* * * *
5/28/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: None issued
Entry alerts: None issued
Trailing stops: NBL
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
********************************************************************
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
- Yellen confirms Fed ready to hike based on current data.
- Market gives up gains on Yellen words, rebounds, sprints higher to the
close.
- Q1 GDP second read better but misses expectations. It is weak any way you
slice it or spin it, and hopes for a Q2 and beyond recovery are the same
hopes each year since 2008.
- Welcome to the Twilight Zone: the Fed, in attempting to get the ammo it
needs to fight off the next crisis might create very next crisis it needs
the ammo to fight.
- Same groups with a few new entrants this past week still look good.
Friday Chairman Yellen confirmed the Fed will continue hiking rates. She
did not say "June is on for a hike," but made it clear the Fed will hike
rates, not because the economy is so grand (though it likes to suggest
that), but because the Fed needs maneuvering room for the next crisis.
What Yellen said:
-The economy continues improving.
-Given the economic gains, raising rates in the coming months may be
appropriate.
-Fed does not have the "typical scope" to cut rates in case of economic or
other shocks.
So, even the uber-dove Yellen realizes keeping rates at 0 for so long has
risks, one of them being no weapons to manipulate markets and wealth when
the next opportunity -- I mean crisis -- comes along.
That raises the next question: how much maneuvering room does the Fed need
for the next shock, i.e. how many rate hikes will it need? Bullard says 4 in
2016, three more over the next 8 months. Easily doable logistically. The
issue is how the economy and market react.
As for the economy, the data Friday was glossed over as an improvement. Q1
GDP second iteration was 0.8%, missing expectations but beating the first
read:
GDP, 2nd revision: 0.8% versus 0.9% expected versus 0.5% first read
Consumer spending: 1.9% vs 2.2% expected vs 1.9 first read
Business investment: -6.2% versus -5.9% first read
Sure there were the usual attempts to spin this a good news. The reality,
however, is another weak GDP report, revisions higher notwithstanding.
Indeed, according to historical norms, with unemployment at 5% GDP should be
3% to 3.5%. Not close in Q1. But of course there were the 'wait until the
second quarter' calls yet again, citing expectations of vast improvement.
Same story, different year. Calls for 'this is the year things are better'
turns into another pile of crappy data.
As for stocks, they reacted rather sanguine. Another weak GDP report?
Nothing changed so keep the status quo. Then you had the Yellen speech. At
first they sold off post-Yellen, but they recovered and indeed rallied to a
higher session high as shorts covered ahead of the long weekend given the
market did not crumble as the chairman confirmed she could and would hike
rates. If she absolutely, positively must.
SP500 8.96, 0.43%
NASDAQ 31.73, 0.65%%
DJ30 44.93, 0.25%
SP400 0.0.77%
RUTX 0.94%
SOX 0.60%
VOLUME: NYSE +5.5%, NASDAQ -6.5%
A/D: 2:1 NYSE, 2:1 NASDAQ
So, bring on the rate hikes, at least before a 3-day weekend. Not a bad
response as the rally shows it has some chops in not crumbling like a dried
out, bargain brand cookie. The short-covering sprint to the close will
certainly give the born again bulls even more fervor with the 'I told you
so' predictions (that, of course, started 6 days after SOX started the
rally).
Nothing worse than a reformed alcoholic? How about a reformed bear? Gushing
is a good word. Everything is coming up roses when not two weeks ago all was
dead and decaying. They are dominated by emotional responses that change
perspective. The economic numbers still are not great, not at all.
Moreover, there will not be a big change in the numbers or any real recovery
until policies in Washington DC change.
Thus, in the bigger picture, we have a bounce in a big 1.5 year top. It is
like the Titanic movie: it was a ship, it sank, get over it. This is a
bounce, it likely fails, deal with it.
How do you with it? Use it. We have some good positions. We are letting
them run. We likely won't buy more a lot more new ones until the market
shows a test of this last move and then demonstrates it can bounce again.
There is, of course, always that chance it won't bounce. Have to be
practical and not grotesquely emotional, recognizing the situation for what
it is. If you do that, you make money. If you start assuming things based
upon preconceived notions clouded by emotions, you end up missing what is in
front of you and not buying (or selling) stocks that have set up good
patterns and are telling you 'buy me.'
THE MARKET
There was no change in the index charts in the immediate aftermath of
Yellen: the indices moved higher ahead of her speech, sold off that move
after. Then, however, the sellers could not advance farther and that caused
short covering. Stocks rallied back to pre-Yellen levels and then sprinted
to the close as shorts were squeezed ahead of a 3-day weekend.
The end result was a new bounce higher after a 2-day pause in the new rally
that is not as new as the financial stations say it is because they cannot
let on that they did not see the move taking shape and starting, missing the
first 2 to 6 days of the move depending upon the index you look at.
The problem is, the move was, as noted, likely short covering and that means
the stock market will have to deal with some potential give back early in
the week. That does not mean we believe the move is over.
To the contrary, the move looks as if it is still finding plenty of support.
Some of the big names are working well (e.g. GOOG), and the same groups that
turned leaders over the past couple of months are still leading: oil,
construction, drugs/biotech. They are joined by chips and some technology.
Indeed, the report this weekend focuses on biotech/drugs as that group is
showing a lot of good patterns with good potential. We even toss in FCX as
it has a nice new setup.
MARKET STATISTICS
NASDAQ
Stats: +31.74 points (+0.65%) to close at 4933.5
Volume: 1.517B (-6.54%)
Up Volume: 1.09B (+265.75M)
Down Volume: 391.32M (-350.88M)
A/D and Hi/Lo: Advancers led 2.06 to 1
Previous Session: Decliners led 1.18 to 1
New Highs: 81 (+15)
New Lows: 22 (-9)
S&P
Stats: +8.96 points (+0.43%) to close at 2099.06
NYSE Volume: 835.9M (+5.46%)
A/D and Hi/Lo: Advancers led 2.06 to 1
Previous Session: Advancers led 1.08 to 1
New Highs: 73 (0)
New Lows: 14 (-3)
DJ30
Stats: +44.93 points (+0.25%) to close at 17873.22
SENTIMENT INDICATORS
The sentiment indications this week provide a textbook example of how they
work: bears jumped, bulls fell just as the market started its most recent
rally.
The irony is, the Fed, in trying to get rates higher in order to have
ammunition to fight the next crisis, may precipitate the next crisis. You
cannot make this stuff up. You don't have to. Such brilliant people are so
blind to the reactions to their actions that they cause the very issues they
are attempting to avoid. It is like the old 'Twilight Zone' episode where
the man goes back in time to stop a school fire and is actually part of the
sequence of events that causes the fire.
VIX: 13.12; -0.31
VXN: 14.55; -0.16
VXO: 12.2; -0.5
Put/Call Ratio (CBOE): 0.9; -0.03
18 of 22 over 1.0, 28 of the last 48 above 1.0. Three sessions straight
below 1.0 as the bounce continues. Easily enough high ratio readings to
bounce stocks and perhaps they are going to make a bounce after this last
pullback.
Bulls and Bears: Bulls plunged and bears jumped just as the market was
starting its move higher. That is a textbook demonstration showing
sentiment is opposite market moves. Everyone from the major brokerages down
to the bald guy on CNBC was glum about the market's prospects. Then it
bounces.
Bulls: 35.4 versus 40.2
Bears: 24.0 versus 21.7
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: 35.4%
40.2 versus 39.2 versus 40.2% versus 44.3% versus 47.4% versus 41.2% versus
45.4% versus 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%
Bears: 24.0%
21.7% versus 21.6% versus 21.7 versus 20.6% versus 21.7% versus 27.8% versus
27.8% versus 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%
OTHER MARKETS
Bonds (10 year): 1.85% versus 1.83%
Historical: 1.83% versus 1.87% versus 1.86% versus 1.83% versus 1.85% versus
1.85% versus 1.85% versus 1.76% versus 1.75% versus 1.70% versus 1.75%
versus 1.735% versus 1.75% versus 1.75% versus 1.78% versus 1.74% versus
1.77% versus 1.80% versus 1.87% versus 1.83% versus 1.83% versus 1.86%
versus 1.94% versus 1.90% versus 1.88% versus 1.86% versus 1.95% versus
1.79% versus 1.77%
EUR/USD: 1.1113 versus 1.1181
Historical: 1.1181 versus 1.1155 versus 1.1142 versus 1.1221 versus 1.1216
versus 1.1199 versus 1.1219 versus 13.1317 versus 1.13145 versus 1.1307
versus 1.13791 versus 1.4252 versus 1.13707 versus 1.13869 versus 1.1405
versus 1.1399 versus 1.14864 versus 1.14864 versus 1.1478 versus 1.15306
versus 1.1450 versus 1.1382 versus 1.1329 versus 1.1293 versus 1.1261 versus
1.2249 versus 1.1289 versus 1.1295 versus 1.1360 versus 1.1317 versus 1.1285
versus 1.1264 versus 1.1278 versus 1.1389 versus 1.1410 versus 1.1397 versus
1.1370
USD/JPY: 110.233 versus 109.70. Dollar bounces, trying to get up and away
from the 50 day MA's that have hemmed it in during the downtrend.
Historical: 109.70 versus 109.72 versus 109.99 versus 109.25 versus 110.165
versus 109.985 versus 110.187 versus 109.073 versus 108.856 versus 108.65
versus 108.95 versus 108.47 versus 109.28 versus 108.343 versus 107.10
versus 107.41 versus 107.126 versus 107.312 versus 106.16 versus 106.33
versus 107.36 versus 109.35 versus 111.36 versus 111.79 versus 109.46 versus
109.135 versus 109.06 versus 108.762 versus 109.65 versus 109.29 versus
108.505 versus 107.95 versus 108.175 versus 108.425 versus 109.84 versus
110.45
Oil: 49.56, +0.16. Still trending higher up the 10 day EMA.
Gold: 1215.30, -4.50. Now down to the late March lows and in good position
to bounce back upside in a relief move, but it has not set that bottom for a
bounce yet.
TUESDAY
Friday stocks resumed the upside after a 1 to 2-day pause. The key to start
the week is whether there is some give back of the move given the short
squeeze last hour surge Friday.
That said, some give back of the Friday move does not give back the rally.
It still appears to have solid underpinnings for now. We are a bit
disappointed in the late upside as we wanted more of a test before resuming
the move. Again, perhaps there is some give back early that helps.
Even so, we have several very nice patterns to play upside regardless of any
early week moves one way or the other. We see the same areas still showing
good accumulation and upside setups, so we plan on continuing making those
plays as long as the market provides them.
Have a great Memorial Day!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4933.50
Resistance:
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4969 is the April 2016 recovery high
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
Support:
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 March 2015 lows at 4843 and 4825
4836 is the March 2016 peak
The 50 day SMA at 4833. Note the 50 day SMA has crossed up through the 200
day MA.
4815 is the December 2014 peak
The 200 day SMA at 4812
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
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
S&P 500: Closed at 2099.06
Resistance:
2104 is the December 2015 high
2111 is the April 2016 recovery 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:
2094 is the December 2014 high, the prior all-time high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
The 50 day EMA at 2054
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 200 day SMA at 2011
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 17,873.22
Resistance:
17,978 is the November 2015 peak
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,168 is the April 2016 recovery high
18,288 from March 2015
18,351 is the all-time high from May 2015
Support:
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
The 50 day EMA at 17,605
17,351 is the September 2014 all-time high.
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 17,124
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
ECONOMIC CALENDAR
May 27 - Friday
GDP - Second Estimate, Q1 (8:30): 0.8% actual versus 0.9% expected, 0.5%
prior
GDP Deflator - 2nd, Q1 (8:30): 0.7% prior
GDP Deflator - 2nd, Q1 (8:30): 0.6% actual versus 0.7% expected, 0.7% prior
Michigan Sentiment - Final, May (10:00): 94.7 actual versus 95.5 expected,
95.8 prior
End part 1 of 3
_______________________________________________________
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Sunday, May 29, 2016
Saturday, May 21, 2016
The Daily, Part 1 of 3, 5-21-16
* * * *
5/21/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: None issued
Entry alerts: CWEI
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
********************************************************************
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
- SOX leads a growth index bounce telegraphed by the Thursday action.
- Overall top remains in place, but stocks set to attempt a bounce.
- Some new groups getting money indicates the market is still working in
some areas, keeping the indices higher for now.
- Playing the upside this week until it runs out and the downside sets up
once more.
Friday saw the rebound in stocks that the Thursday action suggested.
Interestingly, DJ30 and SP500 lagged the growth areas as those indices put
in gains well in excess of 1%.
SP500 12.28, 0.60%
NASDAQ 57.03, 1.21%
DJ30 65.54, 0.38%
SP400 1.33%
RUTX 1.60%
SOX 3.15%
VOLUME: NYSE +3%, NASDAQ +7%.
A/D: NYSE 4.1:1, NASDAQ 3.1:1. Strong upside breadth, stronger than even
the downside breadth of late.
On a week with many Fed speakers opining about the market underestimating
the Fed's resolve for rate hikes as well as the Fed minutes more or less
backing up those comments, stocks recovered remarkably well with Friday
increasing the odds of a near term bounce for stocks overall with SOX
leading the way.
The adage 'sell in May and go away' may have to wait a bit before the market
is ready. No question May started with less than great action, but over the
past week the indices avoided heavy selloffs when they had reason to sell --
the Fed statement backed up by governors saying the Fed is locked and loaded
to hike -- thus showing a fairly good indication investors are not ready to
bail just yet. When you layer in the growing number of brokerages, pundits
and 'name' individual investors bearish on stocks as well as another week
with equity outflows ($5.8B leaving equities the past week), any ability to
hold on, much more bounce, shows there is still will to take upside
positions.
