* * * *
6/25/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: None issued. DIA, CWEI hit targets but letting them both work
Entry alerts: AMZN
Trailing stops: CYBR; QRVO (took some gain off the table, left some on)
Stop alerts: EVEP; RHT; ROVI; WLL
The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
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The REPORT SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play
annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play
links in the reports.
If any market circumstances arise where we see additional plays we want to
prepare for the next session, we will of course issue those plays regardless
of the day of the week.
MARKET SUMMARY
- The polls were wrong, the betting houses were wrong, the markets are
lower.
- 3.5% to 5.75% selloffs on US stock indices.
- Sharp reversals off Thursday sharp upside.
- Predictions of UK and EU doom are grossly exaggerated, but the economic
data for the rest of the world remains weak, US included.
- Durable Goods orders continue their trend lower.
- Leadership groups have decent sessions.
- Indices have some ground to give as the selling likely continues into next
week.
- Will see how leadership holds up through next week's likely selling.
I am reminded of the TD Ameritrade commercial discussing predictable
patterns and then the marlin falls off the wall. 'There's no way of
predicting that' is the catch line.
There's no way of predicting that . . .
Was there no way of predicting the UK vote? Polls had it wrong. The
betting lines had it wrong. The politicians had it wrong. The experts had
it wrong. I felt that the British would be too 'civilized' to vote to leave
after a politician was killed over the matter. I was wrong as well. The
only people who seemed to get it right were the reporters in the UK who were
asking people how they were going to vote and they could not find anyone
voting to stay.
Perhaps the powers that be pulled out all the stops to try and stop the
anger rising to a majority desiring to leave. Reports Thursday of strange
bets on Brexit in the UK betting lines. The polls, just days before the
vote, showed the kind of margin the final vote showed. Yet they skewed away
from what the true outcome showed in the last couple of days. Trying to
influence the outcome?
As with the Clinton emails that have disappeared, we will never know will
we? The outcome, if that was the case, is sweet justice indeed.
So, the world markets were caught with their pants around their ankles.
Stock markets, currency markets, bond markets were bombed around the globe.
The marlin fell.
Now all that is left is the blame game, the round and round on the financial
stations arguing about what to do. Damn those Brits, right? You just
cannot trust the man on the street to do the right thing to protect his
elites and their elite asses -- assets.
Guest after guest after expert after expert squealed 'we have never been
here before!' As I said in the Last Hour alert, sure we have. It is called
panic, panic by those who should know better, who have been in these
situations before, but refuse to see the facts. So, they make statements
about 'never been here before' to cover their failure to adequately
structure their portfolios. They are in stocks that got slaughtered instead
of the leaders that held up well. They didn't have any downside plays on to
at least hedge the downside and protect the upside. I glanced at several
option accounts near the close and noted they were higher on the day or at
least flat. That is a pretty well hedged/diversified account considering
the indices lost 3.5% to 5.75%.
SP500 -75.91, -3.59%
NASDAQ -202.06, -4.12%
DJ30 -610.32, -3.39%
SP400 -3.95%
RUTX -3.81%
SOX -5.76%
VOLUME: NYSE 193%, NASDAQ 115%. Big scare, Russell rebalance, lots of
volume.
A/D: NYSE -5.2:1, NASDAQ -5.2:1. Pretty even burn across the board.
Long before the opening bell it was clear US stocks were gapping lower.
They did. They then tried a quick snapback. As we warned in the pre-market
alert, this likely would not be a one-session event. Sure enough that early
rebound attempt failed. Stocks were not slamming back and forth, they were
just crawling around with a piano on their backs. They sank from that first
half hour bounce off the downside gap, moving back to session lows by the
last hour. A bounce in that hour took back some lost ground but in the last
5 minutes faded again.
Stocks just were not, as a whole, going up for the session. And likely,
this leads to more downside this coming week as the market tries to
reconcile what has happened and perhaps realizes this is not the end of the
world. The fifth largest economy in the world decided it was going to rule
itself again. It has a trade deficit with every one of the other EU
nations. Those nations will scramble as fast as they can to ink trade deals
with the UK because the UK is such a good customer. And will the US turn a
cold shoulder to the UK as our President suggested when he visited the UK a
few weeks back? Of course not. That was all part of protecting the status
quo, protecting those in charge. New day, baby.
So, you get some more downside, everyone realizes that, lo, the UK is still
there, that it didn't just self immolate. Then stocks try and rebound.
IF . . . the US market is still moving up. Remember, THAT was the big
question surrounding the market already without the Brexit issue. The
indices were on a recovery move ever since the February low and were
starting to bump into the last range from the summer 2015 that held the
all-time highs. They were getting to the point where they either going to
break higher or roll over.
Some of the big names in NASDAQ that had led the move fell onto harder
times, e.g. SBUX, AAPL, FB, even GOOG. At the same time some stocks that
had suffered long declines were moving up and providing leadership, e.g. oil
stocks. Indeed, many of these held up fine even on Friday.
Big names struggling, others working well, rising off the lows. With money
moving into new areas as it left others, the stock market found support to
continue the climb into the range of those prior highs.
If that rotation continues into the stocks formerly sold off, the upside can
remain, and thus once the turmoil from accepting the fact of Brexit that
would present a buying opportunity.
If this blast lower represents the event that breaks the upside's will, then
there is a whole lot of downside ahead.
Of course the Fed is always there and can rush the market's aid with more
stimulus of some sort. Indeed, the Fed Funds Futures show a greater
probability of rate CUTS than rate hikes in 2017, with traders buying
positions indicating NIRP is coming. Fed intervention on the stimulus side
could stem any selling tide, but there are some smart people out there who
posit the Fed and other central banks really have no resources left to
really help the stock markets. They did in February, however, with the help
of the BOE and ECB directly intervening into stock markets. I dare say that
we see similar telephone calls and resultant interventions if this Friday
selloff continues with earnest.
What does that mean for us? We continue looking for those stocks that are
holding up in their patterns despite the market weakness. Those that do are
the ones we move into if the selling subsides next week and the buyers
return. We have quite a bit of cash right now, indeed some accounts are
close to 100% cash, that we want to allocate (school accounts, etc.). We
will be watching to see if the washout reverses and leadership is there to
lead. If so, we can go back in with those accounts as well as others. If
not, we continue to pick up the downside positions as they set up and show
their moves similar to what we are doing with AAPL, DIA, FB, and on Friday,
AMZN.
NEWS/ECONOMY
All the talk was about Brexit. We have heard it, discussed it, and now the
market has to deal with it. It will. The pundits are describing disaster
for Britain's economy. They can only see in the rearview mirror. They fail
to see what this does for the future, the potential for the UK versus being
stymied in the EU with its regulations. As noted before, each EU country
will rush to ink deals with the UK in order to keep the sale of their goods
flowing to the Brits.
What about the future? Those who only see disaster just don't understand
how a liberated, free economy can grow and produce. They are the same who
groused about the American Revolution, the loyalists who didn't have the
foresight to see what freedom could bring for all of them. Stuck in the
past with blinders on. They deserve the EU and its suffocating
restrictions.
US Data.
Durable Goods Orders, May: -2.2% versus -0.6% expected versus 3.3% prior
(3.4%)
Ex-Transports: -0.3%
Ex-Defense: -0.9%. Lots of defense spending trying to prop things up.
Non-defense capital goods ex-aircraft (business investment): -0.7%, well
below expectations.
This is the longest run of downward trending durables orders in US history
outside of an textbook recession. I say 'textbook' because much of the
country has been in recession for years while the largest corporations
enjoyed the benefits of free money, protected markets, and basic good old
government cronyism. The socialists like to call it capitalistic cronyism,
but there is nothing capitalist about it: it is the government that set up
this playing field with the TARP, stimulus, bailouts, multitudes of new
taxes, and hundreds of thousands of new regulations strangling small
businesses. That is socialism, i.e. the government chooses who to allocate
resources and preferences to. Nothing capitalistic about that at all.
In any event, Keynesian theories are not working. Again. They never work.
They just neatly fit into the current mindset that government knows best and
are thus trumpeted by those in power and their enablers. I heard Austan
Goolsby on Fox Business today saying that the Brits threw a temper tantrum.
He belittled their fight for their country by comparing it to a child's
inability to control his feelings. That is the kind of outright denial and
unwillingness to look at the facts that you have to deal with.
THE MARKET
No index chart looked great after Friday as they slammed lower when they
were just on the cusp of moving to the prior rally highs or indeed after
breaking to a new recovery high in terms of SOX. Those kind of reversals
are the harshest and in many cases, the most damaging. We will see how the
indices can hang on next week with the help of those leading groups that
held up pretty well even with the Friday selloff. This is either just an
upset in the move higher or it could be the start of a bigger selloff that
the large 21 month top since October 2014.
CHARTS
SOX: Gapped and rallied to a higher recovery high Thursday but then gapped
lower, indeed gapping below the recent pullback low. Sold down to the 50
day SMA on the close after trying to rebound, filling half the gap, but then
reversing to close at the session low. These are the ugliest of reversals:
a move to a higher high wholly rejected.
SP400: The midcaps closed in on the early June high on Thursday then Friday
were ripped lower, closing below the 50 day EMA as well as last week's
pullback low. It can recover, the pattern is not wholly broken, but it is
going to need to hold in this general area to keep the pattern in an overall
uptrend. It can test some more this coming week and find its footing and be
just fine. Will have to show it.
RUTX: Gapped lower and sold through the 50 day MA's and last week's
pullback test low. Still over the 200 day SMA by 10 points, and as with
SP400, can test a bit lower, hold that support, and still continue an upside
trend.
NASDAQ: Nasty gap to the May lows. An intraday rebound took NASDAQ back
close to the 200 day SMA, but it failed and rolled back down to close at
those May lows. NASDAQ was trying to recover its pattern and mount a move
off the 200 day SMA, a move it started Thursday. Friday somewhat dumped on
that attempt.
SP500: Gapped lower and bombed down to the May lows. Similar to RUTX,
SP500 is holding over the 200 day SMA about 35 points lower. This two month
range is looking a LOT like the November through December 2 month range that
collapsed into the January/February selloff.
DJ30: Very similar to SP500, crashing lower to the May lows and holding 150
points over the 200 day SMA. This April to June range looks remarkably
similar to the November/December range that led to the January bomb lower.
LEADERSHIP
Big Names: A late bounce actually helped some of these patterns. FB gapped
lower but managed to work off the low. AAPL gapped lower and managed a
small move off that sharp gap. AMZN gapped lower, rebounded, then folded.
It moved up late and we picked up some downside positions for a move to fill
those gaps. SBUX dropped to a lower selloff low. GOOG gapped sharply
lower, closing where it opened, just above the February lows. The big names
don't look all that good.
Oil: Not a wondrous session, but they showed some holds in their patterns.
ATW, gapped lower but showed low volume as it holds its pattern. ORIG sold
to the 20 day EMA but is easily holding its trend. UNT faded to the 10 day
EMA. SPN gapped lower to the 20 day EMA, showing a doji. Selling yes, but
mostly holding their patterns and trends.
Construction: GRAM held easily at the 50 day SMA. MDR gapped to a doji at
the 20 day EMA, still in the trend up the 50 day EMA.
Software: Some issues. CYBR gapped to a doji below the 10 day EMA; we
closed it to preserve some gain and let it set up again. ROI sold below the
50 day MA's. RHT Fell through the 200 day SMA.
Retail: Retail leaders held up quite well, e.g. KORS, WWW, ULTA, DLTR.
Industrial: CAT fell through the 50 day MA's and the June pullback low. DE
gapped through the 50 day MA's. HON, UTX gapped below the 50 day MA's.
Struggling.
Metals: AKS sold to the 50 day MA's and held. SID slipped to the 20 day
EMA on lighter trade. FCX gapped lower and closed below the 50 day EMA.
CENX sold back to the lows in the double bottom. TX broke below the 50 day
MA's.
Chips: Some leaders are holding fine, e.g. AMD, testing its recent move,
holding the trend. MU is testing the 200 day SMA after surging through it.
Others struggling. SLAB gapped below the 50 day MA. AVGO ditto. QRVO sold
to the 20 day EMA, showing very tame action. We took part of the gain on off
the table, leaving some on, preserving some upside while we see if a good
pattern can hold the line. NVDA, a major chip leader, gapped below the 20
day EMA; after a long run NVDA may be ready to trade downside.
Biotech/Drug: Usually slaughtered in uncertainty, but some of the recent
leaders are not doing bad. XLRN is still in a very nice 50 day MA/200 day
MA test. GALE is a bit volatile but not doing poorly. EXAS looks super,
moving higher. SUPN still looks good to move higher. KITE was steady,
holding the line at the 50 day EMA in the range of the past two weeks. Some
possible life here.
MARKET STATISTICS
NASDAQ
Stats: -202.06 points (-4.12%) to close at 4707.98
Volume: 3.628B (+114.98%)
Up Volume: 454.14M (-1.016B)
Down Volume: 3.79B (+3.534B)
A/D and Hi/Lo: Decliners led 5.15 to 1
Previous Session: Advancers led 3.52 to 1
New Highs: 44 (-52)
New Lows: 125 (+92)
S&P
Stats: -76.02 points (-3.6%) to close at 2037.3
NYSE Volume: 2.5B (+193.46%)
A/D and Hi/Lo: Decliners led 5.24 to 1
Previous Session: Advancers led 4.93 to 1
New Highs: 138 (-27)
New Lows: 48 (+38)
DJ30
Stats: -611.21 points (-3.39%) to close at 17399.86
SENTIMENT INDICATORS
VIX: 25.76; +8.51
VXN: 24.88; +6.67
VXO: 23.27; +7.35
Put/Call Ratio (CBOE): 1.24; -0.04
8 of 9 over 1.0. Another session of a lot of put activity.
11 of the last 21 below 1.0. 28 of 41 over 1.0. Still a LOT of skepticism.
Bulls and Bears: Bulls rebounded back to the 47 level of three weeks back.
Bears faded, a bit, but still at 23 and change.
Bulls: 47.5 versus 45.9
Bears: 23.2 versus 23.5
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: 47.5%
45.9% versus 47.3% versus 45.4% versus 35.4% versus 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: 23.2%
23.5% versus 23.8% versus 23.7% versus 24.0% versus 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): 1.57% versus 1.74%. Able to leap week of selling in a
single bound. TLT gapped off the 50 day EMA test found over five sessions,
closing just below the recent higher highs.
Historical: 1.74% versus 1.68% versus 1.70% versus 1.67% versus 1.61% versus
1.57% versus 1.58% versus 1.62% versus 1.61% versus 1.64% versus 1.68%
versus 1.70% versus 1.72% versus 1.73% versus 1.70% versus 1.80% versus
1.84% versus 1.85% versus 1.85% versus 1.83% versus 1.87% versus 1.86%
versus 1.83% versus 1.85% versus 1.85% versus 1.85% versus 1.76%
EUR/USD: 1.1101 versus 1.14070. After the overnight surge, the overnight
purge. EUR did bounce off the gap below the 200 day SMA and held the 200
day.
