Sunday, April 17, 2016

The Daily, Part 1 of 3, 4-16-16

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4/16/2016 Investment House Daily
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Targets hit: None issued today
Entry alerts: HAR
Trailing stops: None issued
Stop alerts: None issued

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Market Summary Video, Plays and Play Videos, and Play Tables with play annotations will issue Monday, Wednesday and the Weekend.

Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play tables.

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If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.


- Stock indices break higher Wednesday then stall into Friday.
- OPEC Doha meeting provides no freeze, no cut, no nothing.
- US data shows some improvement then more backsliding
- SOX gave up the break through resistance and now can NASDAQ hold its move
- Oil versus earnings: market seeking the next catalyst, though it still has the Fed.

This weekend we waited on releasing the Market Summary given the significance of the OPEC Doha meeting. Friday a draft agreement was leaked that had no enforcement mechanisms and excluded Iran. Today the meeting's start was delayed because Saudi Arabia demanded a rewrite of the draft agreement to include Iran as a necessary part of a freeze. Just now the word has hit: meeting over, no agreement, the parties probably meet again in June.

It is almost as if Saudi Arabia does not get what it wants then it will go back to Plan A, i.e. producing as much as it can in order to drive prices lower and shut down the US domestic shale fracking that has managed to hang on thanks to recovering oil prices. That has happened before, and I don't know if you remember or not, but back in the 1980's, Iran was a major holdout as well and Saudi Arabia decided to teach it a lesson along with the upstart US domestic industry.

On the news, Saudi Arabia stocks are down the most in three weeks.

As an aside before we get into the meat of the market, has anyone been counting the number of serious earthquakes the past week? Last night a 7.8 in Ecuador. This on top of a 7.0 in Japan (one of four majors there), an 8.2 in Chile, a 6.9, 6.7 and two 6.4's in Vanauatu (south Pacific), a 6.9 in Burma, a 6.6 in Afghanistan, and a 6.2 off Guatemala Friday. The 'Ring of Fire' is burning as are other areas in Asia. The experts are suggesting a major quake or quakes of 8.0 or larger are signaled by all of this activity. I guess they know; my understanding was the more smaller ones you had, the more stress released thus making a big one less likely. Nothing to do with the markets of course, but something that keeps people on edge. No matter how many machines and algos trade it, they are programmed by people and thus have emotional biases built in. Thus emotion continues to play a role in market moves.

Overall Friday there was little market changed just as there was little on Thursday. Wednesday saw the important move for the week, a break higher from the two week lateral consolidation. NASDAQ gapped above resistance and held the move into Friday. The Dow is holding a move to the top of the November/December 2015 range while the SP400 similarly tests the November/December peaks. SOX tried the December 2015 peak and has retreated near term.

SP500 -2.05, -0.10%
NASDAQ -7.67, 0.16%
DJ30 -28.97, -0.16%
SP400 0.38%
RUTX 0.21%
SOX -0.85%

VOLUME: NYSE +13%, NASDAQ +2.3%. Expiration so cannot read much into the trade levels.

A/D: NYSE 1.2:1, NASDAQ -1.1:1

In short, the indices broke higher with NASDAQ clearing some resistance (just to face more resistance) and DJ30 continuing to look strong as it takes on higher resistance. Technically they are extended and still at resistance levels below the prior highs. On the other hand, the Fed over the past three weeks has more or less, pledged to support the financial markets, purportedly because the rest of the world is in the crapper.

To end last week, however, the data suggested that Europe was not totally dead and China was stronger than expected with stronger retail sales and an in line GDP. Cramer from CNBC even said "China is fine." That begs the question: if the rest of the world 'is fine,' then why is the Fed not hiking? Perhaps a meeting with the President Monday reiterated that it would be in the nation's 'best interest' if the Fed did not hike during an election year or otherwise let anything disrupt the market's gains? I would not be surprised.

US Data: Some better, some not

New York PMI, April: 9.56 vs 2.3 expected versus 0.6 March. A second month of improvement and much better than expected. Maybe a turn . . . ?

Industrial Production: -0.6 versus 0.0 expected versus -0.6 prior (from -0.5)

Capacity Utilization: 74.8 versus 75.5 expected versus 75.3 prior (from 75.4)

Missing expectations again with write downs of prior levels. Consider also wholesale and business inventories. Both declined but sales are declining faster. That means manufacturing is really tailing off. The regional PMI reports are important but they are also sentiment surveys based upon feelings versus hard data. Thus far the hard data has not caught up to the sentiment, but of course there is a lag as you have to feel better to have the guts to start producing more.