Of course the Friday bounce was nothing big on the large cap indices and
thus the downside still could win out here in May. Perhaps, but many stocks
that we are seeing bottom and move higher have already suffered their own
bear markets inside the market rise through April. These stocks were still
receiving money as of last week and Friday, and indeed we see many more that
appear to have money pushing their way. Semiconductors were an obviously
visible group late in the week.
Thus, while we still view the market as having built a 1.5 year top and
working on what could be the last hurrah before selling off harder, we
recognize that there are still stocks getting money pushed their way. Where
the money goes, so go prices. That has kept many areas still showing very
good action with more good setups coming to the fore. Accordingly, the
report sports several new upside plays in sectors that are showing good
setups and good moves. We will likely play more downside in the not too
distant future, but after banking some good gain to the downside on the week
(e.g. COST, KORS, EMR), with stocks bouncing against the sentiment, we will
look at some more good upside and let the downside patterns set up once
again.
ms
THE MARKET
Lots of pessimism from the brokerages, banks, big investors. Put/call ratio
remains high. Many are negative on the market and in our view rightly so.
At the same time, you have to recognize that the market may not be as ready
to sell, just yet, as the pundits are. That is how you get these counter
moves to what appears to be the direction the market overall wants to take.
The bounce is not set in stone, it just has stocks set up to bounce and many
that are starting to do just that. With good patterns setup and moving up,
it appears there is money to be made on another move in stocks that are
still, as of last week, getting money pushed their way.
CHARTS
SOX: After threatening a break lower two Thursdays back, SOX managed to
recover off the sharp break lower, move back over the 200 day SMA, test that
move, then jump higher Friday through the 50 day MA's. The failed break
down was the key. Now SOX is moving and Friday some good AMAT guidance kept
the index moving higher after its turn from the selloff attempt. There as
many good chips in position to move higher and make us money, e.g. QRVO,
AVGO (flipping it).
NASDAQ: Not out of the woods, but similar to SOX, NASDAQ had opportunities
to selloff but did not. Indeed, it has carved out a double bottom at the
38% Fibonacci retracement of the February to April move, a bullish
indication. Late in the week, NASDAQ received stronger upside volume
(Wednesday and Friday) as it turned higher off the second low. Interesting
action as another growth index shows it wants to break higher near term.
RUTX: The small caps bounced Friday off a Thursday doji at the 38%
Fibonacci retracement of the February to April move. The index set up a
head and shoulders from late March through last week, but it is also trying
to use the near retracement as support to launch a move to break up that
topping near term pattern. Good start Friday as RUTX was another of the
growth indices that saw money move their way.
SP400: Threw a hammer doji with tail Thursday then gapped and rallied
Friday, holding the 50 day MA's during the test and putting in a higher low
bounce. Gapped lower, gapped higher after a four-week pullback. That
action tends to show at least a bit of staying power in the direction of the
last gap.
SP500: Still has that toppish head and shoulders pattern formed the past 8
weeks, but is showing similar action to the other indices. Doji test
Thursday then a Friday break higher on rising volume. Trying to make that
next move but seemingly content for now to let the other smaller indices do
the work. Definitely has not broken up the near term head and shoulders,
but is refusing to sell.
DJ30: After doing much of the leading upside into April and holding on
decently on the first test, DJ30 is struggling, moving upside Friday but not
recovering the 50 day MA's. It is lagging and not looking good, but if the
other indices rally, it likely follows for a bit.
LEADERSHIP
Semiconductors: Not overpowering with great patterns, but moving up. AMD
has a nice pennant set up, and of course AMAT helped lead the equipment
stocks higher (KLAC, KLIC). Others look quite good for possible entries:
QRVO, AVGO, AMKR, EXAR. Money coming their way as a new group receives
money.
Oil: Still some very good action. CWEI broke higher again after its test.
WMB breaking higher Friday after a good week upside. ATW testing nicely,
ready to bounce again. SWN setting up well for a new move. SPN as well.
EVEP, SLAB are others.
Drugs/biotechs: Getting money here as well. RMTI, INCY, JAZZ, PACB, GALE.
Financial: Down Friday but still solid. JPM, MS, C, BAC.
Tech: VMW still working well. FFIV could provide a move this week.
Big Names: Some improvement individually but still struggling overall.
AAPL bounced after it was announced BRK.B had bought a bunch of shares;
still below the 20 day EMA. SBUX sold on the week. AMZN is fine, NFLX
bounced on the week but not a huge move. GOOG is trying to put in a higher
low at the 200 day SMA. FB is holding the 20 day EMA and the upper gap
point. GOOG may be worth trying another upside play.
MARKET STATISTICS
NASDAQ
Stats: +57.03 points (+1.21%) to close at 4769.56
Volume: 1.933B (+6.53%)
Up Volume: 1.54B (+909.72M)
Down Volume: 405.33M (-744.67M)
A/D and Hi/Lo: Advancers led 3.12 to 1
Previous Session: Decliners led 2.3 to 1
New Highs: 35 (+16)
New Lows: 34 (-60)
S&P
Stats: +12.28 points (+0.6%) to close at 2052.32
NYSE Volume: 953M (+3.25%)
A/D and Hi/Lo: Advancers led 4.12 to 1
Previous Session: Decliners led 2.41 to 1
New Highs: 36 (+16)
New Lows: 21 (-17)
DJ30
Stats: +65.54 points (+0.38%) to close at 17500.94
SENTIMENT INDICATORS
VIX: 15.2; -1.13
VXN: 16.4; -1.48
VXO: 15.26; -1.09
Put/Call Ratio (CBOE): 1.04; -0.33
16 of 17 over 1.0, 26 of the last 42 above 1.0. Easily enough high ratio
readings to bounce stocks and perhaps they are going to make a bounce after
this last pullback.
Bulls and Bears: Bulls and Bears moved right back to where they were three
weeks back with bulls rising slightly and bears rising slightly. Not so
high on the bears to suggest a selloff, still pretty low on the bulls.
Bulls: 40.2 versus 39.2
Bears: 21.7 versus 21.6
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: 40.2%
39.2 versus 40.2% versus 44.3% versus 47.4% versus 41.2% versus 45.4% versus
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%
Bears: 21.7%
21.6% versus 21.7 versus 20.6% versus 21.7% versus 27.8% versus 27.8% versus
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%
OTHER MARKETS
Bonds (10 year): 1.85% versus 1.85%. Sold hard Wednesday from last week's
high, closing out the week with a lateral move at the 50 day MA. Still very
much in a four month lateral trading range.
Historical: 1.85% versus 1.85% versus 1.76% versus 1.75% versus 1.70% versus
1.75% versus 1.735% versus 1.75% versus 1.75% versus 1.78% versus 1.74%
versus 1.77% versus 1.80% versus 1.87% versus 1.83% versus 1.83% versus
1.86% versus 1.94% versus 1.90% versus 1.88% versus 1.86% versus 1.95%
versus 1.79% versus 1.77%
EUR/USD: 1.1216 versus 1.1199. Euro rebounded slightly on Friday after a
week of downside took it to a lower low, breaking below the mid-April low.
Three weeks downside after hitting a new rally high to start May.
Historical: 1.1199 versus 1.1219 versus 13.1317 versus 1.13145 versus 1.1307
versus 1.13791 versus 1.4252 versus 1.13707 versus 1.13869 versus 1.1405
versus 1.1399 versus 1.14864 versus 1.14864 versus 1.1478 versus 1.15306
versus 1.1450 versus 1.1382 versus 1.1329 versus 1.1293 versus 1.1261 versus
1.2249 versus 1.1289 versus 1.1295 versus 1.1360 versus 1.1317 versus 1.1285
versus 1.1264 versus 1.1278 versus 1.1389 versus 1.1410 versus 1.1397 versus
1.1370
USD/JPY: 110.165 versus 109.985. Dollar up all week, moving through the 50
day MA Wednesday with must modest advances into Friday. Dollar up versus
the yen for three weeks off the lower low set to start May.
Historical: 109.985 versus 110.187 versus 109.073 versus 108.856 versus
108.65 versus 108.95 versus 108.47 versus 109.28 versus 108.343 versus
107.10 versus 107.41 versus 107.126 versus 107.312 versus 106.16 versus
106.33 versus 107.36 versus 109.35 versus 111.36 versus 111.79 versus 109.46
versus 109.135 versus 109.06 versus 108.762 versus 109.65 versus 109.29
versus 108.505 versus 107.95 versus 108.175 versus 108.425 versus 109.84
versus 110.45
Oil: 48.48, -0.29. Rallied to a higher recovery high Tuesday, paused into
the weekend, testing the 10 day EMA. Pretty normal test of a higher rally
high.
Gold: 1252.90, -2.80. After the strong break to a higher recovery high to
end April, gold has slid back into the range, holding over the 50 day MA's
last week. The Fed's renewed claims it is ready to hike has stolen the near
term upside impetus for gold. How it reacts to this 50 day MA test tells
the next phase for gold.
MONDAY
Toward the end of the week stocks started to bounce, showing some upside in
the midst of all of the pessimism and talk of a looming selloff. Again, we
agree with that overall assessment, it is as always, however, a matter of
when it occurs.
As is somewhat typical, when so many became so negative, the market tried to
bounce. There are still good sectors and good patterns in those sectors
that are receiving money. The chips have come back around and
drugs/healthcare continue to set up. If new sectors get money, the more the
overall market can hold onto gains.
This weekend we are looking at upside plays because we see more than enough
areas and stocks getting money and good patterns. After this upside bounce
runs its course we can then look at downside as they will be set to resume
their moves at that time. Until then we are going to look at some chips,
oil, drugs to start with and see what else develops later in the week.
Not sure how long the upside lasts, but as the other sectors getting money
have shown, even with the overall market struggling, they have worked well.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4769.56
Resistance:
4774 is the January 2-15 high
4811 is the November 2014 peak (intraday)
4815 is the December 2014 peak
The 200 day SMA at 4816
The 50 day SMA at 4821. Note the 50 day SMA has crossed up through the 200
day MA.
The March 2015 lows at 4843 and 4825
4836 is the March 2016 peak
4894 is the September 2015 closing high
4899 - 4902 from the September 2015 peak, July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
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
Support:
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
S&P 500: Closed at 2052.32
Resistance:
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:
The 50 day EMA at 2048
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 200 day SMA at 2011
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 17,500.94
Resistance:
The 50 day EMA at 17,572
17,748 is the mid-April China margin selloff and the bottom of the 5 month
trading range
June 2015 low at 17,715
The March low at 17,786
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
Support:
17,351 is the September 2014 all-time high.
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 17,117
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
ECONOMIC CALENDAR
May 24 - Tuesday
New Home Sales, April (10:00): 521K expected, 511K prior
May 25 - Wednesday
MBA Mortgage Index, 05/21 (7:00)
International Trade , April (8:30): -$56.9B prior
FHFA Housing Price I, March (9:00): 0.4% prior
Crude Inventories, 05/21 (10:30): 1.310M prior
May 26 - Thursday
Initial Claims, 05/21 (8:30): 275K expected, 278K prior
Continuing Claims, 05/14 (8:30): 2152K prior
Durable Orders, April (8:30): 0.6% expected, 0.8% prior
Durable Orders, ex-t, April (8:30): 0.5% expected, -0.2% prior
Pending Home Sales, April (10:00): 0.6% expected, 1.4% prior
Natural Gas Inventor, 05/21 (10:30): 73 bcf prior
May 27 - Friday
GDP - Second Estimate, Q1 (8:30): 0.9% expected, 0.5% prior
GDP Deflator - 2nd, Q1 (8:30): 0.7% prior
GDP Deflator - 2nd, Q1 (8:30): 0.7% expected, 0.7% prior
Michigan Sentiment - Final, May (10:00): 95.5 expected, 95.8 prior
End part 1 of 3
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5/21/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: None issued
Entry alerts: CWEI
Trailing stops: None issued
Stop alerts: None issued
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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
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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
- SOX leads a growth index bounce telegraphed by the Thursday action.
- Overall top remains in place, but stocks set to attempt a bounce.
- Some new groups getting money indicates the market is still working in
some areas, keeping the indices higher for now.
- Playing the upside this week until it runs out and the downside sets up
once more.
Friday saw the rebound in stocks that the Thursday action suggested.
Interestingly, DJ30 and SP500 lagged the growth areas as those indices put
in gains well in excess of 1%.
SP500 12.28, 0.60%
NASDAQ 57.03, 1.21%
DJ30 65.54, 0.38%
SP400 1.33%
RUTX 1.60%
SOX 3.15%
VOLUME: NYSE +3%, NASDAQ +7%.
A/D: NYSE 4.1:1, NASDAQ 3.1:1. Strong upside breadth, stronger than even
the downside breadth of late.
On a week with many Fed speakers opining about the market underestimating
the Fed's resolve for rate hikes as well as the Fed minutes more or less
backing up those comments, stocks recovered remarkably well with Friday
increasing the odds of a near term bounce for stocks overall with SOX
leading the way.
The adage 'sell in May and go away' may have to wait a bit before the market
is ready. No question May started with less than great action, but over the
past week the indices avoided heavy selloffs when they had reason to sell --
the Fed statement backed up by governors saying the Fed is locked and loaded
to hike -- thus showing a fairly good indication investors are not ready to
bail just yet. When you layer in the growing number of brokerages, pundits
and 'name' individual investors bearish on stocks as well as another week
with equity outflows ($5.8B leaving equities the past week), any ability to
hold on, much more bounce, shows there is still will to take upside
positions.
Of course the Friday bounce was nothing big on the large cap indices and
thus the downside still could win out here in May. Perhaps, but many stocks
that we are seeing bottom and move higher have already suffered their own
bear markets inside the market rise through April. These stocks were still
receiving money as of last week and Friday, and indeed we see many more that
appear to have money pushing their way. Semiconductors were an obviously
visible group late in the week.
