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8/27/2016 Investment House Daily
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MARKET ALERTS:
Targets hit: MU
Entry alerts: CWEI
Trailing stops: None issued
Stop alerts: None issued
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Market Summary Video, Plays and Play Videos, and Play Tables with play
annotations will issue Monday, Wednesday and the Weekend.
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MARKET SUMMARY
- Yellen, Bullard, Fischer are all a bit more hawkish -- as GDP Q2 posts a
stellar 1.1% gain!
- SP500, DJ30 are heavy, SOX, RUTX still in solid trends.
- Perhaps, just maybe, NASDAQ gets some help from its big names.
- The sentiment is either new highs or 50% losses.
The market handled Yellen's Jackson Hole presentation well enough. After
all, James Bullard spoke with Bloomberg pre-market and basically said the
Fed would hike once and then not forever (okay, a bit of an exaggeration on
our part). He did note the Fed is "pretty close to its goals, pretty close
to a neutral rate", thus suggesting a hike. His description of the economy,
however, was less than flattering, describing it as a "cyclical, low growth
regime" that did not live up to the Fed's growth forecasts. So, Bullard
concluded, the Fed needs to "rethink its normalization plans" and focus on
the short term issues, e.g. low productivity and output. Hard to
extrapolate out of that anything more than a rate hike to get the Fed
neutral as Bullard sees it and then nothing. For a long time.
With the second reading of Q2 GDP limping home at 1.1%, the same as the
first read now that it was revised lower (1.1% from 1.2%), Bullard's talk of
a "cyclical, low growth regime" certainly seemed to be on point. The
numbers certainly point to low growth.
Yellen's statement at 10:00ET was basically the same theme, the old things
are going good enough to hike rates but very slowly tap dance. 'The case
for a rate hike is stronger in the recent months' (versus when the economy
was arguably much better, though still historically weak, in 2010, 2014?).
'Growth is sufficient to improve labor markets.' The Fed 'anticipates
gradual rate hikes as appropriate.' Much of the same but with more of a
sense of urgency for a hike then likely nothing for quite some time. After
all, IF the Fed is going to hike anytime soon it has to be in September
given the November election.
As noted, the equity and other markets handled these comments rather well as
they are along the lines of what many anticipated. Indeed, stocks started
the session flat to slightly higher, and Yellen's comments helped boost them
to session highs shortly after the statement was released. Stocks tested
that initial move higher, started to rebound again after a short test.
Looked promising.
It was the Fischer factor, however, that upset the session. He rather
unassumingly noted that Yellen's comments "are consistent with a possible
September hike." He also noted the "big issues in growth are investment and
productivity." Yes, those are issues, something low, low interest rates
don't help because when rates are low it pays, as we have seen, not to
invest in usual business activities that generate growth and jobs, but
instead to 'invest' in stock buybacks that boost management salaries by
meeting stock price performance goals.
When Fischer's comments hit, stocks fell straight down for 45 minutes. A
bounce rolled over into a new low mid-afternoon, but stocks did manage to
recover some lost ground in the last hour.
SP500 -3.43%, -0.16%
NASDAQ 6.72, +0.13%
DJ30 -53.01, -0.29%
SP400 -0.33%
RUTX -0.16%
SOX 0.49%
VOLUME: NYSE +15%, NASDAQ +5.5%
A/D: NYSE -1.5:1, NASDAQ -1.1:1
Okay, it was no bloodbath, but there was definitely an adverse reaction to
the Fed stating it may indeed hike rates another one time at some point in
the future that includes possibly September.
The indices closed off the lows but the Dow and SP500 look weaker than most.
All indices showed a move higher intraday but one that also reversed to a
lower low on the session. That last hour helped, but it didn't really
rescue a session that left several stock indices looking weak.
That said, given it was Friday and the market was dosed with a lot of data,
the moves are not absolute. Many times of late you see Friday moves that
are false flags, i.e. they indicate one direction only to be a passing issue
that is reversed the next week. With the market digesting several Fed
speeches all in the same session it is likely the verdict on the Friday
session regarding the Fed comments is not necessarily the final say.
Even so, SP500 and DJ30 do not look well and even NASDAQ is struggling to
move back up after dropping a bit harder Wednesday, falling through the 10
day EMA for the first time since June. DJ20 transports continue to languish
well, well off new highs, impacting Dow Theory negatively (no confirmation
of the DJ30 new high). It was another week that saw some stock indices
break to new highs but then get immediately pushed back down. Eventually
that can wear out all of the upside capital in a rally attempt. While SOX
looks still solid and RUTX not bad, unless something changes to the upside
early this coming week, the near term prognosis is that this move to higher
highs will need a deeper test. A positive is the NASDAQ big names are
showing some life off of support, and if NASDAQ throws in with SOX, that
won't hurt the upside.
THE MARKET
None of the indices are in dire straits. Far from it. SP500 and DJ30 look
heavier and in need of a breather. The thing is, listening to the financial
stations, it is an all or nothing proposition right now: either the indices
hit new highs and continue doing so, OR they roll over and lose half their
value. Nothing in between. That is a false premise and thus has people
playing very scared when there are some really good patterns out there.
INDEX CHARTS
NASDAQ: Sluggish to end the week, fading to the 20 day EMA Wednesday to
Thursday, showing a doji there Friday. Below average volume, but the
highest volume day was on the Wednesday selling. NASDAQ also broke the 10
day EMA on the close for the first time since early July. This was a strong
move that showed great price/volume action in the middle of the move. Now
volume has mostly dried up with the biggest volume sessions on the downside
from Wednesday and the prior Tuesday that were both downside sessions. That
shows a bit more sellers than buyers on this last part of the move, though
still at below average volume levels versus the above average volume buying
that got the index to this point. That said, the NASDAQ big names are
looking better, and if they go up, NASDAQ goes up - - most of the time.
SOX: Tested the 10 day EMA on the week, a normal test for SOX as it has
climbed higher. Bounced Thursday and Friday, reaching a higher post-2000
high on Friday, but it faded to a doji at the close. Positive, but a bit of
a struggle as MACD backs off some. Of course still in the trend and punching
out new highs, just some lower MACD. I guess if you want to fear higher
highs you can, and that seems to be in vogue right now what with all the
billionaires going bearish.
RUTX: Similar to SOX, hitting a higher rally high on the week, then
testing. The disappointment was, as noted at the time, a new high that
looked solid, then giving that move back the next session. Still, it was
after a 4-day move though a very nominal new high was immediately sold: just
not that powerful, but the move certainly is steady as RUTX moves toward the
all-time high from mid-2015. Friday a big doji as it raced higher then
sold, recovering to hold the 10 day EMA and keeps its trend intact. MACD has
waned here as well, something impacting all of the NYSE indices.
SP400: New high early week, then a test Wednesday to Friday as SP400 fell
hard off the new high but did hold the 20 day EMA. Still trending up the 20
day EMA but MACD is markedly lower, indicating slowing momentum, and we know
NYSE trade is weak. Friday was a new high then a selloff, then a modest
recovery to the 20 day EMA. Still using the 20 day EMA as support for this
leg of the uptrend that is working since the sharp late June to early July
recovery.
SP500: Looking quite heavy after a new high two weeks back was challenged
on Tuesday but failed. Volume is pathetic over the past three weeks as
SP500 pushed to that higher high. MACD continues to tail off after a peak
in the third week in July. Friday a big jump higher followed by the same
selloff and recovery in the other indices, but SP500 did not recover the 10
or 20 day EMA. It certainly looks primed for at least a test of the 50 day
EMA and the coincident early August low.
DJ30: Very similar to SP500 in its heavy look. DJ30 has two very distinct
rounded tops the past two months, fading all last week through the 20 day
EMA and toward the 50 day EMA as well as the early August low. Much lower
MACD on that second top. DJ30 is near the 50 day EMA already so it has put
in a pretty good test here and it is still just over the late early August
low. Thus it could put in a higher low at the 50 day EMA and move right back
up. Yes it could, but it is very sluggish right now and will have to show us
it is not a barking dog. Its components are mixed with for example IP
surging higher while UTX sells through the 20 day EMA on higher trade.
LEADERSHIP
Good ACTION FRIDAY: AGEN, AMD, AMZN
Struggled: COST
Dropping: CSX; WSM
Trailing stop: COST
Bubble: PII; TSLA
Ready: SOHU, STX
NASDAQ Big Names: Some promise here as noted earlier. FB is showing solid
volume as it moves off a 2 week 20 day EMA test. AAPL is testing the 20 day
EMA after its good move, MACD still holding up. AMZN broke higher Friday
similar to FB, showing solid volume as well. NFLX was quieter Friday but it
was also up nicely Thursday on solid volume. GOOG is testing the 20 day EMA
and the late July upper gap point, trying to find footing for a bounce.
Semiconductors: Still solid and many were up Friday, e.g. MRVL, AVGO, MU,
AMD, XLNX, LRCX -- the ringleaders in the recent move. That is not bad.
Biotechs/Drugs: Big biotechs struggled on the week, e.g. CELG, BIIB. Some
of the mid- and smaller issues had issues as well, e.g. EXAS as it tests the
20 day EMA, KITE, BLUE. AGEN on the other hand still looks good.
Medical Instruments: The big biotechs really struggled midweek but this
group is looking solid, e.g. ATRS.
Industrial Equipment: Holding up but starting to look heavier in some cases,
e.g. CAT. UTX broke through the 20 day on volume Friday. CMI looks good
enough at the 20 day EMA though it threw a big tombstone doji Friday. TEX
looks fine in its lateral consolidation over the 20 day.
Transportation is mixed. Rails are still good enough in most cases, e.g.
KSU, CSX. Some truckers sold hard, however, e.g. JBHT, WERN. Shipping is
sinking a bit, e.g. DSX, TK. Airlines are not imploding but are in the
doghouse in terms of patterns, and Friday was not a great day for them.
Transports are far from confirming the Dow theory new highs on DJ30.
Retail: Some issues from leaders such as COST as it fell hard to the 50 day
MA to end the week. ROST is testing the 10 day EMA in a decent test after a
new high. KSS looks great in a 2 week flag as does JWN. M is testing a bit
farther. LULU broke lower Friday through support while DECK is holding near
support and RL is near the 10 day EMA. For the most part the group looks
quite good.
Financial: Took some heart from the Yellen speech and the other speeches
from Fischer and company, but had a hard time holding the intraday breaks
higher. GS, JPM. C was still solid upside with a nice high volume break to
a higher rally high on volume.
MARKET STATISTICS
NASDAQ
Stats: +6.71 points (+0.13%) to close at 5218.92
Volume: 1.57B (+5.41%)
Up Volume: 891.22M (+128.95M)
Down Volume: 654.88M (-55.14M)
A/D and Hi/Lo: Decliners led 1.12 to 1
Previous Session: Advancers led 1.11 to 1
New Highs: 148 (+61)
New Lows: 29 (+4)
S&P
Stats: -3.43 points (-0.16%) to close at 2169.04
NYSE Volume: 821.8M (+14.5%)
A/D and Hi/Lo: Decliners led 1.53 to 1
Previous Session: Advancers led 1.24 to 1
New Highs: 169 (+73)
New Lows: 15 (-3)
DJ30
Stats: -53.01 points (-0.29%) to close at 18395.4
SENTIMENT INDICATORS
VIX: 13.65; +0.02
VXN: 15.16; -0.2
VXO: 12.2; -0.34
Put/Call Ratio (CBOE): 1.04; -0.11. Two quick sessions back over 1.0 on
the close, making it 3 in the past two weeks.
29 of 35 below 1.0, 20 of last 52 over 1.0.
After a stretch of sub-1.0 closes, a second 1.0+ close out of the last two
weeks.
Bulls and Bears: Bulls just edged higher this week, rising 0.5, still
enough below 60 to have some remaining upside. Bears actually rebounded to
20.2 from 20.0.
Once gain the Bulls continue higher, the bears lower. Getting very close to
those complacent levels where the market tops. Still has some room up to
60ish for bulls, but not much room to play. Thus have to watch other areas,
particularly the leaders to see if the market is rolling.
Bulls: 56.7 versus 56.2
Bears: 20.2 versus 20.0
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: 56.7 versus 56.2
56.2 versus 54.3 versus 52.9% versus 53.9% versus 54.4% versus 52.5% versus
47.1% versus 41.6% versus 47.5% versus 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%
Bears: 20.2 versus 20.0%
20.0 versus 20.9% versus 21.2% versus 21.6% versus 23.3% versus 24.7% versus
24.5% versus 23.8% versus 23.2% versus 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%
OTHER MARKETS
Bonds (10 year): 1.62% versus 1.58%. Bonds as you would expect sold after
Fed speeches considered more hawkish. It was not that clear initially,
however, as bonds rallied higher before then falling.
Historical: 1.58% versus 1.56% versus 1.54% versus 1.58% versus 1.53% versus
1.55% versus 1.57% versus 1.558% versus 1.51% versus 1.56% versus 1.51%
versus 1.54% versus 1.59% versus 1.585% versus 1.503% versus 1.54% versus
1.558% versus 1.51% versus 1.46% versus 1.50% versus 1.51% versus 1.56%
versus 1.57% versus 1.56% versus 1.558% versus 1.58% versus 1.56% versus
1.59% versus 1.58% versus 1.53% versus 1.47% versus 1.51% versus 1.434%
versus 1.36% versus 1.39% versus 1.373% versus 1.367% versus 1.44% versus
1.475% versus 1.51% versus 1.468% versus 1.46% versus 1.57% versus 1.74%
versus 1.68%
EUR/USD: 1.11949 versus 1.12894. Diving lower to the 50 day EMA as the
dollar strengthens on the 'hawkish' Fed.
Historical: 1.12894 versus 1.1300 versus 1.13045 versus 1.3254 versus
1.13251 versus 1.1342 versus 1.13036 versus 1.12773 versus 1.11824 versus
1.11636 versus 1.11372 versus 1.11803 versus 1.1115 versus 1.1080 versus
1.10882 versus 1.1130 versus 1.1148 versus 1.1219 versus 1.1164 versus
1.1173 versus 1.10806 versus 1.10732 versus 109857 versus 1.0992 versus
1.0977 versus 1.1021 versus 1.1022 versus 1.1021 versus 1.10654 versus
1.1035 versus 1.1117 versus 1.1099
USD/JPY: 101.808 versus 100.485. Sharp move higher by the dollar off of
the early July low.
Historical: 100.485 versus 100.306 versus 100.27 versus 100.297 versus
100.21 versus 99.843 versus 100.529 versus 100.953 versus 101.308 versus
101.864 versus 101.23 versus 101.857 versus 102.356 versus 101.832 versus
101.178 versus 101.256 versus 101.09 versus 102.599 versus 102.045 versus
104.679 versus 105.98 versus 104.731 versus 105.76 versus 106.05 versus
106.11 versus 107.16 versus 106.139 versus 105.95 versus 104.85 versus
105.31 versus 104.74 versus 102.686 versus 100.59 versus 100.768 versus
101.15 versus 100.89 versus 102.497 versus 103.128 versus 102.912 versus
102.60
Oil: 47.64, +0.31. Stronger dollar but not a commensurate rise in oil. It
did, however, hold the 10 day EMA after flopping to it Wednesday and filling
the prior week's upside gap.
Gold: 1325.90, +1.30. Modest gain after an initial big spike upside. That
left gold still below the 50 day EMA after breaking below it Thursday as it
fell harder Wednesday through the bottom of its two week lateral range that
was trying to put in a higher low.
MONDAY
The Fed-speak is out for now with a more hawkish take on the speeches and
comments. Indeed, the odds of a September 25BP rate hike moved up to 36%
from 21% on Thursday. December's odds moved to 63.7% from 51.7%. The
dollar rallied, bonds sold, gold is under pressure. Sure looks as if the
markets are pricing in a rate hike.
But, as noted earlier in the week, what will a rate hike that is 25BP do in
the big picture, and in addition, it is likely to be a rather lonely rate
hike with another 'one and done for the foreseeable future' scenario. In
that case the markets likely can continue about their business as they did
after the December 2015 hike. Hey, they hit new highs during that time.
Of course, history also shows the market hitting highs after Fed rate hikes
only to later crater. The economy is still bifurcated, good for those that
get the easy money and have the scale to overcome the regulations including
the ACA and its crushing costs. Hey, they just lobby Congress and the
President to allow more of those college educated workers on visas to come
over and work for less -- after firing their US-born workers. No that is
not correct: they fire them AFTER they force them to train their
replacements. Like your grandmother making you go cut your own switch to
get whipped with.
Anyway, the point is the economy is not strong across the board as the weak
GDP and other data show. The US will never be the strong engine it was
until these policies are changed, monetary, fiscal, tax, and regulatory.
Hell, the Treasury has taken in record tax receipts for several years in a
row and we are STILL piling up more and more debt. All that tax revenue but
GDP is still at 1%.
Does that not tell you that something is terribly awry with the US'
structural economy? That shows you that the gains are largely on paper,
that large amounts of tax dollars are coming from those inflated financial
asset gains. With that situation, WHY would the government ever want to
change things? It gets more tax dollars without having to 'spend' any on
fiscal measures. More for spending on pet projects that further strengthen
the central government by giving it more money for more areas to spread
control, such as local police forces with the 'do it our way our you don't
get money' carrot and stick.
But, I digress. The NYSE large caps have weakened while growth still looks
decent. There is plenty of leadership out there, much of it in the same
groups, but that is okay. As I always say, leadership is the ultimate proof
of a move. Rallies can start, but if no real leadership in good patterns
takes over, it will fizzle.
