
LEADERSHIP
The metals, industrials, and energy recovery keeps the DJ30 holding its gains. They took a breather Friday but are holding well. Others are getting chucked overboard as money flees them to other areas, and leaves the market overall.
Big Names: More massive selling. GOOG -3.45%. AMZN -6.3%. FB -5.8%. NFLX -7.7%. MSFT -3.5%. Total flight.
Metals: Holding up very well. SID off modestly. STLD, CENX testing but nothing huge. Just testing the recent moves.
Financial: Hitting some resistance in the rebounds, e.g. JPM. GS rallied again but stalled at the 20 day EMA and reversed to flat. BAC gapped and rolled to negative. MA plunged. V broke below the 200 day SMA.
Energy: XOM up to the 200 day SMA. HAL gapped lower to the 20 day EMA. SWN posting a nice 5.6% move. GPOR making a nice 10 day EMA after its surge.
Retail: Again very mixed. LOW and HD are crashing. DLTR trying to hold after a sharp selloff. DDS, M (department stores) are testing but holding up well. KSS, another department store, bombed lower on the week. WSM looks interesting for an upside trade. RL was hammered. NKE broke the 200 day SMA, UA may have a gap to fill.
Utilities: Testing solid moves, e.g. EQT, PCG, AEP.
Software: Slaughtered. BLKB, RHT, SPLK, CALD, PANW and on and on. ORCL hasn't broken but will see if it plays. On the other hand, ROVI remains solid enough, AVID posted a gain Friday. Wish we could have caught some of these.
Chips: Down hard Friday but still trying to consolidate. Not ready to buy. NXPI, AVGO. AMD breaking lower. MU stalled at the 20 day EMA but looks as if it wants to move higher off the January lows.
Industrials: CMI still rallying, CAT taking a pause.
MARKET STATISTICS
NASDAQ
Stats: -146.42 points (-3.25%) to close at 4363.14
Volume: 2.412B (+12.69%)
Up Volume: 344.08M (-1.096B)
Down Volume: 2.14B (+1.398B)
A/D and Hi/Lo: Decliners led 4.37 to 1
Previous Session: Advancers led 1.46 to 1
New Highs: 3 (-11)
New Lows: 209 (+119)
S&P
Stats: -35.4 points (-1.85%) to close at 1880.05
NYSE Volume: 1.19B (-4.8%)
A/D and Hi/Lo: Decliners led 3.24 to 1
Previous Session: Advancers led 1.76 to 1
New Highs: 57 (+9)
New Lows: 153 (+85)
DJ30
Stats: -211.61 points (-1.29%) to close at 16204.97
SENTIMENT INDICATORS
VIX: 23.38; +1.54. VIX is going nowhere despite the selling. This indicator is lagging until it spikes the market likely has nothing but downside. Recall this was the one holdout in all of the sentiment and internal indicators we watched during the market selloff.
VXN: 27.65; +2.3. Even the NASDAQ volatility index is not moving, at least not nearly commensurate to the NASDAQ selloff.
VXO: 25.99; +2.78
Put/Call Ratio (CBOE): 0.97; +0.03
Recent history: Below 1.00 for the past four sessions. Over 1.0 for 18 of the last 26 sessions.
Bulls and Bears: Bulls jumped but so did bears, and with bears jumping the crossover held. Still bullish but thus far the reaction is not there.
Bulls: 34.0 versus 29.2. A rather absurd jump to 34%. Still below 35% threshold and still more bears that bulls.
Bears: 38.1 versus 35.4.
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%
29.2% versus 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%
Background: Bulls hit their lowest level in 2015 since the 2008 and 2009 market plummet.
Bears: 38.1%
35.4% versus 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%
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): 1.85% versus 1.85%. Lowest weekly close since 4/2015.
Historical: 1.85% versus 1.88% versus 1.86% versus 1.96% versus 1.93% versus 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%
EUR/USD: 1.1159 versus 1.1206. Paused the surge higher through the 200 day SMA and the December peak. Big move and now just below the August to October treble highs.
Historical: 1.1206 versus 1.1110 versus 1.0916 versus 1.0905 versus 1.0836 versus 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
USD/JPY: 116.83 versus 116.76. Dollar sold off hard to the January low, showing a tight doji Friday. We will see if it bounces, but the dollar bombed versus the yen after those NIRP's in Japan.
Historical: 116.76 versus 117.88 versus 120.04 versus 121.014 versus 121.055 versus 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: 30.89, -0.80%. Still in the 4 week move up off the January low, but the downtrend is not broken.