Thus, while we still view the market as having built a 1.5 year top and
working on what could be the last hurrah before selling off harder, we
recognize that there are still stocks getting money pushed their way. Where
the money goes, so go prices. That has kept many areas still showing very
good action with more good setups coming to the fore. Accordingly, the
report sports several new upside plays in sectors that are showing good
setups and good moves. We will likely play more downside in the not too
distant future, but after banking some good gain to the downside on the week
(e.g. COST, KORS, EMR), with stocks bouncing against the sentiment, we will
look at some more good upside and let the downside patterns set up once
again.
ms
THE MARKET
Lots of pessimism from the brokerages, banks, big investors. Put/call ratio
remains high. Many are negative on the market and in our view rightly so.
At the same time, you have to recognize that the market may not be as ready
to sell, just yet, as the pundits are. That is how you get these counter
moves to what appears to be the direction the market overall wants to take.
The bounce is not set in stone, it just has stocks set up to bounce and many
that are starting to do just that. With good patterns setup and moving up,
it appears there is money to be made on another move in stocks that are
still, as of last week, getting money pushed their way.
CHARTS
SOX: After threatening a break lower two Thursdays back, SOX managed to
recover off the sharp break lower, move back over the 200 day SMA, test that
move, then jump higher Friday through the 50 day MA's. The failed break
down was the key. Now SOX is moving and Friday some good AMAT guidance kept
the index moving higher after its turn from the selloff attempt. There as
many good chips in position to move higher and make us money, e.g. QRVO,
AVGO (flipping it).
NASDAQ: Not out of the woods, but similar to SOX, NASDAQ had opportunities
to selloff but did not. Indeed, it has carved out a double bottom at the
38% Fibonacci retracement of the February to April move, a bullish
indication. Late in the week, NASDAQ received stronger upside volume
(Wednesday and Friday) as it turned higher off the second low. Interesting
action as another growth index shows it wants to break higher near term.
RUTX: The small caps bounced Friday off a Thursday doji at the 38%
Fibonacci retracement of the February to April move. The index set up a
head and shoulders from late March through last week, but it is also trying
to use the near retracement as support to launch a move to break up that
topping near term pattern. Good start Friday as RUTX was another of the
growth indices that saw money move their way.
SP400: Threw a hammer doji with tail Thursday then gapped and rallied
Friday, holding the 50 day MA's during the test and putting in a higher low
bounce. Gapped lower, gapped higher after a four-week pullback. That
action tends to show at least a bit of staying power in the direction of the
last gap.
SP500: Still has that toppish head and shoulders pattern formed the past 8
weeks, but is showing similar action to the other indices. Doji test
Thursday then a Friday break higher on rising volume. Trying to make that
next move but seemingly content for now to let the other smaller indices do
the work. Definitely has not broken up the near term head and shoulders,
but is refusing to sell.
DJ30: After doing much of the leading upside into April and holding on
decently on the first test, DJ30 is struggling, moving upside Friday but not
recovering the 50 day MA's. It is lagging and not looking good, but if the
other indices rally, it likely follows for a bit.
LEADERSHIP
Semiconductors: Not overpowering with great patterns, but moving up. AMD
has a nice pennant set up, and of course AMAT helped lead the equipment
stocks higher (KLAC, KLIC). Others look quite good for possible entries:
QRVO, AVGO, AMKR, EXAR. Money coming their way as a new group receives
money.
Oil: Still some very good action. CWEI broke higher again after its test.
WMB breaking higher Friday after a good week upside. ATW testing nicely,
ready to bounce again. SWN setting up well for a new move. SPN as well.
EVEP, SLAB are others.
Drugs/biotechs: Getting money here as well. RMTI, INCY, JAZZ, PACB, GALE.
Financial: Down Friday but still solid. JPM, MS, C, BAC.
Tech: VMW still working well. FFIV could provide a move this week.
Big Names: Some improvement individually but still struggling overall.
AAPL bounced after it was announced BRK.B had bought a bunch of shares;
still below the 20 day EMA. SBUX sold on the week. AMZN is fine, NFLX
bounced on the week but not a huge move. GOOG is trying to put in a higher
low at the 200 day SMA. FB is holding the 20 day EMA and the upper gap
point. GOOG may be worth trying another upside play.
MARKET STATISTICS
NASDAQ
Stats: +57.03 points (+1.21%) to close at 4769.56
Volume: 1.933B (+6.53%)
Up Volume: 1.54B (+909.72M)
Down Volume: 405.33M (-744.67M)
A/D and Hi/Lo: Advancers led 3.12 to 1
Previous Session: Decliners led 2.3 to 1
New Highs: 35 (+16)
New Lows: 34 (-60)
S&P
Stats: +12.28 points (+0.6%) to close at 2052.32
NYSE Volume: 953M (+3.25%)
A/D and Hi/Lo: Advancers led 4.12 to 1
Previous Session: Decliners led 2.41 to 1
New Highs: 36 (+16)
New Lows: 21 (-17)
DJ30
Stats: +65.54 points (+0.38%) to close at 17500.94
SENTIMENT INDICATORS
VIX: 15.2; -1.13
VXN: 16.4; -1.48
VXO: 15.26; -1.09
Put/Call Ratio (CBOE): 1.04; -0.33
16 of 17 over 1.0, 26 of the last 42 above 1.0. Easily enough high ratio
readings to bounce stocks and perhaps they are going to make a bounce after
this last pullback.
Bulls and Bears: Bulls and Bears moved right back to where they were three
weeks back with bulls rising slightly and bears rising slightly. Not so
high on the bears to suggest a selloff, still pretty low on the bulls.
Bulls: 40.2 versus 39.2
Bears: 21.7 versus 21.6
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: 40.2%
39.2 versus 40.2% versus 44.3% versus 47.4% versus 41.2% versus 45.4% versus
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%
Bears: 21.7%
21.6% versus 21.7 versus 20.6% versus 21.7% versus 27.8% versus 27.8% versus
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%
OTHER MARKETS
Bonds (10 year): 1.85% versus 1.85%. Sold hard Wednesday from last week's
high, closing out the week with a lateral move at the 50 day MA. Still very
much in a four month lateral trading range.
Historical: 1.85% versus 1.85% versus 1.76% versus 1.75% versus 1.70% versus
1.75% versus 1.735% versus 1.75% versus 1.75% versus 1.78% versus 1.74%
versus 1.77% versus 1.80% versus 1.87% versus 1.83% versus 1.83% versus
1.86% versus 1.94% versus 1.90% versus 1.88% versus 1.86% versus 1.95%
versus 1.79% versus 1.77%
EUR/USD: 1.1216 versus 1.1199. Euro rebounded slightly on Friday after a
week of downside took it to a lower low, breaking below the mid-April low.
Three weeks downside after hitting a new rally high to start May.
Historical: 1.1199 versus 1.1219 versus 13.1317 versus 1.13145 versus 1.1307
versus 1.13791 versus 1.4252 versus 1.13707 versus 1.13869 versus 1.1405
versus 1.1399 versus 1.14864 versus 1.14864 versus 1.1478 versus 1.15306
versus 1.1450 versus 1.1382 versus 1.1329 versus 1.1293 versus 1.1261 versus
1.2249 versus 1.1289 versus 1.1295 versus 1.1360 versus 1.1317 versus 1.1285
versus 1.1264 versus 1.1278 versus 1.1389 versus 1.1410 versus 1.1397 versus
1.1370
USD/JPY: 110.165 versus 109.985. Dollar up all week, moving through the 50
day MA Wednesday with must modest advances into Friday. Dollar up versus
the yen for three weeks off the lower low set to start May.
Historical: 109.985 versus 110.187 versus 109.073 versus 108.856 versus
108.65 versus 108.95 versus 108.47 versus 109.28 versus 108.343 versus
107.10 versus 107.41 versus 107.126 versus 107.312 versus 106.16 versus
106.33 versus 107.36 versus 109.35 versus 111.36 versus 111.79 versus 109.46
versus 109.135 versus 109.06 versus 108.762 versus 109.65 versus 109.29
versus 108.505 versus 107.95 versus 108.175 versus 108.425 versus 109.84
versus 110.45
Oil: 48.48, -0.29. Rallied to a higher recovery high Tuesday, paused into
the weekend, testing the 10 day EMA. Pretty normal test of a higher rally
high.
Gold: 1252.90, -2.80. After the strong break to a higher recovery high to
end April, gold has slid back into the range, holding over the 50 day MA's
last week. The Fed's renewed claims it is ready to hike has stolen the near
term upside impetus for gold. How it reacts to this 50 day MA test tells
the next phase for gold.
MONDAY
Toward the end of the week stocks started to bounce, showing some upside in
the midst of all of the pessimism and talk of a looming selloff. Again, we
agree with that overall assessment, it is as always, however, a matter of
when it occurs.
As is somewhat typical, when so many became so negative, the market tried to
bounce. There are still good sectors and good patterns in those sectors
that are receiving money. The chips have come back around and
drugs/healthcare continue to set up. If new sectors get money, the more the
overall market can hold onto gains.
This weekend we are looking at upside plays because we see more than enough
areas and stocks getting money and good patterns. After this upside bounce
runs its course we can then look at downside as they will be set to resume
their moves at that time. Until then we are going to look at some chips,
oil, drugs to start with and see what else develops later in the week.
Not sure how long the upside lasts, but as the other sectors getting money
have shown, even with the overall market struggling, they have worked well.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4769.56
Resistance:
4774 is the January 2-15 high
4811 is the November 2014 peak (intraday)
4815 is the December 2014 peak
The 200 day SMA at 4816
The 50 day SMA at 4821. Note the 50 day SMA has crossed up through the 200
day MA.
The March 2015 lows at 4843 and 4825
4836 is the March 2016 peak
4894 is the September 2015 closing high
4899 - 4902 from the September 2015 peak, July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
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
Support:
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
S&P 500: Closed at 2052.32
Resistance:
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:
The 50 day EMA at 2048
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 200 day SMA at 2011
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 17,500.94
Resistance:
The 50 day EMA at 17,572
17,748 is the mid-April China margin selloff and the bottom of the 5 month
trading range
June 2015 low at 17,715
The March low at 17,786
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
Support:
17,351 is the September 2014 all-time high.
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 17,117
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
ECONOMIC CALENDAR
May 24 - Tuesday
New Home Sales, April (10:00): 521K expected, 511K prior
May 25 - Wednesday
MBA Mortgage Index, 05/21 (7:00)
International Trade , April (8:30): -$56.9B prior
FHFA Housing Price I, March (9:00): 0.4% prior
Crude Inventories, 05/21 (10:30): 1.310M prior
May 26 - Thursday
Initial Claims, 05/21 (8:30): 275K expected, 278K prior
Continuing Claims, 05/14 (8:30): 2152K prior
Durable Orders, April (8:30): 0.6% expected, 0.8% prior
Durable Orders, ex-t, April (8:30): 0.5% expected, -0.2% prior
Pending Home Sales, April (10:00): 0.6% expected, 1.4% prior
Natural Gas Inventor, 05/21 (10:30): 73 bcf prior
May 27 - Friday
GDP - Second Estimate, Q1 (8:30): 0.9% expected, 0.5% prior
GDP Deflator - 2nd, Q1 (8:30): 0.7% prior
GDP Deflator - 2nd, Q1 (8:30): 0.7% expected, 0.7% prior
Michigan Sentiment - Final, May (10:00): 95.5 expected, 95.8 prior
End part 1 of 3
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Sunday, May 15, 2016
The Daily, Part 1 of 3, 5-14-16
* * * *
5/14/2016 Investment House Daily
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Targets hit: None issued
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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
- Friday issues: market sells harder on a Friday but in this rally have
often recovered the following week.
- DJ30, RUTX start cracking the 50 day EMA while NASDAQ/SOX show relative
strength. NYSE indices starting to 'catch down' to NASDAQ, SOX?
- Retail sales encouraging . . . for AMZN.
- Overall market top remains in place as indices struggle to hold onto the
rally near term.
Tuesday was up, Wednesday down, Thursday a push. That set up Friday as the
rubber match. With Friday down, it would appear the upside lost. The stock
market struggled Friday with even the NYSE indices threatening to break
lower with DJ30 and RUTX closing below the 50 day MA's. We called it the
Friday dilemma, Friday the 13th or not. Fridays are always one we would
prefer to take profits on than initiate new buys. Moreover, this market has
often shown a weak Friday followed by a recovery the following week. That
can suck you into downside positions that then come back at you as the
market comes back from some end of the week exaggerated moves made to square
up ahead of the weekend.
SP500 -17.50, -0.85%
NASDAQ -19.65, -0.41%
DJ30 -185.18, -1.05%
SP400 -0.91%
RUTX -0.56%
SOX +0.39%
VOLUME: NYSE -5%, NASDAQ -12%. No dumping Friday, suggesting it was one of
those Friday slumps where the market is nervous, sells ahead of the weekend,
then recovers the next week. Seen that several times in this more recent
market action. There WAS distribution Wednesday and Thursday on NASDAQ and
to a lesser extent on the NYSE indices.
A/D: NYSE -2:1, NASDAQ -1.4:1. Hardly overpowering to the downside, but of
course, it was not an overpowering downside session A weak session with
some weakening index patterns.
Of course, with the current market in the upper reaches of a large 1.5 year
rounded top, an overall weakening economy (though retail sales improved as
seen Friday), and Fed governors talking smack about the possibility of rate
hikes, each pullback that shows some more indices struggling raises the
question 'is this the one?' that results in an overall market rollover. SOX
and NASDAQ broke lower below the 200 day SMA MA, and SOX is in a quite
bearish pattern. Both, however, are still hanging on though they are
certainly not helping in a recovery.
In the big picture, Friday makes us more cautious about the market's
prospects to avoid a bigger selloff. The setup is in progress; it just
takes a long time to put in a top on a 7 year, monetary policy induced
advance. People have to finally realize the Fed is not going to be there
anymore to inflate asset prices. Indeed, that is the market's dilemma we
have written about and discussed for weeks now.
So where do the Fed and other central banks stand?