This is an older, mature rally, however. It still needs leadership to
advance, but leadership can fade and fizzle. That means new leaders have to
emerge or money has to rotate between groups. If not, the rally will fade
as the leadership gets extended and fades. Money is rotating through the
market, or at least it has been. After the way last week ended the market
will have to show if the money will continue to move in and move around. If
so, we play the upside as the market tries to squeeze out some more gains
against all of those bears that have bearish bets. That is why I chose
'squeeze' to describe more upside: squeezing those bears, BUT with good
patterns from the leaders as well.
This will be an important week to see how SP500 and DJ30 try to shake off
their weakness AND how NASDAQ reacts with the Friday improvement from its
big names. They were tantalizing in their action and if they join SOX and
RUTX, that is strong stuff. We have a play on GOOG, we are in FB and NFLX,
but I tell you AMZN may provide an upside play and AAPL could provide a good
break off its test.
Funny money has built this long rally, and it certainly saved a selloff and
built the rally this year. Will the move remain with the funny money on the
wane (man, I am poetic today)? The market will have a chance to show it.
We will let our upside positions work if they will, add to them if good
moves are made, but if areas fall over, we are looking at them for downside
as well.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5218.92
Resistance:
5231.94 is the 2015 all-time high
5271.36 is the August 2016 intraday all-time high
Support:
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
The 50 day EMA at 5097
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
The 200 day SMA at 4865
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
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.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2169.04
Resistance:
2175 is the June 2016 high
2194 is the August 2016 all-time high
Support:
The 50 day EMA at 2150
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
The 200 day SMA at 2052
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
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
Dow: Closed at 18,395.40
Resistance:
18,595 is the July 2016 peak
Support:
18,351 is the all-time high from May 2015
The 50 day EMA at 18,310
18,288 from March 2015
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,978 is the November 2015 peak
17,600 is the rough bottom of the April to June range.
The 200 day SMA at 17,528
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 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 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
ECONOMIC CALENDAR
August 26 - Friday
GDP - Second Estimat, Q2 (8:30): 1.1% actual versus 1.1% expected, 1.2%
prior
GDP Deflator - Secon, Q2 (8:30): 2.3% actual versus 2.2% expected, 2.2%
prior
International Trade , Julyy (8:30): -$59.3B actual versus -$64.5B prior
(revised from -$63.3B)
Michigan Sentiment - Final, August (10:00): 89.8 actual versus 90.6
expected, 90.4 prior
August 29 - Monday
Personal Income, July (8:30): 0.4% expected, 0.2% prior
Personal Spending, July (8:30): 0.3% expected, 0.4% prior
Core PCE Prices, July (8:30): 0.1% expected, 0.1% prior
August 30 - Tuesday
Case-Shiller 20-city, June (9:00): 5.1% expected, 5.2% prior
Consumer Confidence, August (10:00): 97.0 expected, 97.3 prior
August 31 - Wednesday
MBA Mortgage Index, 08/27 (7:00)
ADP Employment Chang, August (8:15): 170K expected, 179K prior
Chicago PMI, August (9:45): 54.5 expected, 55.8 prior
Pending Home Sales, July (10:00): 0.7% expected, 0.2% prior
Crude Inventories, 08/27 (10:30)
September 1 - Thursday
Challenger Job Cuts, August (7:30): -57.1% prior
Initial Claims, 08/27 (8:30): 265K expected, 261K prior
Continuing Claims, 08/20 (8:30): 2145K prior
Productivity-Rev., Q2 (8:30): -0.6% expected, -0.5% prior
Unit Labor Costs - R, Q2 (8:30): 2.1% expected, 2.0% prior
Construction Spendin, July (10:00): 0.6% expected, -0.6% prior
ISM Index, August (10:00): 52.2 expected, 52.6 prior
Natural Gas Inventor, 08/27 (10:30): 11 bcf prior
Auto Sales, August (14:00): 5.16M prior
Truck Sales, August (14:00): 9.10M prior
September 2 - Friday
Nonfarm Payrolls, August (8:30): 180K expected, 255K prior
Nonfarm Private Payr, August (8:30): 175K expected, 217K prior
Unemployment Rate, August (8:30): 4.8% expected, 4.9% prior
Average Hourly Earni, August (8:30): 0.2% expected, 0.3% prior
Hourly Earnings, August (8:30): 0.3% prior
Average Workweek, August (8:30): 34.5 expected, 34.5 prior
Trade Balance, July (8:30): -$43.0B expected, -$44.5B prior
Factory Orders, July (10:00): 2.0% expected, -1.5% prior
End part 1 of 3
_______________________________________________________
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Sunday, August 28, 2016
Sunday, August 21, 2016
The Daily, Part 1 of 3, 8-20-16
* * * *
8/20/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: AGEN; AMD; BLUE; NPTN; NSC; ROVI; UNP
Entry alerts: WWW
Trailing stops: AMZN; GOOG
Stop alerts: None issued
The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
********************************************************************
The REPORT SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play
annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play
links in the reports.
If any market circumstances arise where we see additional plays we want to
prepare for the next session, we will of course issue those plays regardless
of the day of the week.
MARKET SUMMARY
- SOX surges to a higher high again paving the way but will the others
follow?
- Market still in its uptrend but bearish banks, billionaires, brokerages,
and Bloomberg say it cannot last.
- Momentum has slowed, the market has run far, but leadership has not given
in.
- There are reasons for caution, but there are still stocks that look very
good.
Most of the stock market managed to hang on Friday. All but SOX. It shot
to a new high. The other indices struggled in a back and forth week, in a
move that was less than inspired, especially for expiration. The market
definitely has some leadership groups and Friday, notably semiconductors,
and Friday saw that group put in some inspired moves. That helped lead SOX
to gains but not a lot else.
SP500 -3.15, -0.14%
NASDAQ -1.77, -0.03%
DJ30 -45.13, -0.24%
SP400 0.08%
RUTX -0.01%
SOX 0.87%
VOLUME: NYSE 12%, NASDAQ 2%. Expiration so volume is naturally a bit
elevated. Not very much, however.
A/D: NYSE -1.5:1, NASDAQ -1.1:1. Nothing outrageous here.
Again, the market has leadership, but it also has headwinds including the
time of year and the number of big names turning bearish.
Time of year. It is typically tough for the market to make headway in late
summer. That techs (e.g. chips, software) have led the market is unusual in
itself. This rally could be viewed as being on borrowed time just for that
reason. I hate fearing highs just for being high. New highs are not bad
things in and of themselves, but you do have to factor in time of year and
how that plays with momentum. The indices are maintaining their uptrends
but the move has lost momentum even as some groups, again chips for example,
hit higher highs.
Big Bears. I have chronicled the bearish turns of big brokerages and big
billionaires. GS, BAC, Faber, Tepper, Soros, Icahn, and more. This weekend
Citigroup talks of the "seven signs of a deeply dysfunctional market" and
warns of "surprising, sudden, intense" selloffs. Morgan Stanley tells its
clients "this is the most dangerous time as hope and greed overtake fear and
loathing."
Bloomberg is also bearish with a weekend story noting that markets appear to
be "extravagantly confident" that brokers are too bearish on their profit
forecasts. Moreover, Bloomberg notes history, something we are fond of: S&P
earnings are down four straight quarters and that equity bear markets follow
such protracted declines. Typically the market LEADS the actual news. This
time, however, the central bank activity is extraordinary and it has kept
markets propped up even as fundamentals such as earnings deteriorate.
Wow, hard to be happy about that. I have to say the apprehension is shared,
but you know we have been worried for some time that the lack of
fundamentals would ultimately catch up with the market. It could be
happening now as the momentum wanes on this run to lower volume and lower
MACD new highs, but just why is this time different? Does all the big
brokerages and billionaires turning negative mean the top is in or are they
just a sign that this hated rally is still hated and thus still has that
inverse sentiment driver?
Perhaps the market again vexes the doubters, proving them wrong at least
near term with more new highs and solid gains. Perhaps, but you have to
respect the slow volume, lower MACD, and overall slowing move. Bullish
sentiment is knocking at the 60 level that has preceded all of the selloffs
in this long market uptrend. We have seen this before at highs. You can
argue that the move is just consolidating but then the consolidation pulls a
Wylie Coyote out over the mountain's edge and suddenly plunges.
Contrast that, again, with the leadership. It is not just chips.
Industrial equipment, retail, biotechs/drugs, groups in software all are
rallying. Financial stocks are markedly improved. Oil stocks are
admittedly precarious as they ride oil's move, but they are moving well
right now. There are groups that are concerning, e.g. the NASDAQ big names,
but as of right now there are not collapses.
Of course, most do hang on until they start rolling over. With all of the
indications of slowing momentum, when a few of the big names started to show
some signs of slowing and struggling with near support we started closing
some positions and taking a lot more gain off the table. That is simply
prudent.
Okay, maybe a bit of some fear of flying, but if nothing else it makes us
leaner in terms of positions and the brokerage accounts fatter with some
very, very nice profits taken the past few weeks. Thus no emotional baggage
if the market starts to slide from a from a month of higher highs but also a
month that was very flat in terms of the SP500, SP400.
NASDAQ? Okay, it was flat for the two weeks, overall still very strong.
And SOX? Goodness it is putting on a show. Of course for the bears, too
much of a show, suggesting it is getting overdone as well. Oh well, good
moves always upset half of the traders and investors out there, right?
We still see many upside plays from several sectors in solid position to
move higher and add more to the upside. Semiconductors and electronics,
internet, biotech, retail, metals -- several possibilities if the market
wants to continue higher. We are adding a few downside plays, however, to
start getting ready in the event the slowing market momentum turns into
downside momentum. Not a lot of stocks are in downtrends right now so many
of the downside plays are more short term with targets more along the line
of near term pullbacks. You keep watching the leaders while you play these,
if they show the moves, and if the leaders start breaking their patterns,
then you move toward them as well as those drops can be quite precipitous
when the momentum leaves.
THE MARKET
CHARTS
SOX: Gapped to a higher post-2000 high Monday, tested midweek, then rallied
to a higher high Friday. The only index to do so Friday as SOX shows it is
the true leader in the market. SOX typically sets the trend for the other
indices and there is nothing weak about how it is working right now. The
bears of course might think the semiconductors are in a greed/blow off
phase. No doubt some of the important names have surged and are extended,
e.g. AVGO, NVDA, perhaps AMD, but there are many still in great patterns,
still making good moves but just coming out of a solid consolidation.
NASDAQ: New high Monday, reversed to the 10 day EMA by Wednesday, closing
out the week working laterally just over that near support. Volume wobbly
on the new high but it was excellent on the rally into early August. MACD
has flattened but not rolled over from a higher high on the price highs.
Overall NASDAQ remains solid but it will need some help from the big names
to advance. The chips, software, and others are helping, but NASDAQ could
use GOOG et al to really make a new significant run after this pretty heady
late June to August 650ish point run to all-time highs.
RUTX: New recovery high Monday then reversed and struggled Thursday and
Friday to try and recover it. Did not succeed, MACD has flattened out, and
we know NYSE volume is weak. RUTX remains in its uptrend but each move
higher the past 4 weeks has been quickly sold. It doggedly fights back but
the nominal higher highs are just that, nominal. Momentum is lower near
term, but RUTX is still trending upside, one of the market leaders.
SP500, DJ30, SP400: All present similar patterns, moving to a higher high
in July but then basically working laterally since. Lower MACD on the SP500
and SP400 higher highs, while DJ30 shows lower MACD on the second high this
past week that matches the mid-July high. Potential double top there.
LEADERHIP
Semiconductors: Big moves on the week and to end the week from AMAT
(earnings), AMD, MU, MRVL. AVGO is balking a bit at the upper channel line,
NVDA is testing the 10 day EMA after hitting a new high; both are very
strong leaders but possibly extended thanks to their strength. Stocks such
as PXLW, VECO still look ready to make stronger upside moves.
Big Names: FB spent the week testing the 20 day EMA, still working on a
very decent consolidation of the late July higher high. AAPL tested its
move by holding the 10 day EMA all week and starting upside Friday; nice.
AMZN is fading through the 20 day EMA. NFLX still looks good to move higher
off its 10 day EMA test. GOOG is not overtly bad, but it is struggling a
bit after a good move. If it sets up with a bit more pullback toward
770-768ish we can look at a new upside play.
Biotechs/Drugs: Some good moves testing, e.g. EXAS, AGEN. Some others in
consolidations and looking good, e.g. KITE, BLUE. BIIB is starting to move
and if it continues we can move in. CELG looks good to move higher as well.
Retail: Still quite solid. TGT imploded on its earnings and forecast, but
it has personal problems. KSS, JWN, M all look very good. Discounters such
as WMT (even after its good earnings) and DG don't look all that healthy.
ROST is surging and COST is working still very well. Hard to call the
market dead with retailers performing in good patterns.
China: Some great moves and patterns. SINA is consolidating a strong move.
SOHU, CTRP setting up. XXIA sporting a nice test. BIDU shows a good run to
the 200 day SMA. YNDX testing its breakout.
Rails: After a Thursday surge they took Friday off, but they look very
good, e.g. UNP, KSU, CSX.
Metals: CENX could present a new aluminum opportunity. FCX, SCHN are still
consolidating nicely. AKS is bombing. SID is at the 50 day EMA;
questionable. STLD breaking lower after giving up the 50 day EMA and a
test. Precious metals are iffy, e.g. HMY, GG.
Software: RHT is still struggling a the 50 day EMA/200 day SMA. PANW still
looks too run. SPLK is still rallying. CYBR is attempting to recover from
a selloff 2 weeks back. VMW nice after a 3 week test. FFIV in a nice 20
day EMA test.
Oil: Select groups are working, e.g. services (HAL, SLB), certain
independents (APC, APA, CWEI). Big names not so great, e.g. CVX, XOM.
Financial: MS and GS holding moves higher. JPM, BAC, C consolidating good
upside breaks. TCBI could be interesting.
MARKET STATISTICS
NASDAQ
Stats: -1.77 points (-0.03%) to close at 5238.38
Volume: 1.61B (+2.04%)
Up Volume: 906.65M (-64.24M)
Down Volume: 621.48M (-41.39M)
A/D and Hi/Lo: Decliners led 1.1 to 1
Previous Session: Advancers led 2.17 to 1
New Highs: 125 (+7)
New Lows: 21 (-9)
S&P
Stats: -3.15 points (-0.14%) to close at 2183.87
NYSE Volume: 844.4M (+11.65%)
A/D and Hi/Lo: Decliners led 1.46 to 1
Previous Session: Advancers led 2.4 to 1
New Highs: 101 (-44)
New Lows: 11 (0)
DJ30
Stats: -45.13 points (-0.24%) to close at 18552.57
SENTIMENT INDICATORS
VIX: 11.34; -0.09
VXN: 13.42; -0.73
VXO: 10.32; -0.07
Put/Call Ratio (CBOE): 0.84; -0.02
26 of 30 below 1.0, 18 of last 47 over 1.0.
One 1.0+ read Tuesday, then the put action has died right back down.
Bulls and Bears: Once gain the Bulls continue higher, the bears lower.
Getting very close to those complacent levels where the market tops. Still
has some room up to 60ish for bulls, but not much room to play. Thus have
to watch other areas, particularly the leaders to see if the market is
rolling.
Bulls: 56.2 versus 54.3
Bears: 20.0 versus 20.9
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 56.2 versus 54.3
54.3 versus 52.9% versus 53.9% versus 54.4% versus 52.5% versus 47.1% versus
41.6% versus 47.5% versus 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%
Bears: 20.0% versus 20.9%
20.9% versus 21.2% versus 21.6% versus 23.3% versus 24.7% versus 24.5%
versus 23.8% versus 23.2% versus 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%
OTHER MARKETS
Bonds (10 year): 1.58% versus 1.53%. Gapped lower to a tight doji Friday
holding the 50 day SMA. Despite the back and forth, TLT is working on a nice
2 month pennant consolidating the June to July run.
Historical: 1.53% versus 1.55% versus 1.57% versus 1.558% versus 1.51%
versus 1.56% versus 1.51% versus 1.54% versus 1.59% versus 1.585% versus
1.503% versus 1.54% versus 1.558% versus 1.51% versus 1.46% versus 1.50%
versus 1.51% versus 1.56% versus 1.57% versus 1.56% versus 1.558% versus
1.58% versus 1.56% versus 1.59% versus 1.58% versus 1.53% versus 1.47%
versus 1.51% versus 1.434% versus 1.36% versus 1.39% versus 1.373% versus
1.367% versus 1.44% versus 1.475% versus 1.51% versus 1.468% versus 1.46%
versus 1.57% versus 1.74% versus 1.68%
EUR/USD: 1.13251 versus 1.1342. Solid move higher on the week, resting just
a bit at the weekend.
Historical: 1.1342 versus 1.13036 versus 1.12773 versus 1.11824 versus
1.11636 versus 1.11372 versus 1.11803 versus 1.1115 versus 1.1080 versus
1.10882 versus 1.1130 versus 1.1148 versus 1.1219 versus 1.1164 versus
1.1173 versus 1.10806 versus 1.10732 versus 109857 versus 1.0992 versus
1.0977 versus 1.1021 versus 1.1022 versus 1.1021 versus 1.10654 versus
1.1035 versus 1.1117 versus 1.1099
USD/JPY: 100.21 versus 100.248. Sold on the week, tried to firm at the
early July low. Did firm, but all it did was stop selling versus start
bouncing.
