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5/7/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: MYL
Entry alerts: 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
- 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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