Historical: 1.14070 versus 1.13324 versus 1.1251 versus 1.13131 versus
1.13749 versus 1.12778 versus 1.12554 versus 1.12731 versus 1.2104 versus
1.1297 versus 1.12526 versus 1.13149 versus 1.1412 versus 1.13570
USD/JPY: 102.32 versus 106.73. Similar to the euro, after plunging
overnight the dollar bounced. Some. It hit that 100 level and indeed below
it. Did the BOJ intervene at 100? We will look at the numbers and see if we
can find the scent of a BOJ move.
Historical: 106.73 versus 104.87 versus 104.788 versus 103.98 versus 104.58
versus 104.12 versus 104.68 versus 105.62 versus 106.085 versus 106.019
versus 106.933 versus 106.966 versus 106.66 versus 107.347 versus 107.72
versus 106.55 versus 106.66 versus 108.86 versus 109.99 versus 111.285
versus 110.233 versus 109.70 versus 109.72 versus 109.99 versus 109.25
versus 110.165 versus 109.985 versus 110.187
Oil: 47.57, -2.54. Oil flopped, but it held the 50 day MA's. That holds
the trend and we will see if oil holds this trend. Important to do so for
the market as oil stocks are one of the staunchest leadership groups.
Gold: 1319.10, +56.00. Broke to a higher recovery high. Closed off the
high but holding the break to that high.
MONDAY
A full week next week ahead of the Independence Day (US) shortened following
week. This gives the market plenty of time to absorb, digest, come to grips
with the Brexit result and the subsequent market moves.
The Friday move was likely not the bottom. Stocks tried to rally early,
failed, closed very near session lows. On a Friday that is not a bottom
There are some massive quant positions that will be unwound over the start
of next week and those have to move through the system. Also, with the head
fake upside then sharp reversal, there will be margin calls that have to be
met. That will add to the downside pressure.
So, where is the bottom? Where does the bell ring? We will have to see.
There is no 'x' marks the spot. There are points to look for, but until the
indices show reversal action along with some quality stocks in quality
patterns in position to move, the bottom remains, as the New Mexico state
trooper said in the sequel 'Vacation,' an idea.
'This border represents an idea, that's all that I'm saying.'
So, we watch the action in the indices as well as the groups that have led:
oil, chips, industrial, heavy construction, leading retail. How they hold
tells a lot. Also watch for possible new leadership emerging out of the
ashes of other sectors that crashed. That is how this market has rallied
off the lows and made it close to the 2015 highs.
If the current leaders fail and no others emerge to take their place, that
is bad for the upside. If that is the case we remain light on the upside
and play more downside. If this is the case, this is more of the scenario
that the market has tried for higher highs and failed, and this could be the
final hurray of the 21 month market top, leading to a major market
revaluation (aka major selloff/bear market).
For now we are closely watching the leadership groups and how they test,
looking at them for possible entry points. SP500, RUTX are over their 200
day SMA, SP400 well over its 200 day. SOX is at the 50 day SMA. They have
some room to test, some room to give into support as the week progresses.
As they do, we can play some downside and watch how the leadership groups
hold.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4707.98
Resistance:
4751 is the January 2015 lower high
4774 is the January 2-15 high
4811 is the November 2014 peak (intraday)
4815 is the December 2014 peak
The 200 day SMA at 4820
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.
4969 is the April 2016 recovery high
4980 is the June 2016 peak
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:
4684 is the May 2016 test low
4637 is the February intraday high
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 2037.41
Resistance:
2040 is the March 2015 closing low
2046 is the July 2015 closing low
2062 is the January 2015 lower high
The 50 day EMA at 2073
2079 is the intraday all-time high from November 2014
2094 is the December 2014 high
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
2120 is the June 2016 peak
2126 was the April prior all-time high
2130 is the June 2015 peak
2135 is the May 2015 all-time high
Support:
2026 is the May 2016 low
2023 is the November 2015 low
The 200 day SMA at 2021
2020 is the September 2015 intraday high
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 17,400.75
Resistance:
The 50 day EMA at 17,703
17,978 is the November 2015 peak
18,016 is the June 2016 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:
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
The 200 day SMA at 17,235
17,152 is the mid-July 2014 post bear market high
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
June 24 - Friday
Durable Orders, May (8:30): -2.2% actual versus -0.6% expected, 3.3% prior
(revised from 3.4%)
Durable Orders, ex-t, May (8:30): -0.3% actual versus 0.1% expected, 0.5%
prior (revised from 0.4%)
Michigan Sentiment - Final, June (10:00): 93.5 actual versus 94.0 expected,
94.3 prior (no revisions)
June 27 - Monday
International Trade , May (8:30): -$59.2B expected, -$57.5B prior
June 28 - Tuesday
GDP - Third Estimate, Q1 (8:30): 1.0% expected, 0.8% prior
GDP Deflator - Third, Q1 (8:30): 0.6% expected, 0.6% prior
Case-Shiller 20-city, April (9:00): 5.5% expected, 5.4% prior
Consumer Confidence, June (10:00): 93.1 expected, 92.6 prior
June 29 - Wednesday
MBA Mortgage Index, 06/25 (7:00): 2.9% prior
Personal Income, May (8:30): 0.3% expected, 0.4% prior
Personal Spending, May (8:30): 0.3% expected, 1.0% prior
Core PCE Price Index, May (8:30): 0.2% expected, 0.2% prior
Pending Home Sales, May (10:00): -1.4% expected, 5.1% prior
Crude Inventories, 06/25 (10:30): -0.917M prior
June 30 - Thursday
Initial Claims, 06/25 (8:30): 265K expected, 259K prior
Continuing Claims, 06/18 (8:30): 2142K prior
Chicago PMI, June (9:45): 50.8 expected, 49.3 prior
Natural Gas Inventor, 06/25 (10:30): 62 bcf prior
July 1 - Friday
ISM Index, June (10:00): 51.4 expected, 51.3 prior
Construction Spending, May (10:00): 0.5% expected, -1.8% prior
Auto Sales, June (14:00): 5.16M prior
Truck Sales, June (14:00): 8.55M prior
End part 1 of 3
_______________________________________________________
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Saturday, June 25, 2016
Saturday, June 18, 2016
The Daily, Part 1 of 3, 6-18-16
* * * *
6/18/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: None issued
Entry alerts: KERX; NOV; UNT
Trailing stops: VMW
Stop alerts: AGN
The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
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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
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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
- Thursday reversal but no Friday follow through as stocks struggle to hold
the line.
- Fed feckless and confused, Administration does not care. We are on our
own.
- AAPL banned in Beijing
- Fed officials go full dove, rate hiking 'cycle' all but over.
- Indices split in their strength. Same leadership groups still look good.
Thursday sold off but reversed upside, looking as if the pullback to test
the last higher highs was ending and stocks would advance. Leadership groups
performed decent enough. Friday, futures were lower. No big deal, just a
lower open leading to bids. It did, after further selling. Then, unlike
Thursday, the stock indices had to fight to recover gains and by the close
on SP500 closed positive.
SP500 -6.77, -0.33%
NASDAQ -44.57, -0.92%
DJ30 -57.94, -0.92%
SP400 0.08%
RUTX -0.30%
SOX -0.82%
Volume: Exploded on both exchanges given quad-expiration. No point even
mentioning the levels.
Bigger Picture.
We are on our own. We being US citizens and the economy. The Federal
Reserve is so feckless, so consumed with indecision and self-doubt, it could
star in a Woody Allen movie. The Administration is devoid of interest in
the economy, dogmatically answering all questions economic by reciting 4.7%
unemployment rate, as if almost one-third of the US population not working,
one-third that is all made up of working aged people mind you, is a sign of
robust growth.
How many jobs??!!
A Fed that cannot act when confronted even with the slightest deviation from
its script and a lame duck Administration believing in tax, tax, tax and
spend, spend, spend in order to fulfill its interests in legacy building and
ideological end games. Not great in and of themselves, but layered on top
of a world economy that continues to slide toward another global decline
(Rio de Janeiro, 49 days from the Olympics, announces a "public calamity"
due to the Brazilian financial crisis), the US included, the US citizen and
business owner is left in, at best, limbo, at worst heading for a lower
standard of living and closing in on bankruptcy.
If there was EVER a classic, textbook example of why there is no need for a
Federal Reserve, this is it. The only reason for a Fed was supposedly to
provide liquidity in times of stress. That has morphed, however, into an
economic micromanagement team, tinkering with rates, printing money,
purchasing assets, and more we don't even know about because, heaven forbid,
the Congress, the elected body, should be able to monitor what the Fed is
doing. We might find out just whose interest the Fed has as its primary
focus. All of this, of course, with other people's money.
This Fed, however, proves the utter futility of a small group of elites to
understand and manage markets. Greenspan embarked upon a campaign to
prevent the 'wealth effect' from causing a 'runaway consumer' and lead to
inflation. After he aided in wrecking the US economy and permanently
sending hundreds of thousands of US breadwinner jobs overseas he asked,
anyone, for data that there really was such a thing as a wealth effect.
Bernanke based his entire QE theories on a wealth effect, buying assets
specifically to inflate financial asset prices and make people feel rich so
they would buy, companies would invest to generate supply to meet the
demand, and the economy would pull out of the massive collapse. It just
didn't happen. The Fed didn't realize that if it gave money away to the
financial institutions and made it possible to make guaranteed returns, why
would they lend the money? If huge company executives could use zero
interest money to buy back stock, thus raising their EPS without making one
more item or investing one more cent, then get performance bonuses for
raising the stock price. Who in their right mind would take a risk in that
situation and blow making money on a sure thing? We have seen the result:
no one! US capital investment is horrid and has been horrid since these
programs started. Buybacks only inflate prices, more keeping the cycle
alive.
So smart, yet so stupid. Markets are the collection of every available
scrap of information, synthesized into prices based upon the probabilities
that information suggests. It is the pure price that factors in all human,
natural, and I guess even unnatural events. It is utter folly that a
handful of ivory tower elites could fathom how markets work in the first
place and then direct accurately direct outcomes. Humans might as well try
to accurately predict the weather and take steps to try and direct outcomes
even when they have no control on externalities such as, say, the sun. Oh,
but we are trying to do THAT as well and failing equally atrociously. It is
even to the point Greenspan now says the Fed doesn't really know what it is
doing, just experimenting.
Then, even when it has set out definite rules to follow, when confronted
with any possible upset to its plans, it pulls a Sherman from 'American Pie'
and pisses itself.
Thus, when every criterion the Fed set out to hike rates was met, when China
sneezed the Fed didn't hike. The jobs report flopped, but Yellen said it
was still likely transient. Then the Brexit polls showed the people of the
UK actually want their independence back from a rule-crazy, immigration
pushing elite. Oh, can't hike in that climate; what would the world think?
So, we have an FOMC decision this past week that virtually eliminated any
more than one more rate hike for the year, and frankly I don't think the Fed
will even get there because the world economic situation continues to
worsen. The Fed went from statements that the market was misreading the Fed
minutes, that hikes were indeed coming, and Yellen even saying the Fed had
to get more ammunition back in the gun -- just two weeks ago -- to full
capitulation.
Again, a classic textbook case of why we just need a Fed, if we need one at
all, that can only act to inject some liquidity on a temporary, defined,
finite timetable and then leave the market. If that doesn't fix the
problem, the markets will have to fix themselves. Simple, takes the human
element out of it.
Venezuelan riots at night.
Lots of textbook examples over the past 15 years to teach us once again what
we knew worked and didn't work. Socialism: Venezuela. Keynes economic
theories: Japan, China, US (lower standards of living, massive segments of
the populations not working, wages declining for years). Government
controlled housing markets. Stimulus/deficit spending. And the grand daddy
of them all, the 97% decline in the value of the dollar since the US Federal
Reserve was established. The dollar buys 97% less of what it could buy
pre-Fed while gold still buys the relative same items at the same quality it
has always bought.
THE MARKET
Friday the stock market pulled a mini-Thursday, i.e. selling off intraday
but then recovering. Thursday many indices made it positive. Friday most
did not. On a week where the stock indices and leading groups made nice
tests of the last highs and were set up to rebound, the most notable feature
was their inability to do so. Wednesday a break higher failed. Thursday
stocks sold off hard but recovered, leaving them in position for a Friday
expiration rebound.
Didn't pan out. Friday futures traded lower as Housing Starts fell 0.3% in
what should be a strong May period. Bullard went full frontal dove from
hawk, saying only one rate hike would be needed until 2018!
The market reacted to a wholly feckless, confused, and unnerved Federal
Reserve as you would expect: it sold off. Sure rates were going nowhere,
but when those anointed ones who micromanage our economy have no clue of
what the economy is doing and change their views as each data point comes
out, we are all in deep.
Stocks did recovery from the lows, but only SP400 made it back to positive.
It was not a banner day. Sure it was blamed on the death of the UK
parliamentarian shot and stabbed by a mentally deranged individual, but that
is not the issue. It goes beyond that: a world economy that people feel is
slipping into another major slowdown and those in power to prevent or buffer
the move don't have a clue as to what to do.
The failure to take advantage of a bounce attempt so neatly set up is
disconcerting for the upside. It leaves the market, in our view, now more
vulnerable to the downside even though some leadership groups, e.g. oil,
performed beautifully on Friday. Indeed they still may perform beautifully
for awhile even if the rest of the market fades.
We found ourselves entering more downside positions last week as they
presented themselves along with the good upside in oil and software. AAPL
was ripe and we entered; Friday Beijing banned iPhone 6 sales in China's
ongoing move to block Apple taking over the market or at least extorting
large sums of profits if it allows AAPL in. FB presented a natural new
entry. DIA, QID as well.
Again, the market could go down just as easily, indeed likely more easily,
than up from this juncture. There are some great sectors, e.g. oil and gas,
but the overall action is quite worrisome for the market continuing moving
higher.
Thus we have a lot of downside plays to go along with many still very good
upside plays.
CHARTS
NASDAQ: Thursday I was concerned NASDAQ could not rise off of that
reversal. It certainly could not Friday as it gapped lower and closed at a
lower closing low for this June move lower. Expiration so volume spiked.
NASDAQ double topped from April to June and now it is in the process of
selling, breaking an interim support level Friday. Many big names are
struggling and of course that pushes NASDAQ down, NASDAQ 100 (-1.13%) even
more. Not much to like right now.
SP500: No major issue Friday, just the same inability to move higher off
this 50 day EMA test. Four days working laterally though volatile intraday.
MACD and volume lagged on the June higher high, not a good combination. Has
to hold these 50 day MA levels. Overall the pattern is toppy.
SOX: Acting much better than the other indices. Tapping the April highs
Thursday and Friday on the lows, rebounding to close and holding that break
higher. This is a classic test, breaking higher through resistance then
fading to test, bouncing off it from the intraday lows. SOX looks quite
good with this action.
RUTX: The small caps are trying to hang on. Broke to a higher recovery high
into the second week of June, tested, and Tuesday to Friday held in a
lateral move. Just below the April highs, trying to set up for a new bounce.
Not bad, but this is definitely a 'show me' kind of situation for all
indices.