Historical: 99.843 versus 100.529 versus 100.953 versus 101.308 versus
101.864 versus 101.23 versus 101.857 versus 102.356 versus 101.832 versus
101.178 versus 101.256 versus 101.09 versus 102.599 versus 102.045 versus
104.679 versus 105.98 versus 104.731 versus 105.76 versus 106.05 versus
106.11 versus 107.16 versus 106.139 versus 105.95 versus 104.85 versus
105.31 versus 104.74 versus 102.686 versus 100.59 versus 100.768 versus
101.15 versus 100.89 versus 102.497 versus 103.128 versus 102.912 versus
102.60
Oil: 49.11, +0.22. 49.11, +0.22. Rallied to the May and June penultimate
highs, posting strong moves as the dollar weakened. Friday a softer
session. Three strong weeks upside, a bit overdone near term perhaps as it
comes close to resistance at 50.
Gold: 1346.20, -11.00. Back and forth the past 10 sessions in a narrow
range over the 20 day EMA. Still a bullish setup, but getting to the point
where it will need to make its next move.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5238.38
Resistance:
5271.36 is the August 2016 intraday all-time high
Support:
5231.94 is the 2015 all-time high
The 10 day EMA is 5222
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
The 50 day EMA at 5068
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
The 200 day SMA at 4863
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
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.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2183.87
Resistance:
2194 is the August 2016 all-time high
Support:
2175 is the June 2016 high
The 50 day EMA at 2145
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
The 200 day SMA at 2050
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
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
Dow: Closed at 18,552.27
Resistance:
18,595 is the July 2016 peak
Support:
The 20 day EMA at 18,492
18,351 is the all-time high from May 2015
18,288 from March 2015
The 50 day EMA at 18,272
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,978 is the November 2015 peak
17,600 is the rough bottom of the April to June range.
The 200 day SMA at 17,512
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 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 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
ECONOMIC CALENDAR
August 23 - Tuesday
New Home Sales, July (10:00): 580K expected, 592K prior
August 24 - Wednesday
MBA Mortgage Index, 08/20 (7:00): -4.0% prior
FHFA Housing Price I, June (9:00): 0.2% prior
Existing Home Sales, July (10:00): 5.54M expected, 5.57M prior
Crude Inventories, 08/20 (10:30): -2.51M prior
August 25 - Thursday
Initial Claims, 08/20 (8:30): 265K expected, 262K prior
Continuing Claims, 08/13 (8:30): 2175K prior
Durable Orders, July (8:30): 3.5% expected, -4.0% prior
Durable Orders, Ex-T, July (8:30): 0.4% expected, -0.5% prior
Natural Gas Inventor, 08/20 (10:30): 22 bcf prior
August 26 - Friday
GDP - Second Estimate, Q2 (8:30): 1.1% expected, 1.2% prior
GDP Deflator - 2nd, Q2 (8:30): 2.2% expected, 2.2% prior
International Trade , July (8:30): -$63.3B prior
Michigan Sentiment - Final, August (10:00): 90.6 expected, 90.4 prior
End part 1 of 3
_______________________________________________________
Customer Support: http://www.InvestBilling.com
1153 Bergen Pkwy - Suite I #502 - Evergreen, CO 80439
8/20/2016 Investment House Daily
* * * *
MARKET ALERTS:
Targets hit: AGEN; AMD; BLUE; NPTN; NSC; ROVI; UNP
Entry alerts: WWW
Trailing stops: AMZN; GOOG
Stop alerts: None issued
The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
********************************************************************
The REPORT SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play
annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play
links in the reports.
If any market circumstances arise where we see additional plays we want to
prepare for the next session, we will of course issue those plays regardless
of the day of the week.
MARKET SUMMARY
- SOX surges to a higher high again paving the way but will the others
follow?
- Market still in its uptrend but bearish banks, billionaires, brokerages,
and Bloomberg say it cannot last.
- Momentum has slowed, the market has run far, but leadership has not given
in.
- There are reasons for caution, but there are still stocks that look very
good.
Most of the stock market managed to hang on Friday. All but SOX. It shot
to a new high. The other indices struggled in a back and forth week, in a
move that was less than inspired, especially for expiration. The market
definitely has some leadership groups and Friday, notably semiconductors,
and Friday saw that group put in some inspired moves. That helped lead SOX
to gains but not a lot else.
SP500 -3.15, -0.14%
NASDAQ -1.77, -0.03%
DJ30 -45.13, -0.24%
SP400 0.08%
RUTX -0.01%
SOX 0.87%
VOLUME: NYSE 12%, NASDAQ 2%. Expiration so volume is naturally a bit
elevated. Not very much, however.
A/D: NYSE -1.5:1, NASDAQ -1.1:1. Nothing outrageous here.
Again, the market has leadership, but it also has headwinds including the
time of year and the number of big names turning bearish.
Time of year. It is typically tough for the market to make headway in late
summer. That techs (e.g. chips, software) have led the market is unusual in
itself. This rally could be viewed as being on borrowed time just for that
reason. I hate fearing highs just for being high. New highs are not bad
things in and of themselves, but you do have to factor in time of year and
how that plays with momentum. The indices are maintaining their uptrends
but the move has lost momentum even as some groups, again chips for example,
hit higher highs.
Big Bears. I have chronicled the bearish turns of big brokerages and big
billionaires. GS, BAC, Faber, Tepper, Soros, Icahn, and more. This weekend
Citigroup talks of the "seven signs of a deeply dysfunctional market" and
warns of "surprising, sudden, intense" selloffs. Morgan Stanley tells its
clients "this is the most dangerous time as hope and greed overtake fear and
loathing."
Bloomberg is also bearish with a weekend story noting that markets appear to
be "extravagantly confident" that brokers are too bearish on their profit
forecasts. Moreover, Bloomberg notes history, something we are fond of: S&P
earnings are down four straight quarters and that equity bear markets follow
such protracted declines. Typically the market LEADS the actual news. This
time, however, the central bank activity is extraordinary and it has kept
markets propped up even as fundamentals such as earnings deteriorate.
Wow, hard to be happy about that. I have to say the apprehension is shared,
but you know we have been worried for some time that the lack of
fundamentals would ultimately catch up with the market. It could be
happening now as the momentum wanes on this run to lower volume and lower
MACD new highs, but just why is this time different? Does all the big
brokerages and billionaires turning negative mean the top is in or are they
just a sign that this hated rally is still hated and thus still has that
inverse sentiment driver?
Perhaps the market again vexes the doubters, proving them wrong at least
near term with more new highs and solid gains. Perhaps, but you have to
respect the slow volume, lower MACD, and overall slowing move. Bullish
sentiment is knocking at the 60 level that has preceded all of the selloffs
in this long market uptrend. We have seen this before at highs. You can
argue that the move is just consolidating but then the consolidation pulls a
Wylie Coyote out over the mountain's edge and suddenly plunges.
Contrast that, again, with the leadership. It is not just chips.
Industrial equipment, retail, biotechs/drugs, groups in software all are
rallying. Financial stocks are markedly improved. Oil stocks are
admittedly precarious as they ride oil's move, but they are moving well
right now. There are groups that are concerning, e.g. the NASDAQ big names,
but as of right now there are not collapses.
Of course, most do hang on until they start rolling over. With all of the
indications of slowing momentum, when a few of the big names started to show
some signs of slowing and struggling with near support we started closing
some positions and taking a lot more gain off the table. That is simply
prudent.
Okay, maybe a bit of some fear of flying, but if nothing else it makes us
leaner in terms of positions and the brokerage accounts fatter with some
very, very nice profits taken the past few weeks. Thus no emotional baggage
if the market starts to slide from a from a month of higher highs but also a
month that was very flat in terms of the SP500, SP400.
NASDAQ? Okay, it was flat for the two weeks, overall still very strong.
And SOX? Goodness it is putting on a show. Of course for the bears, too
much of a show, suggesting it is getting overdone as well. Oh well, good
moves always upset half of the traders and investors out there, right?
We still see many upside plays from several sectors in solid position to
move higher and add more to the upside. Semiconductors and electronics,
internet, biotech, retail, metals -- several possibilities if the market
wants to continue higher. We are adding a few downside plays, however, to
start getting ready in the event the slowing market momentum turns into
downside momentum. Not a lot of stocks are in downtrends right now so many
of the downside plays are more short term with targets more along the line
of near term pullbacks. You keep watching the leaders while you play these,
if they show the moves, and if the leaders start breaking their patterns,
then you move toward them as well as those drops can be quite precipitous
when the momentum leaves.
THE MARKET
CHARTS
SOX: Gapped to a higher post-2000 high Monday, tested midweek, then rallied
to a higher high Friday. The only index to do so Friday as SOX shows it is
the true leader in the market. SOX typically sets the trend for the other
indices and there is nothing weak about how it is working right now. The
bears of course might think the semiconductors are in a greed/blow off
phase. No doubt some of the important names have surged and are extended,
e.g. AVGO, NVDA, perhaps AMD, but there are many still in great patterns,
still making good moves but just coming out of a solid consolidation.
NASDAQ: New high Monday, reversed to the 10 day EMA by Wednesday, closing
out the week working laterally just over that near support. Volume wobbly
on the new high but it was excellent on the rally into early August. MACD
has flattened but not rolled over from a higher high on the price highs.
Overall NASDAQ remains solid but it will need some help from the big names
to advance. The chips, software, and others are helping, but NASDAQ could
use GOOG et al to really make a new significant run after this pretty heady
late June to August 650ish point run to all-time highs.
RUTX: New recovery high Monday then reversed and struggled Thursday and
Friday to try and recover it. Did not succeed, MACD has flattened out, and
we know NYSE volume is weak. RUTX remains in its uptrend but each move
higher the past 4 weeks has been quickly sold. It doggedly fights back but
the nominal higher highs are just that, nominal. Momentum is lower near
term, but RUTX is still trending upside, one of the market leaders.
SP500, DJ30, SP400: All present similar patterns, moving to a higher high
in July but then basically working laterally since. Lower MACD on the SP500
and SP400 higher highs, while DJ30 shows lower MACD on the second high this
past week that matches the mid-July high. Potential double top there.
LEADERHIP
Semiconductors: Big moves on the week and to end the week from AMAT
(earnings), AMD, MU, MRVL. AVGO is balking a bit at the upper channel line,
NVDA is testing the 10 day EMA after hitting a new high; both are very
strong leaders but possibly extended thanks to their strength. Stocks such
as PXLW, VECO still look ready to make stronger upside moves.
Big Names: FB spent the week testing the 20 day EMA, still working on a
very decent consolidation of the late July higher high. AAPL tested its
move by holding the 10 day EMA all week and starting upside Friday; nice.
AMZN is fading through the 20 day EMA. NFLX still looks good to move higher
off its 10 day EMA test. GOOG is not overtly bad, but it is struggling a
bit after a good move. If it sets up with a bit more pullback toward
770-768ish we can look at a new upside play.
Biotechs/Drugs: Some good moves testing, e.g. EXAS, AGEN. Some others in
consolidations and looking good, e.g. KITE, BLUE. BIIB is starting to move
and if it continues we can move in. CELG looks good to move higher as well.
Retail: Still quite solid. TGT imploded on its earnings and forecast, but
it has personal problems. KSS, JWN, M all look very good. Discounters such
as WMT (even after its good earnings) and DG don't look all that healthy.
ROST is surging and COST is working still very well. Hard to call the
market dead with retailers performing in good patterns.
China: Some great moves and patterns. SINA is consolidating a strong move.
SOHU, CTRP setting up. XXIA sporting a nice test. BIDU shows a good run to
the 200 day SMA. YNDX testing its breakout.
Rails: After a Thursday surge they took Friday off, but they look very
good, e.g. UNP, KSU, CSX.
Metals: CENX could present a new aluminum opportunity. FCX, SCHN are still
consolidating nicely. AKS is bombing. SID is at the 50 day EMA;
questionable. STLD breaking lower after giving up the 50 day EMA and a
test. Precious metals are iffy, e.g. HMY, GG.
Software: RHT is still struggling a the 50 day EMA/200 day SMA. PANW still
looks too run. SPLK is still rallying. CYBR is attempting to recover from
a selloff 2 weeks back. VMW nice after a 3 week test. FFIV in a nice 20
day EMA test.
Oil: Select groups are working, e.g. services (HAL, SLB), certain
independents (APC, APA, CWEI). Big names not so great, e.g. CVX, XOM.
Financial: MS and GS holding moves higher. JPM, BAC, C consolidating good
upside breaks. TCBI could be interesting.
MARKET STATISTICS
NASDAQ
Stats: -1.77 points (-0.03%) to close at 5238.38
Volume: 1.61B (+2.04%)
Up Volume: 906.65M (-64.24M)
Down Volume: 621.48M (-41.39M)
A/D and Hi/Lo: Decliners led 1.1 to 1
Previous Session: Advancers led 2.17 to 1
New Highs: 125 (+7)
New Lows: 21 (-9)
S&P
Stats: -3.15 points (-0.14%) to close at 2183.87
NYSE Volume: 844.4M (+11.65%)
A/D and Hi/Lo: Decliners led 1.46 to 1
Previous Session: Advancers led 2.4 to 1
New Highs: 101 (-44)
New Lows: 11 (0)
DJ30
Stats: -45.13 points (-0.24%) to close at 18552.57
SENTIMENT INDICATORS
VIX: 11.34; -0.09
VXN: 13.42; -0.73
VXO: 10.32; -0.07
Put/Call Ratio (CBOE): 0.84; -0.02
26 of 30 below 1.0, 18 of last 47 over 1.0.
One 1.0+ read Tuesday, then the put action has died right back down.
Bulls and Bears: Once gain the Bulls continue higher, the bears lower.
Getting very close to those complacent levels where the market tops. Still
has some room up to 60ish for bulls, but not much room to play. Thus have
to watch other areas, particularly the leaders to see if the market is
rolling.
Bulls: 56.2 versus 54.3
Bears: 20.0 versus 20.9
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 56.2 versus 54.3
54.3 versus 52.9% versus 53.9% versus 54.4% versus 52.5% versus 47.1% versus
41.6% versus 47.5% versus 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%
Bears: 20.0% versus 20.9%
20.9% versus 21.2% versus 21.6% versus 23.3% versus 24.7% versus 24.5%
versus 23.8% versus 23.2% versus 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%
OTHER MARKETS
Bonds (10 year): 1.58% versus 1.53%. Gapped lower to a tight doji Friday
holding the 50 day SMA. Despite the back and forth, TLT is working on a nice
2 month pennant consolidating the June to July run.
Historical: 1.53% versus 1.55% versus 1.57% versus 1.558% versus 1.51%
versus 1.56% versus 1.51% versus 1.54% versus 1.59% versus 1.585% versus
1.503% versus 1.54% versus 1.558% versus 1.51% versus 1.46% versus 1.50%
versus 1.51% versus 1.56% versus 1.57% versus 1.56% versus 1.558% versus
1.58% versus 1.56% versus 1.59% versus 1.58% versus 1.53% versus 1.47%
versus 1.51% versus 1.434% versus 1.36% versus 1.39% versus 1.373% versus
1.367% versus 1.44% versus 1.475% versus 1.51% versus 1.468% versus 1.46%
versus 1.57% versus 1.74% versus 1.68%
EUR/USD: 1.13251 versus 1.1342. Solid move higher on the week, resting just
a bit at the weekend.
Historical: 1.1342 versus 1.13036 versus 1.12773 versus 1.11824 versus
1.11636 versus 1.11372 versus 1.11803 versus 1.1115 versus 1.1080 versus
1.10882 versus 1.1130 versus 1.1148 versus 1.1219 versus 1.1164 versus
1.1173 versus 1.10806 versus 1.10732 versus 109857 versus 1.0992 versus
1.0977 versus 1.1021 versus 1.1022 versus 1.1021 versus 1.10654 versus
1.1035 versus 1.1117 versus 1.1099
USD/JPY: 100.21 versus 100.248. Sold on the week, tried to firm at the
early July low. Did firm, but all it did was stop selling versus start
bouncing.
Historical: 99.843 versus 100.529 versus 100.953 versus 101.308 versus
101.864 versus 101.23 versus 101.857 versus 102.356 versus 101.832 versus
101.178 versus 101.256 versus 101.09 versus 102.599 versus 102.045 versus
104.679 versus 105.98 versus 104.731 versus 105.76 versus 106.05 versus
106.11 versus 107.16 versus 106.139 versus 105.95 versus 104.85 versus
105.31 versus 104.74 versus 102.686 versus 100.59 versus 100.768 versus
101.15 versus 100.89 versus 102.497 versus 103.128 versus 102.912 versus
102.60
Oil: 49.11, +0.22. 49.11, +0.22. Rallied to the May and June penultimate
highs, posting strong moves as the dollar weakened. Friday a softer
session. Three strong weeks upside, a bit overdone near term perhaps as it
comes close to resistance at 50.
Gold: 1346.20, -11.00. Back and forth the past 10 sessions in a narrow
range over the 20 day EMA. Still a bullish setup, but getting to the point
where it will need to make its next move.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5238.38
Resistance:
5271.36 is the August 2016 intraday all-time high
Support:
5231.94 is the 2015 all-time high
The 10 day EMA is 5222
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
The 50 day EMA at 5068
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
The 200 day SMA at 4863
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
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.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2183.87
Resistance:
2194 is the August 2016 all-time high
Support:
2175 is the June 2016 high
The 50 day EMA at 2145
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
The 200 day SMA at 2050
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
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
Dow: Closed at 18,552.27
Resistance:
18,595 is the July 2016 peak
Support:
The 20 day EMA at 18,492
18,351 is the all-time high from May 2015
18,288 from March 2015
The 50 day EMA at 18,272
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,978 is the November 2015 peak
17,600 is the rough bottom of the April to June range.