This past week more Federal Reserve governors were in public, providing
hawkish-leaning commentary about rate hikes being more imminent than the
market thought, how it was time to stiffen policy, etc. Unfortunately, as
noted at the time, these governors are WAY too late to the table. The Fed
missed its opportunity to hike two, three, or more years ago. Now that the
its money inflating has run its course and the markets and economy need more
to avoid a rollover and recession respectively, the Fed is talking about
'weaning' markets and the economy off stimulus. Ah yes, once again the Fed
is late to the game and will take the wrong actions at the wrong time and
force even more economic issues. IF, that is, these Fed governors represent
the Fed's real thoughts. Whether she believes these or not, however, Yellen
is the one policy maker, Yellen is a dove, and she is loathe to be the
chairman that reveals the Fed's 7 year gambit is nothing more than asset
inflation.
So, still the market dilemma as to where the Fed and central banks stand,
but regardless, money is moving. Money, as we also noted constantly over
the past few weeks, is the physical manifestation of the markets' beliefs as
to what central banks will do.
Money still moving around in the market, but also leaving the market.
One positive market characteristic is rotation. Money leaves one area, goes
to others. Some sectors fade, others rise. Many sectors in long bear
markets received money, built accumulation/bottoming patterns, then broke
higher. Money moved, but money stayed in the market.
That was apparent again Friday even in the overall market weakness. Oil
still received money. Some healthcare areas received new money, e.g.
medical appliances/devices, health services, and yes, even biotech and
drugs.
What appears to be the new wrinkle, however, is the money moving out of
sectors is not showing up dollar for dollar in other sectors. Money is
going idle in a waiting game or it is leaving the market. The latest
reports on Friday showed the fastest outflows from mutual funds since August
2011 when the US economy received the infamous (and for S&P almost
disastrous) downgrade from S&P. It would appear that investors, big or
small, are not as certain the Fed and central banks are ready to fully stand
behind the market gains they have wrought with their efforts to inflate
financial assets. Based on comments from some players in the Fed and other
central banks, you know that they know the asset inflation has not brought
about economic improvement, and they feel they have to do something
different. The problem is, they don't know any new tricks. That is what
has the markets worried and thus money is moving out.
If the markets lose confidence in the central banks to prop them up, they
get out. Thus Carl Icahn and other big names are short. Big banks from DB,
C, JPM are all negative as to the financial markets' prospects. This
weekend GS turned negative with the other banks.
The world economies are in turmoil, but the news says all is fine.
This even as Hong Kong's GDP plunged to -0.4% month over month (from +0.2%)
and was halved year/year expectations (0.8% versus 1.9%). There is of
course a lot of trouble still in world economies. Things are NOT better as
central banks try to cheerlead. The EU is up, it is down, but who doesn't
think that absorbing millions and millions of immigrants is going to be an
economic drag? Venezuela is the most recent textbook case of how socialism
does not work, yet Bernie Sanders' followers and the media ignore its
bloody, frightening, and very sad collapse. Brazil? Are you kidding? It
is next.
Thus, there should be even more comfort that the central banks will not get
tough, but the central banks can be very good at convincing themselves of a
certain policy and then convince people eager to believe things will get
better. That is when, and it always happens this way, that the 'unforeseen'
crises arise, the ones no one saw but everyone knew were there, the ones
used to try out some new Keynesian money spending plan that s used to take
away more citizen freedom. Been there. Done that. From one crises never
cured that crops up as a supposedly new one but is just a manifestation of
the prior one. Kind of like WWII was really a continuation of WWI.
The US data was a bit more heartening on Friday though overall it is still
poor with weak manufacturing, weak jobs, falling corporate profits.
Retail sales April: 1.3% versus 0.8% expected versus -0.3% March
Ex-Autos: 0.8% versus 0.5% expected, versus 0.4% prior (from 0.2%). Thanks
to a 3.2% spike in motor vehicle sales the overall number was up.
Ex-Autos and gas: 0.6%. A 2.2% gain in gasoline station sales (higher
prices are hitting again) also boosted the overall number. Burning gasoline
in your tank is NOT a good way to increase sales numbers. You have to burn
the gas regardless. It produces nothing. It is just a method of getting to
work or where you need to go.
The breakdown of where sales occurred shows the changing landscape of US
retailing.
General Merchandise: 0.0%
Department stores: 0.3%
Non-Store Retail (internet): 2.1%
PPI: 0.2%
Core: 0.1%
Overall was 0.1% light, core was in line. The BIG story: wholesale drugs
+9.6%, the biggest increase since 1982. Yes, Obamacare is working well . .
. in terms of driving us to a single payer, i.e. the government. Do you
want this government (or any for that matter) making your healthcare
decisions? With all it has loused up and with all of the nonsense that is
transpiring right now?
The Current Situation
The stock indices are still in a 1.5 year topping pattern. They have
rallied back from the February selling thanks to central bank intervention.
DJ30 put in a higher recovery high, but the other indices failed to do so.
NASDAQ and SOX have rolled lower in near term bearish patterns inside the
larger topping pattern. Thus, the overall picture is still one of a market
top.
Nearer term, DJ30 and RUTX started to crack their 50 day MA's just as SOX
and NASDAQ before them. While near term patterns on SP500, DJ30, RUTX, and
SP400 are weaker, they have not broken their trends. Sectors are still
receiving money taken from other areas, but more money is going idle or
leaving.
The biggest question in our view is when does the current upside attempt run
out of gas. Friday may have signaled this, but breadth and volume were low
and this is something seen in this market of late, i.e. Friday weakness then
a recovery. We are playing upside the areas getting the money (e.g. oil,
materials, builders, and we will see if financials remain), opening more
downside as those continue developing, but anticipate shifting to even more
downside as this upside move runs its course.
THE MARKET
CHARTS
Of golden crosses: Recall how four weeks back DJ30 showed a 'golden cross,'
i.e. the 50 day SMA rising up through the 200 day SMA? SP400 showed it
three weeks ago along with SP500. As I noted at the time, often when such a
cross happens, the index doing so has run well and is in need of a breather.
That appears to be the case as the past two weeks have demonstrated. After
Friday, that has set up an interesting test that is now at hand. Note how
NASDAQ was a relative strength leader Friday. NASDAQ sold ahead of the NYSE
indices. That in itself is instructive: does this mean the other indices
are 'catching down' to NASDAQ and SOX?
DJ30: After a sharp Tuesday break higher off the 50 day MA test, DJ30
reversed Wednesday. Friday it gave up the 50 day MA's it just held, a
pretty bearish indication. At least volume remains overall below average.
Nonetheless, the pattern is transforming into near term toppish, in line
with its longer term toppy pattern. Early this week we will see if this was
another Friday swoon that turns into something of an upside boon, i.e. a
resumption of the uptrend.
RUTX: The small caps also broke the 50 day MA's after holding them early
May. Normal test up until Wednesday as RUTX reversed the three day bounce
off support with a three day loss to a lower closing low on this recent
3-week test. Getting near term toppy and if it is going to hold up and
continue the upside, now is the time to act.
SP500: A 3-day bounce off the 50 day EMA followed by a 3-day fade back to
that level. Held the line, lower volume, still in position to continue, but
also the same near term toppy pattern setting in as on DJ30, RUTX.
SP400: sold to close at the 50 day SMA, matching the low from the prior
Friday. Holding nicely, one of the more solid indices, but it too has a bit
of a toppy pattern, and if the other NYSE's break lower, that puts SP400 at
risk as well.
NASDAQ: Rallied to the 50 day MA as of Tuesday, then as of Friday was three
sessions downside and at the prior Thursday closing low. NASDAQ tried to
put a move on resistance, failed. It was a relative strength leader Friday,
however, having sold ahead of the other indices. As queried above, does
this mean the other indices are 'catching down' to NASDAQ and SOX?
SOX: Recovered through the 200 day SMA into Wednesday, but threw a
tombstone doji at the 10 day EMA. Thursday SOX showed a whiplash downside
reversal back through the 200 day SMA and to a lower closing low on this
fade. Friday it was the lone upside index, but gapped to a doji that failed
at the 200 day. Overall it put in a 6 week rounded top, broke lower, and
looks to be failing a test of that break lower.
LEADERSHIP/KEY SECTORS
Retail: Still getting pounded lower, e.g. KORS, COH, JWN, COST, TGT.
Earnings really ripped the group. Some are attempting to bounce, e.g. M,
DDS, but thus far bounce attempts were gutted (classic example: WMT).
Healthcare: Some drugs/biotechs (AGIO, SUPN), medical appliances (FONR),
health services (HLS) are showing money moving their way with big upside
volume spikes.
Energy: Still good movers though it is a big group and some are up, some
are testing. CWEI up sharply. WMB, AXAS, NGL, XEC holding up just fine.
SWN, NBL are examples of some struggling to hold the trend.
Materials/Construction: Still holding up for the most part, e.g. GRAM, EXP.
Some are down some but holding the line, e.g. MDR MAS.
Financial: Once again some good setups are met with adversity as some
strong bond auctions appeared to question the Fed's resolve or ability to
raise rates. As such, financials struggled late week, e.g. JPM, BAC, GS.
Big Names: AMZN, FB still holding moves higher. GOOG posted a 3-day fade
after hitting the 50 day EMA Tuesday. AAPL stinks, SBUX broke lower and is
trying to hold the May lows. NFLX broke to a lower selloff low Thursday.
Industrials: Similar to the indices: trying to hold on but struggling some.
UTX, CAT. HON remains solid enough.
MARKET STATISTICS
NASDAQ
Stats: -19.66 points (-0.41%) to close at 4717.68
Volume: 1.728B (-11.41%)
Up Volume: 763.55M (+291.65M)
Down Volume: 908.57M (-531.43M)
A/D and Hi/Lo: Decliners led 1.42 to 1
Previous Session: Decliners led 2.09 to 1
New Highs: 33 (-5)
New Lows: 81 (-31)
S&P
Stats: -17.5 points (-0.85%) to close at 2046.61
NYSE Volume: 879.3M (-4.73%)
A/D and Hi/Lo: Decliners led 2.01 to 1
Previous Session: Decliners led 1.09 to 1
New Highs: 82 (-23)
New Lows: 41 (0)
DJ30
Stats: -185.18 points (-1.05%) to close at 17535.32
SENTIMENT INDICATORS
VIX: 15.04; +0.63
VXN: 17.1; -0.16
VXO: 15.82; +0.86
Put/Call Ratio (CBOE): 1.15; -0.13
One session below 1.0 last week. 12 of 13 over 1.0, 22 of the last 37 above
1.0. More than enough 1.0+ readings to support a move back upside.
Bulls and Bears: Bulls faded again after what was an impressive string of
upside moves. Near really got that high to suggest overbought.
Bulls: 39.2 versus 40.2
Bears: 21.6 versus 21.7
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: 39.2
40.2% versus 44.3% versus 47.4% versus 41.2% versus 45.4% versus 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%
Bears: 21.6%
21.7 versus 20.6% versus 21.7% versus 27.8% versus 27.8% versus 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%
OTHER MARKETS
Bonds (10 year): 1.70% versus 1.75%. Bonds gapping higher and rallying to
a May peak. Just below the early April peak now. A series of strong
Treasury auctions pushed yields lower.
Historical: 1.75% versus 1.735% versus 1.75% versus 1.75% versus 1.78%
versus 1.74% versus 1.77% versus 1.80% versus 1.87% versus 1.83% versus
1.83% versus 1.86% versus 1.94% versus 1.90% versus 1.88% versus 1.86%
versus 1.95% versus 1.79% versus 1.77% versus 1.75% versus 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%
EUR/USD: 1.1307 versus 1.13791. Dollar showing some strength in May as the
euro tested to near support, then broke to the 50 day MA Friday. Important
test for the euro and dollar. Personally, I want to see a stronger dollar as
it is better for the country overall an not just the Washington DC money
printers and the multinational corporations. Remember, a government wants
to pay back debts with a weaker currency, and we are a HUGELY debtor nation.
Historical: 1.13791 versus 1.4252 versus 1.13707 versus 1.13869 versus
1.1405 versus 1.1399 versus 1.14864 versus 1.14864 versus 1.1478 versus
1.15306 versus 1.1450 versus 1.1382 versus 1.1329 versus 1.1293 versus
1.1261 versus 1.2249 versus 1.1289 versus 1.1295 versus 1.1360 versus 1.1317
versus 1.1285 versus 1.1264 versus 1.1278 versus 1.1389 versus 1.1410 versus
1.1397 versus 1.1370 versus 1.1396 versus 1.13792 versus 1.l1392 versus
USD/JPY: 108.65 versus 108.95. Rallied into Monday, then spent all week
working laterally with reaches up to the 50 day MA intraday. The 50 day is
a key test as that has acted as resistance on the dollar.
Historical: 108.95 versus 108.47 versus 109.28 versus 108.343 versus 107.10
versus 107.41 versus 107.126 versus 107.312 versus 106.16 versus 106.33
versus 107.36 versus 109.35 versus 111.36 versus 111.79 versus 109.46 versus
109.135 versus 109.06 versus 108.762 versus 109.65 versus 109.29 versus
108.505 versus 107.95 versus 108.175 versus 108.425 versus 109.84 versus
110.45
Oil: 47.03, -0.16. Big week, moving to a higher recovery high.
Gold: 1272.70, +1.50. In a two week test of the late April break to a
higher high. Holding at the 20 day EMA and still looking quite solid.
MONDAY
As noted earlier, the near term picture is more indices starting to show
wear and tear and threatening a break lower similar to NASDAQ and SOX. DJ30
and RUTX started to crack their 50 day MA's just as SOX and NASDAQ before
them.
That said, while the near term patterns on SP500, DJ30, RUTX, and SP400 are
weaker, they have not broken their trends. Sectors are still receiving
money taken from other areas, but more money is going idle or leaving.