SP400: Doji Friday, the fourth in a row as SP400 moves laterally along the
rising 50 day MA's and just below the April peak. Good positioning similar
to SOX. Looks as if it is up to the chips and midcaps.
DJ30: after the Thursday reversal DJ30 looked good for a higher low and
bounce. After Friday it is not bad, just not as great. AAPL hurt it with
the Beijing ban. Anyway, it is working in its range, trying to set up a
move upside. Nothing determinative yet.
LEADERSHIP
Oil: Sporting excellent action as oil rebounded and oil stocks rebounded
off doji tests as well. ORIG, SPN. We are looking at new plays on CWEI,
ATW.
Software: ROVI, CYBR had great weeks. RHT not bad but has to make a move.
Chips: Overall still quite nice as the SOX indicates, but some recent
leaders struggling, e.g. SLAB, AGVO.
Biotechs/Drugs: Some working well, others struggling. GALE continues
blowing higher. CELG is still selling. More struggling starting up.
Industrials: Still fine, e.g. CAT, HON.
Construction: Still good after a test. MDR bouncing, GRAM holding support.
Big Names: FB, AAPL down hard again Friday. GOOG bombed lower. NFLX could
do the same, and AMZN is heavy right now and we are looking at downside
plays on both in the event NASDAQ breaks further downside.
THE MARKET
MARKET STATISTICS
NASDAQ
Stats: -44.58 points (-0.92%) to close at 4800.34
Volume: 2.397B (+31.72%)
Up Volume: 1.16B (+100M)
Down Volume: 1.44B (+671.36M)
A/D and Hi/Lo: Decliners led 1.29 to 1
Previous Session: Decliners led 1.18 to 1
New Highs: 43 (+2)
New Lows: 51 (-30)
S&P
Stats: -6.77 points (-0.33%) to close at 2071.22
NYSE Volume: 2.1B (+134.98%)
A/D and Hi/Lo: Advancers led 1.54 to 1
Previous Session: Decliners led 1.04 to 1
New Highs: 92 (-5)
New Lows: 15 (-28)
DJ30
Stats: -57.94 points (-0.33%) to close at 17675.16
SENTIMENT INDICATORS
VIX: 19.41; +0.04
VXN: 20.25; +0.42
VXO: 18.63; -1.67
Put/Call Ratio (CBOE): 1.11; -0.28
Four straight over 1.0 on the close as the negative sentiment in the options
market prevails. Maybe it will be enough to rebound stocks along with the
leaders holding up.
10 of the last 16 below 1.0. 24 of 36 over 1.0. They did their job,
playing a part in bouncing the market. Now the extremes are backing off as
you would expect. Even so, they are still fairly high readings after a
solid move higher.
Bulls and Bears: Bulls faded back to the levels three weeks back and of
course bears, as it seems usually the case, held more or less steady. Still
more bullish.
Bulls: 45.9 versus 47.3
Bears: 23.5 versus 23.8
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 45.9%
47.3% versus 45.4% versus 35.4% versus 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: 23.5%
23.8% versus 23.7% versus 24.0% versus 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): 1.61% versus 1.57%. After a big surge through Thursday,
TLT gapped lower off a tombstone doji. After 3 weeks of surging, just a bit
overdone.
Historical: 1.57% versus 1.58% versus 1.62% versus 1.61% versus 1.64% versus
1.68% versus 1.70% versus 1.72% versus 1.73% versus 1.70% versus 1.80%
versus 1.84% versus 1.85% versus 1.85% versus 1.83% versus 1.87% versus
1.86% versus 1.83% versus 1.85% versus 1.85% versus 1.85% versus 1.76%
EUR/USD: 1.12778 versus 1.12554. Still holding a volatile lateral move
below the 50 day SMA.
Historical: 1.12554 versus 1.12731 versus 1.2104 versus 1.1297 versus
1.12526 versus 1.13149 versus 1.1412 versus 1.13570 versus 1.13553 versus
1.13668 versus 1.1149 versus 1.1186 versus 1.1128 versus 1.1113 versus
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
USD/JPY: 104.124 versus 104.68. Dollar keeps bombing lower versus the yen.
At some point before too long Japan will break its vow of nonintervention.
Historical: 104.68 versus 105.62 versus 106.085 versus 106.019 versus
106.933 versus 106.966 versus 106.66 versus 107.347 versus 107.72 versus
106.55 versus 106.66 versus 108.86 versus 109.99 versus 111.285 versus
110.233 versus 109.70 versus 109.72 versus 109.99 versus 109.25 versus
110.165 versus 109.985 versus 110.187
Oil: 48.56, +1.82. After fading to the 50 day MA through Thursday in a
test of the higher high, oil blasted upside Friday, starting the recovery.
Gold: 1301.60, +3.20. Up all week, moving to a higher closing high. Not a
lot of power on the moves, but moving upside.
MONDAY
The market has a split of sorts. SOX, SP400 looking solid. RUTX, SP500
in-between. DJ30 just watching. Big Names breaking lower, many of the same
leaders holding and then bouncing Friday.
The market is going to have to make a decision. We still have upside plays
in the solid sectors and if the market breaks higher or those sectors do, we
have plays for more of them. We also have more downside plays because the
market is showing those setting up and breaking lower. At some point they
market has to make the direction they are all going. For now, while there
are good upside sectors remaining, we feel the market is in trouble.
That is, however, just a feeling. It is not the market move. So, we play
the individual moves that make up the market moves. Again, there are some
very good looking upside plays remaining. Quite a few for that matter.
Fitting the Clash is a UK band.
There is also the Brexit vote Thursday. There could be some gyrations ahead
of that. If they stay, much rejoicing. If they go, temporary panic. Both
would be overreactions to actual events.
Unfortunately the moves in anticipation and in reality can be hard on the
psyche. So, we stick with good patterns as long as they are good patterns.
If we see good moves in good sectors, we go with that. The downside can be
more fickle, but if this move breaks some of these big names will provide
impressive returns, in size and in speed.
One step at a time. See how the leading indices hold, see how the leading
stocks perform. We base our actions off of them, not the hyperbole being
spread every day on the financial stations.
Have a great weekend and Father's Day!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4800.34
Resistance:
4811 is the November 2014 peak (intraday)
4815 is the December 2014 peak
The 200 day SMA at 4817
4836 is the March 2016 peak
The March 2015 lows at 4843 and 4825
The 50 day EMA at 4843
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.
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:
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 2071.22
Resistance:
2079 is the intraday all-time high from November 2014
2094 is the December 2014 high
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:
The 50 day EMA at 2070
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2023 is the November 2015 low
2020 is the September 2015 intraday high
The 200 day SMA at 2017
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 17,675.16
Resistance:
The 50 day EMA at 17,691
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
18,168 is the April 2016 recovery high
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
The 200 day SMA at 17,191
17,152 is the mid-July post bear market high
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
June 17 - Friday
Housing Starts, May (8:30): 1164K actual versus 1150K expected, 1167K prior
(revised from 1172K)
Building Permits, May (8:30): 1138K actual versus 1150K expected, 1130K
prior (revised from 1116K)
June 22 - Wednesday
MBA Mortgage Index, 06/18 (7:00): -2.4% prior
FHFA Housing Price I, April (9:00): 0.7% prior
Existing Home Sales, May (10:00): 5.50M expected, 5.45M prior
Crude Inventories, 06/18 (10:30): -0.933M prior
June 23 - Thursday
Initial Claims, 06/18 (8:30): 273K expected, 277K prior
Continuing Claims, 06/11 (8:30): 2157K prior
New Home Sales, May (10:00): 560K expected, 619K prior
Natural Gas Inventor, 06/18 (10:30): 69 bcf prior
June 24 - Friday
Durable Orders, May (8:30): -0.6% expected, 3.4% prior
Durable Orders, ex-transports, May (8:30): 0.1% expected, 0.4% prior
Michigan Sentiment - Final, June (10:00): 94.0 expected, 94.3 prior
End part 1 of 3
_______________________________________________________
Customer Support: http://www.InvestBilling.com
1153 Bergen Pkwy - Suite I #502 - Evergreen, CO 80439
6/18/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: None issued
Entry alerts: KERX; NOV; UNT
Trailing stops: VMW
Stop alerts: AGN
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
- Thursday reversal but no Friday follow through as stocks struggle to hold
the line.
- Fed feckless and confused, Administration does not care. We are on our
own.
- AAPL banned in Beijing
- Fed officials go full dove, rate hiking 'cycle' all but over.
- Indices split in their strength. Same leadership groups still look good.
Thursday sold off but reversed upside, looking as if the pullback to test
the last higher highs was ending and stocks would advance. Leadership groups
performed decent enough. Friday, futures were lower. No big deal, just a
lower open leading to bids. It did, after further selling. Then, unlike
Thursday, the stock indices had to fight to recover gains and by the close
on SP500 closed positive.
SP500 -6.77, -0.33%
NASDAQ -44.57, -0.92%
DJ30 -57.94, -0.92%
SP400 0.08%
RUTX -0.30%
SOX -0.82%
Volume: Exploded on both exchanges given quad-expiration. No point even
mentioning the levels.
Bigger Picture.
We are on our own. We being US citizens and the economy. The Federal
Reserve is so feckless, so consumed with indecision and self-doubt, it could
star in a Woody Allen movie. The Administration is devoid of interest in
the economy, dogmatically answering all questions economic by reciting 4.7%
unemployment rate, as if almost one-third of the US population not working,
one-third that is all made up of working aged people mind you, is a sign of
robust growth.
How many jobs??!!
A Fed that cannot act when confronted even with the slightest deviation from
its script and a lame duck Administration believing in tax, tax, tax and
spend, spend, spend in order to fulfill its interests in legacy building and
ideological end games. Not great in and of themselves, but layered on top
of a world economy that continues to slide toward another global decline
(Rio de Janeiro, 49 days from the Olympics, announces a "public calamity"
due to the Brazilian financial crisis), the US included, the US citizen and
business owner is left in, at best, limbo, at worst heading for a lower
standard of living and closing in on bankruptcy.
If there was EVER a classic, textbook example of why there is no need for a
Federal Reserve, this is it. The only reason for a Fed was supposedly to
provide liquidity in times of stress. That has morphed, however, into an
economic micromanagement team, tinkering with rates, printing money,
purchasing assets, and more we don't even know about because, heaven forbid,
the Congress, the elected body, should be able to monitor what the Fed is
doing. We might find out just whose interest the Fed has as its primary
focus. All of this, of course, with other people's money.
This Fed, however, proves the utter futility of a small group of elites to
understand and manage markets. Greenspan embarked upon a campaign to
prevent the 'wealth effect' from causing a 'runaway consumer' and lead to
inflation. After he aided in wrecking the US economy and permanently
sending hundreds of thousands of US breadwinner jobs overseas he asked,
anyone, for data that there really was such a thing as a wealth effect.
Bernanke based his entire QE theories on a wealth effect, buying assets
specifically to inflate financial asset prices and make people feel rich so
they would buy, companies would invest to generate supply to meet the
demand, and the economy would pull out of the massive collapse. It just
didn't happen. The Fed didn't realize that if it gave money away to the
financial institutions and made it possible to make guaranteed returns, why
would they lend the money? If huge company executives could use zero
interest money to buy back stock, thus raising their EPS without making one
more item or investing one more cent, then get performance bonuses for
raising the stock price. Who in their right mind would take a risk in that
situation and blow making money on a sure thing? We have seen the result:
no one! US capital investment is horrid and has been horrid since these
programs started. Buybacks only inflate prices, more keeping the cycle
alive.
So smart, yet so stupid. Markets are the collection of every available
scrap of information, synthesized into prices based upon the probabilities
that information suggests. It is the pure price that factors in all human,
natural, and I guess even unnatural events. It is utter folly that a
handful of ivory tower elites could fathom how markets work in the first
place and then direct accurately direct outcomes. Humans might as well try
to accurately predict the weather and take steps to try and direct outcomes
even when they have no control on externalities such as, say, the sun. Oh,
but we are trying to do THAT as well and failing equally atrociously. It is
even to the point Greenspan now says the Fed doesn't really know what it is
doing, just experimenting.
Then, even when it has set out definite rules to follow, when confronted
with any possible upset to its plans, it pulls a Sherman from 'American Pie'
and pisses itself.
Thus, when every criterion the Fed set out to hike rates was met, when China
sneezed the Fed didn't hike. The jobs report flopped, but Yellen said it
was still likely transient. Then the Brexit polls showed the people of the
UK actually want their independence back from a rule-crazy, immigration
pushing elite. Oh, can't hike in that climate; what would the world think?
So, we have an FOMC decision this past week that virtually eliminated any
more than one more rate hike for the year, and frankly I don't think the Fed
will even get there because the world economic situation continues to
worsen. The Fed went from statements that the market was misreading the Fed
minutes, that hikes were indeed coming, and Yellen even saying the Fed had
to get more ammunition back in the gun -- just two weeks ago -- to full
capitulation.
Again, a classic textbook case of why we just need a Fed, if we need one at
all, that can only act to inject some liquidity on a temporary, defined,
finite timetable and then leave the market. If that doesn't fix the
problem, the markets will have to fix themselves. Simple, takes the human
element out of it.
Venezuelan riots at night.
Lots of textbook examples over the past 15 years to teach us once again what
we knew worked and didn't work. Socialism: Venezuela. Keynes economic
theories: Japan, China, US (lower standards of living, massive segments of
the populations not working, wages declining for years). Government
controlled housing markets. Stimulus/deficit spending. And the grand daddy
of them all, the 97% decline in the value of the dollar since the US Federal
Reserve was established. The dollar buys 97% less of what it could buy
pre-Fed while gold still buys the relative same items at the same quality it
has always bought.
THE MARKET
Friday the stock market pulled a mini-Thursday, i.e. selling off intraday
but then recovering. Thursday many indices made it positive. Friday most
did not. On a week where the stock indices and leading groups made nice
tests of the last highs and were set up to rebound, the most notable feature
was their inability to do so. Wednesday a break higher failed. Thursday
stocks sold off hard but recovered, leaving them in position for a Friday
expiration rebound.
Didn't pan out. Friday futures traded lower as Housing Starts fell 0.3% in
what should be a strong May period. Bullard went full frontal dove from
hawk, saying only one rate hike would be needed until 2018!
The market reacted to a wholly feckless, confused, and unnerved Federal
Reserve as you would expect: it sold off. Sure rates were going nowhere,
but when those anointed ones who micromanage our economy have no clue of
what the economy is doing and change their views as each data point comes
out, we are all in deep.
Stocks did recovery from the lows, but only SP400 made it back to positive.
It was not a banner day. Sure it was blamed on the death of the UK
parliamentarian shot and stabbed by a mentally deranged individual, but that
is not the issue. It goes beyond that: a world economy that people feel is
slipping into another major slowdown and those in power to prevent or buffer
the move don't have a clue as to what to do.
The failure to take advantage of a bounce attempt so neatly set up is
disconcerting for the upside. It leaves the market, in our view, now more
vulnerable to the downside even though some leadership groups, e.g. oil,
performed beautifully on Friday. Indeed they still may perform beautifully
for awhile even if the rest of the market fades.