The 200 day SMA at 17,512
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 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 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
ECONOMIC CALENDAR
August 23 - Tuesday
New Home Sales, July (10:00): 580K expected, 592K prior
August 24 - Wednesday
MBA Mortgage Index, 08/20 (7:00): -4.0% prior
FHFA Housing Price I, June (9:00): 0.2% prior
Existing Home Sales, July (10:00): 5.54M expected, 5.57M prior
Crude Inventories, 08/20 (10:30): -2.51M prior
August 25 - Thursday
Initial Claims, 08/20 (8:30): 265K expected, 262K prior
Continuing Claims, 08/13 (8:30): 2175K prior
Durable Orders, July (8:30): 3.5% expected, -4.0% prior
Durable Orders, Ex-T, July (8:30): 0.4% expected, -0.5% prior
Natural Gas Inventor, 08/20 (10:30): 22 bcf prior
August 26 - Friday
GDP - Second Estimate, Q2 (8:30): 1.1% expected, 1.2% prior
GDP Deflator - 2nd, Q2 (8:30): 2.2% expected, 2.2% prior
International Trade , July (8:30): -$63.3B prior
Michigan Sentiment - Final, August (10:00): 90.6 expected, 90.4 prior
End part 1 of 3
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Saturday, August 13, 2016
The Daily, Part 1 of 3, 8-13-16
* * * *
8/13/2016 Investment House Daily
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MARKET ALERTS:
Targets hit: GRAM
Entry alerts: AGEN; BLUE
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
- Friday cannot continue the Thursday rebound, at least for the indices.
- NYSE indices look good to continue the upside while SOX is somewhat
worrisome, NASDAQ a bit less so.
- Still leadership that is working and that keeps the upside prognosis
decent.
- Economic data has turned for the worse again as productivity, factory
orders, retail sales disappoint. Jobs Report is now just a distant Fed
consideration.
- Ultra wealthy fear a market drop, perhaps knowing things us common people
don't. Playing the central banks makes it tougher, but we still make money
letting the market point the way and taking what it gives.
Tight doji for no gain Friday after that strong Thursday breakout move on
strong volume.
This Friday was more a whimper than a surge as the indices basically fought
to a draw to close the week. Indeed, the week was pretty much a draw as far
as the indices are concerned. A nice 1-2-3 fade through Wednesday, a good
Thursday rebound, but then Friday just fizzled.
SP500 -1.74, -0.08%
NASDAQ 4.49, 0.09%
DJ30 -37.05, -0.20%
SP400 -0.15%
RUTX 0.06%
SOX 0.46%
VOLUME: NYSE -9%, NASDAQ -3%. Still very low, below average volume.
Entire week on low volume. Not a lot of upside, not a lot of volume.
A/D: NYSE -1.1:1, NASDAQ -1.1:1.
Not a bad fizzle, just not able to extend the move higher. DJ30, SP500,
RUTX, and SP400 all show doji sitting on the 10 day EMA, still in very good
position to continue the break higher. NASDAQ is not bad, still working
laterally and slightly higher on the week, though volume has really dropped
off after such good price/volume action on the rally. It is still in great
position, just needs the big names to join in the upside once again.
SOX is a bit worrisome as it put in a new closing high, but is struggling to
get over late July high. SOX was an early leader in the move and indeed led
the rest of the market higher. It is up off the test of that late July
higher high, but didn't show much conviction on the week. As with NASDAQ,
still in great shape to make a new breakout, just has to hang in and show
that move. If not, it has something of a near term double top on lower
MACD. Important time for SOX and indeed the rest of the market as it tends
to follow SOX' lead.
The leaders still look good even if the NASDAQ big names took some time off
on the week letting others do the work. Biotechs are quite strong though
some of the big names didn't move; the others certainly did, e.g. AGEN,
EXAS, BLUE. Retail was sagging then totally reversed course on earnings for
the group. Perhaps money is leaving some areas such as industrial metals
(at a critical juncture) but it is moving into others as retail sees a
renaissance of sorts. Rotation has been the savior of this move ever since
the February selloff was rescued by central bank; when one area falters,
money does not leave the market, it just moves to another area. Lots of
negativity from some really rich people as well as brokerages and banks that
represent really rich people. Yet, the market is still moving higher.
Perhaps the economic data played a role Friday as it did the previous
Friday. Not as an upside catalyst, but perhaps putting a lid on a further
upside move following the Thursday rebound. Hey, at least the weak data
didn't torpedo Thursday. It may, after all is digested, actually help if it
keeps the Fed at bay. I mean, negative retail sales ex-autos when sales
were expected to rise is not a great economic indication. Jobs are one
thing and important, but they are not a leading indicator. Productivity,
factory orders, and now retail sales are suggesting what was hoped to be an
improvement in the data might, once again, indicate that bounce was yet
another false hope ahead of a slump.
No banner move on the session as there was no better than expected economic
data as on the prior Friday. Indeed, given the very weak productivity and
retail sales this week. holding the gains to the weekend is a decent feat.
We picked up some AGEN as it rebounded from its test, also grabbed some more
BLUE as it broke upside off its test. Took some gain on GRAM as it
triggered the initial target. It then faded to a doji, but we banked some
very nice gain on that initial surge.
The week was not great, but certain leadership groups moved very well as
money rotated to new areas while some such as semiconductors and NASDAQ
Names rested. Thus we will continue looking for those stocks setting up
patterns to break higher and help lead a new move. May be some of those
NASDAQ Names themselves. Don't want to be wholly upside given all of the
smart folks so concerned about stocks, but thus far money keeps pushing good
patterns higher.
NEWS/ECONOMY
A big disappointment on top of productivity, factory orders, an ISM miss.
You get a bit more jobs reported though most are still the low paying jobs,
and everyone gushes how great things are. Then reality starts to set back
in. More of that reality hit Friday, flipping futures from positive to
negative.
Retail Sales, July: 0.0% vs 0.4% exp vs 0.8% (from 0.6%)
Ex auto: -0.3% vs +0.2% exp vs 0.9 prior (from 0.7).
Ex-auto and gas: -0.1% vs 0.3% prior. Gasoline was a drag as well, a good
drag.
Gas stations -2.7%
Sporting goods -2.2%. No sports in summer? We have bought a lot of sporting
goods. All of those people on summer vacation are surely buying sporting
goods just as Clark Griswold did in the original 'Vacation.'
Department stores -0.5%. Hmm, don't tell Macy's, JWN as their earnings were
pretty good.
Autos helped bail out sales as the flat overall reading fell to -0.3%.
Gasoline sales dragged it down, not a bad thing as noted above. Autos prop
up otherwise very weak retail sales, gasoline drags it down.
PPI: -0.4% vs 0.0 exp vs 0.5 prior
Core PPI: 0.3% vs 0.2% exp vs 0.4 prior
What do the retail sales and PPI show?
Combining the data, perhaps the price deflation is impacting retail sales.
Remember, retail sales are not the number of units sold but the amount of
dollars spent. Some price deflation would result in lower retail sales.
Okay, what is the reality of that? Prices for the consumer are NOT falling
and inflation is much higher than the way the government calculates it
reflects. Ask anyone: other than a bit lower gasoline prices (never as low
as you would think they should be when you factor in the actual cost input),
the cost of what you need to provide for a family are not going lower.
THE MARKET
The indices showed moments of trying to keep the jobs surge going. A 3-day
test on the NYSE, a break higher Thursday to higher highs. Friday was kind
of a dud, but a dud that leaves those NYSE indices in good position to move
higher. That is nice, but thus far it is SOX and NASDAQ that drove the bus.
They are not sporting such neat patterns but they are not rolling over
either.
CHARTS
Mostly lateral trends on the week with some new highs thrown in. Volume was
lower so even though the indices found it difficult to extend the move there
was no dumping of stocks. Doesn't mean the move cannot die from a lack of
interest, but low volume overall in a lateral move and leaders breaking
higher is not bad.
SOX: Led the market move higher in July, set up a good test to start
August, bounced nicely. Last week SOX continued the recovery off the new
post-2000 high test, but the move was back and forth. Rising up the 10 day
EMA, putting in another new post-2000 closing high, but not showing that
strong breakout through that July peak. Still in a solid trend higher, but
MACD has flattened just a bit as it tests that late July high.
NASDAQ: Closed higher for the week and again at a new all-time closing
high, but the week really went nowhere. Maybe that is a good thing, but
after the jobs gap, it was less than inspiring. The big names didn't really
move higher but they didn't sell. Volume faded during the lateral move
after showing great price/volume action on the rally. Low volume shows no
churn, no unloading positions. If the big names and chips come out of their
tests, NASDAQ can rock higher.
SP500: Similar to NASDAQ in that after the jobs rally day, SP500 moved
slightly higher, but more laterally, along the 10 day EMA. New high
Thursday, but not a lot more than that. At least volume was up a bit
Thursday. Showing a nice tight doji over the 10 day EMA and frankly in
pretty good shape to continue the move. The fly in the ointment, okay, one
of them, is MACD. It is lower on this higher high, suggesting the momentum
is slowing.
DJ30: Classic move, the 1-2-3 test of the Friday jobs surge and then a
break higher Thursday to a new all-time high. Friday a modest fade on very
low volume. Similar to SOX in the somewhat double top, and MACD is lower on
this move as well. This week is the rubber match to see if the Dow can
continue higher and make good on that Thursday new high.
RUTX: The small caps look pretty good with the weeklong test of the break
into the 2015 new high range. Holding the 10 day EMA in a lateral move to
end the week, a good setup to move higher. That said, RUTX also suffers
from lower MACD on this higher high. Not a huge drop, but lower. And you
know NYSE volume was lower all week. Again, at least no churn, no higher
volume selling of the stocks at this higher high.
SP400: Similar to RUTX, the midcaps broke to a higher high a week back,
faded to test the move, holding the 10 day EMA Wednesday to Friday. Not a
bad setup to move higher, and needs to do it. SP400 broke to a higher
all-time high but needs to build upon it.
LEADERHIP
There are still plenty of groups moving well, enough to support this move
and indeed send stocks higher.
Big Names: NFLX showed some of the best action of the FANG on the week,
testing the 50 day MA into Wednesday then rebounding nicely. FB spent the
entire week testing, but now is showing a doji at the 10 day EMA; good
position to break higher. AAPL showed very nice action, hitting a higher
recovery high, then putting in a modest Wednesday to Friday test. AMZN
drifted slowly up the 10 day EMA on lower, and lower below average volume.
New high Friday but hardly what you would call powerful. GOOG up all week,
MACD higher, testing Friday. Not bad. SBUX trying to bottom after a 2 week
test.
Semiconductors: Up on the week as SOX did move up to test the prior high.
AVGO put in a new high but is also slowing at the top of its channel. NVDA
gapped to a higher high on earnings. XLNX testing on the week after moving
to a higher recovery high. SLAB working laterally at the 10 day EMA. NXPI
in pretty good shape to move higher.
Biotechs/Drugs: The big names were quieter on the week, e.g. AMGN, CELG,
BIIB, but are set up very nicely. Others continued nicely. EXAS surging
still to a higher high. AGEN shot higher Friday after a short test. BLUE
looks as if it is making a move back up.
Retail: Impressive turn on the week even with lower retail sales Friday.
JWN, KSS, M, ROST. DECK walked higher on the week with a nice new break.
DDS may be ready to make a new break upside.
Industrial equipment: CMI, CAT, UTX all higher on the week, perhaps now a
bit extended.
Metals: Really struggled on the week. AKS heading lower in big chunks.
SID is holding a lateral move at the 10 day EMA, not all that bad. CENX is
trying to hang on in its handle as is SCHN. A bit of turbulence on the week
but no pattern wreckers in most cases.
Software: Watching to see if some money comes back. ROVI still looks good
as it rends up the 10 day EMA. CRM trying to revive off of the 50 day EMA,
bouncing Thursday and Friday. SPLK running to a higher high. VMW, FFIV
testing their moves. RHT struggling. BLKB trying to fight off the dips.
PANW still trying to make good on its break of the downtrend.
Oil: CWEI was crazy on the week, up almost 22 points. APC has struggled,
but it is back up through the 50 day SMA. SWN decent but needs work. CVX
broke lower, but as oil recovered, CWEI recovered to the 50 day EMA. Some
look good but others not: DO, ORIG, RIG.
Financial: Some interesting setups, e.g. BAC in a short test of its gap
over the 200 day SMA, JPM in a weeklong pullback to the 10 day EMA. GS is
working laterally along the 200 day SMA, looking for a break higher.
MARKET STATISTICS
NASDAQ
Stats: +4.5 points (+0.09%) to close at 5232.89
Volume: 1.47B (-2.75%)
Up Volume: 823.8M (-236.2M)
Down Volume: 621.65M (+180.9M)
A/D and Hi/Lo: Decliners led 1.07 to 1
Previous Session: Advancers led 1.76 to 1
New Highs: 121 (-37)
New Lows: 30 (-2)
S&P
Stats: -1.74 points (-0.08%) to close at 2184.05
NYSE Volume: 712.1M (-8.89%)
Up Volume: 1.38B (-1.1B)
Down Volume: 1.57B (+686.46M)
A/D and Hi/Lo: Decliners led 1.08 to 1
Previous Session: Advancers led 1.7 to 1
New Highs: 143 (-40)
New Lows: 13 (+5)
DJ30
Stats: -37.05 points (-0.2%) to close at 18576.47
SENTIMENT INDICATORS
VIX: 11.55; -0.13
VXN: 13.99; -0.32
VXO: 10.67; -0.15
Put/Call Ratio (CBOE): 0.76; -0.19
22 of 25 below 1.0, 17 of last 42 over 1.0. You could say the shift from
worry to complacency has completed and now the market appears a bit
lackadaisical.
Bulls and Bears: Bulls continue higher, bears lower, both still below the
2014 and 2015 highs and lows, but both approaching levels that show the
complacency that can lead to turns. Not there, but getting closer.
Bulls: 54.3 versus 52.9
Bears: 20.9 versus 21.2
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: 54.3 versus 52.9
52.9% versus 53.9% versus 54.4% versus 52.5% versus 47.1% versus 41.6%
versus 47.5% versus 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%
Bears: 20.9% versus 21.2%
21.2% versus 21.6% versus 23.3% versus 24.7% versus 24.5% versus 23.8%
versus 23.2% versus 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%
OTHER MARKETS
Bonds (10 year): 1.51% versus 1.56%. Back and forth a lot on the week, but
the overall trend that remains is bonds are building a positive pattern as
TLT consolidates the June to July rally.
Historical: 1.56% versus 1.51% versus 1.54% versus 1.59% versus 1.585%
versus 1.503% versus 1.54% versus 1.558% versus 1.51% versus 1.46% versus
1.50% versus 1.51% versus 1.56% versus 1.57% versus 1.56% versus 1.558%
versus 1.58% versus 1.56% versus 1.59% versus 1.58% versus 1.53% versus
1.47% versus 1.51% versus 1.434% versus 1.36% versus 1.39% versus 1.373%
versus 1.367% versus 1.44% versus 1.475% versus 1.51% versus 1.468% versus
1.46% versus 1.57% versus 1.74% versus 1.68% versus 1.70% versus 1.67%
versus 1.61%
EUR/USD: 1.11636 versus 1.11372. Euro looks really ready to rally off of a
nice double bottom with handle setup.
Historical: 1.11372 versus 1.11803 versus 1.1115 versus 1.1080 versus
1.10882 versus 1.1130 versus 1.1148 versus 1.1219 versus 1.1164 versus
1.1173 versus 1.10806 versus 1.10732 versus 109857 versus 1.0992 versus
1.0977 versus 1.1021 versus 1.1022 versus 1.1021 versus 1.10654 versus
1.1035 versus 1.1117 versus 1.1099
USD/JPY: 101.308 versus 101.864. Well, the dollar LOOKED as if it was going
to try a bounce but Friday certainly looked weaker, stalling at the 10 day
EMA.
Historical: 101.864 versus 101.23 versus 101.857 versus 102.356 versus
101.832 versus 101.178 versus 101.256 versus 101.09 versus 102.599 versus
102.045 versus 104.679 versus 105.98 versus 104.731 versus 105.76 versus
106.05 versus 106.11 versus 107.16 versus 106.139 versus 105.95 versus
104.85 versus 105.31 versus 104.74 versus 102.686 versus 100.59 versus
100.768 versus 101.15 versus 100.89 versus 102.497 versus 103.128 versus
102.912 versus 102.60
Oil: 44.49, +0.26. Out of the July dive into August, oil rebounded four
sessions, then fell hard Wednesday. Looked as if the bounce may have run
its course. Thursday, however, a big surge and Friday oil fought off a
lower open to add another gain. It did not, however, take out the 50 day
EMA, the next test on this move.
Gold: 1343.20, -6.80. After the dump to the 20 day EMA on the jobs report,
gold recovered to midweek. Friday a gap lower, a surge higher, but that
failed. Gold remains at the 20 day EMA, where it started the week.
Important next two weeks for gold. Thus far it has worked on a new upside
move and to keep that going gold needs to work on the pattern. It could fall
to the 50 day MA, however, and still continue working on an upside pattern.
MONDAY
Earnings are mostly over. Big economic reports are out, though regional
manufacturing reports (New York, Philly), CPI, Industrial
production/Capacity utilization, and the FOMC minutes are not play toys.
The economic data improved and raised hope this year, this time, it would be
better. As I wrote a month back, however, the data was starting to follow
the same trend of the prior years: a weak start, improvement that looked
promising . . . then a fade into the back half of the year into the first
quarter.