Consumer Sentiment

Michigan Sentiment, Preliminary April: 89.7 versus 92.0 expected versus 91.0 March

Gallup sentiment: -14, weakest since 11/2015. Outlook is -22, indicating that 59% of the adults feel the economy is worsening.

Higher gas prices were a main component of the Gallup survey and bolsters our belief that one of the few perqs the average citizen got from the recovery is lower gasoline prices thanks to a stronger dollar. Those started to dissipate as the national average for gasoline climbed to $2.11/gallon over the past two weeks.

Costs: More on the CPI

Costs, we are told, are just so low we should all be thankful. Yet the same costs keep rising, e.g. rents (3.7%), education, food (though it took a month off), and healthcare.

The increase in rents alone was more than any gain in disposable income thanks to minimum wage hikes. On top of that you have to add in rising healthcare costs.

Yes, the Affordable Care Act has failed, as most legislation sporting such lofty titles, to deliver affordable care. It is no surprise simply because it defies market principles, yet it always surprises those true believers when the data comes in.

CPI showed medical care costs growing at the fastest pace in 3 years. It is now 2016 and the ACA effectiveness was pushed back time and again, not coming fully effective even yet. Nonetheless, in 2014 most of the provisions became effective. Not surprisingly and as predicted, as soon as the provisions became effective, the backend loaded costs have showed up. Medical care costs are exploding higher, and companies such as THC cannot stay in markets because they cannot charge enough for policies thanks to the 80%/20% payout ratio of payouts to profits the ACA requires.

Is this bad? Not really; it is the plan: put a doomed system in place, then when it fails say 'well, we just have to go to single payer (i.e. the government) systems.



As with Thursday, no change in relative position. The indices broke higher Wednesday from the two week lateral consolidation below resistance, NASDAQ moving through nearest resistance with DJ30 bumping to make a clean break. Still sitting on top of a two month run and thus far overcoming any selling attempts, even a few distribution sessions the prior two weeks. It would appear the Fed is mightier, for now, than the sell button.

NASDAQ: A pair of doji after breaking past 4820 Wednesday. 5,000 is the next real test if the bids hold. Lots of overhead resistance still, but thus far trusting in the Fed.

DJ30: Broke to a higher closing high Thursday over the November 2015 peak but faded that move slightly by Friday. Still at the top of the range and still no volume with MACD putting in what looks to be a lower high. Technically a folding lawn chair ready to fall in on itself, but thus far with the Fed continually talking up the market, no cigar for the sellers.

SP500: Broke to a higher rally high Wednesday, but that is still well off the December and even higher November 2015 highs (2117 the later, closed Friday at 2080). Low volume, questionable MACD, but as with the other indices, the Fed is providing the boost thus far.

RUTX: Rallied to the 200 day SMA last week and closed just below it Friday. New rally highs for sure but also smack dab in the lower portion of the September through December lateral range. At some pretty serious resistance, but that has not stopped the indices thus far.

SP400: Broke to a higher rally high Wednesday and closed at a higher rally high Friday. 1473 marks the top of the November/December 2015 twin peaks. Closing at 1464.77, SP400 is ready to test the next resistance.

SOX: Broke to a new rally high past 680 and 685 Wednesday but was immediately rejected, gapping lower Thursday and selling further Friday. Not a major rollover, but certainly the buyers left after that resistance break. SOX broke resistance with NASDAQ and SOX has retreated some. Very important to watch its action this week as the market often follows SOX' lead.


Financial: After the false break and drop, financial stocks rebounded on the JPM earnings and are still holding gains. A new group coming up and we are looking at NOAH and WETF this week as possible plays.

Energy: Many of the smaller stocks tested to end last week, ending in great position to move higher, e.g. WLL, UNT. Now we will see how they perform after the OPEC non-deal.

Metals: Steel finished the week well with new breakouts from AKS, SID on the week and good Friday sessions to boot. FCX was solid with a new upside break and CENX (aluminum) looks good as well. Precious metal stocks took a fast drop but are not bad at near support, e.g. NEM.

Biotech/Drugs: Still looking solid overall. CRMD enjoyed a strong week. ZIOP remains strong. CELG, BIIB look ready to try and bounce again.