We found ourselves entering more downside positions last week as they
presented themselves along with the good upside in oil and software. AAPL
was ripe and we entered; Friday Beijing banned iPhone 6 sales in China's
ongoing move to block Apple taking over the market or at least extorting
large sums of profits if it allows AAPL in. FB presented a natural new
entry. DIA, QID as well.
Again, the market could go down just as easily, indeed likely more easily,
than up from this juncture. There are some great sectors, e.g. oil and gas,
but the overall action is quite worrisome for the market continuing moving
higher.
Thus we have a lot of downside plays to go along with many still very good
upside plays.
CHARTS
NASDAQ: Thursday I was concerned NASDAQ could not rise off of that
reversal. It certainly could not Friday as it gapped lower and closed at a
lower closing low for this June move lower. Expiration so volume spiked.
NASDAQ double topped from April to June and now it is in the process of
selling, breaking an interim support level Friday. Many big names are
struggling and of course that pushes NASDAQ down, NASDAQ 100 (-1.13%) even
more. Not much to like right now.
SP500: No major issue Friday, just the same inability to move higher off
this 50 day EMA test. Four days working laterally though volatile intraday.
MACD and volume lagged on the June higher high, not a good combination. Has
to hold these 50 day MA levels. Overall the pattern is toppy.
SOX: Acting much better than the other indices. Tapping the April highs
Thursday and Friday on the lows, rebounding to close and holding that break
higher. This is a classic test, breaking higher through resistance then
fading to test, bouncing off it from the intraday lows. SOX looks quite
good with this action.
RUTX: The small caps are trying to hang on. Broke to a higher recovery high
into the second week of June, tested, and Tuesday to Friday held in a
lateral move. Just below the April highs, trying to set up for a new bounce.
Not bad, but this is definitely a 'show me' kind of situation for all
indices.
SP400: Doji Friday, the fourth in a row as SP400 moves laterally along the
rising 50 day MA's and just below the April peak. Good positioning similar
to SOX. Looks as if it is up to the chips and midcaps.
DJ30: after the Thursday reversal DJ30 looked good for a higher low and
bounce. After Friday it is not bad, just not as great. AAPL hurt it with
the Beijing ban. Anyway, it is working in its range, trying to set up a
move upside. Nothing determinative yet.
LEADERSHIP
Oil: Sporting excellent action as oil rebounded and oil stocks rebounded
off doji tests as well. ORIG, SPN. We are looking at new plays on CWEI,
ATW.
Software: ROVI, CYBR had great weeks. RHT not bad but has to make a move.
Chips: Overall still quite nice as the SOX indicates, but some recent
leaders struggling, e.g. SLAB, AGVO.
Biotechs/Drugs: Some working well, others struggling. GALE continues
blowing higher. CELG is still selling. More struggling starting up.
Industrials: Still fine, e.g. CAT, HON.
Construction: Still good after a test. MDR bouncing, GRAM holding support.
Big Names: FB, AAPL down hard again Friday. GOOG bombed lower. NFLX could
do the same, and AMZN is heavy right now and we are looking at downside
plays on both in the event NASDAQ breaks further downside.
THE MARKET
MARKET STATISTICS
NASDAQ
Stats: -44.58 points (-0.92%) to close at 4800.34
Volume: 2.397B (+31.72%)
Up Volume: 1.16B (+100M)
Down Volume: 1.44B (+671.36M)
A/D and Hi/Lo: Decliners led 1.29 to 1
Previous Session: Decliners led 1.18 to 1
New Highs: 43 (+2)
New Lows: 51 (-30)
S&P
Stats: -6.77 points (-0.33%) to close at 2071.22
NYSE Volume: 2.1B (+134.98%)
A/D and Hi/Lo: Advancers led 1.54 to 1
Previous Session: Decliners led 1.04 to 1
New Highs: 92 (-5)
New Lows: 15 (-28)
DJ30
Stats: -57.94 points (-0.33%) to close at 17675.16
SENTIMENT INDICATORS
VIX: 19.41; +0.04
VXN: 20.25; +0.42
VXO: 18.63; -1.67
Put/Call Ratio (CBOE): 1.11; -0.28
Four straight over 1.0 on the close as the negative sentiment in the options
market prevails. Maybe it will be enough to rebound stocks along with the
leaders holding up.
10 of the last 16 below 1.0. 24 of 36 over 1.0. They did their job,
playing a part in bouncing the market. Now the extremes are backing off as
you would expect. Even so, they are still fairly high readings after a
solid move higher.
Bulls and Bears: Bulls faded back to the levels three weeks back and of
course bears, as it seems usually the case, held more or less steady. Still
more bullish.
Bulls: 45.9 versus 47.3
Bears: 23.5 versus 23.8
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 45.9%
47.3% versus 45.4% versus 35.4% versus 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: 23.5%
23.8% versus 23.7% versus 24.0% versus 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): 1.61% versus 1.57%. After a big surge through Thursday,
TLT gapped lower off a tombstone doji. After 3 weeks of surging, just a bit
overdone.
Historical: 1.57% versus 1.58% versus 1.62% versus 1.61% versus 1.64% versus
1.68% versus 1.70% versus 1.72% versus 1.73% versus 1.70% versus 1.80%
versus 1.84% versus 1.85% versus 1.85% versus 1.83% versus 1.87% versus
1.86% versus 1.83% versus 1.85% versus 1.85% versus 1.85% versus 1.76%
EUR/USD: 1.12778 versus 1.12554. Still holding a volatile lateral move
below the 50 day SMA.
Historical: 1.12554 versus 1.12731 versus 1.2104 versus 1.1297 versus
1.12526 versus 1.13149 versus 1.1412 versus 1.13570 versus 1.13553 versus
1.13668 versus 1.1149 versus 1.1186 versus 1.1128 versus 1.1113 versus
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
USD/JPY: 104.124 versus 104.68. Dollar keeps bombing lower versus the yen.
At some point before too long Japan will break its vow of nonintervention.
Historical: 104.68 versus 105.62 versus 106.085 versus 106.019 versus
106.933 versus 106.966 versus 106.66 versus 107.347 versus 107.72 versus
106.55 versus 106.66 versus 108.86 versus 109.99 versus 111.285 versus
110.233 versus 109.70 versus 109.72 versus 109.99 versus 109.25 versus
110.165 versus 109.985 versus 110.187
Oil: 48.56, +1.82. After fading to the 50 day MA through Thursday in a
test of the higher high, oil blasted upside Friday, starting the recovery.
Gold: 1301.60, +3.20. Up all week, moving to a higher closing high. Not a
lot of power on the moves, but moving upside.
MONDAY
The market has a split of sorts. SOX, SP400 looking solid. RUTX, SP500
in-between. DJ30 just watching. Big Names breaking lower, many of the same
leaders holding and then bouncing Friday.
The market is going to have to make a decision. We still have upside plays
in the solid sectors and if the market breaks higher or those sectors do, we
have plays for more of them. We also have more downside plays because the
market is showing those setting up and breaking lower. At some point they
market has to make the direction they are all going. For now, while there
are good upside sectors remaining, we feel the market is in trouble.
That is, however, just a feeling. It is not the market move. So, we play
the individual moves that make up the market moves. Again, there are some
very good looking upside plays remaining. Quite a few for that matter.
Fitting the Clash is a UK band.
There is also the Brexit vote Thursday. There could be some gyrations ahead
of that. If they stay, much rejoicing. If they go, temporary panic. Both
would be overreactions to actual events.
Unfortunately the moves in anticipation and in reality can be hard on the
psyche. So, we stick with good patterns as long as they are good patterns.
If we see good moves in good sectors, we go with that. The downside can be
more fickle, but if this move breaks some of these big names will provide
impressive returns, in size and in speed.
One step at a time. See how the leading indices hold, see how the leading
stocks perform. We base our actions off of them, not the hyperbole being
spread every day on the financial stations.
Have a great weekend and Father's Day!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4800.34
Resistance:
4811 is the November 2014 peak (intraday)
4815 is the December 2014 peak
The 200 day SMA at 4817
4836 is the March 2016 peak
The March 2015 lows at 4843 and 4825
The 50 day EMA at 4843
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.
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:
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 2071.22
Resistance:
2079 is the intraday all-time high from November 2014
2094 is the December 2014 high
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:
The 50 day EMA at 2070
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2023 is the November 2015 low
2020 is the September 2015 intraday high
The 200 day SMA at 2017
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 17,675.16
Resistance:
The 50 day EMA at 17,691
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
18,168 is the April 2016 recovery high
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
The 200 day SMA at 17,191
17,152 is the mid-July post bear market high
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
June 17 - Friday
Housing Starts, May (8:30): 1164K actual versus 1150K expected, 1167K prior
(revised from 1172K)
Building Permits, May (8:30): 1138K actual versus 1150K expected, 1130K
prior (revised from 1116K)
June 22 - Wednesday
MBA Mortgage Index, 06/18 (7:00): -2.4% prior
FHFA Housing Price I, April (9:00): 0.7% prior
Existing Home Sales, May (10:00): 5.50M expected, 5.45M prior
Crude Inventories, 06/18 (10:30): -0.933M prior
June 23 - Thursday
Initial Claims, 06/18 (8:30): 273K expected, 277K prior
Continuing Claims, 06/11 (8:30): 2157K prior
New Home Sales, May (10:00): 560K expected, 619K prior
Natural Gas Inventor, 06/18 (10:30): 69 bcf prior
June 24 - Friday
Durable Orders, May (8:30): -0.6% expected, 3.4% prior
Durable Orders, ex-transports, May (8:30): 0.1% expected, 0.4% prior
Michigan Sentiment - Final, June (10:00): 94.0 expected, 94.3 prior
End part 1 of 3
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Sunday, June 12, 2016
The Daily, Part 1 of 3, 6-11-16
* * * *
6/11/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: After a good week of taking gain, none for Friday
Entry alerts: None issued
Trailing stops: CWEI; SWN; XEC
Stop alerts: AMKR; BLUE; C; CWEI; MS
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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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http://www.investmenthouse.com/alertdaily.html
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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
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of the day of the week.
MARKET SUMMARY
- Stocks, already starting their pullback, get a push from Brexit poll
- Not such an orderly test to end the week.
- Some leadership groups take on water as market gets a bit defensive.
- Money resumes its outflow
- A bit early to look for a lot of new upside.
Friday started lower on top of the Thursday modest fade. Unlike Thursday,
there was no afternoon recovery. A lower start did try to rebound, but any
possibility of a second serious afternoon recovery disappeared when a UK
newspaper poll showed the Brits favoring Brexit by 55% to 45%. Any weak buy
attempts were squashed as stocks sold to session lows in the afternoon. A
late bounce tried to put a happier face on the day but it was thinly veiled
and did not help many areas.
SP500 -19.41, -0.92%
NASDAQ -64.07, -1.29%
DJ30 -119.85, -0.67%
SP400 -1.44%
RUTX -1.46%
SOX -1.67%
VOLUME: NYSE +8%, NASDAQ +12%. Volume was up but lower on NYSE, back up to
average on NASDAQ. A bit heavier selling on the Friday drop shows some
dumping but not wholesale fleeing.
A/D: NYSE -4.2:1, NASDAQ -3.8:1. Impressive leap in negative breadth
thanks to the small and midcaps getting whacked.
Definitely a non-growth oriented session as DJ30 showed relative strength
leadership. Tech, small caps, midcaps all took it on the chin, or other
parts not mentioned in a family setting.
That said, the indices didn't show any breakdowns but the decline was not
exactly orderly and was a larger magnitude than those showing a pullback due
mostly to the lack of new bids.
Leadership was mixed. Oil, biotechs, financials took it in the shorts. Big
Names, chips, construction, industrial equipment, big name industrials,
software held up just fine.
It could still be early in the pullback, however. If there was no news out
there that could potentially rock the boat, then you look for a shorter
pullback. Might get that anyway, but there is that Brexit vote that, as
Friday showed, can cause issues for the market. That vote is not until June
23, almost two weeks away. Lovely.
The news was light to end the week. There was the Brexit poll released in
the afternoon. Bonds around the globe continued their surge with yields
hitting record lows in Germany and other European countries. US treasuries
were snapped up at every auction, driving Treasury yields lower and lower
and pushing TLT to a higher closing high, moving past the February peak
during the market plunge lower.
Yes you heard right. TLT is a 2016 new closing high, eyeing the January
2015 peak. Bonds are being bought as hard and fast as they were during the
February market scare, YET stock indices are near their 2015 all-time highs
despite the late week pullback.
Sentiment. I talked about the negative sentiment that surrounded the lows
hit in May. They helped trigger it. There is still a lot of negative
sentiment out there even as some turned way too bullish (certain people on
CNBC among others) over just a rebound move.
Bonds can indicate the negative sentiment is correct sentiment. Bonds are
considered the smartest money in the market and accurately forecast moves.
Of course with the FOMC intervening constantly, rates get skewed. At times
of stress, however, even if they are shifted up or down on the scale due to
Fed action, they typically still project the correct read of economics or
other worry.
Given that, if bonds are surging to levels hit in the February selling, one
would conclude that something is amiss. The negative sentiment was good
enough, combined with the double bottoms at the 38% Fibonacci retracement on
some of the indices, to bounce the markets. Question is, as we noted all
along, what will be the outcome of any test, one that is on right now?
This pullback is, as noted, rather abrupt in some areas, particularly growth
that has been a large part of the move higher. It is not a slam dunk,
indeed it never was, that this move continues higher after a test. The big
1.5 year top is still intact, the economic data is sketchy even in the best
light, and money resumed leaving the market last week (-2.6B after a +1.6B
bounce before that). Remember, the market is really only this high because
of the Fed's 'wealth effect' actions to push stocks higher with QE. Now
they are trying to hold stocks higher by being vague about when rate hikes
resume. The lack of rate hikes, however, will not support the economy and
thus not, ultimately, support stocks.
But for the leadership groups having been acting well, this is a challenged
rebound. Friday some of those groups, as noted, saw money fleeing. If they
don't hold the line the first half of the coming week, you have to discount
more downside.
That is why we were taking gain as it presented itself and started paring
back on the upside positions. We will now see if the pullback was just
exacerbated by the Brexit poll results and becomes more orderly while
leadership groups hold the line and their patterns. Or they don't. Then
the larger top takes precedence until and if the FOMC acts.
This is thus not the best time to be moving in on the upside plays. We are
going to let the leaders test more and show they are ready to bounce given
Friday's drop for many was rather precipitous and unceremonious. Some are
just fine, e.g. GOOG, and we can still look at it upside as well as some
short term trades, options trades in some cases, on stocks such as CAT as it
can bounce an easy 4 points to the prior peak and we can make money on that.
Indeed, that is the key right now until the market shows what this pullback
is made of: plays that can make money near term without having to go far.
If they end up going far, groovy. If we make 50+% on some option trades on
a short move, that more than works as well. We may get some great entries
on the upside after the Brexit upchucking from Friday ends, and we will be
watching for those, but they are going to have to set up and show the moves.