So, yes, the economics always make a difference. But, with carefully
engineered asset inflation since March 2009 and as given aide and support
throughout the years, most notably of late in February, the world central
banks have maintained the move. Remember, in February the market was in a
second plunge after a rebound off the January low failed. Phone records of
the Fed Chairman, part of the public record, show phone calls to the BOE at
the lows, followed 20 minutes later by a turn in the market. The next
session a call to Mario Draghi, and within a half hour stocks were shooting
higher again. Nice save.
I believe that double dive then rescue is what has the elite convinced the
market will fall. Indeed, Friday we learned that Mr. Tepper is heavily
bearish now, having exited his upside index call plays and is playing the
downside. It is not that they don't believe the Fed and central banks will
not again come to its rescue; after all the New Zealand central bank just
cut rates and said more to come a la the Bank of England. It is more a
belief that the central banks have run out of their ability to float the
markets through attempted selloffs. What makes them believe that is likely
information that you and I are not privy to and cannot get.
I also believe that the jobs report's impact on a rate hike is over. The
data since (Factory Orders, productivity, retail sales) is all weak and what
DB said about how this Fed works is very likely true, to wit: every time a
data point disappoints, the Fed timetable is reset in terms of the next rate
hike, starting the entire process over.
Maybe those in the inner circle of knowledge believe this and see interest
rates moving inexorably toward negative and fear what may happen
economically and to the market as a result. Or perhaps those in the inner
circle of knowledge may know the Fed has decided it has to get rates higher
and know the impact on the market given the economy is, as they know, not
nearly as strong as the reworked, rehashed, readjusted reported economic
numbers suggest.
These are considerations you NEVER had to deal with back when the Fed was
not in the economic micromanagement business and the government stuck more
to making sure people and businesses COULD conduct business the best they
saw fit versus telling them HOW to conduct business. The inevitable result
is the economy we have. Happened in the 1930's as the leaders tried to
manipulate markets out of the depression (something that did not happen in
the 1920's depression that quickly turned into the roaring 20's), happened
again in the 1970's when massive regulation, taxation, wage controls, dollar
floating led to another long period of economic stagnation. Now, the same
policies, the same results.
In any event, regardless of what the fears of the elite may be, all I can do
is look at what the market tells you. After the stick save in February and
the stimulus that followed, stocks have rallied, set up good bases, broke
higher, and then did it again. New leaders arise even as prior leader
groups fade as money rotates around the market. That is always a sign of a
healthy market, i.e. if there are leaders and money moves to new areas
versus leaving the market after a group of leaders makes a solid run and
gets a bit extended.
Even with the indices tickling at new highs, there are still some quality
sectors out there with excellent patterns and volume. For now we continue
looking for upside opportunity until the leadership runs dry. When that
happens the market rolls over, and if it cannot find new leaders after the
Fed and central banks inevitably step in, that would likely spell the end of
the long bull run. But, the market has not stalled this current move, the
Fed and company have not had to step in again, and we of course don't know
what the outcome of that central bank intervention would be. So, we play
the market we have and take what the market gives.
Will see what news comes out this weekend, but though the indices were less
than thrilling and satisfying overall, some leaders showed really good
action.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5232.89
Resistance:
5238.54 is the August 2016 intraday all-time high
Support:
5231.94 is the 2015 all-time high
The 10 day EMA is 5196
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
5042 is the March 2015 high
The 50 day EMA at 5029
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
The 200 day SMA at 4859
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
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.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2184.05
Resistance:
Support:
2175 is the June 2016 high
The 50 day EMA at 2136
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
The 200 day SMA at 2048
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
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
Dow: Closed at 18,577.94
Resistance:
18,595 is the July 2016 peak
Support:
18,351 is the all-time high from May 2015
18,288 from March 2015
18,247 is the August 2016 low
The 50 day EMA at 18,204
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,978 is the November 2015 peak
17,600 is the rough bottom of the April to June range.
The 200 day SMA at 17,492
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 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 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
ECONOMIC CALENDAR
August 12 - Friday
PPI, July (8:30): -0.4% actual versus 0.0% expected, 0.5% prior (no
revisions)
Core PPI, July (8:30): -0.3% actual versus 0.2% expected, 0.4% prior (no
revisions)
Retail Sales, July (8:30): 0.0% actual versus 0.4% expected, 0.8% prior
(revised from 0.6%)
Retail Sales ex-auto, July (8:30): -0.3% actual versus 0.2% expected, 0.9%
prior (revised from 0.7%)
Michigan Sentiment - Pre, August (10:00): 90.4 actual versus 90.2 expected,
90.0 prior
Business Inventories, June (10:00): 0.2% actual versus 0.1% expected, 0.2%
prior (no revisions)
August 15 - Monday
Empire Manufacturing, August (8:30): 4.0 expected, 0.55 prior
NAHB Housing Market , August (10:00): 59 expected, 59 prior
Net Long-Term TIC Fl, June (16:00): $41.1B prior
August 16 - Tuesday
Building Permits, July (8:30): 1153K prior
Core CPI, July (8:30): 0.2% prior
CPI, July (8:30): 0.0% expected, 0.2% prior
Housing Starts, July (8:30): 1189K prior
Core CPI, July (8:30): 0.2% expected, 0.2% prior
Housing Starts, July (8:30): 1167K expected, 1189K prior
Building Permits, July (8:30): 1153K expected, 1153K prior
Capacity Utilization, July (9:15): 75.4% prior
Industrial Productio, July (9:15): 0.3% expected, 0.6% prior
Capacity Utilization, July (9:15): 75.7% expected, 75.4% prior
August 17 - Wednesday
MBA Mortgage Index, 08/13 (7:00): 7.1% prior
Crude Inventories, 08/13 (10:30): 1.055M prior
FOMC Minutes, July 27 (14:00)
August 18 - Thursday
Initial Claims, 08/13 (8:30): 265K expected, 266K prior
Continuing Claims, 08/06 (8:30): 2155K prior
Philadelphia Fed, August (8:30): 0.5 expected, -2.9 prior
Leading Indicators, July (10:00): 0.4% expected, 0.3% prior
Natural Gas Inventor, 08/13 (10:30): 29 bcf prior
End part 1 of 3
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The REPORT SCHEDULE is as follows:
Market Summary Video, Plays and Play Videos, and Play Tables with play
annotations will issue Monday, Wednesday and the Weekend.
Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play
links in the reports.
If any market circumstances arise where we see additional plays we want to
prepare for the next session, we will of course issue those plays regardless
of the day of the week.
MARKET SUMMARY
- Friday cannot continue the Thursday rebound, at least for the indices.
- NYSE indices look good to continue the upside while SOX is somewhat
worrisome, NASDAQ a bit less so.
- Still leadership that is working and that keeps the upside prognosis
decent.
- Economic data has turned for the worse again as productivity, factory
orders, retail sales disappoint. Jobs Report is now just a distant Fed
consideration.
- Ultra wealthy fear a market drop, perhaps knowing things us common people
don't. Playing the central banks makes it tougher, but we still make money
letting the market point the way and taking what it gives.
Tight doji for no gain Friday after that strong Thursday breakout move on
strong volume.
This Friday was more a whimper than a surge as the indices basically fought
to a draw to close the week. Indeed, the week was pretty much a draw as far
as the indices are concerned. A nice 1-2-3 fade through Wednesday, a good
Thursday rebound, but then Friday just fizzled.
SP500 -1.74, -0.08%
NASDAQ 4.49, 0.09%
DJ30 -37.05, -0.20%
SP400 -0.15%
RUTX 0.06%
SOX 0.46%
VOLUME: NYSE -9%, NASDAQ -3%. Still very low, below average volume.
Entire week on low volume. Not a lot of upside, not a lot of volume.
A/D: NYSE -1.1:1, NASDAQ -1.1:1.
Not a bad fizzle, just not able to extend the move higher. DJ30, SP500,
RUTX, and SP400 all show doji sitting on the 10 day EMA, still in very good
position to continue the break higher. NASDAQ is not bad, still working
laterally and slightly higher on the week, though volume has really dropped
off after such good price/volume action on the rally. It is still in great
position, just needs the big names to join in the upside once again.
SOX is a bit worrisome as it put in a new closing high, but is struggling to
get over late July high. SOX was an early leader in the move and indeed led
the rest of the market higher. It is up off the test of that late July
higher high, but didn't show much conviction on the week. As with NASDAQ,
still in great shape to make a new breakout, just has to hang in and show
that move. If not, it has something of a near term double top on lower
MACD. Important time for SOX and indeed the rest of the market as it tends
to follow SOX' lead.
The leaders still look good even if the NASDAQ big names took some time off
on the week letting others do the work. Biotechs are quite strong though
some of the big names didn't move; the others certainly did, e.g. AGEN,
EXAS, BLUE. Retail was sagging then totally reversed course on earnings for
the group. Perhaps money is leaving some areas such as industrial metals
(at a critical juncture) but it is moving into others as retail sees a
renaissance of sorts. Rotation has been the savior of this move ever since
the February selloff was rescued by central bank; when one area falters,
money does not leave the market, it just moves to another area. Lots of
negativity from some really rich people as well as brokerages and banks that
represent really rich people. Yet, the market is still moving higher.
Perhaps the economic data played a role Friday as it did the previous
Friday. Not as an upside catalyst, but perhaps putting a lid on a further
upside move following the Thursday rebound. Hey, at least the weak data
didn't torpedo Thursday. It may, after all is digested, actually help if it
keeps the Fed at bay. I mean, negative retail sales ex-autos when sales
were expected to rise is not a great economic indication. Jobs are one
thing and important, but they are not a leading indicator. Productivity,
factory orders, and now retail sales are suggesting what was hoped to be an
improvement in the data might, once again, indicate that bounce was yet
another false hope ahead of a slump.
No banner move on the session as there was no better than expected economic
data as on the prior Friday. Indeed, given the very weak productivity and
retail sales this week. holding the gains to the weekend is a decent feat.
We picked up some AGEN as it rebounded from its test, also grabbed some more
BLUE as it broke upside off its test. Took some gain on GRAM as it
triggered the initial target. It then faded to a doji, but we banked some
very nice gain on that initial surge.
The week was not great, but certain leadership groups moved very well as
money rotated to new areas while some such as semiconductors and NASDAQ
Names rested. Thus we will continue looking for those stocks setting up
patterns to break higher and help lead a new move. May be some of those
NASDAQ Names themselves. Don't want to be wholly upside given all of the
smart folks so concerned about stocks, but thus far money keeps pushing good
patterns higher.
NEWS/ECONOMY
A big disappointment on top of productivity, factory orders, an ISM miss.
You get a bit more jobs reported though most are still the low paying jobs,
and everyone gushes how great things are. Then reality starts to set back
in. More of that reality hit Friday, flipping futures from positive to
negative.
Retail Sales, July: 0.0% vs 0.4% exp vs 0.8% (from 0.6%)
Ex auto: -0.3% vs +0.2% exp vs 0.9 prior (from 0.7).
Ex-auto and gas: -0.1% vs 0.3% prior. Gasoline was a drag as well, a good
drag.
Gas stations -2.7%
Sporting goods -2.2%. No sports in summer? We have bought a lot of sporting
goods. All of those people on summer vacation are surely buying sporting
goods just as Clark Griswold did in the original 'Vacation.'
Department stores -0.5%. Hmm, don't tell Macy's, JWN as their earnings were
pretty good.
Autos helped bail out sales as the flat overall reading fell to -0.3%.
Gasoline sales dragged it down, not a bad thing as noted above. Autos prop
up otherwise very weak retail sales, gasoline drags it down.
PPI: -0.4% vs 0.0 exp vs 0.5 prior
Core PPI: 0.3% vs 0.2% exp vs 0.4 prior
What do the retail sales and PPI show?
Combining the data, perhaps the price deflation is impacting retail sales.
Remember, retail sales are not the number of units sold but the amount of
dollars spent. Some price deflation would result in lower retail sales.
Okay, what is the reality of that? Prices for the consumer are NOT falling
and inflation is much higher than the way the government calculates it
reflects. Ask anyone: other than a bit lower gasoline prices (never as low
as you would think they should be when you factor in the actual cost input),
the cost of what you need to provide for a family are not going lower.
THE MARKET
The indices showed moments of trying to keep the jobs surge going. A 3-day
test on the NYSE, a break higher Thursday to higher highs. Friday was kind
of a dud, but a dud that leaves those NYSE indices in good position to move
higher. That is nice, but thus far it is SOX and NASDAQ that drove the bus.
They are not sporting such neat patterns but they are not rolling over
either.
CHARTS
Mostly lateral trends on the week with some new highs thrown in. Volume was
lower so even though the indices found it difficult to extend the move there
was no dumping of stocks. Doesn't mean the move cannot die from a lack of
interest, but low volume overall in a lateral move and leaders breaking
higher is not bad.
SOX: Led the market move higher in July, set up a good test to start
August, bounced nicely. Last week SOX continued the recovery off the new
post-2000 high test, but the move was back and forth. Rising up the 10 day
EMA, putting in another new post-2000 closing high, but not showing that
strong breakout through that July peak. Still in a solid trend higher, but
MACD has flattened just a bit as it tests that late July high.
NASDAQ: Closed higher for the week and again at a new all-time closing
high, but the week really went nowhere. Maybe that is a good thing, but
after the jobs gap, it was less than inspiring. The big names didn't really
move higher but they didn't sell. Volume faded during the lateral move
after showing great price/volume action on the rally. Low volume shows no
churn, no unloading positions. If the big names and chips come out of their
tests, NASDAQ can rock higher.
SP500: Similar to NASDAQ in that after the jobs rally day, SP500 moved
slightly higher, but more laterally, along the 10 day EMA. New high
Thursday, but not a lot more than that. At least volume was up a bit
Thursday. Showing a nice tight doji over the 10 day EMA and frankly in
pretty good shape to continue the move. The fly in the ointment, okay, one
of them, is MACD. It is lower on this higher high, suggesting the momentum
is slowing.
DJ30: Classic move, the 1-2-3 test of the Friday jobs surge and then a
break higher Thursday to a new all-time high. Friday a modest fade on very
low volume. Similar to SOX in the somewhat double top, and MACD is lower on
this move as well. This week is the rubber match to see if the Dow can
continue higher and make good on that Thursday new high.
RUTX: The small caps look pretty good with the weeklong test of the break
into the 2015 new high range. Holding the 10 day EMA in a lateral move to
end the week, a good setup to move higher. That said, RUTX also suffers
from lower MACD on this higher high. Not a huge drop, but lower. And you
know NYSE volume was lower all week. Again, at least no churn, no higher
volume selling of the stocks at this higher high.
SP400: Similar to RUTX, the midcaps broke to a higher high a week back,
faded to test the move, holding the 10 day EMA Wednesday to Friday. Not a
bad setup to move higher, and needs to do it. SP400 broke to a higher
all-time high but needs to build upon it.
LEADERHIP
There are still plenty of groups moving well, enough to support this move
and indeed send stocks higher.
Big Names: NFLX showed some of the best action of the FANG on the week,
testing the 50 day MA into Wednesday then rebounding nicely. FB spent the
entire week testing, but now is showing a doji at the 10 day EMA; good
position to break higher. AAPL showed very nice action, hitting a higher
recovery high, then putting in a modest Wednesday to Friday test. AMZN
drifted slowly up the 10 day EMA on lower, and lower below average volume.
New high Friday but hardly what you would call powerful. GOOG up all week,
MACD higher, testing Friday. Not bad. SBUX trying to bottom after a 2 week
test.
Semiconductors: Up on the week as SOX did move up to test the prior high.
AVGO put in a new high but is also slowing at the top of its channel. NVDA
gapped to a higher high on earnings. XLNX testing on the week after moving
to a higher recovery high. SLAB working laterally at the 10 day EMA. NXPI
in pretty good shape to move higher.
Biotechs/Drugs: The big names were quieter on the week, e.g. AMGN, CELG,
BIIB, but are set up very nicely. Others continued nicely. EXAS surging
still to a higher high. AGEN shot higher Friday after a short test. BLUE
looks as if it is making a move back up.
Retail: Impressive turn on the week even with lower retail sales Friday.
JWN, KSS, M, ROST. DECK walked higher on the week with a nice new break.
DDS may be ready to make a new break upside.
Industrial equipment: CMI, CAT, UTX all higher on the week, perhaps now a
bit extended.
Metals: Really struggled on the week. AKS heading lower in big chunks.
SID is holding a lateral move at the 10 day EMA, not all that bad. CENX is
trying to hang on in its handle as is SCHN. A bit of turbulence on the week
but no pattern wreckers in most cases.
Software: Watching to see if some money comes back. ROVI still looks good
as it rends up the 10 day EMA. CRM trying to revive off of the 50 day EMA,
bouncing Thursday and Friday. SPLK running to a higher high. VMW, FFIV
testing their moves. RHT struggling. BLKB trying to fight off the dips.
PANW still trying to make good on its break of the downtrend.
Oil: CWEI was crazy on the week, up almost 22 points. APC has struggled,
but it is back up through the 50 day SMA. SWN decent but needs work. CVX
broke lower, but as oil recovered, CWEI recovered to the 50 day EMA. Some
look good but others not: DO, ORIG, RIG.
Financial: Some interesting setups, e.g. BAC in a short test of its gap
over the 200 day SMA, JPM in a weeklong pullback to the 10 day EMA. GS is
working laterally along the 200 day SMA, looking for a break higher.