Stats: -7.67 points (-0.16%) to close at 4938.22
Volume: 1.718B (+2.28%)

Up Volume: 815.12M (+55.51M)
Down Volume: 847.75M (-9.88M)

A/D and Hi/Lo: Decliners led 1.04 to 1
Previous Session: Decliners led 1.02 to 1

New Highs: 64 (+8)
New Lows: 22 (+10)

Stats: -2.05 points (-0.1%) to close at 2080.73
NYSE Volume: 1B (+13.38%)

A/D and Hi/Lo: Advancers led 1.14 to 1
Previous Session: Decliners led 1.26 to 1

New Highs: 74 (-1)
New Lows: 6 (+3)

Stats: -28.97 points (-0.16%) to close at 17897.46


VIX: 13.62; -0.1
VXN: 16.05; -0.55
VXO: 13.87; -0.04

Put/Call Ratio (CBOE): 0.8; -0.06

8 of the last 18 above 1.0. After a spike of several 1.0 sessions, a streak of sub-1.0.

Bulls and Bears: Bulls rebounded back upside after a one-week backfill. Still very confident. Bears no so much so in their downside conviction, falling back to 27.8 from three weeks back. Retreated from well over 35% and still weakening.

Bulls: 45.4 versus 43.3

Bears: 27.8 versus 28.9

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: 45.4%
43.3% versus 47.4% versus 44.4% versus 39.4% versus 36.4% versus 34.7% versus 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 late 2015 and 2016 since the 2008 and 2009 market plummet.

Bears: 27.8%
28.9% versus 27.8% versus 30.3% versus 35.4% versus 34.3% versus 35.7% versus 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: Finally back below 35% after spiking to 39.8 three weeks back.


Bonds (10 year): 1.753% versus 1.79%. Faded to the 20 day EMA then bounced sharply Friday, putting in a higher low.

Historical: 1.79% versus 1.76% versus 1.77% versus 1.72% versus 1.72% versus 1.691% versus 1.75% versus 1.72% versus 1.77% versus 1.79% versus 1.77% versus 1.82% versus 1.80% versus 1.88% versus 1.90% versus 1.88% versus 1.94% versus 1.92% versus 1.89% versus 1.90% versus 1.91% versus 1.97% versus 1.966% versus 1.979% versus 1.927% versus 1.88%

EUR/USD: 1.1285 versus 1.1264

Historical: 1.1264 versus 1.1278 versus 1.1389 versus 1.1410 versus 1.1397 versus 1.1370 versus 1.1396 versus 1.13792 versus 1l1392 versus 1.1391 versus 1.1382 versus 1.1339 versus 1.1295 versus 1.1195 versus 1.1178 versus 1.1177 versus 1.1217 versus 1.1243 versus 1.1272 versus 1.1313 versus 1.1227 versus 1.1112 versus 1.1103 versus 1.1149 versus 1.1106 versus 1.1107 versus 1.1017 versus 1.0999 versus 1.0961 versus 1.0865 versus 1.0866 versus 1.0880 versus 1.0940 versus 1.102

USD/JPY: 108.762 versus 109.65. Dollar turned sharply lower Friday after a four session bounce back up to the 10 day EMA.

Historical: 109.65 versus 109.29 versus 108.505 versus 107.95 versus 108.175 versus 108.425 versus 109.84 versus 110.45 versus 111.313 versus 111.620 versus 112.60 versus 112.415 versus 112.71 versus 113.425 versus 113.612 versus 112.83 versus 112.445 versus 112.298 versus 111.90 versus 111.605 versus 111.46 versus 112.58 versus 113.11

Oil: 41.75, -0.90. Oil fell in anticipation of the weekend OPEC meeting. It will likely trade lower on the no-deal outcome.

Gold: 1234.60, +5.30. Gold is fighting to hold up but really suffered Wednesday and Thursday as it dropped back to the 50 day SMA, hanging on to close there Friday. Was looking as if it would pull out of the toppy pattern, but has yet to break free and hold the move.


Oil looks as if it will be under pressure post-OPEC meeting. The Canadian Loonie is down hard versus the dollar, backtracking all of last week's gain. According to those that figure these sort of things, that means oil opens below $39/bbl (closed at 41.75 Friday).

Lower oil used to be considered a good thing but with the overwhelming bulk of quality job creation in the US dependent upon the oil and gas industry, the demise of oil prices and thus the shale fracking industry is a blow to US economic gains. Of course, without those jobs, jobs already on the tail the past 1.5 years, I think the consumer would not mind lower energy prices and a stronger dollar. Now Joe citizen may get a lower dollar and stronger energy prices, that old double whammy.

Weaker oil is imbued by many to mean weaker stocks. Thus if the oil open holds you would expect lower prices Monday in the US as the stock indices again test the Wednesday break higher from the lateral consolidation on the large cap indices.

