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8/20/2016 Investment House Daily
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Targets hit: AGEN; AMD; BLUE; NPTN; NSC; ROVI; UNP
Entry alerts: WWW
Trailing stops: AMZN; GOOG
Stop alerts: None issued
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If any market circumstances arise where we see additional plays we want to
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of the day of the week.
- SOX surges to a higher high again paving the way but will the others
- 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
- There are reasons for caution, but there are still stocks that look very
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%
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
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
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.
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.
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.
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)
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)
Stats: -45.13 points (-0.24%) to close at 18552.57
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
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%
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
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
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
5271.36 is the August 2016 intraday all-time high
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
4920 is the lower gap point from mid-October 2015, the January 2016 lower
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
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
2194 is the August 2016 all-time high
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
18,595 is the July 2016 peak
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
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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