MARKET STATISTICS
NASDAQ
Stats: +4.5 points (+0.09%) to close at 5232.89
Volume: 1.47B (-2.75%)
Up Volume: 823.8M (-236.2M)
Down Volume: 621.65M (+180.9M)
A/D and Hi/Lo: Decliners led 1.07 to 1
Previous Session: Advancers led 1.76 to 1
New Highs: 121 (-37)
New Lows: 30 (-2)
S&P
Stats: -1.74 points (-0.08%) to close at 2184.05
NYSE Volume: 712.1M (-8.89%)
Up Volume: 1.38B (-1.1B)
Down Volume: 1.57B (+686.46M)
A/D and Hi/Lo: Decliners led 1.08 to 1
Previous Session: Advancers led 1.7 to 1
New Highs: 143 (-40)
New Lows: 13 (+5)
DJ30
Stats: -37.05 points (-0.2%) to close at 18576.47
SENTIMENT INDICATORS
VIX: 11.55; -0.13
VXN: 13.99; -0.32
VXO: 10.67; -0.15
Put/Call Ratio (CBOE): 0.76; -0.19
22 of 25 below 1.0, 17 of last 42 over 1.0. You could say the shift from
worry to complacency has completed and now the market appears a bit
lackadaisical.
Bulls and Bears: Bulls continue higher, bears lower, both still below the
2014 and 2015 highs and lows, but both approaching levels that show the
complacency that can lead to turns. Not there, but getting closer.
Bulls: 54.3 versus 52.9
Bears: 20.9 versus 21.2
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: 54.3 versus 52.9
52.9% versus 53.9% versus 54.4% versus 52.5% versus 47.1% versus 41.6%
versus 47.5% versus 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%
Bears: 20.9% versus 21.2%
21.2% versus 21.6% versus 23.3% versus 24.7% versus 24.5% versus 23.8%
versus 23.2% versus 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%
OTHER MARKETS
Bonds (10 year): 1.51% versus 1.56%. Back and forth a lot on the week, but
the overall trend that remains is bonds are building a positive pattern as
TLT consolidates the June to July rally.
Historical: 1.56% versus 1.51% versus 1.54% versus 1.59% versus 1.585%
versus 1.503% versus 1.54% versus 1.558% versus 1.51% versus 1.46% versus
1.50% versus 1.51% versus 1.56% versus 1.57% versus 1.56% versus 1.558%
versus 1.58% versus 1.56% versus 1.59% versus 1.58% versus 1.53% versus
1.47% versus 1.51% versus 1.434% versus 1.36% versus 1.39% versus 1.373%
versus 1.367% versus 1.44% versus 1.475% versus 1.51% versus 1.468% versus
1.46% versus 1.57% versus 1.74% versus 1.68% versus 1.70% versus 1.67%
versus 1.61%
EUR/USD: 1.11636 versus 1.11372. Euro looks really ready to rally off of a
nice double bottom with handle setup.
Historical: 1.11372 versus 1.11803 versus 1.1115 versus 1.1080 versus
1.10882 versus 1.1130 versus 1.1148 versus 1.1219 versus 1.1164 versus
1.1173 versus 1.10806 versus 1.10732 versus 109857 versus 1.0992 versus
1.0977 versus 1.1021 versus 1.1022 versus 1.1021 versus 1.10654 versus
1.1035 versus 1.1117 versus 1.1099
USD/JPY: 101.308 versus 101.864. Well, the dollar LOOKED as if it was going
to try a bounce but Friday certainly looked weaker, stalling at the 10 day
EMA.
Historical: 101.864 versus 101.23 versus 101.857 versus 102.356 versus
101.832 versus 101.178 versus 101.256 versus 101.09 versus 102.599 versus
102.045 versus 104.679 versus 105.98 versus 104.731 versus 105.76 versus
106.05 versus 106.11 versus 107.16 versus 106.139 versus 105.95 versus
104.85 versus 105.31 versus 104.74 versus 102.686 versus 100.59 versus
100.768 versus 101.15 versus 100.89 versus 102.497 versus 103.128 versus
102.912 versus 102.60
Oil: 44.49, +0.26. Out of the July dive into August, oil rebounded four
sessions, then fell hard Wednesday. Looked as if the bounce may have run
its course. Thursday, however, a big surge and Friday oil fought off a
lower open to add another gain. It did not, however, take out the 50 day
EMA, the next test on this move.
Gold: 1343.20, -6.80. After the dump to the 20 day EMA on the jobs report,
gold recovered to midweek. Friday a gap lower, a surge higher, but that
failed. Gold remains at the 20 day EMA, where it started the week.
Important next two weeks for gold. Thus far it has worked on a new upside
move and to keep that going gold needs to work on the pattern. It could fall
to the 50 day MA, however, and still continue working on an upside pattern.
MONDAY
Earnings are mostly over. Big economic reports are out, though regional
manufacturing reports (New York, Philly), CPI, Industrial
production/Capacity utilization, and the FOMC minutes are not play toys.
The economic data improved and raised hope this year, this time, it would be
better. As I wrote a month back, however, the data was starting to follow
the same trend of the prior years: a weak start, improvement that looked
promising . . . then a fade into the back half of the year into the first
quarter.
So, yes, the economics always make a difference. But, with carefully
engineered asset inflation since March 2009 and as given aide and support
throughout the years, most notably of late in February, the world central
banks have maintained the move. Remember, in February the market was in a
second plunge after a rebound off the January low failed. Phone records of
the Fed Chairman, part of the public record, show phone calls to the BOE at
the lows, followed 20 minutes later by a turn in the market. The next
session a call to Mario Draghi, and within a half hour stocks were shooting
higher again. Nice save.
I believe that double dive then rescue is what has the elite convinced the
market will fall. Indeed, Friday we learned that Mr. Tepper is heavily
bearish now, having exited his upside index call plays and is playing the
downside. It is not that they don't believe the Fed and central banks will
not again come to its rescue; after all the New Zealand central bank just
cut rates and said more to come a la the Bank of England. It is more a
belief that the central banks have run out of their ability to float the
markets through attempted selloffs. What makes them believe that is likely
information that you and I are not privy to and cannot get.
I also believe that the jobs report's impact on a rate hike is over. The
data since (Factory Orders, productivity, retail sales) is all weak and what
DB said about how this Fed works is very likely true, to wit: every time a
data point disappoints, the Fed timetable is reset in terms of the next rate
hike, starting the entire process over.
Maybe those in the inner circle of knowledge believe this and see interest
rates moving inexorably toward negative and fear what may happen
economically and to the market as a result. Or perhaps those in the inner
circle of knowledge may know the Fed has decided it has to get rates higher
and know the impact on the market given the economy is, as they know, not
nearly as strong as the reworked, rehashed, readjusted reported economic
numbers suggest.
These are considerations you NEVER had to deal with back when the Fed was
not in the economic micromanagement business and the government stuck more
to making sure people and businesses COULD conduct business the best they
saw fit versus telling them HOW to conduct business. The inevitable result
is the economy we have. Happened in the 1930's as the leaders tried to
manipulate markets out of the depression (something that did not happen in
the 1920's depression that quickly turned into the roaring 20's), happened
again in the 1970's when massive regulation, taxation, wage controls, dollar
floating led to another long period of economic stagnation. Now, the same
policies, the same results.
In any event, regardless of what the fears of the elite may be, all I can do
is look at what the market tells you. After the stick save in February and
the stimulus that followed, stocks have rallied, set up good bases, broke
higher, and then did it again. New leaders arise even as prior leader
groups fade as money rotates around the market. That is always a sign of a
healthy market, i.e. if there are leaders and money moves to new areas
versus leaving the market after a group of leaders makes a solid run and
gets a bit extended.
Even with the indices tickling at new highs, there are still some quality
sectors out there with excellent patterns and volume. For now we continue
looking for upside opportunity until the leadership runs dry. When that
happens the market rolls over, and if it cannot find new leaders after the
Fed and central banks inevitably step in, that would likely spell the end of
the long bull run. But, the market has not stalled this current move, the
Fed and company have not had to step in again, and we of course don't know
what the outcome of that central bank intervention would be. So, we play
the market we have and take what the market gives.
Will see what news comes out this weekend, but though the indices were less
than thrilling and satisfying overall, some leaders showed really good
action.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5232.89
Resistance:
5238.54 is the August 2016 intraday all-time high
Support:
5231.94 is the 2015 all-time high
The 10 day EMA is 5196
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
5042 is the March 2015 high
The 50 day EMA at 5029
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
The 200 day SMA at 4859
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
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.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2184.05
Resistance:
Support:
2175 is the June 2016 high
The 50 day EMA at 2136
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
The 200 day SMA at 2048
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
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
Dow: Closed at 18,577.94
Resistance:
18,595 is the July 2016 peak
Support:
18,351 is the all-time high from May 2015
18,288 from March 2015
18,247 is the August 2016 low
The 50 day EMA at 18,204
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,978 is the November 2015 peak
17,600 is the rough bottom of the April to June range.
The 200 day SMA at 17,492
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 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 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
ECONOMIC CALENDAR
August 12 - Friday
PPI, July (8:30): -0.4% actual versus 0.0% expected, 0.5% prior (no
revisions)
Core PPI, July (8:30): -0.3% actual versus 0.2% expected, 0.4% prior (no
revisions)
Retail Sales, July (8:30): 0.0% actual versus 0.4% expected, 0.8% prior
(revised from 0.6%)
Retail Sales ex-auto, July (8:30): -0.3% actual versus 0.2% expected, 0.9%
prior (revised from 0.7%)
Michigan Sentiment - Pre, August (10:00): 90.4 actual versus 90.2 expected,
90.0 prior
Business Inventories, June (10:00): 0.2% actual versus 0.1% expected, 0.2%
prior (no revisions)
August 15 - Monday
Empire Manufacturing, August (8:30): 4.0 expected, 0.55 prior
NAHB Housing Market , August (10:00): 59 expected, 59 prior
Net Long-Term TIC Fl, June (16:00): $41.1B prior
August 16 - Tuesday
Building Permits, July (8:30): 1153K prior
Core CPI, July (8:30): 0.2% prior
CPI, July (8:30): 0.0% expected, 0.2% prior
Housing Starts, July (8:30): 1189K prior
Core CPI, July (8:30): 0.2% expected, 0.2% prior
Housing Starts, July (8:30): 1167K expected, 1189K prior
Building Permits, July (8:30): 1153K expected, 1153K prior
Capacity Utilization, July (9:15): 75.4% prior
Industrial Productio, July (9:15): 0.3% expected, 0.6% prior
Capacity Utilization, July (9:15): 75.7% expected, 75.4% prior
August 17 - Wednesday
MBA Mortgage Index, 08/13 (7:00): 7.1% prior
Crude Inventories, 08/13 (10:30): 1.055M prior
FOMC Minutes, July 27 (14:00)
August 18 - Thursday
Initial Claims, 08/13 (8:30): 265K expected, 266K prior
Continuing Claims, 08/06 (8:30): 2155K prior
Philadelphia Fed, August (8:30): 0.5 expected, -2.9 prior
Leading Indicators, July (10:00): 0.4% expected, 0.3% prior
Natural Gas Inventor, 08/13 (10:30): 29 bcf prior
End part 1 of 3
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Saturday, August 06, 2016
The Daily, Part 1 of 3, 8-6-16
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8/6/2016 Investment House Daily
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MARKET SUMMARY
- Jobs report helps stock indices to new highs.
- The billionaire hated rally continues.
- Jobs report is all headline, no story. Oh, there is a story, it just
doesn't fit the headline.
- Stock indices renew the upside and until otherwise we continue to play it.
Finally, a catalyst to move the market.
The most feared rally in recent history continues, flying in the face of GS,
JPM, Gundlach started it, Bill Gross joined in, and today it was reported
that Carl Icahn is still massively bearish. They may ultimately be correct,
but it was not Friday as stocks, dormant on the NYSE for three weeks, shot
higher on another 'stellar,' 'blowout,' 'recovery verifying' jobs report.
Oh really now? Of course we will look at the numbers for you in detail.
Surprisingly, we and the few others that pay attention to the report details
were not the only ones pointing out the deficiencies, that this time include
as glaring a massive, multi-standard deviation seasonal adjustment as ever
seen -- as well as the usual heavy skew toward lower wage hourly positions.
As is usually the case, however, the headlines ruled. Moreover, after the
pitiful GDP report the prior Friday, the rubber match jobs report gave
investors enough confidence that the market rallied on perceived good news.
In other words, the jobs headline was viewed as convincing that the economy
was improving enough to support stock prices even if the Fed feels compelled
to hike.
Of course the Fed SHOULD feel compelled to hike, but it won't in September
because that is too close to election time and doing so might roil the
markets and jeopardize Yellen continuing her tenure as the FOMC chief. You
know, first female FOMC chair, first female President. As Harry Callahan
said in 'The Enforcer' about the mayor's initiative to get more women into
new areas in the police force, that sounds very stylish. I won't go into
Eastwood's more recent colorful remarks though with all the crying about
'safe spaces' on college campuses so the kids don't have to confront the
real world, they seem rather appropriate.
"That's a hell of a price to pay for being stylish." The Enforcer (1976)
Stocks shot higher and never looked back, though as is often the case in
these situations, most of the move was in the books at the open and after
the first hour or so. Enough to push more indices to all-time highs. Now
that the jobs report 'confirms' economic recovery, I would suppose new highs
are appropriate.
SP500 new high. SP400 new all-time closing high. NASDAQ at a new closing
high but not intraday high (5231.94 high in July 2015). DJ30 showed a great
bounce and is on the road to a new high. RUTX finally broke into the last
range in 2015 that holds the high. SOX took off upside again and is on the
way to another new post-2000 high.
SP500 18.62, 0.86%
NASDAQ 54.87, 1.06%
DJ30 191.48, 1.04%
SP400 1.01%
RUTX 1.45%
SOX 1.34%
VOLUME: NYSE +6%; NASDAQ +5%. NYSE trade was higher but still
disappointingly below average. NASDAQ trade moved back above average on a
break to a higher high. NASDAQ continues to show solid price/volume action
with several rising, above average volume sessions on the move higher.
A/D: NYSE 2.6:1, NASDAQ 2.6:1. Good, not great.
So, the stock indices received their catalyst. Earnings, BOJ, BOE, the Fed,
weak GDP, Durables Orders, Factory Orders. More rate cuts (as Bank of
America noted, there have been 666 rate cuts by the world central banks
since LEH; ooh, spooky). Mere child's play. The indices were at the 'go,
no go' point for a continued upside move and jobs gave them the 'go' nod.
We picked up a couple of positions on the day, a Motel/Hotel REIT (oh so
sexy -- but the gains will be) and CPHD in electronics. For the rest we
mostly let them run. We could have banked quite a bit of gain, but it was a
new breakout move and you hate to cut off a potentially lucrative new leg on
day one. We did take some AVGO gain as we had not taken any yet. Other
than that, we let them run.
Perhaps Monday there will be some buyer's remorse. Doubt it, however. Too
many are betting short, and even at new highs they can be squeezed more and
more before they scream. At most we may get a bit of early softness, but if
we see that we likely use some of that to buy as others probably will as
well.
The jobs report was quite frankly more of the same in terms of the type of
jobs created, and it had the extra spice of being massively adjusted many
times historical norms. I am sure Jack Welch was spluttering his oatmeal
this morning when the report came out; remember, he argued the jobs reports
ahead of the 2012 election were rigged. Of course we later learned that was
correct. Still, it makes for a good joke to help you laugh instead of cry
about how our institutions are pretty much untrustworthy.
But, it was enough for the market to continue higher whether based on a
mirage or not. I would love to say it was real, that we were creating great
jobs. Since I cannot, in the alternative I will take solace in making money
on the moves.
NEWS/ECONOMY
Jobs Report 'stellar,' 'blowout.' Not without a lot of help.
July Non-Farm Jobs: 255K versus 185K expected versus 292K (from 285K).
Private Payrolls: 217K versus 171K expected versus 259K June (from 265K)
Unemployment rate: 4.9% versus 4.8% expected versus 4.9% prior. Expected
to drop, but those moving into the workforce rose 400K and overshot the
number of jobs.
Average hourly wages: 0.3% versus 0.2% expected versus 0.1% June
Year/year: +2.7%. Nicer gain.
Participation Rate: 62.8% versus 62.7% June.
The headline numbers are all better. They could give you the idea that the
economy is finally catching hold, that this time it is different despite no
change in economic, regulatory, fiscal, or monetary policy. That would,
however, be inaccurate. The real reason for the surge is it is an election
year. Happened before, happening again.
There is no way the GDP, factory orders, durable orders, lack of capital
investment, and other reports can support a strong jobs market producing a
lot of jobs and a lot of breadwinner jobs. Despite the headlines, the July
report, just as the June report, is no indication of an economic surge.
Sadly.
Massive seasonal adjustments.
Here is the skinny: without the extra large season adjustment private sector
jobs would have gained just 85K instead of the 217K reported.
Sure there are adjustments made to 'smooth' out the data. These adjustments
are not doing that. The volatility is huge. Why? Because there are
adjustments to affect an outcome versus provide an accurate insight into the
numbers.
Graphically:
The Same Jobs Mix: Skewed toward the Low Paying jobs
In terms of the jobs created there was no change. The jobs market is
showing the same structural problems as it has during the entire recovery.
ADP on Wednesday indicated 80% of the jobs were service jobs. That is the
theme for the entire recovery and it held again in July. Imagine that.
Sure there were 17,000 temp jobs added and some such as Steve Liesman on
CNBC said that 'offered more hope' for the future in terms of better paying
jobs. Seven years into a recovery and you are still hoping some more
temporary jobs are a good thing?
Here is the real story on temps: the jobs market, just as we have chronicled
for years, has fundamentally changed, adapting to the rules and regulations
promulgated under the ACA and other countless new laws and regs. Temporary
help has become the norm for what used to be salaried positions. Legal
help, accounting help, etc. have fundamentally changed as many, many of the
professionals work temporary assignments versus working full-time. Clients
want lower costs, firms cannot given them those without altering the
workforce. Squeeze any industry and it will try to find a way to survive.