THE MARKET
CHARTS
RUTX: Sharp drop through the 10 day EMA and looks to be heading toward the
late April peak (1154 closing, 1164 Friday close) or 20 day EMA (1152). If
the rally is to survive, that is the range you look for it to hold. Rally
leader, important group.
SP400: Gapped and sold off through the 10 day EMA and is moving on the 20
day and the late April high (1488 closing, closed at 1499 Friday). As of
Friday SP400 is still in the range of the summer 2015 highs, but right at
the lower end.
SOX: Faded through the 10 day EMA though still holding well above the early
December high (691; closed at 699 Friday). It is now testing the break to a
higher high as expected, and how this leaders holds the move is key for the
rally.
NASDAQ: Gapped through the 10 day EMA, sold below the 20 day EMA on the
close. MACD was lower as NASDAQ put in a higher high in early June, so not a
powerful move. The 50 day SMA (4858) is near the lower gap point from late
May (4861), a rather logical point to test given the rather sizeable Friday
drop.
SP500: Faded to test the 20 day EMA on the low, recovered a bit. The move
to the higher rally high was not that strong, so this test is not that bad
at all. Lower MACD similar to NASDAQ but holding up better thus far.
DJ30: Similar to SP500, DJ30 shows relative strength, tapping the 20 day
EMA on the low and rebounding to cut the losses. Never made a higher high on
this move. Showing relative strength on the selling, but then again, it
never really moved that well on the rally.
LEADERSHIP
Oil: The losses started to get rather large Friday though some oil stocks
held up well. SWN, CWEI, XEC lost chunks. Others were not bad, e.g. WMB,
PTEN, GPOR, CVX. Definitely some pressure here, however.
Financial: Suffering some woes with gaps lower again: BAC, C, MS, GS.
Construction: Not bad as GRAM, MDR were lower but holding the trend higher.
Biotech/Drugs: Struggling for certain. BLUE, CELG, BIIB. But not all: GALE
was up 5%, XLRN rose 2.7%. PACB closed at the 10 day EMA. Still some very
interesting patterns in the group.
Metals: Steel mostly just tested its move, AKS, RS, STLD. FCX (copper) did
not fare as well, gapping to the bottom of the four week range. Precious
metals were lower but not that low.
Chips: Down but not bad. QRVO fell to the 10 day EMA. AVGO ditto. SLAB
broke it but did not dive. AMKR was iffy so we closed it. MXL is in a nice
test of the 20 day EMA; wow, an orderly test.
Big Names: GOOG still is setting up well. SBUX could put in a bounce off
this four week range after the selloff to mid-May. FB is fading to test the
50 day MA's in a rather decent test. AMZN gave up some ground but looks
solid enough; not going to try and short it, at least not just yet.
Software: Rather solid overall and could give some new entries after tests,
e.g. VMW, FFIV. RHT is testing the 20 day EMA on lower volume.
Industrial/Equipment: Some interesting tests, e.g. CAT. UTX is hanging in.
HON rallied nicely into Thursday, took a breather Friday. These are seeing
almost defensive money move their way.
MARKET STATISTICS
NASDAQ
Stats: -64.07 points (-1.29%) to close at 4894.55
Volume: 1.779B (+11.69%)
Up Volume: 341.31M (-322.3M)
Down Volume: 1.47B (+549.63M)
A/D and Hi/Lo: Decliners led 3.74 to 1
Previous Session: Decliners led 2.23 to 1
New Highs: 49 (-51)
New Lows: 55 (+22)
S&P
Stats: -19.41 points (-0.92%) to close at 2096.07
NYSE Volume: 877.7M (+8.02%)
A/D and Hi/Lo: Decliners led 4.16 to 1
Previous Session: Decliners led 1.64 to 1
New Highs: 139 (-55)
New Lows: 25 (+16)
DJ30
Stats: -119.85 points (-0.67%) to close at 17865.34
SENTIMENT INDICATORS
VIX: 17.03; +2.39
VXN: 17.64; +1.96
VXO: 15.54; +1.86
Put/Call Ratio (CBOE): 1.09; +0.15
First 1.0+ on the close in over a week. 9 of the last 11 below 1.0. 20 of
31 over 1.0. They did their job, playing a part in bouncing the market.
Now the extremes are backing off as you would expect. Even so, they are
still fairly high readings after a solid move higher.
Bulls and Bears: Bulls rose again though just 2 points after the 10 point
jump the week before. From gloom to almost happy. Now the market has
stumbled and it will be interesting and instructive to see how fast the
bears run back in.
Bulls: 47.3 versus 45.4
Bears: 23.8 versus 23.7
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: 47.3%
45.4% versus 35.4% versus 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: 23.8%
23.7% versus 24.0% versus 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): 1.64% versus 1.68%. New closing high for the year.
Historical: 1.68% versus 1.70% versus 1.72% versus 1.73% versus 1.70% versus
1.80% versus 1.84% versus 1.85% versus 1.85% versus 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%
EUR/USD: 1.12526 versus 1.13149. Breaking below the 50 day MA's after
staling at the early April highs. Kind of a head and shoulders and now EUR
is heading back toward the late May low over the 200 day SMA. Brexit
worries if the pound is not there.
Historical: 1.13149 versus 1.1412 versus 1.13570 versus 1.13553 versus
1.13668 versus 1.1149 versus 1.1186 versus 1.1128 versus 1.1113 versus
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
USD/JPY: 106.933 versus 106.966. Still working laterally the past week,
though up and down in the range, right over the early May low.
Historical: 106.966 versus 106.66 versus 107.347 versus 107.72 versus
106.55 versus 106.66 versus 108.86 versus 109.99 versus 111.285 versus
110.233 versus 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
Oil: 48.88, -1.68. After surging to a higher rally high Wednesday, oil is
backtracking, aided by the stronger dollar. Held the 20 day EMA on the
Friday close, however, and that has been the trendline for this move to that
higher recovery high.
Gold: 1276.30, +3.60. Stormed higher on the week, reversing off the late
March low and rallying pat the March closing highs. Looks as if it is
working on the right shoulder to a head and shoulders, but that remains to
be seen.
MONDAY
As noted earlier, thanks to the leadership groups acting well, this rally
has survived. Without them, this is a challenged rebound. Friday some of
those groups saw money fleeing. If they don't hold the line the first half
of the coming week, you have to factor in more downside.
That is why we were taking gain as it presented itself and started paring
back on the upside positions, including new ones. We will now see if the
pullback was just exacerbated by the Brexit poll results and becomes more
orderly while leadership groups hold the line and their patterns. Or they
don't. Then the larger top takes precedence until and if the FOMC acts.
This is thus not the best time to be moving in on the upside plays. We are
going to let the leaders test more and show they are ready to bounce given
Friday's drop for many was rather precipitous and unceremonious. Some are
just fine, e.g. GOOG, and we can still look at it upside as well as some
short term trades, options trades in some cases, on stocks such as CAT as it
can bounce an easy 4 points to the prior peak and we can make money on that.
Indeed, that is the key right now until the market shows what this pullback
is made of: plays that can make money near term without having to go far.
If they end up going far, groovy. If we make 50+% on some option trades on
a short move, that more than works as well. We may get some great entries
on the upside after the Brexit hiccupping from Friday ends, and we will be
watching for those, but they are going to have to set up and show the moves.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4894.55
Resistance:
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.
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:
4894 is the September 2015 closing high
The 50 day SMA at 4858
The March 2015 lows at 4843 and 4825
4836 is the March 2016 peak
4815 is the December 2014 peak
The 200 day SMA at 4815
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 2096.67
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
The 50 day EMA at 2070
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2023 is the November 2015 low
2020 is the September 2015 intraday high
The 200 day SMA at 2015
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 17,865.34
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 50 day SMA at 17,788
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 17,691
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
The 200 day SMA at 17,168
17,152 is the mid-July post bear market high
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
June 10 - Friday
Michigan Sentiment - Pre, June (10:00): 94.3 actual versus 94.0 expected,
94.7 prior
Treasury Budget, May (14:00): -$52.5B actual versus -$84.1B prior
June 14 - Tuesday
Export Prices ex-ag., May (8:30): 0.5% prior
Import Prices ex-oil, May (8:30): 0.1% prior
Retail Sales, May (8:30): 0.3% expected, 1.3% prior
Retail Sales ex-auto, May (8:30): 0.4% expected, 0.8% prior
Business Inventories, April (10:00): 0.2% expected, 0.4% prior
June 15 - Wednesday
MBA Mortgage Index, 06/11 (7:00): 9.3% prior
PPI, May (8:30): 0.3% expected, 0.2% prior
Core PPI, May (8:30): 0.1% expected, 0.1% prior
Empire Manufacturing, June (8:30): -4.7 expected, -9.0 prior
Capacity Utilization, May (9:15): 75.2% expected, 75.4% prior
Industrial Productio, May (9:15): -0.2% expected, 0.7% prior
Capacity Utilization, May (9:15): 75.2% expected, 75.4% prior
Crude Inventories, 06/11 (10:30): -3.226M prior
FOMC Rate Decision, June (14:00): 0.37% expected, 0.37% prior
Net Long-Term TIC Fl, April (16:00): $78.1B prior
June 16 - Thursday
CPI, May (8:30): 0.3% expected, 0.4% prior
Core CPI, May (8:30): 0.2% expected, 0.2% prior
Initial Claims, 06/11 (8:30): 270K expected, 264K prior
Continuing Claims, 06/04 (8:30): 2095K prior
Philadelphia Fed, June (8:30): 1.2 expected, -1.8 prior
Current Account Bala, Q1 (8:30): -$125.0B expected, -$125.3B prior
NAHB Housing Market , June (10:00): 59 expected, 58 prior
Natural Gas Inventor, 06/11 (10:30): 65 bcf prior
June 17 - Friday
Building Permits, May (8:30): 1147K expected, 1116K prior
Housing Starts, May (8:30): 1155K expected, 1172K prior
Building Permits, May (8:30): 1147K expected, 1116K prior
End part 1 of 3
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MARKET ALERTS:
Targets hit: After a good week of taking gain, none for Friday
Entry alerts: None issued
Trailing stops: CWEI; SWN; XEC
Stop alerts: AMKR; BLUE; C; CWEI; MS
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annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to
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of the day of the week.
MARKET SUMMARY
- Stocks, already starting their pullback, get a push from Brexit poll
- Not such an orderly test to end the week.
- Some leadership groups take on water as market gets a bit defensive.
- Money resumes its outflow
- A bit early to look for a lot of new upside.
Friday started lower on top of the Thursday modest fade. Unlike Thursday,
there was no afternoon recovery. A lower start did try to rebound, but any
possibility of a second serious afternoon recovery disappeared when a UK
newspaper poll showed the Brits favoring Brexit by 55% to 45%. Any weak buy
attempts were squashed as stocks sold to session lows in the afternoon. A
late bounce tried to put a happier face on the day but it was thinly veiled
and did not help many areas.
SP500 -19.41, -0.92%
NASDAQ -64.07, -1.29%
DJ30 -119.85, -0.67%
SP400 -1.44%
RUTX -1.46%
SOX -1.67%
VOLUME: NYSE +8%, NASDAQ +12%. Volume was up but lower on NYSE, back up to
average on NASDAQ. A bit heavier selling on the Friday drop shows some
dumping but not wholesale fleeing.
A/D: NYSE -4.2:1, NASDAQ -3.8:1. Impressive leap in negative breadth
thanks to the small and midcaps getting whacked.
Definitely a non-growth oriented session as DJ30 showed relative strength
leadership. Tech, small caps, midcaps all took it on the chin, or other
parts not mentioned in a family setting.
That said, the indices didn't show any breakdowns but the decline was not
exactly orderly and was a larger magnitude than those showing a pullback due
mostly to the lack of new bids.
Leadership was mixed. Oil, biotechs, financials took it in the shorts. Big
Names, chips, construction, industrial equipment, big name industrials,
software held up just fine.
It could still be early in the pullback, however. If there was no news out
there that could potentially rock the boat, then you look for a shorter
pullback. Might get that anyway, but there is that Brexit vote that, as
Friday showed, can cause issues for the market. That vote is not until June
23, almost two weeks away. Lovely.
The news was light to end the week. There was the Brexit poll released in
the afternoon. Bonds around the globe continued their surge with yields
hitting record lows in Germany and other European countries. US treasuries
were snapped up at every auction, driving Treasury yields lower and lower
and pushing TLT to a higher closing high, moving past the February peak
during the market plunge lower.
Yes you heard right. TLT is a 2016 new closing high, eyeing the January
2015 peak. Bonds are being bought as hard and fast as they were during the
February market scare, YET stock indices are near their 2015 all-time highs
despite the late week pullback.
Sentiment. I talked about the negative sentiment that surrounded the lows
hit in May. They helped trigger it. There is still a lot of negative
sentiment out there even as some turned way too bullish (certain people on
CNBC among others) over just a rebound move.
Bonds can indicate the negative sentiment is correct sentiment. Bonds are
considered the smartest money in the market and accurately forecast moves.
Of course with the FOMC intervening constantly, rates get skewed. At times
of stress, however, even if they are shifted up or down on the scale due to
Fed action, they typically still project the correct read of economics or
other worry.
Given that, if bonds are surging to levels hit in the February selling, one
would conclude that something is amiss. The negative sentiment was good
enough, combined with the double bottoms at the 38% Fibonacci retracement on
some of the indices, to bounce the markets. Question is, as we noted all
along, what will be the outcome of any test, one that is on right now?
This pullback is, as noted, rather abrupt in some areas, particularly growth
that has been a large part of the move higher. It is not a slam dunk,
indeed it never was, that this move continues higher after a test. The big
1.5 year top is still intact, the economic data is sketchy even in the best
light, and money resumed leaving the market last week (-2.6B after a +1.6B
bounce before that). Remember, the market is really only this high because
of the Fed's 'wealth effect' actions to push stocks higher with QE. Now
they are trying to hold stocks higher by being vague about when rate hikes
resume. The lack of rate hikes, however, will not support the economy and
thus not, ultimately, support stocks.
But for the leadership groups having been acting well, this is a challenged
rebound. Friday some of those groups, as noted, saw money fleeing. If they
don't hold the line the first half of the coming week, you have to discount
more downside.
That is why we were taking gain as it presented itself and started paring
back on the upside positions. We will now see if the pullback was just
exacerbated by the Brexit poll results and becomes more orderly while
leadership groups hold the line and their patterns. Or they don't. Then
the larger top takes precedence until and if the FOMC acts.
This is thus not the best time to be moving in on the upside plays. We are
going to let the leaders test more and show they are ready to bounce given
Friday's drop for many was rather precipitous and unceremonious. Some are
just fine, e.g. GOOG, and we can still look at it upside as well as some
short term trades, options trades in some cases, on stocks such as CAT as it
can bounce an easy 4 points to the prior peak and we can make money on that.
Indeed, that is the key right now until the market shows what this pullback
is made of: plays that can make money near term without having to go far.