The biggest question in our view is when does the current upside attempt run
out of gas. Friday may have signaled this, but breadth and volume were low
and this is something seen in this market of late, i.e. Friday weakness then
a recovery. We are playing upside the areas getting the money (e.g. oil,
materials, builders, and we will see if financials remain), opening more
downside as those continue developing, but anticipate shifting to even more
downside as this upside move runs its course.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4717.68
Resistance:
4751 is the January 2015 lower high
4774 is the January 2-15 high
The 50 day SMA at 4815
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 4826
4836 is the March 2016 peak
4894 is the September 2015 closing high
4899 - 4902 from the September 2015 peak, July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
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
Support:
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
S&P 500: Closed at 2046.61
Resistance:
The 50 day EMA at 2048
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:
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 200 day SMA at 2012
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 17,535.32
Resistance:
The 50 day EMA at 17,580
17,748 is the mid-April China margin selloff and the bottom of the 5 month
trading range
June 2015 low at 17,715
The March low at 17,786
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
Support:
17,351 is the September 2014 all-time high.
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 17,119
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
ECONOMIC CALENDAR
May 13 - Friday
PPI, April (8:30): 0.2% actual versus 0.3% expected, -0.1% prior (no
revisions)
Core PPI, April (8:30): 0.1% actual versus 0.1% expected, -0.1% prior (no
revisions)
Retail Sales, April (8:30): 1.3% actual versus 0.8% expected, -0.3% prior
(no revisions)
Retail Sales ex-auto, April (8:30): 0.8% actual versus 0.5% expected, 0.4%
prior (revised from 0.2%)
Business Inventories, March (10:00): 0.4% actual versus 0.2% expected, -0.1%
prior
Mich Sentiment, May (10:00): 95.8 actual versus 90.0 expected, 89.0 prior
May 16 - Monday
Empire Manufacturing, May (8:30): 6.2 expected, 9.6 prior
NAHB Housing Market , May (10:00): 59 expected, 58 prior
Net Long-Term TIC Fl, March (16:00): $72.0B prior
May 17 - Tuesday
CPI, April (8:30): 0.3% expected, 0.1% prior
Core CPI, April (8:30): 0.2% expected, 0.1% prior
Housing Starts, April (8:30): 1135K expected, 1089K prior
Building Permits, April (8:30): 1130K expected, 1086K prior
Industrial Production, April (9:15): 0.2% expected, -0.6% prior
Capacity Utilization, April (9:15): 75.0% expected, 74.8% prior
May 18 - Wednesday
MBA Mortgage Index, 05/14 (7:00): 0.4% prior
Crude Inventories, 05/14 (10:30): -3.410M prior
FOMC Minutes, April 27 (14:00)
May 19 - Thursday
Initial Claims, 05/14 (8:30): 278K expected, 294K prior
Continuing Claims, 05/07 (8:30): 2161K prior
Philadelphia Fed, May (8:30): 2.7 expected, -1.6 prior
Leading Indicators, April (10:00): 0.3% expected, 0.2% prior
Natural Gas Inventor, 05/14 (10:30): 56 bcf prior
May 20 - Friday
Existing Home Sales, April (10:00): 5.40M expected, 5.33M 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
- Friday issues: market sells harder on a Friday but in this rally have
often recovered the following week.
- DJ30, RUTX start cracking the 50 day EMA while NASDAQ/SOX show relative
strength. NYSE indices starting to 'catch down' to NASDAQ, SOX?
- Retail sales encouraging . . . for AMZN.
- Overall market top remains in place as indices struggle to hold onto the
rally near term.
Tuesday was up, Wednesday down, Thursday a push. That set up Friday as the
rubber match. With Friday down, it would appear the upside lost. The stock
market struggled Friday with even the NYSE indices threatening to break
lower with DJ30 and RUTX closing below the 50 day MA's. We called it the
Friday dilemma, Friday the 13th or not. Fridays are always one we would
prefer to take profits on than initiate new buys. Moreover, this market has
often shown a weak Friday followed by a recovery the following week. That
can suck you into downside positions that then come back at you as the
market comes back from some end of the week exaggerated moves made to square
up ahead of the weekend.
SP500 -17.50, -0.85%
NASDAQ -19.65, -0.41%
DJ30 -185.18, -1.05%
SP400 -0.91%
RUTX -0.56%
SOX +0.39%
VOLUME: NYSE -5%, NASDAQ -12%. No dumping Friday, suggesting it was one of
those Friday slumps where the market is nervous, sells ahead of the weekend,
then recovers the next week. Seen that several times in this more recent
market action. There WAS distribution Wednesday and Thursday on NASDAQ and
to a lesser extent on the NYSE indices.
A/D: NYSE -2:1, NASDAQ -1.4:1. Hardly overpowering to the downside, but of
course, it was not an overpowering downside session A weak session with
some weakening index patterns.
Of course, with the current market in the upper reaches of a large 1.5 year
rounded top, an overall weakening economy (though retail sales improved as
seen Friday), and Fed governors talking smack about the possibility of rate
hikes, each pullback that shows some more indices struggling raises the
question 'is this the one?' that results in an overall market rollover. SOX
and NASDAQ broke lower below the 200 day SMA MA, and SOX is in a quite
bearish pattern. Both, however, are still hanging on though they are
certainly not helping in a recovery.
In the big picture, Friday makes us more cautious about the market's
prospects to avoid a bigger selloff. The setup is in progress; it just
takes a long time to put in a top on a 7 year, monetary policy induced
advance. People have to finally realize the Fed is not going to be there
anymore to inflate asset prices. Indeed, that is the market's dilemma we
have written about and discussed for weeks now.
So where do the Fed and other central banks stand?
This past week more Federal Reserve governors were in public, providing
hawkish-leaning commentary about rate hikes being more imminent than the
market thought, how it was time to stiffen policy, etc. Unfortunately, as
noted at the time, these governors are WAY too late to the table. The Fed
missed its opportunity to hike two, three, or more years ago. Now that the
its money inflating has run its course and the markets and economy need more
to avoid a rollover and recession respectively, the Fed is talking about
'weaning' markets and the economy off stimulus. Ah yes, once again the Fed
is late to the game and will take the wrong actions at the wrong time and
force even more economic issues. IF, that is, these Fed governors represent
the Fed's real thoughts. Whether she believes these or not, however, Yellen
is the one policy maker, Yellen is a dove, and she is loathe to be the
chairman that reveals the Fed's 7 year gambit is nothing more than asset
inflation.
So, still the market dilemma as to where the Fed and central banks stand,
but regardless, money is moving. Money, as we also noted constantly over
the past few weeks, is the physical manifestation of the markets' beliefs as
to what central banks will do.
Money still moving around in the market, but also leaving the market.
One positive market characteristic is rotation. Money leaves one area, goes
to others. Some sectors fade, others rise. Many sectors in long bear
markets received money, built accumulation/bottoming patterns, then broke
higher. Money moved, but money stayed in the market.
That was apparent again Friday even in the overall market weakness. Oil
still received money. Some healthcare areas received new money, e.g.
medical appliances/devices, health services, and yes, even biotech and
drugs.
What appears to be the new wrinkle, however, is the money moving out of
sectors is not showing up dollar for dollar in other sectors. Money is
going idle in a waiting game or it is leaving the market. The latest
reports on Friday showed the fastest outflows from mutual funds since August
2011 when the US economy received the infamous (and for S&P almost
disastrous) downgrade from S&P. It would appear that investors, big or
small, are not as certain the Fed and central banks are ready to fully stand
behind the market gains they have wrought with their efforts to inflate
financial assets. Based on comments from some players in the Fed and other
central banks, you know that they know the asset inflation has not brought
about economic improvement, and they feel they have to do something
different. The problem is, they don't know any new tricks. That is what
has the markets worried and thus money is moving out.
If the markets lose confidence in the central banks to prop them up, they
get out. Thus Carl Icahn and other big names are short. Big banks from DB,
C, JPM are all negative as to the financial markets' prospects. This
weekend GS turned negative with the other banks.
The world economies are in turmoil, but the news says all is fine.
This even as Hong Kong's GDP plunged to -0.4% month over month (from +0.2%)
and was halved year/year expectations (0.8% versus 1.9%). There is of
course a lot of trouble still in world economies. Things are NOT better as
central banks try to cheerlead. The EU is up, it is down, but who doesn't
think that absorbing millions and millions of immigrants is going to be an
economic drag? Venezuela is the most recent textbook case of how socialism
does not work, yet Bernie Sanders' followers and the media ignore its
bloody, frightening, and very sad collapse. Brazil? Are you kidding? It
is next.
Thus, there should be even more comfort that the central banks will not get
tough, but the central banks can be very good at convincing themselves of a
certain policy and then convince people eager to believe things will get
better. That is when, and it always happens this way, that the 'unforeseen'
crises arise, the ones no one saw but everyone knew were there, the ones
used to try out some new Keynesian money spending plan that s used to take
away more citizen freedom. Been there. Done that. From one crises never
cured that crops up as a supposedly new one but is just a manifestation of
the prior one. Kind of like WWII was really a continuation of WWI.
The US data was a bit more heartening on Friday though overall it is still
poor with weak manufacturing, weak jobs, falling corporate profits.
Retail sales April: 1.3% versus 0.8% expected versus -0.3% March
Ex-Autos: 0.8% versus 0.5% expected, versus 0.4% prior (from 0.2%). Thanks
to a 3.2% spike in motor vehicle sales the overall number was up.
Ex-Autos and gas: 0.6%. A 2.2% gain in gasoline station sales (higher
prices are hitting again) also boosted the overall number. Burning gasoline
in your tank is NOT a good way to increase sales numbers. You have to burn
the gas regardless. It produces nothing. It is just a method of getting to
work or where you need to go.
The breakdown of where sales occurred shows the changing landscape of US
retailing.
General Merchandise: 0.0%
Department stores: 0.3%
Non-Store Retail (internet): 2.1%
PPI: 0.2%
Core: 0.1%
Overall was 0.1% light, core was in line. The BIG story: wholesale drugs
+9.6%, the biggest increase since 1982. Yes, Obamacare is working well . .
. in terms of driving us to a single payer, i.e. the government. Do you
want this government (or any for that matter) making your healthcare
decisions? With all it has loused up and with all of the nonsense that is
transpiring right now?
The Current Situation
The stock indices are still in a 1.5 year topping pattern. They have
rallied back from the February selling thanks to central bank intervention.
DJ30 put in a higher recovery high, but the other indices failed to do so.
NASDAQ and SOX have rolled lower in near term bearish patterns inside the
larger topping pattern. Thus, the overall picture is still one of a market
top.
Nearer term, DJ30 and RUTX started to crack their 50 day MA's just as SOX
and NASDAQ before them. While near term patterns on SP500, DJ30, RUTX, and
SP400 are weaker, they have not broken their trends. Sectors are still
receiving money taken from other areas, but more money is going idle or
leaving.
The biggest question in our view is when does the current upside attempt run
out of gas. Friday may have signaled this, but breadth and volume were low
and this is something seen in this market of late, i.e. Friday weakness then
a recovery. We are playing upside the areas getting the money (e.g. oil,
materials, builders, and we will see if financials remain), opening more
downside as those continue developing, but anticipate shifting to even more
downside as this upside move runs its course.
THE MARKET
CHARTS
Of golden crosses: Recall how four weeks back DJ30 showed a 'golden cross,'
i.e. the 50 day SMA rising up through the 200 day SMA? SP400 showed it
three weeks ago along with SP500. As I noted at the time, often when such a
cross happens, the index doing so has run well and is in need of a breather.
That appears to be the case as the past two weeks have demonstrated. After
Friday, that has set up an interesting test that is now at hand. Note how
NASDAQ was a relative strength leader Friday. NASDAQ sold ahead of the NYSE
indices. That in itself is instructive: does this mean the other indices
are 'catching down' to NASDAQ and SOX?
DJ30: After a sharp Tuesday break higher off the 50 day MA test, DJ30
reversed Wednesday. Friday it gave up the 50 day MA's it just held, a
pretty bearish indication. At least volume remains overall below average.
Nonetheless, the pattern is transforming into near term toppish, in line
with its longer term toppy pattern. Early this week we will see if this was
another Friday swoon that turns into something of an upside boon, i.e. a
resumption of the uptrend.
RUTX: The small caps also broke the 50 day MA's after holding them early
May. Normal test up until Wednesday as RUTX reversed the three day bounce
off support with a three day loss to a lower closing low on this recent
3-week test. Getting near term toppy and if it is going to hold up and
continue the upside, now is the time to act.
SP500: A 3-day bounce off the 50 day EMA followed by a 3-day fade back to
that level. Held the line, lower volume, still in position to continue, but
also the same near term toppy pattern setting in as on DJ30, RUTX.
SP400: sold to close at the 50 day SMA, matching the low from the prior
Friday. Holding nicely, one of the more solid indices, but it too has a bit
of a toppy pattern, and if the other NYSE's break lower, that puts SP400 at
risk as well.
NASDAQ: Rallied to the 50 day MA as of Tuesday, then as of Friday was three
sessions downside and at the prior Thursday closing low. NASDAQ tried to
put a move on resistance, failed. It was a relative strength leader Friday,
however, having sold ahead of the other indices. As queried above, does
this mean the other indices are 'catching down' to NASDAQ and SOX?
SOX: Recovered through the 200 day SMA into Wednesday, but threw a
tombstone doji at the 10 day EMA. Thursday SOX showed a whiplash downside
reversal back through the 200 day SMA and to a lower closing low on this
fade. Friday it was the lone upside index, but gapped to a doji that failed
at the 200 day. Overall it put in a 6 week rounded top, broke lower, and
looks to be failing a test of that break lower.
LEADERSHIP/KEY SECTORS
Retail: Still getting pounded lower, e.g. KORS, COH, JWN, COST, TGT.
Earnings really ripped the group. Some are attempting to bounce, e.g. M,
DDS, but thus far bounce attempts were gutted (classic example: WMT).
Healthcare: Some drugs/biotechs (AGIO, SUPN), medical appliances (FONR),
health services (HLS) are showing money moving their way with big upside
volume spikes.