SOX will be an important indicator as it made higher highs and immediately gave them up. If it falls harder and NASDAQ reverses its breakout over resistance, that means the buyers have to regroup. That gives the sellers an opening to try again. Thus far they have failed to muster lasting strength, but after some distribution sessions the past two weeks, the market is susceptible to selling if the resistance slams the door.

On top of the oil news and the market technical setup the earnings season opens up full throttle. Last week the earnings helped boost the indices past the two week consolidation to higher recovery highs. After the oil deal disappointment (as if that was a surprise?) it looks as if it will take some good earnings to boost the market back up.

For the new week we have a mix of upside and downside. As has been the case, some sectors are getting money pushed their way while others are experiencing money leaving. Overall market direction has been stable, giving trades both ways. After the Doha meeting and combined with earnings, maybe one side will finally win out (the upside is trying, e.g. the Wednesday break higher) here at resistance and we can go one-sided. It does seem apparent that the market is at an important point and set to make an important break. It would appear from a technical view that it would break lower, but with the Fed providing the wind in the sails, it is hard to buck the upside.

Thus we will watch these individual plays and pick up positions accordingly. Still quite a few stocks coming off of rounded bottoms, and those have provided fairly easy money thus far.

Have a great day!


NASDAQ: Closed at 4938.22

4960 is the September 2015 intraday high, an important reversal point for NASDAQ.
4999 is the October upper gap point
5007 is the 12/31 upper gap point from that big gap lower
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

4920 is the lower gap point from mid-October 2015, the January 2016 lower gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
The 200 day SMA at 4852
4836 is the March 2016 peak
The March 2015 lows at 4843 and 4825
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
The 50 day EMA at 4772
4751 is the January 2015 lower high
4637 is the February intraday high
4736 is the early January lower gap point downside, the last downside gap in the selloff.
4620 is the February 1 closing high
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
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 2080.73

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

2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2023 is the November 2015 low
2020 is the September 2015 intraday high
The 50 day EMA at 2017
The 200 day SMA at 2014
2011 is the September prior all-time high
1995 is the September 2015 recovery peak
1991 is the July 2014 high
1972 is the December 2014 low
1947 is the February 2016 intraday high, the late February peak
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
1891 is last week's intraday low prior to the miraculous reversal.
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 17,897.46

17,978 is the November 2015 peak
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,288 from March 2015
18,351 is the all-time high from May 2015

The March low at 17,786
June 2015 low at 17,715
17,748 is the mid-April China margin selloff and the bottom of the 5 month trading range
17,351 is the September 2014 all-time high.
The 50 day EMA at 17,282
17,265 is a December 2015 closing low
17,245 is the November 2015 closing low
17,152 is the mid-July post bear market high
The 200 day SMA at 17,114
17,068 is the early July 2014 peak
17067 is the December 2014 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery intraday peak
16,740 is the mid-September peak and potential apex for a right shoulder to a head and shoulders pattern
16,736 is a prior all-time high from May 2014
16,670 is the December 2014 peak and the recent August 2015 relief bounce peak.
16,665 is the late August 2015 closing high
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
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
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


April 15 - Friday
Empire Manufacturing, April (8:30): 9.6 actual versus 2.3 expected, 0.6 prior
Industrial Productio, March (9:15): -0.6% actual versus 0.0% expected, -0.6% prior (revised from -0.5%)
Capacity Utilization, March (9:15): 74.8% actual versus 75.5% expected, 75.3% prior (revised from 75.4%)
Michigan Sentiment - Preliminary, April (10:00): 89.7 actual versus 92.0 expected, 91.0 prior
Net Long-Term TIC Fl, February (16:00): $72.0B actual versus -$11.9B prior (revised from -$12.0B)

April 18 - Monday
NAHB Housing Market , April (10:00): 59 expected, 58 prior

April 19 - Tuesday
Building Permits, March (8:30): 1200K expected, 1167K prior
Housing Starts, March (8:30): 1170K expected, 1178K prior

April 20 - Wednesday
MBA Mortgage Index, 04/16 (7:00)
Existing Home Sales, March (10:00): 5.30M expected, 5.08M prior
Crude Inventories, 04/16 (10:30): 6.634M prior

April 21 - Thursday
Initial Claims, 04/16 (8:30): 263K expected, 253K prior
Continuing Claims, 04/09 (8:30): 2171K prior
Philadelphia Fed, April (8:30): 9.9 expected, 12.4 prior
FHFA Housing Price I, February (9:00): 0.5% prior
Leading Indicators, March (10:00): 0.4% expected, 0.1% prior
Natural Gas Inventor, 04/16 (10:30): -3 bcf prior

End part 1 of 3
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