Where the jobs are:
Professional and Business Services: 53K
Leisure and Hospitality: 43K
Government: 38K
Education and health 36K
Temporary help services: 17K
Retail: 14.7K
Construction: 14K
Transport/Warehousing: 11.7K
Manufacturing: 9K
Information: 0 (from 43K in June as VZ employees went back to work)
Mining, Logging: -7K
Still on Manufacturing Jobs
After July, the lopsided skew in low wage jobs versus high pay jobs
contnues. Indeed, since 2014 the US has, on a net basis, the US has created
500K watier/bartender jobs and ZERO manufacturing jobs.
Who is getting jobs: From the education standpoint.
A very telling manner in gauging the job market's strength is not to look
just at numbers. We have looked at the age disparity before and chronicled
how month after month it is the oldest demographic getting the jobs as they
go back to work in their golden years, unable to pay the bills. Indeed, the
26 to 54 demographic, the most prolific earners, are still over a million
jobs short of where they were in December 2007.
How about education? All of those college grads with great minds and
educations. Are they filling the workforce, bringing America to its fullest
potential? No. they have not budged since hitting the bottom in 2009.
In other words, the nearly 100% of the net jobs have gone to those with an
education less than high school. No doubt some of those people are very
bright, but they are not being hired as lawyers, doctors, architects,
medical techs, nurses, stock brokers -- no, they are the hires in all of
those jobs being created, all of those low end, low pay jobs.
Our working class is being transformed into mostly less than high school
educated workers with those with educations being the ones NOT working.
We are 'fundamentally transforming' our country. No doubt we are a service
country, but that doesn't mean providing legal and medical services per se.
They are still there
All of the trillion dollars in student debt accumulated for what? There are
a dearth of jobs for those to work. Moreover, those jobs that are there for
the highly educated and skilled, well, they are being populated by the
foreign workers who are being fast-tracked to the US because there are 'just
no skilled workers in the US to fill these jobs' according to Mr. Bill
Gates, Mark Zuckerburg, and many other 'pillars' of American industry.
We have accumulated over $1T of student loan debt, and so much of that debt
is in arrears that the President has proposed forms of loan forgiveness. Is
that the solution? Have the American people absorb the debt of education
that our country either 1) apparently does not need because of the kind of
jobs created, and/or 2) doesn't want because the cost of that labor is too
high compared to hungry foreign workers ready to take any jobs they can get?
Just ask the Disney employees fired and forced to train their educated but
wholly unskilled replacements lest they lose their severance package.
Of course the 'fix' does not go to the heart of the problem. Our economy
is, through the tax code, new oppressive regulation, and the new judicial
interpretations, no longer one that can produce large numbers of high
quality jobs. You can call it globalization or whatever you want, you can
spin the numbers anyway you want. What I do here is report the numbers, the
facts. One of the most telling is, after 7 years of recovery, the US is
still a net DESTROYER of businesses versus a creator of businesses. This
from what was once the greatest entrepreneur nation ever seen.
THE MARKET
CHARTS
NASDAQ: After a short test, a 1-day test, NASDAQ got serious again, gapping
and rallying to a new closing high. Did not take out the intraday highs
from 2015 but of course NASDAQ is working well as techs continue to perform
late summer. Of course it is the renewal of the big names that energized
NASDAQ, along with the semiconductors that make up some big names on NASDAQ
as well. Stronger, above average volume, decent breadth, still, overall, a
large cap move on NASDAQ.
SOX: After a 6 say test through Wednesday, SOX gapped higher Thursday and
again Friday. No new high but that is no issue. SOX made the key break two
weeks back, moving to a new post-2000 high. Tested that move back to the
prior high then started back up. Perfect breakout test and new move upside.
MACD put in a higher high on the breakout, a good indication the momentum
remains.
RUTX: Not bad at all, finally making a more definitive move into that range
from 2015 holding the all-time high. That Tuesday sharp drop was indeed a
shakeout that set up the new upside break. Good initial move, and as noted
a couple of weeks back when it tried this resistance, it now needs to expand
the breakout. Good start.
SP500: New all-time high after three weeks working laterally. Higher but
still below average volume. What is new for SP500?
DJ30: After the three week test back to the prior all-time high, DJ30
gapped upside Friday as MRK prospered while BMY plunged. The two compete in
a certain area and BMY's results were not good. DJ30 rode MRK's back with a
gap higher and solid move off the excellent pullback.
SP400: New high for the midcaps, just moving past last week's highs. Not a
powerful move, but a new high, following along with the rest of the indices.
LEADERHIP
Big Names: FB posted good move Thursday, so-so Friday, but moving up off
the 10 day EMA test. Same as AMZN, moving off the 10 day EMA Thursday and a
modest Friday gain. AAPL surging nicely. GOOG surging over 1% to a new
post-earnings high. NFLX surged upside on strong volume. PCLN gapped past
the 5 month range and moving toward the November 2015 peak.
Chips: AVGO, MU, XLNX, NVDA, TXN and more moving up off of the nice tests.
Metals: No major moves, but not bad. SCHN moving up off its test. AKS
still in a nice test, setting up a new entry. FCX tapped the 50 day MA on
the low and rebounded; nice test. Precious metals took a hit after the jobs
data.
Industrial Equipment: Some good moves, e.g. TEX, CMI. CAT up modestly off
the test.
Biotechs: CELG, BIIB took a day off. EXAS gapped higher but is showing a
tombstone doji. May want to test some. BLUE bounced right back up off the
200 day SMA after testing it after earnings. Still a very solid group.
Oil: Some good rebounds off tests. APA touched the 200 day SMA and snapped
back; may make a stand. APC touched the 200 day SMA again and posted a
strong move on strong volume. CWEI continues its impressive post-earnings
run. SWN is holding a good lateral move. Still a really mixed group, but
improved late week.
Financial: Big day on jobs. MS gapped upside. JPM nice strong break. BAC
gapped over the 200 day SMA. C gapped and rallied up to the 200 day. Got
some life injected in it.
MARKET STATISTICS
NASDAQ
Stats: +54.87 points (+1.06%) to close at 5221.12
Volume: 1.935B (+5.08%)
Up Volume: 1.43B (+380M)
Down Volume: 572.66M (-147.84M)
A/D and Hi/Lo: Advancers led 2.55 to 1
Previous Session: Advancers led 1.06 to 1
New Highs: 171 (+70)
New Lows: 27 (-7)
S&P
Stats: +18.62 points (+0.86%) to close at 2182.87
NYSE Volume: 865.5M (+6.33%)
Up Volume: 2.55B (+680M)
Down Volume: 1.05B (-500M)
A/D and Hi/Lo: Advancers led 2.59 to 1
Previous Session: Advancers led 1.33 to 1
New Highs: 204 (+73)
New Lows: 7 (-3)
DJ30
Stats: +191.48 points (+1.04%) to close at 18543.53
SENTIMENT INDICATORS
VIX: 11.39; -1.03
VXN: 13.77; -0.7
VXO: 10.56; -1.25
Put/Call Ratio (CBOE): 0.92; -0.01
17 of 20 below 1.0, 17 of last 37 over 1.0.
Bulls and Bears: After bears dropped fairly hard three weeks back and bulls
surged upside, the slower market kept the two sides relatively unchanged.
Bulls: 52.9 versus 53.9
Bears: 21.2 versus 21.6
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 52.9 versus 53.9
53.9% versus 54.4% versus 52.5% versus 47.1% versus 41.6% versus 47.5%
versus 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%
Bears: 21.1% versus 21.6%
21.6% versus 23.3% versus 24.7% versus 24.5% versus 23.8% versus 23.2%
versus 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%
OTHER MARKETS
Bonds (10 year): 1.585% versus 1.503%. Another week of back and forth, but
mostly back. Bonds sold early week to the 50 day MA, jumped Thursday, but
then flopped back Friday to again test the 50 day. This will be a big tell
for the market overall, particularly the financial stocks.
Historical: 1.503% versus 1.54% versus 1.558% versus 1.51% versus 1.46%
versus 1.50% versus 1.51% versus 1.56% versus 1.57% versus 1.56% versus
1.558% versus 1.58% versus 1.56% versus 1.59% versus 1.58% versus 1.53%
versus 1.47% versus 1.51% versus 1.434% versus 1.36% versus 1.39% versus
1.373% versus 1.367% versus 1.44% versus 1.475% versus 1.51% versus 1.468%
versus 1.46% versus 1.57% versus 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%
EUR/USD: 1.10882 versus 1.1130. Stronger jobs, more likely a rate hike --
at some point -- so the dollar gained strength versus the euro.
Historical: 1.1130 versus 1.1148 versus 1.1219 versus 1.1164 versus 1.1173
versus 1.10806 versus 1.10732 versus 109857 versus 1.0992 versus 1.0977
versus 1.1021 versus 1.1022 versus 1.1021 versus 1.10654 versus 1.1035
versus 1.1117 versus 1.1099
USD/JPY: 101.832 versus 101.178. Of course the dollar rebounded on the jobs
report. Still entrenched in the downtrend, however, after bombing lower the
prior two weeks, giving up the breakout attempt.
Historical: 101.178 versus 101.256 versus 101.09 versus 102.599 versus
102.045 versus 104.679 versus 105.98 versus 104.731 versus 105.76 versus
106.05 versus 106.11 versus 107.16 versus 106.139 versus 105.95 versus
104.85 versus 105.31 versus 104.74 versus 102.686 versus 100.59 versus
100.768 versus 101.15 versus 100.89 versus 102.497 versus 103.128 versus
102.912 versus 102.60 versus 101.93 versus 102.32 versus 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
Oil: 41.80, -0.13. After a three week sharp slide inside the 2 month
decline, oil recovered the 200 day SMA late week. Friday was a wash but it
held the break back through.
Gold: 1344.40, -23.00. No surprise gold sold on the stronger jobs report.
Had rallied off the 50 day MA test back to the early July peak, tested a
bit, looked ready to try a new breakout. Flopped to the 20 day EMA Friday.
Will it put in a higher low or roll over in a double top?
MONDAY
Most of the big news is out. Earnings, GDP, central bank decisions, jobs
report. The market ignored most of it for a few weeks, got a bit nervous,
then got what it wanted. Now there are new breakouts and renewed moves.
Nice.
Now can they continue the move? We will see. As noted all week, even
though some leadership struggled, there is still plenty to move the market
upside. If Financial stocks want to join the others, that helps SP500 make
even more new highs.
Of course you have to watch and see if Monday brings some new reversal, a
repudiation of the move. Volume was not that great, breadth okay but not
wonderful. There is that possibility -- I mean so many wise, smart,
respected market experts are counting on a market selloff.
Okay, so you have that in mind. Great. The fact is the indices broke
higher once more and even if it was on a fluffed up jobs report there is
leadership as well. Therefore we continue looking for upside setups ready
to move higher on a continued breakout move. Nothing appears ready to stop
the move higher so we will continue playing it.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5221.12
Resistance:
5231.94 is the 2015 all-time high
Support:
5162 is the early November peak, 5176 is the December intraday peak
The 10 day EMA is 5150
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
4999 is the October upper gap point
The 50 day EMA at 4987
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
The 200 day SMA at 4853
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
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.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2182.87
Resistance:
Support:
2175 is the June 2016 high
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
The 50 day EMA at 2125
2120 is the June 2016 peak
2119 is the February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
The 200 day SMA at 2045
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
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
Dow: Closed at 18,543.53
Resistance:
18,595 is the July 2016 peak
Support:
18,351 is the all-time high from May 2015
18,288 from March 2015
18,168 is the April 2016 recovery high
The 50 day EMA at 18,127
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,978 is the November 2015 peak
17,600 is the rough bottom of the April to June range.
The 200 day SMA at 17,466
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 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 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
ECONOMIC CALENDAR
August 5 - Friday
Nonfarm Payrolls, July (8:30): 255K actual versus 185K expected, 292K prior
(revised from 287K)
Nonfarm Private Payr, July (8:30): 217K actual versus 171K expected, 259K
prior (revised from 265K)
Unemployment Rate, July (8:30): 4.9% actual versus 4.8% expected, 4.9% prior
(no revisions)
Average Hourly Earni, July (8:30): 0.3% actual versus 0.2% expected, 0.1%
prior (no revisions)
Average Workweek, July (8:30): 34.5 actual versus 34.4 expected, 34.4 prior
(no revisions)
Trade Balance, June (8:30): -$44.5B actual versus -$42.7B expected, -$41.0B
prior (revised from -$41.1B)
Consumer Credit, June (15:00): $12.3B actual versus $16.2B expected, $18.0B
prior (revised from $18.6B)
August 9 - Tuesday
Productivity-Prel, Q2 (8:30): 0.5% expected, -0.6% prior
Unit Labor Costs, Q2 (8:30): 1.7% expected, 4.5% prior
Wholesale Inventorie, June (10:00): 0.2% expected, 0.1% prior
August 10 - Wednesday
MBA Mortgage Index, 08/06 (7:00): -3.5% prior
JOLTS - Job Openings, June (10:00): 5.500M prior
JOLTS - Job Openings, June (10:00): 5.500M prior
Crude Inventories, 08/06 (10:30): 1.413M prior
Treasury Budget, July (14:00): -$149.2B prior
August 11 - Thursday
Initial Claims, 08/06 (8:30): 266K expected, 269K prior
Continuing Claims, 07/30 (8:30): 2138K prior
Export Prices ex-ag., July (8:30): 0.5% prior
Import Prices ex-oil, July (8:30): -0.3% prior
Natural Gas Inventor, 08/06 (10:30): -6B prior
August 12 - Friday
PPI, July (8:30): 0.0% expected, 0.5% prior
Core PPI, July (8:30): 0.2% expected, 0.4% prior
Retail Sales, July (8:30): 0.4% expected, 0.6% prior
Retail Sales ex-auto, July (8:30): 0.2% expected, 0.7% prior
Mich Sentiment, August (10:00)
Mich Sentiment - Pre, August (10:00): 90.2 expected, 90.0 prior
Business Inventories, June (10:00): 0.1% expected, 0.2% prior
End part 1 of 3
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Market Summary Video, Plays and Play Videos, and Play Tables with play
annotations will issue Monday, Wednesday and the Weekend.
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MARKET SUMMARY
- Jobs report helps stock indices to new highs.
- The billionaire hated rally continues.
- Jobs report is all headline, no story. Oh, there is a story, it just
doesn't fit the headline.
- Stock indices renew the upside and until otherwise we continue to play it.
Finally, a catalyst to move the market.
The most feared rally in recent history continues, flying in the face of GS,
JPM, Gundlach started it, Bill Gross joined in, and today it was reported
that Carl Icahn is still massively bearish. They may ultimately be correct,
but it was not Friday as stocks, dormant on the NYSE for three weeks, shot
higher on another 'stellar,' 'blowout,' 'recovery verifying' jobs report.
Oh really now? Of course we will look at the numbers for you in detail.
Surprisingly, we and the few others that pay attention to the report details
were not the only ones pointing out the deficiencies, that this time include
as glaring a massive, multi-standard deviation seasonal adjustment as ever
seen -- as well as the usual heavy skew toward lower wage hourly positions.
As is usually the case, however, the headlines ruled. Moreover, after the
pitiful GDP report the prior Friday, the rubber match jobs report gave
investors enough confidence that the market rallied on perceived good news.
In other words, the jobs headline was viewed as convincing that the economy
was improving enough to support stock prices even if the Fed feels compelled
to hike.
Of course the Fed SHOULD feel compelled to hike, but it won't in September
because that is too close to election time and doing so might roil the
markets and jeopardize Yellen continuing her tenure as the FOMC chief. You
know, first female FOMC chair, first female President. As Harry Callahan
said in 'The Enforcer' about the mayor's initiative to get more women into
new areas in the police force, that sounds very stylish. I won't go into
Eastwood's more recent colorful remarks though with all the crying about
'safe spaces' on college campuses so the kids don't have to confront the
real world, they seem rather appropriate.
"That's a hell of a price to pay for being stylish." The Enforcer (1976)
Stocks shot higher and never looked back, though as is often the case in
these situations, most of the move was in the books at the open and after
the first hour or so. Enough to push more indices to all-time highs. Now
that the jobs report 'confirms' economic recovery, I would suppose new highs
are appropriate.
SP500 new high. SP400 new all-time closing high. NASDAQ at a new closing
high but not intraday high (5231.94 high in July 2015). DJ30 showed a great
bounce and is on the road to a new high. RUTX finally broke into the last
range in 2015 that holds the high. SOX took off upside again and is on the
way to another new post-2000 high.
SP500 18.62, 0.86%
NASDAQ 54.87, 1.06%
DJ30 191.48, 1.04%
SP400 1.01%
RUTX 1.45%
SOX 1.34%
VOLUME: NYSE +6%; NASDAQ +5%. NYSE trade was higher but still
disappointingly below average. NASDAQ trade moved back above average on a
break to a higher high. NASDAQ continues to show solid price/volume action
with several rising, above average volume sessions on the move higher.
A/D: NYSE 2.6:1, NASDAQ 2.6:1. Good, not great.
So, the stock indices received their catalyst. Earnings, BOJ, BOE, the Fed,
weak GDP, Durables Orders, Factory Orders. More rate cuts (as Bank of
America noted, there have been 666 rate cuts by the world central banks
since LEH; ooh, spooky). Mere child's play. The indices were at the 'go,
no go' point for a continued upside move and jobs gave them the 'go' nod.