If they end up going far, groovy. If we make 50+% on some option trades on
a short move, that more than works as well. We may get some great entries
on the upside after the Brexit upchucking from Friday ends, and we will be
watching for those, but they are going to have to set up and show the moves.
THE MARKET
CHARTS
RUTX: Sharp drop through the 10 day EMA and looks to be heading toward the
late April peak (1154 closing, 1164 Friday close) or 20 day EMA (1152). If
the rally is to survive, that is the range you look for it to hold. Rally
leader, important group.
SP400: Gapped and sold off through the 10 day EMA and is moving on the 20
day and the late April high (1488 closing, closed at 1499 Friday). As of
Friday SP400 is still in the range of the summer 2015 highs, but right at
the lower end.
SOX: Faded through the 10 day EMA though still holding well above the early
December high (691; closed at 699 Friday). It is now testing the break to a
higher high as expected, and how this leaders holds the move is key for the
rally.
NASDAQ: Gapped through the 10 day EMA, sold below the 20 day EMA on the
close. MACD was lower as NASDAQ put in a higher high in early June, so not a
powerful move. The 50 day SMA (4858) is near the lower gap point from late
May (4861), a rather logical point to test given the rather sizeable Friday
drop.
SP500: Faded to test the 20 day EMA on the low, recovered a bit. The move
to the higher rally high was not that strong, so this test is not that bad
at all. Lower MACD similar to NASDAQ but holding up better thus far.
DJ30: Similar to SP500, DJ30 shows relative strength, tapping the 20 day
EMA on the low and rebounding to cut the losses. Never made a higher high on
this move. Showing relative strength on the selling, but then again, it
never really moved that well on the rally.
LEADERSHIP
Oil: The losses started to get rather large Friday though some oil stocks
held up well. SWN, CWEI, XEC lost chunks. Others were not bad, e.g. WMB,
PTEN, GPOR, CVX. Definitely some pressure here, however.
Financial: Suffering some woes with gaps lower again: BAC, C, MS, GS.
Construction: Not bad as GRAM, MDR were lower but holding the trend higher.
Biotech/Drugs: Struggling for certain. BLUE, CELG, BIIB. But not all: GALE
was up 5%, XLRN rose 2.7%. PACB closed at the 10 day EMA. Still some very
interesting patterns in the group.
Metals: Steel mostly just tested its move, AKS, RS, STLD. FCX (copper) did
not fare as well, gapping to the bottom of the four week range. Precious
metals were lower but not that low.
Chips: Down but not bad. QRVO fell to the 10 day EMA. AVGO ditto. SLAB
broke it but did not dive. AMKR was iffy so we closed it. MXL is in a nice
test of the 20 day EMA; wow, an orderly test.
Big Names: GOOG still is setting up well. SBUX could put in a bounce off
this four week range after the selloff to mid-May. FB is fading to test the
50 day MA's in a rather decent test. AMZN gave up some ground but looks
solid enough; not going to try and short it, at least not just yet.
Software: Rather solid overall and could give some new entries after tests,
e.g. VMW, FFIV. RHT is testing the 20 day EMA on lower volume.
Industrial/Equipment: Some interesting tests, e.g. CAT. UTX is hanging in.
HON rallied nicely into Thursday, took a breather Friday. These are seeing
almost defensive money move their way.
MARKET STATISTICS
NASDAQ
Stats: -64.07 points (-1.29%) to close at 4894.55
Volume: 1.779B (+11.69%)
Up Volume: 341.31M (-322.3M)
Down Volume: 1.47B (+549.63M)
A/D and Hi/Lo: Decliners led 3.74 to 1
Previous Session: Decliners led 2.23 to 1
New Highs: 49 (-51)
New Lows: 55 (+22)
S&P
Stats: -19.41 points (-0.92%) to close at 2096.07
NYSE Volume: 877.7M (+8.02%)
A/D and Hi/Lo: Decliners led 4.16 to 1
Previous Session: Decliners led 1.64 to 1
New Highs: 139 (-55)
New Lows: 25 (+16)
DJ30
Stats: -119.85 points (-0.67%) to close at 17865.34
SENTIMENT INDICATORS
VIX: 17.03; +2.39
VXN: 17.64; +1.96
VXO: 15.54; +1.86
Put/Call Ratio (CBOE): 1.09; +0.15
First 1.0+ on the close in over a week. 9 of the last 11 below 1.0. 20 of
31 over 1.0. They did their job, playing a part in bouncing the market.
Now the extremes are backing off as you would expect. Even so, they are
still fairly high readings after a solid move higher.
Bulls and Bears: Bulls rose again though just 2 points after the 10 point
jump the week before. From gloom to almost happy. Now the market has
stumbled and it will be interesting and instructive to see how fast the
bears run back in.
Bulls: 47.3 versus 45.4
Bears: 23.8 versus 23.7
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: 47.3%
45.4% versus 35.4% versus 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: 23.8%
23.7% versus 24.0% versus 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): 1.64% versus 1.68%. New closing high for the year.
Historical: 1.68% versus 1.70% versus 1.72% versus 1.73% versus 1.70% versus
1.80% versus 1.84% versus 1.85% versus 1.85% versus 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%
EUR/USD: 1.12526 versus 1.13149. Breaking below the 50 day MA's after
staling at the early April highs. Kind of a head and shoulders and now EUR
is heading back toward the late May low over the 200 day SMA. Brexit
worries if the pound is not there.
Historical: 1.13149 versus 1.1412 versus 1.13570 versus 1.13553 versus
1.13668 versus 1.1149 versus 1.1186 versus 1.1128 versus 1.1113 versus
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
USD/JPY: 106.933 versus 106.966. Still working laterally the past week,
though up and down in the range, right over the early May low.
Historical: 106.966 versus 106.66 versus 107.347 versus 107.72 versus
106.55 versus 106.66 versus 108.86 versus 109.99 versus 111.285 versus
110.233 versus 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
Oil: 48.88, -1.68. After surging to a higher rally high Wednesday, oil is
backtracking, aided by the stronger dollar. Held the 20 day EMA on the
Friday close, however, and that has been the trendline for this move to that
higher recovery high.
Gold: 1276.30, +3.60. Stormed higher on the week, reversing off the late
March low and rallying pat the March closing highs. Looks as if it is
working on the right shoulder to a head and shoulders, but that remains to
be seen.
MONDAY
As noted earlier, thanks to the leadership groups acting well, this rally
has survived. Without them, this is a challenged rebound. Friday some of
those groups saw money fleeing. If they don't hold the line the first half
of the coming week, you have to factor in more downside.
That is why we were taking gain as it presented itself and started paring
back on the upside positions, including new ones. We will now see if the
pullback was just exacerbated by the Brexit poll results and becomes more
orderly while leadership groups hold the line and their patterns. Or they
don't. Then the larger top takes precedence until and if the FOMC acts.
This is thus not the best time to be moving in on the upside plays. We are
going to let the leaders test more and show they are ready to bounce given
Friday's drop for many was rather precipitous and unceremonious. Some are
just fine, e.g. GOOG, and we can still look at it upside as well as some
short term trades, options trades in some cases, on stocks such as CAT as it
can bounce an easy 4 points to the prior peak and we can make money on that.
Indeed, that is the key right now until the market shows what this pullback
is made of: plays that can make money near term without having to go far.
If they end up going far, groovy. If we make 50+% on some option trades on
a short move, that more than works as well. We may get some great entries
on the upside after the Brexit hiccupping from Friday ends, and we will be
watching for those, but they are going to have to set up and show the moves.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4894.55
Resistance:
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.
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:
4894 is the September 2015 closing high
The 50 day SMA at 4858
The March 2015 lows at 4843 and 4825
4836 is the March 2016 peak
4815 is the December 2014 peak
The 200 day SMA at 4815
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 2096.67
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
The 50 day EMA at 2070
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2023 is the November 2015 low
2020 is the September 2015 intraday high
The 200 day SMA at 2015
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 17,865.34
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 50 day SMA at 17,788
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 17,691
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
The 200 day SMA at 17,168
17,152 is the mid-July post bear market high
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
June 10 - Friday
Michigan Sentiment - Pre, June (10:00): 94.3 actual versus 94.0 expected,
94.7 prior
Treasury Budget, May (14:00): -$52.5B actual versus -$84.1B prior
June 14 - Tuesday
Export Prices ex-ag., May (8:30): 0.5% prior
Import Prices ex-oil, May (8:30): 0.1% prior
Retail Sales, May (8:30): 0.3% expected, 1.3% prior
Retail Sales ex-auto, May (8:30): 0.4% expected, 0.8% prior
Business Inventories, April (10:00): 0.2% expected, 0.4% prior
June 15 - Wednesday
MBA Mortgage Index, 06/11 (7:00): 9.3% prior
PPI, May (8:30): 0.3% expected, 0.2% prior
Core PPI, May (8:30): 0.1% expected, 0.1% prior
Empire Manufacturing, June (8:30): -4.7 expected, -9.0 prior
Capacity Utilization, May (9:15): 75.2% expected, 75.4% prior
Industrial Productio, May (9:15): -0.2% expected, 0.7% prior
Capacity Utilization, May (9:15): 75.2% expected, 75.4% prior
Crude Inventories, 06/11 (10:30): -3.226M prior
FOMC Rate Decision, June (14:00): 0.37% expected, 0.37% prior
Net Long-Term TIC Fl, April (16:00): $78.1B prior
June 16 - Thursday
CPI, May (8:30): 0.3% expected, 0.4% prior
Core CPI, May (8:30): 0.2% expected, 0.2% prior
Initial Claims, 06/11 (8:30): 270K expected, 264K prior
Continuing Claims, 06/04 (8:30): 2095K prior
Philadelphia Fed, June (8:30): 1.2 expected, -1.8 prior
Current Account Bala, Q1 (8:30): -$125.0B expected, -$125.3B prior
NAHB Housing Market , June (10:00): 59 expected, 58 prior
Natural Gas Inventor, 06/11 (10:30): 65 bcf prior
June 17 - Friday
Building Permits, May (8:30): 1147K expected, 1116K prior
Housing Starts, May (8:30): 1155K expected, 1172K prior
Building Permits, May (8:30): 1147K expected, 1116K prior
End part 1 of 3
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The Daily, Part 1 of 3, 6-4-16
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6/4/2016 Investment House Daily
* * * *
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Targets hit: SWN
Entry alerts: None issued
Trailing stops: None issued
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
- Jobs bomb, building on the April rollover and following the rest of the
economy lower.
- Rate hike odds for June and July plummet, but not so sure the Fed will be
that quick to knuckle under.
- Unemployment rate drops to 4.7% as workers flee from the labor force.
- Same old story: all May jobs were part-time as the economy lost 312K
full-time jobs the past two months.
- Stock indices do a credible job of recovering.
- Large caps still at resistance. RUTX, SOX, SP400 likely ready to test a
good rally.
- Same groups still look pretty solid, and that is the rally's hope.
- A test is likely, and the question is who will lead out of the test:
growth upside or large caps downside?
Some big moves on Friday. Not in the stock market. After a shockingly bad
Jobs Report stocks did a fairly good job of managing the aftermath. The big
moves? Jobs. Bonds. Dollar. Rate hike expectations.
As you would expect after a 38K print for May jobs, stocks started lower.
After the first half hour, however, the turned to a slow steady rise into
the last hour. Only SOX closed positive on the session, but DJ30 and even
SP500 put in credible recovery performances even if SP500 missed the 2100
level that so many watch by a mere 0.87 points.
SP500 -6.13, -0.29%
NASDAQ -28.84, -0.58%
DJ30 -31.50, -0.18%
SP400 -0.41%
RUTX -0.55%
SOX 0.31%
VOLUME: NYSE -7%, NASDAQ -3%. No big surge in selling on the weak jobs, so
no real dumping of shares and no churn as SP500, DJ30, NASDAQ bump against
the April highs. That is a better scenario than volume rising as they bump
those levels but cannot break through.
A/D: NYSE 1.2:1, NASDAQ -1.6:1.
JOBS: If it was not so sad it would have been comical watching the
Administration trying to talk up an utterly pathetic jobs report.
Non-Farm: 38K versus 155K expected versus 123K April (from 160K). March
and April revisions -59K
3-month average: 116K/month. Pathetic.
Harry Doyle (Bob Uecker): How many jobs did we get? 38K G** D*** jobs?
Color man: You can't say 'G** D***' on the air.
Doyle: That's okay. No one is listening anyway.
'Major League,' 1989
Unemployment rate: 4.7% vs 5% expected vs 5.0% April. Why so low? 458,000
left the workforce. Take away a half million people from the labor pool and
you get a better unemployment rate the same way a company buys back stock
and raises its EPS even if earnings were actually worse. Magic! Except --
94.7M people are not in the workforce have no jobs.
Workweek: 34.4 versus 34.5 expected versus 34.4 prior (revised down from
34.5). The workweek just cannot gain traction and it is no wonder given the
Affordable Care Act is such that it behooves companies to not work an
employee more than 29 hours per week. That incentive is keeping the
workweek lower . . . along with an economy that is nowhere near as good
those against 'fiction peddling' are peddling.
Participation rate: 62.6% versus 62.8%. Big drop as 458K left the
workforce.
Part-time workers due to economic conditions (cannot find a full-time job):
+468K
Not in the workforce: 94.7M, +664K
Number of fulltime jobs since January: 0
Number of fulltime jobs lost the past two months: 312,000
Percentage of service jobs created of all jobs in May: 100%
Jobs breakdown:
Construction -15K
Mining: -10K
Manufacturing -18K
Temporary -21K
Healthcare +45K. The lion's share of jobs. Thank you Affordable Care Act,
right?
Professional and Business: +10K
Food and Beverage +22K
Retail +11K
Government +13K. It takes a lot of people to enforce bathroom rules, to
monitor bakeries to make sure they serve everyone, to collapse the
healthcare system, to spy on every conversation of every man, woman, child,
trans-gender person, etc.
As you can see, all of the jobs are again in the lower wage service areas of
the economy. Services. 100% of the jobs gains. Basically you can say the
US took a few steps back in the jobs picture.
Indeed, since 2014, the US added 455K waiters and bartenders, LOST 10K
manufacturing jobs.
Insult to injury: Payrolls would have been negative but for seasonal
adjustments.
BONDS
Ten year Treasury: 1.70% versus 1.80%. Bonds exploded higher, gapping
through the April and May twin peaks. Bonds are now knocking at the early
February high, the last high before the current four month trading range.
Quite the breakout as the market trashes any chance of a June and likely
July rate hike.
DOLLAR
As the rate hike chances faded, so too did the dollar's value. Supposedly
this is good for US businesses. Then why was it down so much when business
was so bad it was not hiring?
EUR/USD: 1.13668 versus 1.1149. Euro explodes higher off the 200 day SMA
test. Over the February peak, taking back half of the losses sustained since
the early May higher high.
USD/JPY: 106.55 versus 108.85. So much for breaking out of the downtrend.
That breakout move had all but failed and then came the insult, slamming the
dollar back down to the late April/early May lows. No breakout.
Jobs dive, bonds soar, the dollar dumps. Stocks? They sold but not hard,
managing a fairly decent recovery.
