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9/17/2016 Investment House Daily
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NOTE: THERE IS NO MARKET SUMMARY VIDEO THIS WEEKEND AS JON JOHNSON IS
TRAVELING. THANK YOU.
Targets hit: None issued
Entry alerts: EXAS
Trailing stops: None issued
Stop alerts: AMZN; CX
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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.
- Stocks status quo on expiration and ahead of FOMC week.
- SOX, NASDAQ leading and in decent shape. SP500, DJ30 just cannot decide.
- CPI year/year core 2+% again, but this 'speed limit' won't limit the Fed.
- The Fed versus the bears. 8 year old habits are hard to break.
Day to day, back and forth volatility continued into Friday, the September
expiration. Volume shot higher as the stocks indices struggled, but the
losses were not severe. Indeed, SOX was positive until the very session end
when some weakness hit again and took it lower with the other indices.
SP500 -8.10, -0.38%
DJ30 -88.68, -0.49%
NASDAQ -5.12, -0.10%
VOLUME: NYSE +140%, NASDAQ +44%. Big expiration volume.
A/D: NYSE -1.8:1, NASDAQ -1.2:1
SOX and NASDAQ were the clear leading indices last week as they posted
significant upside that helped break up some potentially near term bearish
It would appear that the while there is concern about selling, indeed GS on
Friday again issued a downside warning for SP500, old habits are hard to
give up. That would be particularly true it would appear after almost 8
years of Fed market coddling, printing trillions of dollars to inflate
financial assets to generate a 'wealth effect' in individuals and instill
'animal spirits' in the economy. Yes the middle class has dropped below 50%
and capital investment in the US is still at recession levels, but look at
that unemployment rate and look at that 5.2% wage growth! Who cares if
there are still 94M working aged people out of the workforce thus pushing
the rate lower and the wage increase was due simply changing the way they
count wages and income. In a country that lives by headlines and sound
bites all you need to do is make the assertion and quote unsupported 'facts'
and it must be true.
Well, there I go again. Anyway, the market was in prime position to sell
off but even with the negative views by the big money, indeed maybe because
of it, the indices are trying to hang in and SOX and NASDAQ actually look
pretty strong after bouncing off their 50 day MA's.
Certainly the Wednesday FOMC meeting is playing a role. Sellers have tried
to enter the market of late, particularly the prior Friday. A Fed that
likely won't raise rates acts as a counterweight to that downside pressure,
keeping the indices from totally selling off.
Frankly with the Fed likely to keep rates steady thanks to a crappy retail
sales report Thursday. Even the hotter CPI Friday with a core reading of
2.3%, now 10 months over the presumed 'speed limit' of 2.0% likely won't act
to give Yellen pause. As Brainard said on Monday, better to overshoot on
the inflation than to have premature tightening.
With the Fed likely to keep rates the same (and that is just based upon the
numbers not really pushing hard upside; the Fed could always 'surprise' the
market though I don't think Yellen has that in her) if there is any downside
between now and the meeting, that might be the downside's last hurrah until
the market gets used to the Fed decision and then has to start thinking
about what is next.
Given that, if there is downside to start the week we let the downside
positions work as far as they will then, hopefully after sharp early week
drop, we can close them in preparation for upside. Heck, if there is sharp
downside that is all the more reason the Fed does not hike as it has to give
deference to the markets of course.
Anyway, we will see if we can get some downside in better position to take
at least some profits next week and then prep in the event there is upside
in some short covering just before the FOMC decision or after a 'no change'
rate hike verdict.
August CPI: 0.2% VS 0.1 VS 0.0. Year/year: 1.1%
Core CPI: 0.3% vs 0.2% vs 0.1%. Year/year: 2.3% Highest core since 9/2008
10 months of core CPI > 2%
Household wealth jumps but has the same issues as the wage increase.
Household wealth hits a record $89T, but there is a but. A big but. 50% of
US households own just 1% of the wealth, down from 3% in 1989. And sadly,
the poor are even more in debt.
What this means is what we already knew: the wealthiest captures the lion's
share of the wealth gains. That naturally follows from the middle class
falling below 50% this past year for the first time since becoming the
majority. It is a no brainer. The administration painted rosy scenario
last week but failed to mention the really nasty details of all of this
prosperity, the plight of the middle class being one of those inconvenient
GS: Cuts its outlook on SP500 and US bonds in its most recent bearish call.