Energy: Still good movers though it is a big group and some are up, some
are testing. CWEI up sharply. WMB, AXAS, NGL, XEC holding up just fine.
SWN, NBL are examples of some struggling to hold the trend.
Materials/Construction: Still holding up for the most part, e.g. GRAM, EXP.
Some are down some but holding the line, e.g. MDR MAS.
Financial: Once again some good setups are met with adversity as some
strong bond auctions appeared to question the Fed's resolve or ability to
raise rates. As such, financials struggled late week, e.g. JPM, BAC, GS.
Big Names: AMZN, FB still holding moves higher. GOOG posted a 3-day fade
after hitting the 50 day EMA Tuesday. AAPL stinks, SBUX broke lower and is
trying to hold the May lows. NFLX broke to a lower selloff low Thursday.
Industrials: Similar to the indices: trying to hold on but struggling some.
UTX, CAT. HON remains solid enough.
MARKET STATISTICS
NASDAQ
Stats: -19.66 points (-0.41%) to close at 4717.68
Volume: 1.728B (-11.41%)
Up Volume: 763.55M (+291.65M)
Down Volume: 908.57M (-531.43M)
A/D and Hi/Lo: Decliners led 1.42 to 1
Previous Session: Decliners led 2.09 to 1
New Highs: 33 (-5)
New Lows: 81 (-31)
S&P
Stats: -17.5 points (-0.85%) to close at 2046.61
NYSE Volume: 879.3M (-4.73%)
A/D and Hi/Lo: Decliners led 2.01 to 1
Previous Session: Decliners led 1.09 to 1
New Highs: 82 (-23)
New Lows: 41 (0)
DJ30
Stats: -185.18 points (-1.05%) to close at 17535.32
SENTIMENT INDICATORS
VIX: 15.04; +0.63
VXN: 17.1; -0.16
VXO: 15.82; +0.86
Put/Call Ratio (CBOE): 1.15; -0.13
One session below 1.0 last week. 12 of 13 over 1.0, 22 of the last 37 above
1.0. More than enough 1.0+ readings to support a move back upside.
Bulls and Bears: Bulls faded again after what was an impressive string of
upside moves. Near really got that high to suggest overbought.
Bulls: 39.2 versus 40.2
Bears: 21.6 versus 21.7
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: 39.2
40.2% versus 44.3% versus 47.4% versus 41.2% versus 45.4% versus 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%
Bears: 21.6%
21.7 versus 20.6% versus 21.7% versus 27.8% versus 27.8% versus 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%
OTHER MARKETS
Bonds (10 year): 1.70% versus 1.75%. Bonds gapping higher and rallying to
a May peak. Just below the early April peak now. A series of strong
Treasury auctions pushed yields lower.
Historical: 1.75% versus 1.735% versus 1.75% versus 1.75% versus 1.78%
versus 1.74% versus 1.77% versus 1.80% versus 1.87% versus 1.83% versus
1.83% versus 1.86% versus 1.94% versus 1.90% versus 1.88% versus 1.86%
versus 1.95% versus 1.79% versus 1.77% versus 1.75% versus 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%
EUR/USD: 1.1307 versus 1.13791. Dollar showing some strength in May as the
euro tested to near support, then broke to the 50 day MA Friday. Important
test for the euro and dollar. Personally, I want to see a stronger dollar as
it is better for the country overall an not just the Washington DC money
printers and the multinational corporations. Remember, a government wants
to pay back debts with a weaker currency, and we are a HUGELY debtor nation.
Historical: 1.13791 versus 1.4252 versus 1.13707 versus 1.13869 versus
1.1405 versus 1.1399 versus 1.14864 versus 1.14864 versus 1.1478 versus
1.15306 versus 1.1450 versus 1.1382 versus 1.1329 versus 1.1293 versus
1.1261 versus 1.2249 versus 1.1289 versus 1.1295 versus 1.1360 versus 1.1317
versus 1.1285 versus 1.1264 versus 1.1278 versus 1.1389 versus 1.1410 versus
1.1397 versus 1.1370 versus 1.1396 versus 1.13792 versus 1.l1392 versus
USD/JPY: 108.65 versus 108.95. Rallied into Monday, then spent all week
working laterally with reaches up to the 50 day MA intraday. The 50 day is
a key test as that has acted as resistance on the dollar.
Historical: 108.95 versus 108.47 versus 109.28 versus 108.343 versus 107.10
versus 107.41 versus 107.126 versus 107.312 versus 106.16 versus 106.33
versus 107.36 versus 109.35 versus 111.36 versus 111.79 versus 109.46 versus
109.135 versus 109.06 versus 108.762 versus 109.65 versus 109.29 versus
108.505 versus 107.95 versus 108.175 versus 108.425 versus 109.84 versus
110.45
Oil: 47.03, -0.16. Big week, moving to a higher recovery high.
Gold: 1272.70, +1.50. In a two week test of the late April break to a
higher high. Holding at the 20 day EMA and still looking quite solid.
MONDAY
As noted earlier, the near term picture is more indices starting to show
wear and tear and threatening a break lower similar to NASDAQ and SOX. DJ30
and RUTX started to crack their 50 day MA's just as SOX and NASDAQ before
them.
That said, while the near term patterns on SP500, DJ30, RUTX, and SP400 are
weaker, they have not broken their trends. Sectors are still receiving
money taken from other areas, but more money is going idle or leaving.
The biggest question in our view is when does the current upside attempt run
out of gas. Friday may have signaled this, but breadth and volume were low
and this is something seen in this market of late, i.e. Friday weakness then
a recovery. We are playing upside the areas getting the money (e.g. oil,
materials, builders, and we will see if financials remain), opening more
downside as those continue developing, but anticipate shifting to even more
downside as this upside move runs its course.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4717.68
Resistance:
4751 is the January 2015 lower high
4774 is the January 2-15 high
The 50 day SMA at 4815
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 4826
4836 is the March 2016 peak
4894 is the September 2015 closing high
4899 - 4902 from the September 2015 peak, July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
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
Support:
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
S&P 500: Closed at 2046.61
Resistance:
The 50 day EMA at 2048
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:
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 200 day SMA at 2012
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 17,535.32
Resistance:
The 50 day EMA at 17,580
17,748 is the mid-April China margin selloff and the bottom of the 5 month
trading range
June 2015 low at 17,715
The March low at 17,786
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
Support:
17,351 is the September 2014 all-time high.
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 17,119
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
ECONOMIC CALENDAR
May 13 - Friday
PPI, April (8:30): 0.2% actual versus 0.3% expected, -0.1% prior (no
revisions)
Core PPI, April (8:30): 0.1% actual versus 0.1% expected, -0.1% prior (no
revisions)
Retail Sales, April (8:30): 1.3% actual versus 0.8% expected, -0.3% prior
(no revisions)
Retail Sales ex-auto, April (8:30): 0.8% actual versus 0.5% expected, 0.4%
prior (revised from 0.2%)
Business Inventories, March (10:00): 0.4% actual versus 0.2% expected, -0.1%
prior
Mich Sentiment, May (10:00): 95.8 actual versus 90.0 expected, 89.0 prior
May 16 - Monday
Empire Manufacturing, May (8:30): 6.2 expected, 9.6 prior
NAHB Housing Market , May (10:00): 59 expected, 58 prior
Net Long-Term TIC Fl, March (16:00): $72.0B prior
May 17 - Tuesday
CPI, April (8:30): 0.3% expected, 0.1% prior
Core CPI, April (8:30): 0.2% expected, 0.1% prior
Housing Starts, April (8:30): 1135K expected, 1089K prior
Building Permits, April (8:30): 1130K expected, 1086K prior
Industrial Production, April (9:15): 0.2% expected, -0.6% prior
Capacity Utilization, April (9:15): 75.0% expected, 74.8% prior
May 18 - Wednesday
MBA Mortgage Index, 05/14 (7:00): 0.4% prior
Crude Inventories, 05/14 (10:30): -3.410M prior
FOMC Minutes, April 27 (14:00)
May 19 - Thursday
Initial Claims, 05/14 (8:30): 278K expected, 294K prior
Continuing Claims, 05/07 (8:30): 2161K prior
Philadelphia Fed, May (8:30): 2.7 expected, -1.6 prior
Leading Indicators, April (10:00): 0.3% expected, 0.2% prior
Natural Gas Inventor, 05/14 (10:30): 56 bcf prior
May 20 - Friday
Existing Home Sales, April (10:00): 5.40M expected, 5.33M prior
End part 1 of 3
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Saturday, May 07, 2016
The Daily, Part 1 of 3, 5-7-16
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5/7/2016 Investment House Daily
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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
- After a week of pullback, stocks try to start a bounce.
- Jobs Report is talked up by those who believe in bad numbers while others
shake their head at the substantive change in the US jobs market.
- NASDAQ big names show some life though not great patterns. At the same
time the 'revenge of the nerd' stocks continues with the recent leaders.
- Looks as if the market will try some upside but still not that convinced
any move can overcome the market top.
An oversold yet noncommittal market traded modestly lower pre-market. The
Jobs Report, despite the spin meisters' attempts to paint a 'strong' jobs
market, rang hollow. Stocks initially sold on the 160K non-farm payrolls
and falling participation, but there was no sharp break lower. As the
market opened stocks staved off further weakness and put in a slow, steady
low to high move into the close. Indeed, in the last hour stocks
accelerated as it was clear the sellers were not interested.
A bit oversold and at the next support, the indices found enough lack of
selling to bounce off that support. Again, as the gains held, the advance
accelerated late session. Of course 0.3% to 0.5% gains are not exactly big
moves for this market.
SP500 6.51, 0.32%
NASDAQ 19.07, 0.40%
DJ30 79.92, 0.45%
SP400 0.43%
RUTX 0.61%
SOX 0.11%
VOLUME: NYSE +0.1%; NASDAQ -3%.
A/D: NYSE -1.1:1, NASDAQ 1.2:1. Clearly a large cap day, and when you look
at the NASDAQ big names you see the best moves in those stocks.
As the breadth shows, not a lot of stocks were surging. There were
recoveries but it was spotty, and some that were up earlier in energy,
commodities and the like were unable to hold their moves. Big names were
getting money, something of an anomaly in more recent times.
That in itself makes Friday appear more like an anomaly than a pattern that
is ready to continue. Maybe it will. Perhaps traders see the jobs data as
something that will prompt the Fed to stay easy and actively support stocks.
If that is the case, then those big names indeed become more alluring.
At the same time, bonds sold and yields rallied, suggesting that the data
was not really that weak, that the Fed would remain in a tightening mindset.
Perhaps; the Fed Funds Futures contract virtually priced out a June hike and
indeed, you have to go out to February 2017 to get a 50+% forecast of a rate
hike. That, however, is subject to wide variance; the farther out you go,
it becomes more and more arbitrary.
The stock indices, after 2+ weeks of downside in some cases, found next
support Wednesday, held Thursday, and posted modest Friday bounces. Logical
place to bounce as we pointed out Wednesday and Thursday.
That said, the Friday bounces were not in themselves proof of anything.
Rather modest gains, volume light, narrow breadth. We were not buying the
move. The big NASDAQ names still have rather ugly patterns though there are
some possible trades, e.g. AAPL, GOOG. Overall they are not really strong
enough to engender a lot of excitement unless they can show more.
So, we opted to wait through Friday and see the market's take on the FOMC,
the dollar, the economy, with a particular aim at watching to see if money
stays in the market. You know that by watching stocks that have built
decent patterns continuing to do so and actually making the moves higher.
Metals are kind of lonely right now, and you can say the same about many
energy stocks. Materials are getting some money pushed their way and rails
have some interesting patterns. Hate to say it, but even DIS has a good
setup; hey, may not like its policies, but I will make money off of it and
use it to NOT go to a DIS movie. Ha!
The indices are at some support, they can bounce, but overall their patterns
are, to understate it, worrisome. What you have to see is the money
rotating again, moving into areas with good patterns and breaking them
higher. That shows money is not leaving the market, and the only reason for
that is the market believes the Fed has its back. If it does that, we make
those plays upside where the money is going, downside where it is leaving.
If it leaves all the market, well, we go there. That is, however, for next
week to show as the market tries the move off of this test of support.
NEWS/ECONOMY
Jobs numbers weak again as even low wage jobs are now fewer.
The 'great jobs machine' is still labeled such by Mark Zandi of ADP.
Looking at the real numbers, I would say that Zandi is one engaged in the
'fiction peddling' the President scorns as he tries touting how great his
lousy economy is. Facts are not fiction that is peddled. Facts stand for
themselves unlike the self-aggrandizing view of the recovery this
administration attempts to sell a populace that knows all too well just how
bad this recovery has been and remains.
Non-Farm Payrolls: 160K versus 191K expected versus 208K prior (from 215K).
Unemployment rate: Steady at 5.0% as expected.
Hourly earnings: 0.3% versus 0.3% exp versus 0.2% prior (from 0.3%). 2.5%
year/year.
This appears nicer, but it also reflects a rising minimum wage that will
reduce the total number of jobs. Okay, we are going to pay people more for
working a no to low skill job, one that is supposed to be for students and
young people who are on the way to their permanent jobs. Instead, because
this economy cannot generate nearly enough full-time jobs, these jobs are
converted into careers. As no one can make a living at these wages, a
higher rate is mandated by government. So, you get more money for a job
that doesn't throw off enough income to justify it at a higher wage, so 1)
there are less of those jobs, 2) they still cannot provide a decent living,
and 3) they are on the way out as fast as possible as companies seek to
automate as many of these jobs as possible.
Participation: 62.8% versus 63.0% prior. After the heralded return of
higher participation rates, they flop right back down, pushing the 'out of
workforce' figure to over 94M again as 562,000 left the workforce.
Jobs lost: -316K overall with 253K of those jobs being full-time jobs.