SP500 closed just below 2100 and that had the correction tongues wagging.
Could be correct as that is the April high and a potential double top with
lower MACD, indicating slowing momentum.
NASDAQ shows similar action, also at the April high on lower MACD. DJ30 is
not even at that level.
It appears the large cap indices are slowing at resistance. The small cap
and midcaps, however, blew through the April peaks. That does not mean they
won't test, but the money is moving their way, and they can test back toward
the April high and still be in position to rally.
That will be the main question: will the small and midcaps test then
rebound? If so, will they carry the large caps with them? Or, will the
large caps stall and fall, unable to move past the April peaks?
Thus far the leadership groups are still working, and that has been the tell
for the market direction. Biotechs and drugs struggled Friday, but they
have good patterns and have started breaking higher. Software still looks
strong. Oil as well. Financial stocks are of course weak after the
terrible economic data, and while many discount them in the market's bigger
picture, I would note that the market has performed better when they were
setting up positive patterns versus when they suffer interest rate related
drops.
Friday we didn't do much. We banked some solid 20% stock gain and 50+%
option gain on SWN. That was it. We figured the market has to recover from
what the jobs report dropped on it and thus the Friday direction may not be
that indicative of next week. With the leadership groups holding up well,
however, we were content to let our positions work.
THE MARKET
The large cap indices are at resistance from the April highs and elsewhere.
The small, midcap, and SOX indices broke to higher rally highs and are a bit
extended. Their test will be key as will the action of the large caps if
there is a successful test by the smaller caps. There are still leadership
groups performing nicely, and that is what has kept the rally alive.
CHARTS
RUTX: Sold back from Thursday's higher recovery high, but did cut the
losses in half. Easily above the 10 day EMA after its 9 session run.
Likely tests, and the April high (1154 closing) and the 10 day EMA (1148)
are logical targets.
SOX: Continued its rally though with less power. Gapped to the session
high, filled the gap, but then recovered some of the early gains. Long 15
session rally has SOX bumping the last trading range that held the June 2015
peak. About due for a test. 692 is the early December 2015 peak as well as
the 10 day EMA (689).
SP400: Punched a new rally high Thursday, then faded Friday. Tapped near
the 10 day EMA on the low, recovered to a more modest decline. Following
RUTX and SOX higher, working nicely up the 10 day EMA.
NASDAQ: Posted a higher closing high Thursday over the April closing high
but then gave it up Friday. Tested the 10 day EMA on the low, rebounded to
cut the losses by the close. Nice double bottom bounce off the 38% Fibonacci
retracement yielded this rally. Now it is at the prior high and
experiencing some resistance from that level as well as the October through
December trading range. Key test of resistance for NASDAQ.
SP500: Very similar situation to NASDAQ, at the April high that is also in
the October through December trading range. MACD lower. 2100 is a level
many watch as a key resistance point and thus far SP500 has not taken it
out. That will embolden some sellers and they will likely try to sell it
next week. Given the market is due a test that is okay. A lot will depend
upon how the other indices test their higher highs.
DJ30: Just following along, still below the April high but in the upper
half of the November through December range. Not bad action at all, holding
at the 20 day EMA and trying to put in a higher low.
LEADERSHIP
Everything was more or less under pressure Friday post-jobs, but the same
groups held their patterns and moves and look solid overall.
Oil: SWN surged early and gave us our initial target. NGL was up yet
again. CWEI was holding up at the 10 day EMA just fine. WMB, UNT also
holding nicely at the 10 day EMA. Overall just a solid group, holding their
trends and moving higher.
Drugs/Biotech: Struggled but holding up. XLRN reached down to the 10 day
EMA but rebounded to cut the losses. GALE gapped lower but then moved back
up. EVHC lost some ground but is trending higher. EXAS holding fine.
Basically not an up session, but taking a breather.
Financial: Struggled as interest rate hikes are deferred. MS, GS gapped
lower, but both held support and rebounded to doji. BAC, JPM did the same,
gapping, holding support on the low, recovering some lost ground. Not a
total washout and we will have to see what Yellen says Monday.
Construction: Not bad. GRAM moved higher off its test, posting a solid 4.6%
gain. MDR held steady at the 10 day EMA.
Industrial machinery: some good moves. DE gapped higher and cleared the
April and May peaks. CAT looks very good right now.
Chips: Not bad at all. XLNX trying to break higher from a two week lateral
move. MXL tested, but showing a doji at the 10 day EMA. QRVO up modestly
after a nice Wednesday and Thursday move. AVGO gapped higher on earnings.
NXPI testing the 10 day EMA after a nice two week run.
Software: Solid week. CYBR was flat on the day, but this after a solid
Tuesday to Thursday rally. RHT was flat as well, but it too put in a good
move on the week. VMW enjoyed a strong week, hitting our initial target
along the way.
MARKET STATISTICS
NASDAQ
Stats: -28.85 points (-0.58%) to close at 4942.52
Volume: 1.68B (-3.04%)
Up Volume: 520.83M (-639.17M)
Down Volume: 1.14B (+591.43M)
A/D and Hi/Lo: Decliners led 1.6 to 1
Previous Session: Advancers led 1.61 to 1
New Highs: 71 (-15)
New Lows: 33 (+8)
S&P
Stats: -6.13 points (-0.29%) to close at 2099.13
NYSE Volume: 888M (-6.72%)
A/D and Hi/Lo: Advancers led 1.17 to 1
Previous Session: Advancers led 1.86 to 1
New Highs: 182 (+64)
New Lows: 10 (+2)
DJ30
Stats: -31.5 points (-0.18%) to close at 17807.06
SENTIMENT INDICATORS
VIX: 13.47; -0.16
VXN: 15.03; -0.12
VXO: 12.59; -0.13
Put/Call Ratio (CBOE): 0.88; -0.03
4 of the last 6 below 1.0. 19 of 26 over 1.0. They did their job, playing
a part in bouncing the market. Now the extremes are backing off as you
would expect. Even so, they are still fairly high readings after a solid
move higher.
Bulls and Bears: As fast as bulls plunged the prior week they surged,
jumping 10 points. Highest reading in 7 weeks (47.5). Bears fell, but not
at the same rate. Back and forth action shows investment advisors are being
fickle, right? They were caught napping with the move, as bulls tumbled to
35 just as the rally started. Now they are right back in, saying they knew
it all along. While not at the 60 level that would condemn a rally, the big
moves show how fickle the big money is right now.
Bulls: 45.4 versus 35.4
Bears: 23.7 versus 24.0
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 45.4%
35.4% versus 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: 23.7%
24.0% versus 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): 1.70% versus 1.80%
Historical: 1.80% versus 1.84% versus 1.85% versus 1.85% versus 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: 1.13668 versus 1.1149. The dollar strikes back with a gain,
sending the Wednesday upside bounce in the euro back to the showers.
Historical: 1.1149 versus 1.1186 versus 1.1128 versus 1.1113 versus 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
USD/JPY: 106.55 versus 108.86
Historical: 108.86 versus 109.99 versus 111.285 versus 110.233 versus
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
Oil: 48.62, -0.44. Spent the week testing the prior week's gains. Modest
loss Friday, closing just below the 10 day EMA. This even as the dollar was
hammered. If the dollar stays lower, that acts as support for oil as oil is
priced in dollars. The weaker the dollar, the more dollars it takes to buy
oil, and thus the price rises.
Gold: 1242.90, +30.30. After slipping to the late March lows last week,
Friday gold exploded higher as the rate hike odds dropped sharply. Back to
the middle of the February to June range.
MONDAY
The carefully, if not foolishly, constructed meme to further raise interest
rates received a sharp blow. Jobs are one of the Fed's main indicators
prompting its new found courage to talk about hiking rates. Not hiking
rates, just talking about it. Of course the Fed could dogmatically focus on
the unemployment rate, but to do so reveals the Fed as totally mechanical
and almost pandering to a false narrative. I mean, we all know why the
unemployment rate is at 4.7%: almost one-third of the country is not
working, and that group is a much larger portion of the actual working-aged
group in society. Hey, if the other 7.4M people who are 'officially'
unemployed decided to leave the workforce, unemployment would be 0%! Surely
the Fed would hike rates then.
Yellen will talk Monday in Philadelphia and everyone will listen and watch
closely. You know what? I think she sticks to her guns regarding hiking to
get more ammo for when the next crisis arises. If she does not, what kind
of fool would the chairman and her fellow FOMC members appear? They
carefully construct the reasons for hiking, then one report and they go
running as if a skunk snuck in the committee room? Of course Yellen could
panic and revert to her nature, the one where she has the urge to migrate
every year and coo in the mornings. One would hope not.
Thus, the market could be right back where it was pre-jobs in terms of rate
hike expectations. All it takes is the chairman saying it was just one
report and the hikes are still on track. Then the financials start to
recover from Friday, and quite likely we see the same leadership groups
continue to work. We may see the latter group continue to work regardless.
That said, near term the market still could use a test. SOX and RUTX are up
nicely over the April highs and it is normal to test breaks through
resistance. SP500 and NASDAQ are struggling at the April highs, a natural
place to fade. As noted earlier, the question then becomes whether the
large caps drag down the leadership indices, or if the leaders (SOX, RUTX)
represent where the money is moving and pull the big names back up.
It is noteworthy that money actually moved back into equity funds last week
after fleeing for its life just as the market bottomed for this current
rebound move. Not a huge amount, but a net positive of $1.6B. Late to the
party? Perhaps, but pulling that short money back into the upside is how
rallies maintain themselves.
We are going to continue looking at the leadership groups of late, and if
there is a pullback we want to use that as stocks rebound, if they do
rebound. This current leg likely cannot rally much more before it needs to
test, and if there is a further move higher we want to use it to bank some
more gain. Then we let it test, see how the leadership groups hold and
setup, see if any new groups emerge, and if so, play them on a bounce.
Of course, the market is still in that big 1.5 year top and this level for
the indices is starting to tug on Superman's cape, so to speak. In other
words, we have to exercise caution and watch closely as any pullback starts.
What are the leadership groups doing? How are their stocks holding support?
What is the overall market volume? Breadth? The economy is weak, jobs are
rolling over to follow it, and the Fed likely still wants to hike rates.
Heck, even if it does not hike that won't prevent issues relating to a
weaker and weaker economy. So, we play the good stocks but we also have to
recognize where the market is.
Have a great weekend! Enjoy graduations and early summer. We have another
graduation party this weekend. It is a great time and everyone should make
a point of sharing it with friends and family.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4942.52
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
The 50 day SMA at 4845
4836 is the March 2016 peak
4815 is the December 2014 peak
The 200 day SMA at 4810
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 2099.13
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 2061
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 17,807.06
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 17,635
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 17,131
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
June 3 - Friday
Nonfarm Payrolls, May (8:30): 38K actual versus 155K expected, 123K prior
(revised from 160K)
Nonfarm Private Payr, May (8:30): 25K actual versus 160K expected, 130K
prior (revised from 171K)
Unemployment Rate, May (8:30): 4.7% actual versus 4.9% expected, 5.0% prior
(no revisions)
Hourly Earnings, May (8:30): 0.2% actual versus 0.2% expected, 0.4% prior
(revised from 0.3%)
Average Workweek, May (8:30): 34.4 actual versus 34.5 expected, 34.4 prior
(revised from 34.5)
Trade Balance, April (8:30): -$37.4B actual versus -$41.6B expected, -$35.5B
prior (revised from -$40.4B)
Factory Orders, April (10:00): 1.9% actual versus 1.6% expected, 1.7% prior
(revised from 1.1%)
ISM Services, May (10:00): 52.9 actual versus 55.4 expected, 55.7 prior (no
revisions)
June 7 - Tuesday
Productivity-Rev., Q1 (8:30): -0.6% expected, -1.0% prior
Unit Labor Costs - R, Q1 (8:30): 4.0% expected, 4.1% prior
Consumer Credit, April (15:00): $18.5B expected, $29.6B prior
June 8 - Wednesday
MBA Mortgage Index, 06/04 (7:00): -4.1% prior
JOLTS - Job Openings, April (10:00): 5.757M prior
Crude Inventories, 06/04 (10:30): -1.366M prior
June 9 - Thursday
Initial Claims, 06/04 (8:30): 265K expected, 267K prior
Continuing Claims, 05/28 (8:30): 2172K prior
Wholesale Inventories, April (10:00): 0.1% expected, 0.1% prior
Natural Gas Inventor, 06/04 (10:30): 82 bcf prior
June 10 - Friday
Michigan Sentiment - Pre, June (10:00): 94.0 expected, 94.7 prior
Treasury Budget, May (14:00): -$84.1B prior
End part 1 of 3
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6/4/2016 Investment House Daily
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Targets hit: SWN
Entry alerts: None issued
Trailing stops: None issued
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
- Jobs bomb, building on the April rollover and following the rest of the
economy lower.
- Rate hike odds for June and July plummet, but not so sure the Fed will be
that quick to knuckle under.
- Unemployment rate drops to 4.7% as workers flee from the labor force.
- Same old story: all May jobs were part-time as the economy lost 312K
full-time jobs the past two months.
- Stock indices do a credible job of recovering.
- Large caps still at resistance. RUTX, SOX, SP400 likely ready to test a
good rally.
- Same groups still look pretty solid, and that is the rally's hope.
- A test is likely, and the question is who will lead out of the test:
growth upside or large caps downside?
Some big moves on Friday. Not in the stock market. After a shockingly bad
Jobs Report stocks did a fairly good job of managing the aftermath. The big
moves? Jobs. Bonds. Dollar. Rate hike expectations.
As you would expect after a 38K print for May jobs, stocks started lower.
After the first half hour, however, the turned to a slow steady rise into
the last hour. Only SOX closed positive on the session, but DJ30 and even
SP500 put in credible recovery performances even if SP500 missed the 2100
level that so many watch by a mere 0.87 points.
SP500 -6.13, -0.29%
NASDAQ -28.84, -0.58%
DJ30 -31.50, -0.18%
SP400 -0.41%
RUTX -0.55%
SOX 0.31%
VOLUME: NYSE -7%, NASDAQ -3%. No big surge in selling on the weak jobs, so
no real dumping of shares and no churn as SP500, DJ30, NASDAQ bump against
the April highs. That is a better scenario than volume rising as they bump
those levels but cannot break through.
A/D: NYSE 1.2:1, NASDAQ -1.6:1.
JOBS: If it was not so sad it would have been comical watching the
Administration trying to talk up an utterly pathetic jobs report.
Non-Farm: 38K versus 155K expected versus 123K April (from 160K). March
and April revisions -59K
3-month average: 116K/month. Pathetic.
Harry Doyle (Bob Uecker): How many jobs did we get? 38K G** D*** jobs?
Color man: You can't say 'G** D***' on the air.
Doyle: That's okay. No one is listening anyway.
'Major League,' 1989
Unemployment rate: 4.7% vs 5% expected vs 5.0% April. Why so low? 458,000
left the workforce. Take away a half million people from the labor pool and
you get a better unemployment rate the same way a company buys back stock
and raises its EPS even if earnings were actually worse. Magic! Except --
94.7M people are not in the workforce have no jobs.