DB: DOJ wants $14B fine for DB' involvement in the 2005 - 2007 mortgage
Once again the DOJ operates a shakedown when the government wants more $
Irony: the banks were just doing the government's bidding in getting
mortgages in the hands of people whose finances simply could not afford
them. Bush administration started it then got cold feet, warning re Freddie
Mac and Fannie Mae insolvency, but then the Congress picked up the torch
with Bernie Frank and Schumer threatening banks with hellish audits if they
did not make these loans available. So, the banks stepped in, gladly
underwriting these and knowing they could sell them to the US. A very
incestuous setup and all have unclean hands.
BOJ: Abe advisor says the "positive aspects of negative rates are very big."
For who? Certainly not for the populace. Only profligate, spendthrift
governments like negative rates. Just who are they serving? If that is a
question that needs to be asked these days: government serves government.
INTC: INTC raises its Q3 guidance.
To view charts, click on link or paste URL into browser.
SOX: Bounced off the 50 day MA tests, overcoming any notion of weakness.
Friday SOX moved higher to near the early September peak then backed off.
Trended up the 10 day EMA, needed a test, tested the 50 day, rebounded back
over the 10 day EMA. Thus far still a pretty normal test in an ongoing
NASDAQ: Looked somewhat iffy but managed a recovery over the 50 day EMA and
posted a solid upside break Thursday, taking the day off Friday. Nice
recovery, and with SOX leading NASDAQ has improved its look.
RUTX: Held near the 50 day MA's in the selling, bounced modestly Thursday.
RUTX remains in solid position to move higher after it too trended up the 10
day EMA and has come back to test the 50 day. Now it shows if it can bounce
a la SOX.
SP400: The midcaps fell off their 10 day EMA uptrend as well but unlike SOX
have not recovered. Of course the midcaps did not hold the 50 day MA's so
they have more resistance to deal with and right now are not dealing with
SP500: Broke lower two Fridays back and have worked laterally since below
the 50 day MA's. Working laterally, trying to hang on. Has to show it can
do so, and of course a continued compliant Fed will help SP500 make a
DJ30: Same action as SP500, moving laterally below the 50 day MA's and
below the July to early September lateral range.
Big Names: Solid week overall. AAPL led with gaps and rallies past the
April prior high. FB trended up the 20 day EMA; not a big move but still
in the uptrend. AMZN held the 50 day EMA and bounced Friday so we
reluctantly closed it. NFLX bounced nicely Friday back to the 200 day SMA.
GOOG held the 50 day MA and is trying to move, just has not done so yet.
Biotech: Many look ready to move up out of bases formed post downtrend. We
will see if they can join in more to the upside. AMGN, AGEN have provided
good leadership. Many others are trying the same and this weekend we have a
lot on the report.
Chips: Big week for the AAPL related chips, e.g. SWKS, AVGO. Others look
ready to move as well, e.g. LSCC. MRVL may give us an entry this week as
Financial: Struggled into Friday, factoring in that the Fed just may not
hike rates. C fell below recent lows while JPM faded to the 50 day EMA. MS
holding up well at the 20 day EMA.
Oil: Very mixed. Friday many oil stocks gapped lower, e.g. GPOR, COG.
CWEI, however, had another great week. APC tested near the 50 day MA and
bounced Friday. Very mixed.
Retail: Perked up nicely, e.g. JWN. Overall retail has some very resolute
stocks evne though some are selling off.
Stats: -5.12 points (-0.1%) to close at 5244.57
Volume: 2.728B (+43.58%)
Up Volume: 1.15B (-410M)
Down Volume: 1.84B (+1.478B)
A/D and Hi/Lo: Decliners led 1.17 to 1
Previous Session: Advancers led 2.67 to 1
New Highs: 83 (+12)
New Lows: 49 (+6)
Stats: -8.1 points (-0.38%) to close at 2139.16
NYSE Volume: 2B (+138.92%)
A/D and Hi/Lo: Decliners led 1.78 to 1
Previous Session: Advancers led 3.03 to 1
New Highs: 44 (-13)
New Lows: 28 (+1)
Stats: -88.68 points (-0.49%) to close at 18123.8
VIX: 15.37; -0.93
VXN: 15.14; -1.25
VXO: 14.8; -0.71
Put/Call Ratio (CBOE): 1; +0.16
Nine 1.0+ Readings in 3 weeks, 5 of 8 sessions over 1.0.