The Report's theme: the same one, i.e. poor job quality yet again as this
economy cannot produce in number any quality, breadwinner jobs. There is no
investment other than stock buybacks. That is not going to create new
business requiring more employees. Indeed, as we have seen, many companies
continue cutting staff (is there anyone left to fire from full-time jobs?)
in order to improve the bottom line in an economy where sales beats are rare
and highly celebrated.
Jobs gains/losses by age group: More of the same story.
Age 20-24: -155K
Age 25-54: -284K
Age 55-69: +166K
WMT brought back the job of the greeter, but that was hardly necessary. The
55-69 work group has scored the most gains in the entire recovery.
So, through the entire recovery from 12/2007:
Combining ages 16 to 54: -3.5M jobs from 12/2007.
55-69: +8.1M jobs from 12/2007.
Total 55-69 workers: 34.4M (all-time high), a full 22.8% of the total 151M
workers counted by the establishment survey.
The best and the worst: No change at the top . . . or at the bottom.
Since 12/2014:
Segment with the highest number of net jobs created: Waiters and bartenders
at 450K.
Segment with the least number of net jobs created: Manufacturing at 0.0K
Since 12/2007:
Waiters and bartenders: +1.6M
Manufacturing: -1.5M
THE MARKET
The indices bounced off of support after 2.5 weeks of declines, holding
where they had to. It was not, however, an overly strong session. It is up
to this week to show if a real bounce can set in. The indices are near term
oversold and set to bounce, and indeed some good moves appeared from NASDAQ
big names, some energy, materials. If the money keeps coming their way, the
market can bounce again.
CHARTS
SP500/DJ30: Both held at the converging 50 day MA's starting Wednesday,
both put in decent bounces Friday. MACD rolled over on the last high,
putting in a lower peak as stocks put in a higher high. That indicates
momentum has slowed. The pattern could, particularly with this weaker
momentum, develop a head and shoulders top spanning the late March to
present prices. SP500/DJ30 are holding the neckline and attempting a
bounce. The key move on a bounce is at the late March/early April high. A
failure there is a move you want to play to the downside. Of course, the
head and shoulders is a pattern that often tries to set up but also often
does not get fulfilled. Watching for a bounce this coming week and we will
see how much strength it musters.
NASDAQ: Up Monday after selling back for a week, then spent the rest of the
week selling. Friday NASDAQ gapped lower then reversed to a gain. Volume
was lower but remained just above average. The big names helped NASDAQ post
the bounce, making the difference after being mostly absent for a couple of
weeks. Oversold, due for a bounce but 4800-4820 is resistance on a further
bounce (closed at 4735.
SOX: Sold to a lower low on this selloff, undercutting the early March low.
It reversed to positive, showing a good shakeout move. Still below the 200
day SMA but oversold. If it bounces it has resistance at 655.
RUTX: Sold to the 50 day MA's on the week, held the 50 day SMA on the
Friday low, reversed nicely for a gain. After a run higher up the 20 day
EMA from March, a bit deeper test was in order and this move to the 50 day
EMA keeps the upside trend intact. The question for RUTX, and for all of
the indices, is whether there is enough reason to rally again and take on
resistance and prior highs. Economics are weak, and that leave . . .
central banks and the trust that central banks are going to back the market.
SP400: Held over the 50 day MA's on its fade last week, bounced Friday with
the market. Closed at the late March high. Important level to take out,
but SP400 put in a nice pullback and a higher low.
LEADERSHIP/KEY SECTORS
Big Names: Putting in some upside. GOOG looks as if it can put in a
tradable bounce. AAPL ditto. SBUX showing the same action as AAPL, i.e.
attempting a double bottom off two intraday reaches lower. NFLX shows the
same action. Any of these could be ready to move higher this week.
Energy: Some good moves, others holding up well. They may get the money
right back. Drillers did well, e.g. RIG, ATW, UNT. Others are set up well:
SPN, NBL, NOV.
Materials: Some life. LPX (lumber). MAS bouncing up off the 50 day MA's
on volume.
Retail: Bouncing from some ugly selling. WMT defied the odds and surged
back through the 50 day MA. Others may be ready to try to bounce after
selloffs, e.g. JWN, KSS; not much more than bounces likely. COST sold hard.
Financial: Still in the nice pullbacks. JPM, GS, MS, BAC.
MARKET STATISTICS
NASDAQ
Stats: +19.06 points (+0.4%) to close at 4736.16
Volume: 1.8B (-2.7%)
Up Volume: 1.01B (+171.85M)
Down Volume: 822.38M (-177.62M)
A/D and Hi/Lo: Advancers led 1.22 to 1
Previous Session: Decliners led 1.75 to 1
New Highs: 35 (-5)
New Lows: 88 (+27)
S&P
Stats: +6.51 points (+0.32%) to close at 2057.14
NYSE Volume: 950M (+0.11%)
A/D and Hi/Lo: Advancers led 1.82 to 1
Previous Session: Decliners led 1.11 to 1
New Highs: 136 (+2)
New Lows: 36 (+8)
DJ30
Stats: +79.92 points (+0.45%) to close at 17740.63
SENTIMENT INDICATORS
VIX: 14.72; -1.19
VXN: 17.54; -1.6
VXO: 15.26; -1.32
Put/Call Ratio (CBOE): 1.19; -0.01
Eight straight at 1.0 or better as the indices hit a high and then started
to peel back. 18 of the last 32 above 1.0. More than enough 1.0+ readings
to support a move back upside.
Bulls and Bears: Another week of downside took some air out of the bulls,
pumped up bears just a bit. Still diverging after crossing back to head to
their respective corners.
Bulls: 40.2 versus 44.3
Bears: 21.7 versus 20.6
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: 40.2
44.3% versus 47.4% versus 41.2% versus 45.4% versus 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%
Bears: 21.7
20.6% versus 21.7% versus 27.8% versus 27.8% versus 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%
OTHER MARKETS
Bonds (10 year): 1.78% versus 1.74%. A more definitive move the past week
as TLT bounced off the double bottom at the 50% Fibonacci retracement of the
December to February rally.
Historical: 1.74% versus 1.77% versus 1.80% versus 1.87% versus 1.83% versus
1.83% versus 1.86% versus 1.94% versus 1.90% versus 1.88% versus 1.86%
versus 1.95% versus 1.79% versus 1.77% versus 1.75% versus 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%
EUR/USD: 1.1405 versus 1.1399. Euro posted a higher rally high on the week
and then faded to the 20 day EMA and the early April consolidation. Good
test, in position to continue the move.
Historical: 1.1399 versus 1.14864 versus 1.14864 versus 1.1478 versus
1.15306 versus 1.1450 versus 1.1382 versus 1.1329 versus 1.1293 versus
1.1261 versus 1.2249 versus 1.1289 versus 1.1295 versus 1.1360 versus 1.1317
versus 1.1285 versus 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
USD/JPY: 107.10 versus 107.41. Bounced off the lower low, but not a really
impressive move as USD holds in a downtrend, but oversold and in position ot
break higher with higher MACD.
Historical: 107.41 versus 107.126 versus 107.312 versus 106.16 versus
106.33 versus 107.36 versus 109.35 versus 111.36 versus 111.79 versus 109.46
versus 109.135 versus 109.06 versus 108.762 versus 109.65 versus 109.29
versus 108.505 versus 107.95 versus 108.175 versus 108.425 versus 109.84
versus 110.45
Oil: 44.56, +0.24. Faded on the week, but holding the 20 day EMA as oil
continues its trend higher.
Gold: 1289.70, +17.40. After breaking out of the 3 month range the prior
Friday, gold tested all week, moving back to the 10 day EMA then rebounding
Friday. Excellent upside action.
MONDAY
The bulk of earnings are over. The Jobs Report is out. The FOMC met a week
back. It is May. What could be out there to drive stocks higher? A belief
the Fed stands behind the market and will overcome weak economic data to
keep financial assets pumped up.
Kind of thin what with the indices just coming off a flirt with the prior
highs. Yet they are trying to set up another upside move. The NASDAQ big
names are showing a series of short double bottoms, indicating some money
moving their way. Perhaps it is just a short bottom attempt that runs out
of money, but the patterns are there. We will be looking at some of them a
trades.
Others show good patterns such as DIS, some materials, some energy. If
these areas continue setting up show upside breaks, we will look at playing
them as well.
Not looking for new highs; the index patterns are still in a huge topping
pattern, and they will have to prove if they can do more than bounce. Thus
we play a bounce if it presents again, and if the indices keep moving higher
and higher, well okay then.
Not pessimists, just pragmatists, looking to take what the market gives us.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4736.16
Resistance:
4751 is the January 2015 lower high
4774 is the January 2-15 high
The 50 day EMA at 4799
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 4835
4836 is the March 2016 peak
4894 is the September 2015 closing high
4899 - 4902 from the September 2015 peak, July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
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
Support:
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
S&P 500: Closed at 2057.14
Resistance:
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:
2046 is the July 2015 closing low
The 50 day EMA at 2044
2040 is the March 2015 closing low
2023 is the November 2015 low
2020 is the September 2015 intraday high
The 200 day SMA at 2013
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 17,740.63
Resistance:
17,748 is the mid-April China margin selloff and the bottom of the 5 month
trading range
June 2015 low at 17,715
The March low at 17,786
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
Support:
The 50 day EMA at 17,549
17,351 is the September 2014 all-time high.
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 17,116
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
ECONOMIC CALENDAR
May 6 - Friday
Nonfarm Payrolls, April (8:30): 160K actual versus 207K expected, 208K prior
(revised from 215K)
Nonfarm Private Payrolls, April (8:30): 171K actual versus 191K expected,
184K prior (revised from 195K)
Unemployment Rate, April (8:30): 5.0% actual versus 5.0% expected, 5.0%
prior
Hourly Earnings, April (8:30): 0.3% actual versus 0.3% expected, 0.2% prior
(revised from 0.3%)
Average Workweek, April (8:30): 34.5 actual versus 34.5 expected, 34.4 prior
Consumer Credit, March (15:00): $29.6B actual versus $18.0B expected, $14.2B
prior (revised from $17.3B)
May 10 - Tuesday
JOLTS - Job Openings, March (10:00): 5.445M prior
Wholesale Inventories, March (10:00): 0.2% expected, -0.5% prior
May 11 - Wednesday
MBA Mortgage Index, 05/07 (7:00): -3.4% prior
Crude Inventories, 05/07 (10:30): 2.784M prior
Treasury Budget, April (14:00): $156.7B prior
May 12 - Thursday
Initial Claims, 05/07 (8:30): 270K expected, 274K prior
Continuing Claims, 04/30 (8:30): 2121K prior
Import Prices ex-oil, April (8:30): -0.1% prior
Export Prices ex-ag., April (8:30): 0.3% prior
Natural Gas Inventor, 05/07 (10:30): 68 bcf prior
May 13 - Friday
PPI, April (8:30): 0.3% expected, -0.1% prior
Core PPI, April (8:30): 0.1% expected, -0.1% prior
Retail Sales, April (8:30): 0.8% expected, -0.3% prior
Retail Sales ex-auto, April (8:30): 0.5% expected, 0.2% prior
Business Inventories, March (10:00): 0.2% expected, -0.1% prior
Michigan Sentiment, Preliminary May (10:00): 90.0 expected, 89.7 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
- After a week of pullback, stocks try to start a bounce.
- Jobs Report is talked up by those who believe in bad numbers while others
shake their head at the substantive change in the US jobs market.
- NASDAQ big names show some life though not great patterns. At the same
time the 'revenge of the nerd' stocks continues with the recent leaders.
- Looks as if the market will try some upside but still not that convinced
any move can overcome the market top.
An oversold yet noncommittal market traded modestly lower pre-market. The
Jobs Report, despite the spin meisters' attempts to paint a 'strong' jobs
market, rang hollow. Stocks initially sold on the 160K non-farm payrolls
and falling participation, but there was no sharp break lower. As the
market opened stocks staved off further weakness and put in a slow, steady
low to high move into the close. Indeed, in the last hour stocks
accelerated as it was clear the sellers were not interested.
A bit oversold and at the next support, the indices found enough lack of
selling to bounce off that support. Again, as the gains held, the advance
accelerated late session. Of course 0.3% to 0.5% gains are not exactly big
moves for this market.
SP500 6.51, 0.32%
NASDAQ 19.07, 0.40%
DJ30 79.92, 0.45%
SP400 0.43%
RUTX 0.61%
SOX 0.11%
VOLUME: NYSE +0.1%; NASDAQ -3%.
A/D: NYSE -1.1:1, NASDAQ 1.2:1. Clearly a large cap day, and when you look
at the NASDAQ big names you see the best moves in those stocks.
As the breadth shows, not a lot of stocks were surging. There were
recoveries but it was spotty, and some that were up earlier in energy,
commodities and the like were unable to hold their moves. Big names were
getting money, something of an anomaly in more recent times.
That in itself makes Friday appear more like an anomaly than a pattern that
is ready to continue. Maybe it will. Perhaps traders see the jobs data as
something that will prompt the Fed to stay easy and actively support stocks.
If that is the case, then those big names indeed become more alluring.
At the same time, bonds sold and yields rallied, suggesting that the data
was not really that weak, that the Fed would remain in a tightening mindset.
Perhaps; the Fed Funds Futures contract virtually priced out a June hike and
indeed, you have to go out to February 2017 to get a 50+% forecast of a rate
hike. That, however, is subject to wide variance; the farther out you go,
it becomes more and more arbitrary.
The stock indices, after 2+ weeks of downside in some cases, found next
support Wednesday, held Thursday, and posted modest Friday bounces. Logical
place to bounce as we pointed out Wednesday and Thursday.
That said, the Friday bounces were not in themselves proof of anything.
Rather modest gains, volume light, narrow breadth. We were not buying the
move. The big NASDAQ names still have rather ugly patterns though there are
some possible trades, e.g. AAPL, GOOG. Overall they are not really strong
enough to engender a lot of excitement unless they can show more.