Workweek: 34.4 versus 34.5 expected versus 34.4 prior (revised down from
34.5). The workweek just cannot gain traction and it is no wonder given the
Affordable Care Act is such that it behooves companies to not work an
employee more than 29 hours per week. That incentive is keeping the
workweek lower . . . along with an economy that is nowhere near as good
those against 'fiction peddling' are peddling.
Participation rate: 62.6% versus 62.8%. Big drop as 458K left the
workforce.
Part-time workers due to economic conditions (cannot find a full-time job):
+468K
Not in the workforce: 94.7M, +664K
Number of fulltime jobs since January: 0
Number of fulltime jobs lost the past two months: 312,000
Percentage of service jobs created of all jobs in May: 100%
Jobs breakdown:
Construction -15K
Mining: -10K
Manufacturing -18K
Temporary -21K
Healthcare +45K. The lion's share of jobs. Thank you Affordable Care Act,
right?
Professional and Business: +10K
Food and Beverage +22K
Retail +11K
Government +13K. It takes a lot of people to enforce bathroom rules, to
monitor bakeries to make sure they serve everyone, to collapse the
healthcare system, to spy on every conversation of every man, woman, child,
trans-gender person, etc.
As you can see, all of the jobs are again in the lower wage service areas of
the economy. Services. 100% of the jobs gains. Basically you can say the
US took a few steps back in the jobs picture.
Indeed, since 2014, the US added 455K waiters and bartenders, LOST 10K
manufacturing jobs.
Insult to injury: Payrolls would have been negative but for seasonal
adjustments.
BONDS
Ten year Treasury: 1.70% versus 1.80%. Bonds exploded higher, gapping
through the April and May twin peaks. Bonds are now knocking at the early
February high, the last high before the current four month trading range.
Quite the breakout as the market trashes any chance of a June and likely
July rate hike.
DOLLAR
As the rate hike chances faded, so too did the dollar's value. Supposedly
this is good for US businesses. Then why was it down so much when business
was so bad it was not hiring?
EUR/USD: 1.13668 versus 1.1149. Euro explodes higher off the 200 day SMA
test. Over the February peak, taking back half of the losses sustained since
the early May higher high.
USD/JPY: 106.55 versus 108.85. So much for breaking out of the downtrend.
That breakout move had all but failed and then came the insult, slamming the
dollar back down to the late April/early May lows. No breakout.
Jobs dive, bonds soar, the dollar dumps. Stocks? They sold but not hard,
managing a fairly decent recovery.
SP500 closed just below 2100 and that had the correction tongues wagging.
Could be correct as that is the April high and a potential double top with
lower MACD, indicating slowing momentum.
NASDAQ shows similar action, also at the April high on lower MACD. DJ30 is
not even at that level.
It appears the large cap indices are slowing at resistance. The small cap
and midcaps, however, blew through the April peaks. That does not mean they
won't test, but the money is moving their way, and they can test back toward
the April high and still be in position to rally.
That will be the main question: will the small and midcaps test then
rebound? If so, will they carry the large caps with them? Or, will the
large caps stall and fall, unable to move past the April peaks?
Thus far the leadership groups are still working, and that has been the tell
for the market direction. Biotechs and drugs struggled Friday, but they
have good patterns and have started breaking higher. Software still looks
strong. Oil as well. Financial stocks are of course weak after the
terrible economic data, and while many discount them in the market's bigger
picture, I would note that the market has performed better when they were
setting up positive patterns versus when they suffer interest rate related
drops.
Friday we didn't do much. We banked some solid 20% stock gain and 50+%
option gain on SWN. That was it. We figured the market has to recover from
what the jobs report dropped on it and thus the Friday direction may not be
that indicative of next week. With the leadership groups holding up well,
however, we were content to let our positions work.
THE MARKET
The large cap indices are at resistance from the April highs and elsewhere.
The small, midcap, and SOX indices broke to higher rally highs and are a bit
extended. Their test will be key as will the action of the large caps if
there is a successful test by the smaller caps. There are still leadership
groups performing nicely, and that is what has kept the rally alive.
CHARTS
RUTX: Sold back from Thursday's higher recovery high, but did cut the
losses in half. Easily above the 10 day EMA after its 9 session run.
Likely tests, and the April high (1154 closing) and the 10 day EMA (1148)
are logical targets.
SOX: Continued its rally though with less power. Gapped to the session
high, filled the gap, but then recovered some of the early gains. Long 15
session rally has SOX bumping the last trading range that held the June 2015
peak. About due for a test. 692 is the early December 2015 peak as well as
the 10 day EMA (689).
SP400: Punched a new rally high Thursday, then faded Friday. Tapped near
the 10 day EMA on the low, recovered to a more modest decline. Following
RUTX and SOX higher, working nicely up the 10 day EMA.
NASDAQ: Posted a higher closing high Thursday over the April closing high
but then gave it up Friday. Tested the 10 day EMA on the low, rebounded to
cut the losses by the close. Nice double bottom bounce off the 38% Fibonacci
retracement yielded this rally. Now it is at the prior high and
experiencing some resistance from that level as well as the October through
December trading range. Key test of resistance for NASDAQ.
SP500: Very similar situation to NASDAQ, at the April high that is also in
the October through December trading range. MACD lower. 2100 is a level
many watch as a key resistance point and thus far SP500 has not taken it
out. That will embolden some sellers and they will likely try to sell it
next week. Given the market is due a test that is okay. A lot will depend
upon how the other indices test their higher highs.
DJ30: Just following along, still below the April high but in the upper
half of the November through December range. Not bad action at all, holding
at the 20 day EMA and trying to put in a higher low.
LEADERSHIP
Everything was more or less under pressure Friday post-jobs, but the same
groups held their patterns and moves and look solid overall.
Oil: SWN surged early and gave us our initial target. NGL was up yet
again. CWEI was holding up at the 10 day EMA just fine. WMB, UNT also
holding nicely at the 10 day EMA. Overall just a solid group, holding their
trends and moving higher.
Drugs/Biotech: Struggled but holding up. XLRN reached down to the 10 day
EMA but rebounded to cut the losses. GALE gapped lower but then moved back
up. EVHC lost some ground but is trending higher. EXAS holding fine.
Basically not an up session, but taking a breather.
Financial: Struggled as interest rate hikes are deferred. MS, GS gapped
lower, but both held support and rebounded to doji. BAC, JPM did the same,
gapping, holding support on the low, recovering some lost ground. Not a
total washout and we will have to see what Yellen says Monday.
Construction: Not bad. GRAM moved higher off its test, posting a solid 4.6%
gain. MDR held steady at the 10 day EMA.
Industrial machinery: some good moves. DE gapped higher and cleared the
April and May peaks. CAT looks very good right now.
Chips: Not bad at all. XLNX trying to break higher from a two week lateral
move. MXL tested, but showing a doji at the 10 day EMA. QRVO up modestly
after a nice Wednesday and Thursday move. AVGO gapped higher on earnings.
NXPI testing the 10 day EMA after a nice two week run.
Software: Solid week. CYBR was flat on the day, but this after a solid
Tuesday to Thursday rally. RHT was flat as well, but it too put in a good
move on the week. VMW enjoyed a strong week, hitting our initial target
along the way.
MARKET STATISTICS
NASDAQ
Stats: -28.85 points (-0.58%) to close at 4942.52
Volume: 1.68B (-3.04%)
Up Volume: 520.83M (-639.17M)
Down Volume: 1.14B (+591.43M)
A/D and Hi/Lo: Decliners led 1.6 to 1
Previous Session: Advancers led 1.61 to 1
New Highs: 71 (-15)
New Lows: 33 (+8)
S&P
Stats: -6.13 points (-0.29%) to close at 2099.13
NYSE Volume: 888M (-6.72%)
A/D and Hi/Lo: Advancers led 1.17 to 1
Previous Session: Advancers led 1.86 to 1
New Highs: 182 (+64)
New Lows: 10 (+2)
DJ30
Stats: -31.5 points (-0.18%) to close at 17807.06
SENTIMENT INDICATORS
VIX: 13.47; -0.16
VXN: 15.03; -0.12
VXO: 12.59; -0.13
Put/Call Ratio (CBOE): 0.88; -0.03
4 of the last 6 below 1.0. 19 of 26 over 1.0. They did their job, playing
a part in bouncing the market. Now the extremes are backing off as you
would expect. Even so, they are still fairly high readings after a solid
move higher.
Bulls and Bears: As fast as bulls plunged the prior week they surged,
jumping 10 points. Highest reading in 7 weeks (47.5). Bears fell, but not
at the same rate. Back and forth action shows investment advisors are being
fickle, right? They were caught napping with the move, as bulls tumbled to
35 just as the rally started. Now they are right back in, saying they knew
it all along. While not at the 60 level that would condemn a rally, the big
moves show how fickle the big money is right now.
Bulls: 45.4 versus 35.4
Bears: 23.7 versus 24.0
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 45.4%
35.4% versus 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: 23.7%
24.0% versus 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): 1.70% versus 1.80%
Historical: 1.80% versus 1.84% versus 1.85% versus 1.85% versus 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: 1.13668 versus 1.1149. The dollar strikes back with a gain,
sending the Wednesday upside bounce in the euro back to the showers.
Historical: 1.1149 versus 1.1186 versus 1.1128 versus 1.1113 versus 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
USD/JPY: 106.55 versus 108.86
Historical: 108.86 versus 109.99 versus 111.285 versus 110.233 versus
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
Oil: 48.62, -0.44. Spent the week testing the prior week's gains. Modest
loss Friday, closing just below the 10 day EMA. This even as the dollar was
hammered. If the dollar stays lower, that acts as support for oil as oil is
priced in dollars. The weaker the dollar, the more dollars it takes to buy
oil, and thus the price rises.
Gold: 1242.90, +30.30. After slipping to the late March lows last week,
Friday gold exploded higher as the rate hike odds dropped sharply. Back to
the middle of the February to June range.
MONDAY
The carefully, if not foolishly, constructed meme to further raise interest
rates received a sharp blow. Jobs are one of the Fed's main indicators
prompting its new found courage to talk about hiking rates. Not hiking
rates, just talking about it. Of course the Fed could dogmatically focus on
the unemployment rate, but to do so reveals the Fed as totally mechanical
and almost pandering to a false narrative. I mean, we all know why the
unemployment rate is at 4.7%: almost one-third of the country is not
working, and that group is a much larger portion of the actual working-aged
group in society. Hey, if the other 7.4M people who are 'officially'
unemployed decided to leave the workforce, unemployment would be 0%! Surely
the Fed would hike rates then.
Yellen will talk Monday in Philadelphia and everyone will listen and watch
closely. You know what? I think she sticks to her guns regarding hiking to
get more ammo for when the next crisis arises. If she does not, what kind
of fool would the chairman and her fellow FOMC members appear? They
carefully construct the reasons for hiking, then one report and they go
running as if a skunk snuck in the committee room? Of course Yellen could
panic and revert to her nature, the one where she has the urge to migrate
every year and coo in the mornings. One would hope not.
Thus, the market could be right back where it was pre-jobs in terms of rate
hike expectations. All it takes is the chairman saying it was just one
report and the hikes are still on track. Then the financials start to
recover from Friday, and quite likely we see the same leadership groups
continue to work. We may see the latter group continue to work regardless.
That said, near term the market still could use a test. SOX and RUTX are up
nicely over the April highs and it is normal to test breaks through
resistance. SP500 and NASDAQ are struggling at the April highs, a natural
place to fade. As noted earlier, the question then becomes whether the
large caps drag down the leadership indices, or if the leaders (SOX, RUTX)
represent where the money is moving and pull the big names back up.
It is noteworthy that money actually moved back into equity funds last week
after fleeing for its life just as the market bottomed for this current
rebound move. Not a huge amount, but a net positive of $1.6B. Late to the
party? Perhaps, but pulling that short money back into the upside is how
rallies maintain themselves.
We are going to continue looking at the leadership groups of late, and if
there is a pullback we want to use that as stocks rebound, if they do
rebound. This current leg likely cannot rally much more before it needs to
test, and if there is a further move higher we want to use it to bank some
more gain. Then we let it test, see how the leadership groups hold and
setup, see if any new groups emerge, and if so, play them on a bounce.
Of course, the market is still in that big 1.5 year top and this level for
the indices is starting to tug on Superman's cape, so to speak. In other
words, we have to exercise caution and watch closely as any pullback starts.
What are the leadership groups doing? How are their stocks holding support?
What is the overall market volume? Breadth? The economy is weak, jobs are
rolling over to follow it, and the Fed likely still wants to hike rates.
Heck, even if it does not hike that won't prevent issues relating to a
weaker and weaker economy. So, we play the good stocks but we also have to
recognize where the market is.
Have a great weekend! Enjoy graduations and early summer. We have another
graduation party this weekend. It is a great time and everyone should make
a point of sharing it with friends and family.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4942.52
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
The 50 day SMA at 4845
4836 is the March 2016 peak
4815 is the December 2014 peak
The 200 day SMA at 4810
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 2099.13
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 2061
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 17,807.06
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 17,635
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 17,131
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
June 3 - Friday
Nonfarm Payrolls, May (8:30): 38K actual versus 155K expected, 123K prior
(revised from 160K)
Nonfarm Private Payr, May (8:30): 25K actual versus 160K expected, 130K
prior (revised from 171K)
Unemployment Rate, May (8:30): 4.7% actual versus 4.9% expected, 5.0% prior
(no revisions)
Hourly Earnings, May (8:30): 0.2% actual versus 0.2% expected, 0.4% prior
(revised from 0.3%)
Average Workweek, May (8:30): 34.4 actual versus 34.5 expected, 34.4 prior
(revised from 34.5)
Trade Balance, April (8:30): -$37.4B actual versus -$41.6B expected, -$35.5B
prior (revised from -$40.4B)
Factory Orders, April (10:00): 1.9% actual versus 1.6% expected, 1.7% prior
(revised from 1.1%)
ISM Services, May (10:00): 52.9 actual versus 55.4 expected, 55.7 prior (no
revisions)
June 7 - Tuesday
Productivity-Rev., Q1 (8:30): -0.6% expected, -1.0% prior
Unit Labor Costs - R, Q1 (8:30): 4.0% expected, 4.1% prior
Consumer Credit, April (15:00): $18.5B expected, $29.6B prior
June 8 - Wednesday
MBA Mortgage Index, 06/04 (7:00): -4.1% prior
JOLTS - Job Openings, April (10:00): 5.757M prior
Crude Inventories, 06/04 (10:30): -1.366M prior
June 9 - Thursday
Initial Claims, 06/04 (8:30): 265K expected, 267K prior
Continuing Claims, 05/28 (8:30): 2172K prior
Wholesale Inventories, April (10:00): 0.1% expected, 0.1% prior
Natural Gas Inventor, 06/04 (10:30): 82 bcf prior
June 10 - Friday
Michigan Sentiment - Pre, June (10:00): 94.0 expected, 94.7 prior
Treasury Budget, May (14:00): -$84.1B prior
End part 1 of 3
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