* * * *
6/11/2016 Investment House Daily
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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
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
- 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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