Gold: 1157.70, +1.70. Doji after a blistering week higher on top of more than a month of rallying.
MONDAY
A Friday bomb lower has often meant a Monday recovery of some degree. Of course now the market is in a downtrend and that can dull bounce attempts, and at worst lead to more selling with no bounce.
That said, there is still money seeking other areas of the market as discussed earlier, the 'value' areas. Thus after such a selloff you are hearing talk of opportunity to step in and buy. Perfect. We believe that opportunity will lead to our opportunity for more downside plays. We will be watching for some of these stocks to rebound and give us a better entry point for the downside.
Indeed, we see several plays, despite the Friday selling, that are in position to pick up of the market continues lower. If it wants to bounce a bit, okay, they give us a better entry point. We can go either way. Not sure how that came out, but you get the meaning.
Upside? Yes there are some we see as possibilities in addition to the SWN, EQT we already have. WSM, CENT -- there are a few where money is still moving that can make us money. If they continue rallying, great. But, remain vigilant as the market is now in a downtrend, and if a stock becomes too conspicuous in its advance the sellers may start shooting at it.
Overall the market is now in a downtrend and we act accordingly. Play some upside in areas showing money flow as long as they work, playing shorter moves with options or stock as the case allows, bank some gain, repeat when we can. Play the downside as the predominant play with short term single moves as well as longer term options and non-option plays (e.g. SDS, QID) to play many rotations to the downside, thus using short term and long term plays to provide our best possible returns with as little headache as possible.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4363.14
Resistance:
4471 is the January 2016 closing low
4485 are the twin July 2014 peaks
4517-4506 from the September 2015 and August 2015 closing lows
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4635 is the February peak
4736 is the early January lower gap point downside, the last downside gap in the selloff.
4751 is the January 2015 lower high
The 50 day EMA at 4752
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
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 4941
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:
4352 is the March 2014 peak
4313 is the January 2016 intraday low
4292 is the August 2015 low
4116 is the October 2014 low
S&P 500: Closed at 1880.05
Resistance:
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
1940 is the early January 2016 failed bounce peak
The 50 day EMA at 1969
1972 is the December 2014 low
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
The 200 day SMA at 2042
2046 is the July 2015 closing low
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
1812 is the January 2016 intraday low
1772 are the Q4 2013 highs and lows
Dow: Closed at 16,204.97
Resistance:
16,368 is the August 2014 low
16,506 is the March 2014 peak
16,526 is the early January resistance
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.
The 50 day EMA at 16,733
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 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
The 200 day SMA at 17,339
17,351 is the September 2014 all-time high.
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:
16,117 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
February 5 - Friday
Nonfarm Payrolls, January (8:30): 151K actual versus 188K expected, 262K prior (revised from 292K)
Nonfarm Private Payr, January (8:30): 158K actual versus 183K expected, 251K prior (revised from 275K)
Unemployment Rate, January (8:30): 4.9% actual versus 5.0% expected, 5.0% prior
Hourly Earnings, January (8:30): 0.5% actual versus 0.3% expected, 0.0% prior
Average Workweek, January (8:30): 34.6 actual versus 34.5 expected, 34.5 prior
Trade Balance, December (8:30): -$43.4B actual versus -$43.5B expected, -$42.2B prior (revised from -$42.4B)
Consumer Credit, December (15:00): $21.3B actual versus $16.5B expected, $14.0B prior (revised from $13.9B)
February 9 - Tuesday
Wholesale Inventories, December (10:00): 0.0% expected, -0.3% prior
February 10 - Wednesday
MBA Mortgage Index, 02/06 (7:00): -2.6% prior
Crude Inventories, 02/06 (10:30): +7.79M prior
Treasury Budget, January (14:00): -$14.4B prior
February 11 - Thursday
Continuing Claims, 01/30 (8:30): 2255K prior
Initial Claims, 02/06 (8:30): 280K expected, 277K prior
Natural Gas Inventor, 02/06 (10:30): -152 bcf prior
February 12 - Friday
Export Prices ex-ag., January (8:30): -1.0% prior
Import Prices ex-oil, January (8:30): -0.4% prior
Retail Sales, January (8:30): +0.2% expected, -0.1% prior
Retail Sales ex-auto, January (8:30): 0.0% expected, -0.1% prior
Business Inventories, December (10:00): +0.1% expected, -0.2% prior
Mich Sentiment, February (10:00): 92.7 expected, 93.3 prior
By: Jon Johnson, Editor
Copyright 2015 | All Rights Reserved Jon Johnson is the Editor of The Daily at InvestmentHouse.com Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com
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