So, we opted to wait through Friday and see the market's take on the FOMC,
the dollar, the economy, with a particular aim at watching to see if money
stays in the market. You know that by watching stocks that have built
decent patterns continuing to do so and actually making the moves higher.
Metals are kind of lonely right now, and you can say the same about many
energy stocks. Materials are getting some money pushed their way and rails
have some interesting patterns. Hate to say it, but even DIS has a good
setup; hey, may not like its policies, but I will make money off of it and
use it to NOT go to a DIS movie. Ha!
The indices are at some support, they can bounce, but overall their patterns
are, to understate it, worrisome. What you have to see is the money
rotating again, moving into areas with good patterns and breaking them
higher. That shows money is not leaving the market, and the only reason for
that is the market believes the Fed has its back. If it does that, we make
those plays upside where the money is going, downside where it is leaving.
If it leaves all the market, well, we go there. That is, however, for next
week to show as the market tries the move off of this test of support.
NEWS/ECONOMY
Jobs numbers weak again as even low wage jobs are now fewer.
The 'great jobs machine' is still labeled such by Mark Zandi of ADP.
Looking at the real numbers, I would say that Zandi is one engaged in the
'fiction peddling' the President scorns as he tries touting how great his
lousy economy is. Facts are not fiction that is peddled. Facts stand for
themselves unlike the self-aggrandizing view of the recovery this
administration attempts to sell a populace that knows all too well just how
bad this recovery has been and remains.
Non-Farm Payrolls: 160K versus 191K expected versus 208K prior (from 215K).
Unemployment rate: Steady at 5.0% as expected.
Hourly earnings: 0.3% versus 0.3% exp versus 0.2% prior (from 0.3%). 2.5%
year/year.
This appears nicer, but it also reflects a rising minimum wage that will
reduce the total number of jobs. Okay, we are going to pay people more for
working a no to low skill job, one that is supposed to be for students and
young people who are on the way to their permanent jobs. Instead, because
this economy cannot generate nearly enough full-time jobs, these jobs are
converted into careers. As no one can make a living at these wages, a
higher rate is mandated by government. So, you get more money for a job
that doesn't throw off enough income to justify it at a higher wage, so 1)
there are less of those jobs, 2) they still cannot provide a decent living,
and 3) they are on the way out as fast as possible as companies seek to
automate as many of these jobs as possible.
Participation: 62.8% versus 63.0% prior. After the heralded return of
higher participation rates, they flop right back down, pushing the 'out of
workforce' figure to over 94M again as 562,000 left the workforce.
Jobs lost: -316K overall with 253K of those jobs being full-time jobs.
The Report's theme: the same one, i.e. poor job quality yet again as this
economy cannot produce in number any quality, breadwinner jobs. There is no
investment other than stock buybacks. That is not going to create new
business requiring more employees. Indeed, as we have seen, many companies
continue cutting staff (is there anyone left to fire from full-time jobs?)
in order to improve the bottom line in an economy where sales beats are rare
and highly celebrated.
Jobs gains/losses by age group: More of the same story.
Age 20-24: -155K
Age 25-54: -284K
Age 55-69: +166K
WMT brought back the job of the greeter, but that was hardly necessary. The
55-69 work group has scored the most gains in the entire recovery.
So, through the entire recovery from 12/2007:
Combining ages 16 to 54: -3.5M jobs from 12/2007.
55-69: +8.1M jobs from 12/2007.
Total 55-69 workers: 34.4M (all-time high), a full 22.8% of the total 151M
workers counted by the establishment survey.
The best and the worst: No change at the top . . . or at the bottom.
Since 12/2014:
Segment with the highest number of net jobs created: Waiters and bartenders
at 450K.
Segment with the least number of net jobs created: Manufacturing at 0.0K
Since 12/2007:
Waiters and bartenders: +1.6M
Manufacturing: -1.5M
THE MARKET
The indices bounced off of support after 2.5 weeks of declines, holding
where they had to. It was not, however, an overly strong session. It is up
to this week to show if a real bounce can set in. The indices are near term
oversold and set to bounce, and indeed some good moves appeared from NASDAQ
big names, some energy, materials. If the money keeps coming their way, the
market can bounce again.
CHARTS
SP500/DJ30: Both held at the converging 50 day MA's starting Wednesday,
both put in decent bounces Friday. MACD rolled over on the last high,
putting in a lower peak as stocks put in a higher high. That indicates
momentum has slowed. The pattern could, particularly with this weaker
momentum, develop a head and shoulders top spanning the late March to
present prices. SP500/DJ30 are holding the neckline and attempting a
bounce. The key move on a bounce is at the late March/early April high. A
failure there is a move you want to play to the downside. Of course, the
head and shoulders is a pattern that often tries to set up but also often
does not get fulfilled. Watching for a bounce this coming week and we will
see how much strength it musters.
NASDAQ: Up Monday after selling back for a week, then spent the rest of the
week selling. Friday NASDAQ gapped lower then reversed to a gain. Volume
was lower but remained just above average. The big names helped NASDAQ post
the bounce, making the difference after being mostly absent for a couple of
weeks. Oversold, due for a bounce but 4800-4820 is resistance on a further
bounce (closed at 4735.
SOX: Sold to a lower low on this selloff, undercutting the early March low.
It reversed to positive, showing a good shakeout move. Still below the 200
day SMA but oversold. If it bounces it has resistance at 655.
RUTX: Sold to the 50 day MA's on the week, held the 50 day SMA on the
Friday low, reversed nicely for a gain. After a run higher up the 20 day
EMA from March, a bit deeper test was in order and this move to the 50 day
EMA keeps the upside trend intact. The question for RUTX, and for all of
the indices, is whether there is enough reason to rally again and take on
resistance and prior highs. Economics are weak, and that leave . . .
central banks and the trust that central banks are going to back the market.
SP400: Held over the 50 day MA's on its fade last week, bounced Friday with
the market. Closed at the late March high. Important level to take out,
but SP400 put in a nice pullback and a higher low.
LEADERSHIP/KEY SECTORS
Big Names: Putting in some upside. GOOG looks as if it can put in a
tradable bounce. AAPL ditto. SBUX showing the same action as AAPL, i.e.
attempting a double bottom off two intraday reaches lower. NFLX shows the
same action. Any of these could be ready to move higher this week.
Energy: Some good moves, others holding up well. They may get the money
right back. Drillers did well, e.g. RIG, ATW, UNT. Others are set up well:
SPN, NBL, NOV.
Materials: Some life. LPX (lumber). MAS bouncing up off the 50 day MA's
on volume.
Retail: Bouncing from some ugly selling. WMT defied the odds and surged
back through the 50 day MA. Others may be ready to try to bounce after
selloffs, e.g. JWN, KSS; not much more than bounces likely. COST sold hard.
Financial: Still in the nice pullbacks. JPM, GS, MS, BAC.
MARKET STATISTICS
NASDAQ
Stats: +19.06 points (+0.4%) to close at 4736.16
Volume: 1.8B (-2.7%)
Up Volume: 1.01B (+171.85M)
Down Volume: 822.38M (-177.62M)
A/D and Hi/Lo: Advancers led 1.22 to 1
Previous Session: Decliners led 1.75 to 1
New Highs: 35 (-5)
New Lows: 88 (+27)
S&P
Stats: +6.51 points (+0.32%) to close at 2057.14
NYSE Volume: 950M (+0.11%)
A/D and Hi/Lo: Advancers led 1.82 to 1
Previous Session: Decliners led 1.11 to 1
New Highs: 136 (+2)
New Lows: 36 (+8)
DJ30
Stats: +79.92 points (+0.45%) to close at 17740.63
SENTIMENT INDICATORS
VIX: 14.72; -1.19
VXN: 17.54; -1.6
VXO: 15.26; -1.32
Put/Call Ratio (CBOE): 1.19; -0.01
Eight straight at 1.0 or better as the indices hit a high and then started
to peel back. 18 of the last 32 above 1.0. More than enough 1.0+ readings
to support a move back upside.
Bulls and Bears: Another week of downside took some air out of the bulls,
pumped up bears just a bit. Still diverging after crossing back to head to
their respective corners.
Bulls: 40.2 versus 44.3
Bears: 21.7 versus 20.6
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: 40.2
44.3% versus 47.4% versus 41.2% versus 45.4% versus 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%
Bears: 21.7
20.6% versus 21.7% versus 27.8% versus 27.8% versus 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%
OTHER MARKETS
Bonds (10 year): 1.78% versus 1.74%. A more definitive move the past week
as TLT bounced off the double bottom at the 50% Fibonacci retracement of the
December to February rally.
Historical: 1.74% versus 1.77% versus 1.80% versus 1.87% versus 1.83% versus
1.83% versus 1.86% versus 1.94% versus 1.90% versus 1.88% versus 1.86%
versus 1.95% versus 1.79% versus 1.77% versus 1.75% versus 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%
EUR/USD: 1.1405 versus 1.1399. Euro posted a higher rally high on the week
and then faded to the 20 day EMA and the early April consolidation. Good
test, in position to continue the move.
Historical: 1.1399 versus 1.14864 versus 1.14864 versus 1.1478 versus
1.15306 versus 1.1450 versus 1.1382 versus 1.1329 versus 1.1293 versus
1.1261 versus 1.2249 versus 1.1289 versus 1.1295 versus 1.1360 versus 1.1317
versus 1.1285 versus 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
USD/JPY: 107.10 versus 107.41. Bounced off the lower low, but not a really
impressive move as USD holds in a downtrend, but oversold and in position ot
break higher with higher MACD.
Historical: 107.41 versus 107.126 versus 107.312 versus 106.16 versus
106.33 versus 107.36 versus 109.35 versus 111.36 versus 111.79 versus 109.46
versus 109.135 versus 109.06 versus 108.762 versus 109.65 versus 109.29
versus 108.505 versus 107.95 versus 108.175 versus 108.425 versus 109.84
versus 110.45
Oil: 44.56, +0.24. Faded on the week, but holding the 20 day EMA as oil
continues its trend higher.
Gold: 1289.70, +17.40. After breaking out of the 3 month range the prior
Friday, gold tested all week, moving back to the 10 day EMA then rebounding
Friday. Excellent upside action.
MONDAY
The bulk of earnings are over. The Jobs Report is out. The FOMC met a week
back. It is May. What could be out there to drive stocks higher? A belief
the Fed stands behind the market and will overcome weak economic data to
keep financial assets pumped up.
Kind of thin what with the indices just coming off a flirt with the prior
highs. Yet they are trying to set up another upside move. The NASDAQ big
names are showing a series of short double bottoms, indicating some money
moving their way. Perhaps it is just a short bottom attempt that runs out
of money, but the patterns are there. We will be looking at some of them a
trades.
Others show good patterns such as DIS, some materials, some energy. If
these areas continue setting up show upside breaks, we will look at playing
them as well.
Not looking for new highs; the index patterns are still in a huge topping
pattern, and they will have to prove if they can do more than bounce. Thus
we play a bounce if it presents again, and if the indices keep moving higher
and higher, well okay then.
Not pessimists, just pragmatists, looking to take what the market gives us.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4736.16
Resistance:
4751 is the January 2015 lower high
4774 is the January 2-15 high
The 50 day EMA at 4799
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 4835
4836 is the March 2016 peak
4894 is the September 2015 closing high
4899 - 4902 from the September 2015 peak, July 2015 low
4916 is the mid-November 2015 low
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
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
Support:
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
S&P 500: Closed at 2057.14
Resistance:
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:
2046 is the July 2015 closing low
The 50 day EMA at 2044
2040 is the March 2015 closing low
2023 is the November 2015 low
2020 is the September 2015 intraday high
The 200 day SMA at 2013
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 17,740.63
Resistance:
17,748 is the mid-April China margin selloff and the bottom of the 5 month
trading range
June 2015 low at 17,715
The March low at 17,786
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
Support:
The 50 day EMA at 17,549
17,351 is the September 2014 all-time high.
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 17,116
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
ECONOMIC CALENDAR
May 6 - Friday
Nonfarm Payrolls, April (8:30): 160K actual versus 207K expected, 208K prior
(revised from 215K)
Nonfarm Private Payrolls, April (8:30): 171K actual versus 191K expected,
184K prior (revised from 195K)
Unemployment Rate, April (8:30): 5.0% actual versus 5.0% expected, 5.0%
prior
Hourly Earnings, April (8:30): 0.3% actual versus 0.3% expected, 0.2% prior
(revised from 0.3%)
Average Workweek, April (8:30): 34.5 actual versus 34.5 expected, 34.4 prior
Consumer Credit, March (15:00): $29.6B actual versus $18.0B expected, $14.2B
prior (revised from $17.3B)
May 10 - Tuesday
JOLTS - Job Openings, March (10:00): 5.445M prior
Wholesale Inventories, March (10:00): 0.2% expected, -0.5% prior
May 11 - Wednesday
MBA Mortgage Index, 05/07 (7:00): -3.4% prior
Crude Inventories, 05/07 (10:30): 2.784M prior
Treasury Budget, April (14:00): $156.7B prior
May 12 - Thursday
Initial Claims, 05/07 (8:30): 270K expected, 274K prior
Continuing Claims, 04/30 (8:30): 2121K prior
Import Prices ex-oil, April (8:30): -0.1% prior
Export Prices ex-ag., April (8:30): 0.3% prior
Natural Gas Inventor, 05/07 (10:30): 68 bcf prior
May 13 - Friday
PPI, April (8:30): 0.3% expected, -0.1% prior
Core PPI, April (8:30): 0.1% expected, -0.1% prior
Retail Sales, April (8:30): 0.8% expected, -0.3% prior
Retail Sales ex-auto, April (8:30): 0.5% expected, 0.2% prior
Business Inventories, March (10:00): 0.2% expected, -0.1% prior
Michigan Sentiment, Preliminary May (10:00): 90.0 expected, 89.7 prior
End part 1 of 3
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