We picked up a couple of positions on the day, a Motel/Hotel REIT (oh so
sexy -- but the gains will be) and CPHD in electronics. For the rest we
mostly let them run. We could have banked quite a bit of gain, but it was a
new breakout move and you hate to cut off a potentially lucrative new leg on
day one. We did take some AVGO gain as we had not taken any yet. Other
than that, we let them run.
Perhaps Monday there will be some buyer's remorse. Doubt it, however. Too
many are betting short, and even at new highs they can be squeezed more and
more before they scream. At most we may get a bit of early softness, but if
we see that we likely use some of that to buy as others probably will as
well.
The jobs report was quite frankly more of the same in terms of the type of
jobs created, and it had the extra spice of being massively adjusted many
times historical norms. I am sure Jack Welch was spluttering his oatmeal
this morning when the report came out; remember, he argued the jobs reports
ahead of the 2012 election were rigged. Of course we later learned that was
correct. Still, it makes for a good joke to help you laugh instead of cry
about how our institutions are pretty much untrustworthy.
But, it was enough for the market to continue higher whether based on a
mirage or not. I would love to say it was real, that we were creating great
jobs. Since I cannot, in the alternative I will take solace in making money
on the moves.
NEWS/ECONOMY
Jobs Report 'stellar,' 'blowout.' Not without a lot of help.
July Non-Farm Jobs: 255K versus 185K expected versus 292K (from 285K).
Private Payrolls: 217K versus 171K expected versus 259K June (from 265K)
Unemployment rate: 4.9% versus 4.8% expected versus 4.9% prior. Expected
to drop, but those moving into the workforce rose 400K and overshot the
number of jobs.
Average hourly wages: 0.3% versus 0.2% expected versus 0.1% June
Year/year: +2.7%. Nicer gain.
Participation Rate: 62.8% versus 62.7% June.
The headline numbers are all better. They could give you the idea that the
economy is finally catching hold, that this time it is different despite no
change in economic, regulatory, fiscal, or monetary policy. That would,
however, be inaccurate. The real reason for the surge is it is an election
year. Happened before, happening again.
There is no way the GDP, factory orders, durable orders, lack of capital
investment, and other reports can support a strong jobs market producing a
lot of jobs and a lot of breadwinner jobs. Despite the headlines, the July
report, just as the June report, is no indication of an economic surge.
Sadly.
Massive seasonal adjustments.
Here is the skinny: without the extra large season adjustment private sector
jobs would have gained just 85K instead of the 217K reported.
Sure there are adjustments made to 'smooth' out the data. These adjustments
are not doing that. The volatility is huge. Why? Because there are
adjustments to affect an outcome versus provide an accurate insight into the
numbers.
Graphically:
The Same Jobs Mix: Skewed toward the Low Paying jobs
In terms of the jobs created there was no change. The jobs market is
showing the same structural problems as it has during the entire recovery.
ADP on Wednesday indicated 80% of the jobs were service jobs. That is the
theme for the entire recovery and it held again in July. Imagine that.
Sure there were 17,000 temp jobs added and some such as Steve Liesman on
CNBC said that 'offered more hope' for the future in terms of better paying
jobs. Seven years into a recovery and you are still hoping some more
temporary jobs are a good thing?
Here is the real story on temps: the jobs market, just as we have chronicled
for years, has fundamentally changed, adapting to the rules and regulations
promulgated under the ACA and other countless new laws and regs. Temporary
help has become the norm for what used to be salaried positions. Legal
help, accounting help, etc. have fundamentally changed as many, many of the
professionals work temporary assignments versus working full-time. Clients
want lower costs, firms cannot given them those without altering the
workforce. Squeeze any industry and it will try to find a way to survive.
Where the jobs are:
Professional and Business Services: 53K
Leisure and Hospitality: 43K
Government: 38K
Education and health 36K
Temporary help services: 17K
Retail: 14.7K
Construction: 14K
Transport/Warehousing: 11.7K
Manufacturing: 9K
Information: 0 (from 43K in June as VZ employees went back to work)
Mining, Logging: -7K
Still on Manufacturing Jobs
After July, the lopsided skew in low wage jobs versus high pay jobs
contnues. Indeed, since 2014 the US has, on a net basis, the US has created
500K watier/bartender jobs and ZERO manufacturing jobs.
Who is getting jobs: From the education standpoint.
A very telling manner in gauging the job market's strength is not to look
just at numbers. We have looked at the age disparity before and chronicled
how month after month it is the oldest demographic getting the jobs as they
go back to work in their golden years, unable to pay the bills. Indeed, the
26 to 54 demographic, the most prolific earners, are still over a million
jobs short of where they were in December 2007.
How about education? All of those college grads with great minds and
educations. Are they filling the workforce, bringing America to its fullest
potential? No. they have not budged since hitting the bottom in 2009.
In other words, the nearly 100% of the net jobs have gone to those with an
education less than high school. No doubt some of those people are very
bright, but they are not being hired as lawyers, doctors, architects,
medical techs, nurses, stock brokers -- no, they are the hires in all of
those jobs being created, all of those low end, low pay jobs.
Our working class is being transformed into mostly less than high school
educated workers with those with educations being the ones NOT working.
We are 'fundamentally transforming' our country. No doubt we are a service
country, but that doesn't mean providing legal and medical services per se.
They are still there
All of the trillion dollars in student debt accumulated for what? There are
a dearth of jobs for those to work. Moreover, those jobs that are there for
the highly educated and skilled, well, they are being populated by the
foreign workers who are being fast-tracked to the US because there are 'just
no skilled workers in the US to fill these jobs' according to Mr. Bill
Gates, Mark Zuckerburg, and many other 'pillars' of American industry.
We have accumulated over $1T of student loan debt, and so much of that debt
is in arrears that the President has proposed forms of loan forgiveness. Is
that the solution? Have the American people absorb the debt of education
that our country either 1) apparently does not need because of the kind of
jobs created, and/or 2) doesn't want because the cost of that labor is too
high compared to hungry foreign workers ready to take any jobs they can get?
Just ask the Disney employees fired and forced to train their educated but
wholly unskilled replacements lest they lose their severance package.
Of course the 'fix' does not go to the heart of the problem. Our economy
is, through the tax code, new oppressive regulation, and the new judicial
interpretations, no longer one that can produce large numbers of high
quality jobs. You can call it globalization or whatever you want, you can
spin the numbers anyway you want. What I do here is report the numbers, the
facts. One of the most telling is, after 7 years of recovery, the US is
still a net DESTROYER of businesses versus a creator of businesses. This
from what was once the greatest entrepreneur nation ever seen.
THE MARKET
CHARTS
NASDAQ: After a short test, a 1-day test, NASDAQ got serious again, gapping
and rallying to a new closing high. Did not take out the intraday highs
from 2015 but of course NASDAQ is working well as techs continue to perform
late summer. Of course it is the renewal of the big names that energized
NASDAQ, along with the semiconductors that make up some big names on NASDAQ
as well. Stronger, above average volume, decent breadth, still, overall, a
large cap move on NASDAQ.
SOX: After a 6 say test through Wednesday, SOX gapped higher Thursday and
again Friday. No new high but that is no issue. SOX made the key break two
weeks back, moving to a new post-2000 high. Tested that move back to the
prior high then started back up. Perfect breakout test and new move upside.
MACD put in a higher high on the breakout, a good indication the momentum
remains.
RUTX: Not bad at all, finally making a more definitive move into that range
from 2015 holding the all-time high. That Tuesday sharp drop was indeed a
shakeout that set up the new upside break. Good initial move, and as noted
a couple of weeks back when it tried this resistance, it now needs to expand
the breakout. Good start.
SP500: New all-time high after three weeks working laterally. Higher but
still below average volume. What is new for SP500?
DJ30: After the three week test back to the prior all-time high, DJ30
gapped upside Friday as MRK prospered while BMY plunged. The two compete in
a certain area and BMY's results were not good. DJ30 rode MRK's back with a
gap higher and solid move off the excellent pullback.
SP400: New high for the midcaps, just moving past last week's highs. Not a
powerful move, but a new high, following along with the rest of the indices.
LEADERHIP
Big Names: FB posted good move Thursday, so-so Friday, but moving up off
the 10 day EMA test. Same as AMZN, moving off the 10 day EMA Thursday and a
modest Friday gain. AAPL surging nicely. GOOG surging over 1% to a new
post-earnings high. NFLX surged upside on strong volume. PCLN gapped past
the 5 month range and moving toward the November 2015 peak.
Chips: AVGO, MU, XLNX, NVDA, TXN and more moving up off of the nice tests.
Metals: No major moves, but not bad. SCHN moving up off its test. AKS
still in a nice test, setting up a new entry. FCX tapped the 50 day MA on
the low and rebounded; nice test. Precious metals took a hit after the jobs
data.
Industrial Equipment: Some good moves, e.g. TEX, CMI. CAT up modestly off
the test.
Biotechs: CELG, BIIB took a day off. EXAS gapped higher but is showing a
tombstone doji. May want to test some. BLUE bounced right back up off the
200 day SMA after testing it after earnings. Still a very solid group.
Oil: Some good rebounds off tests. APA touched the 200 day SMA and snapped
back; may make a stand. APC touched the 200 day SMA again and posted a
strong move on strong volume. CWEI continues its impressive post-earnings
run. SWN is holding a good lateral move. Still a really mixed group, but
improved late week.
Financial: Big day on jobs. MS gapped upside. JPM nice strong break. BAC
gapped over the 200 day SMA. C gapped and rallied up to the 200 day. Got
some life injected in it.
MARKET STATISTICS
NASDAQ
Stats: +54.87 points (+1.06%) to close at 5221.12
Volume: 1.935B (+5.08%)
Up Volume: 1.43B (+380M)
Down Volume: 572.66M (-147.84M)
A/D and Hi/Lo: Advancers led 2.55 to 1
Previous Session: Advancers led 1.06 to 1
New Highs: 171 (+70)
New Lows: 27 (-7)
S&P
Stats: +18.62 points (+0.86%) to close at 2182.87
NYSE Volume: 865.5M (+6.33%)
Up Volume: 2.55B (+680M)
Down Volume: 1.05B (-500M)
A/D and Hi/Lo: Advancers led 2.59 to 1
Previous Session: Advancers led 1.33 to 1
New Highs: 204 (+73)
New Lows: 7 (-3)
DJ30
Stats: +191.48 points (+1.04%) to close at 18543.53
SENTIMENT INDICATORS
VIX: 11.39; -1.03
VXN: 13.77; -0.7
VXO: 10.56; -1.25
Put/Call Ratio (CBOE): 0.92; -0.01
17 of 20 below 1.0, 17 of last 37 over 1.0.
Bulls and Bears: After bears dropped fairly hard three weeks back and bulls
surged upside, the slower market kept the two sides relatively unchanged.
Bulls: 52.9 versus 53.9
Bears: 21.2 versus 21.6
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 52.9 versus 53.9
53.9% versus 54.4% versus 52.5% versus 47.1% versus 41.6% versus 47.5%
versus 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%
Bears: 21.1% versus 21.6%
21.6% versus 23.3% versus 24.7% versus 24.5% versus 23.8% versus 23.2%
versus 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%
OTHER MARKETS
Bonds (10 year): 1.585% versus 1.503%. Another week of back and forth, but
mostly back. Bonds sold early week to the 50 day MA, jumped Thursday, but
then flopped back Friday to again test the 50 day. This will be a big tell
for the market overall, particularly the financial stocks.
Historical: 1.503% versus 1.54% versus 1.558% versus 1.51% versus 1.46%
versus 1.50% versus 1.51% versus 1.56% versus 1.57% versus 1.56% versus
1.558% versus 1.58% versus 1.56% versus 1.59% versus 1.58% versus 1.53%
versus 1.47% versus 1.51% versus 1.434% versus 1.36% versus 1.39% versus
1.373% versus 1.367% versus 1.44% versus 1.475% versus 1.51% versus 1.468%
versus 1.46% versus 1.57% versus 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%
EUR/USD: 1.10882 versus 1.1130. Stronger jobs, more likely a rate hike --
at some point -- so the dollar gained strength versus the euro.
Historical: 1.1130 versus 1.1148 versus 1.1219 versus 1.1164 versus 1.1173
versus 1.10806 versus 1.10732 versus 109857 versus 1.0992 versus 1.0977
versus 1.1021 versus 1.1022 versus 1.1021 versus 1.10654 versus 1.1035
versus 1.1117 versus 1.1099
USD/JPY: 101.832 versus 101.178. Of course the dollar rebounded on the jobs
report. Still entrenched in the downtrend, however, after bombing lower the
prior two weeks, giving up the breakout attempt.
Historical: 101.178 versus 101.256 versus 101.09 versus 102.599 versus
102.045 versus 104.679 versus 105.98 versus 104.731 versus 105.76 versus
106.05 versus 106.11 versus 107.16 versus 106.139 versus 105.95 versus
104.85 versus 105.31 versus 104.74 versus 102.686 versus 100.59 versus
100.768 versus 101.15 versus 100.89 versus 102.497 versus 103.128 versus
102.912 versus 102.60 versus 101.93 versus 102.32 versus 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
Oil: 41.80, -0.13. After a three week sharp slide inside the 2 month
decline, oil recovered the 200 day SMA late week. Friday was a wash but it
held the break back through.
Gold: 1344.40, -23.00. No surprise gold sold on the stronger jobs report.
Had rallied off the 50 day MA test back to the early July peak, tested a
bit, looked ready to try a new breakout. Flopped to the 20 day EMA Friday.
Will it put in a higher low or roll over in a double top?
MONDAY
Most of the big news is out. Earnings, GDP, central bank decisions, jobs
report. The market ignored most of it for a few weeks, got a bit nervous,
then got what it wanted. Now there are new breakouts and renewed moves.
Nice.
Now can they continue the move? We will see. As noted all week, even
though some leadership struggled, there is still plenty to move the market
upside. If Financial stocks want to join the others, that helps SP500 make
even more new highs.
Of course you have to watch and see if Monday brings some new reversal, a
repudiation of the move. Volume was not that great, breadth okay but not
wonderful. There is that possibility -- I mean so many wise, smart,
respected market experts are counting on a market selloff.
Okay, so you have that in mind. Great. The fact is the indices broke
higher once more and even if it was on a fluffed up jobs report there is
leadership as well. Therefore we continue looking for upside setups ready
to move higher on a continued breakout move. Nothing appears ready to stop
the move higher so we will continue playing it.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5221.12
Resistance:
5231.94 is the 2015 all-time high
Support:
5162 is the early November peak, 5176 is the December intraday peak
The 10 day EMA is 5150
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
4999 is the October upper gap point
The 50 day EMA at 4987
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
The 200 day SMA at 4853
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
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.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2182.87
Resistance:
Support:
2175 is the June 2016 high
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
The 50 day EMA at 2125
2120 is the June 2016 peak
2119 is the February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
The 200 day SMA at 2045
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
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
Dow: Closed at 18,543.53
Resistance:
18,595 is the July 2016 peak
Support:
18,351 is the all-time high from May 2015
18,288 from March 2015
18,168 is the April 2016 recovery high
The 50 day EMA at 18,127
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,978 is the November 2015 peak
17,600 is the rough bottom of the April to June range.
The 200 day SMA at 17,466
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 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 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
ECONOMIC CALENDAR
August 5 - Friday
Nonfarm Payrolls, July (8:30): 255K actual versus 185K expected, 292K prior
(revised from 287K)
Nonfarm Private Payr, July (8:30): 217K actual versus 171K expected, 259K
prior (revised from 265K)
Unemployment Rate, July (8:30): 4.9% actual versus 4.8% expected, 4.9% prior
(no revisions)
Average Hourly Earni, July (8:30): 0.3% actual versus 0.2% expected, 0.1%
prior (no revisions)
Average Workweek, July (8:30): 34.5 actual versus 34.4 expected, 34.4 prior
(no revisions)
Trade Balance, June (8:30): -$44.5B actual versus -$42.7B expected, -$41.0B
prior (revised from -$41.1B)
Consumer Credit, June (15:00): $12.3B actual versus $16.2B expected, $18.0B
prior (revised from $18.6B)
August 9 - Tuesday
Productivity-Prel, Q2 (8:30): 0.5% expected, -0.6% prior
Unit Labor Costs, Q2 (8:30): 1.7% expected, 4.5% prior
Wholesale Inventorie, June (10:00): 0.2% expected, 0.1% prior
August 10 - Wednesday
MBA Mortgage Index, 08/06 (7:00): -3.5% prior
JOLTS - Job Openings, June (10:00): 5.500M prior
JOLTS - Job Openings, June (10:00): 5.500M prior
Crude Inventories, 08/06 (10:30): 1.413M prior
Treasury Budget, July (14:00): -$149.2B prior
August 11 - Thursday
Initial Claims, 08/06 (8:30): 266K expected, 269K prior
Continuing Claims, 07/30 (8:30): 2138K prior
Export Prices ex-ag., July (8:30): 0.5% prior
Import Prices ex-oil, July (8:30): -0.3% prior
Natural Gas Inventor, 08/06 (10:30): -6B prior
August 12 - Friday
PPI, July (8:30): 0.0% expected, 0.5% prior
Core PPI, July (8:30): 0.2% expected, 0.4% prior
Retail Sales, July (8:30): 0.4% expected, 0.6% prior
Retail Sales ex-auto, July (8:30): 0.2% expected, 0.7% prior
Mich Sentiment, August (10:00)
Mich Sentiment - Pre, August (10:00): 90.2 expected, 90.0 prior
Business Inventories, June (10:00): 0.1% expected, 0.2% prior
End part 1 of 3
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