Bulls and Bears: Bulls and bears go different ways with bulls less bullish
and bears less bearish. Bulls are falling nicely off the 56.7% high hit on
this round that was enough to start at least some selling. The threshold
seems to get lower as this rally continues. Bears were strange, falling as
the market struggled.
Bulls: 49.0 versus 52.5
Bears: 22.6 versus 22.8
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 49.0 versus 52.5
52.5 versus 55.9 versus 56.7 versus 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%
Bears: 22.6 versus 22.8
22.8 versus 20.6 Versus 20.2 versus 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%
Bonds (10 year): 1.698% versus 1.70%. Rough week continuing downside
though Friday saw a bit of a rebound. Broke lower for sure.
Historical: 1.70% versus 1.698% versus 1.718% versus 1.671% versus 1.67%
versus 1.61% versus 1.53% versus 1.54% versus 1.601% versus 1.57% versus
1.58% versus 1.57% versus 1.57% versus 1.62% versus 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%
EUR/USD: 1.1155 versus 1.12444. Euro bombed lower through the 50 and 200
day SMA, back to the lows from late August. Wow. Looked pretty solid for a
Historical: 1.12444 versus 1.1245 versus 1.12196 versus 1.12335 versus
1.12318 versus 1.12661 versus 1.1239 versus 1.12554 versus 1.11545 versus
1.11943 versus 1.11572 versus 1.1146 versus 1.11708 versus 1.11949 versus
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
USD/JPY: 102.280 versus 102.086. Unlike versus the euro, dollar was mostly
steady versus yen on the week.
Historical: 102.086 versus 102.172 versus 102.155 versus 102.814 versus
101.57 versus 102.685 versus 102.439 versus 102.439 versus 101.698 versus
101.412 versus 103.92 versus 103.226 versus 103.269 versus 102.965 versus
102.160 versus 101.808 versus 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
Oil: 43.03, -0.88. Testing the low from two weeks back. Will see if it can
find some bounce here.
Gold: 1310.20, -7.80. Selling back to the late August low as gold tries to
hold its 3 month trading range.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5244.57
5271.36 is the August 2016 intraday prior all-time high
5287.61 is the all-time high from September 2016
5231.94 is the 2015 all-time high
5162 is the early November peak, 5176 is the December intraday peak
The 50 day EMA at 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
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 4876
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 2139.16
The 50 day EMA at 2154
2175 is the June 2016 high
2194 is the August 2016 all-time high
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 2059
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 18,222.15
18,247 is the August 2016 low
18,288 from March 2015
The 50 day EMA at 18,310
18,351 is the all-time high from May 2015
18,595 is the July 2016 peak
18,669 is the August 2016 all-time high
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 17,574
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
September 16 - Friday
CPI, August (8:30): 0.2% actual versus 0.1% expected, 0.0% prior (no
Core CPI, August (8:30): 0.3% actual versus 0.2% expected, 0.1% prior (no
Mich Sentiment, September (10:00): 89.8 actual versus 91.5 expected, 89.8
Net Long-Term TIC Fl, July (16:00): $103.9B actual versus -$0.5B prior
(revised from -$3.6B)
September 19 - Monday
NAHB Housing Market , September (10:00): 59 expected, 60 prior
September 20 - Tuesday
Housing Starts, August (8:30): 1186K expected, 1211K prior
Building Permits, August (8:30): 1160K expected, 1152K prior
September 21 - Wednesday
MBA Mortgage Index, 09/17 (7:00): 4.2% prior
Crude Inventories, 09/17 (10:30): -0.559M prior
FOMC Rate Decision, September (14:00): 0.375% expected, 0.375% prior
September 22 - Thursday
Initial Claims, 09/17 (8:30): 262K expected, 260K prior
Continuing Claims, 09/10 (8:30): 2143K prior
FHFA Housing Price I, July (9:00): 0.2% prior
Existing Home Sales, August (10:00): 5.50M expected, 5.39M prior
Natural Gas Inventor, 09/17 (10:30): 62 bcf prior
End part 1 of 3
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