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2/25/2017 Investment House Daily
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Entry alerts: None issued
Trailing stops: None issued
Stop alerts: None issued
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Market Summary Video, Plays and Play Videos, and Play Table with play
annotations will issue Wednesday, Weekend.
Monday a Market Summary video, new plays, play table annotations.
Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play table.
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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 start lower, continuing the Thursday weakness, then the indices
- Sellers just cannot get the job done thus far.
- The recovery is good for the most part, but some leaders are problematic
- Economic recovery hope versus reality: is the administration listening to
the right people?
- Key leadership groups take a hit, some sport leader breakdowns.
- This week the rally attempts to hold against weak internals, rising
sentiment, some leaders breaking lower.
What a comeback. After a Thursday that saw stocks sell and recover in some
cases, Friday opened down with some 40+ point losses on NASDAQ. SP500 and
DJ30 were mostly fine on the session, but growth was way off the upside
Once again, however, the sellers did not have their way. From the open
stocks started to recover off the early weakness, moved into midmorning and
worked laterally to the last hour. Then a 'miraculous' recovery in the last
hour pushed all but RUTX and SOX positive.
SP500 3.53, 0.15%
NASDAQ 9.80, 0.17%
DJ30 11.44, 0.05%
Yes, once again the sellers tried but it was a half-hearted effort, and as
soon as they didn't press the move the buyers bought back in. The indices
bounced off the 10 or 20 day EMA, as the case may be, and recovered most of
Can you trust that recovery? Not on a Friday on a short week when the
sellers give it a shot on the week. Thus we were not buying on the day.
But, there are still many leaders that, while they were boxed around some on
the week, held up well and indeed even have some pretty nice entry setups.
That means we are still looking at the upside predominantly as the trends
held, are still holding, and the leaders are, most of them that did test,
setting up some potential new entry points. It may be that Friday was just
a short covering move or a buy on the dip bounce to close the week. As
there are not that many shorts, covering seems to be a rather absurd
I have to say that that some leaders did break on the week. NVDA broke the
50 day MA's after the last rally attempt failed to take out the prior high
in December. But that is okay. Cramer Friday was talking his hedge fund
knowledge saying that there were momentum 'battleground stocks' and you just
don't get in until the battle is over.
That is true: let the fight between the buyers and sellers get resolved and
then move in. What gets me about every one of these TV pundits is that they
always say selling is okay, just buy it when the pullback is over. Well,
not everyone has a hedge fund using other people's money. Cramer was
touting NVDA up to the point it rolled over. Now he is saying buy it when
the battle is over. With what, the profits you don't have now that a stock
that was touted as a core holding a couple of weeks ago sells off? It is
always the same story when selling crops up: just buy it on the dip! They
always skip, however, that transition from strong buy to buy it after it
sells off. And, of course, no one says one thing about it. Fake news or
just a momentary lapse?
It was the best of times, it was the worst of times. New records on the
stock indices, sentiment reports surging, but the 'hard' economic data still
turning in disappointing results.
Gasoline demand fell 5.2% the past week, the second week of demand drop and
this after GS said the prior week's and general demand trend points to
recession. Happy spring! I would say the groundhog was wrong this year;
saw his shadow but it is spring everywhere you go.
The Fed's national activity Index in January turned negative. Counter that
with Small Business sentiment expecting the economy to grow jumping to 54%
from 29% in the summer of 2016. Lots of hope, not a lot of real activity.
One of the more disappointing, even disturbing, stories of the week was the
Trump meeting with CEO's. He wanted to discuss creating jobs and growing
the economy. Sound great. When the meeting was over, however, the CEO's
said that the main problem was not a lack of jobs but a lack of skilled
workers, pushing again for more of the H-1b visas to let more cheaper
foreign workers in.
If I was Trump I would have to ask, 'was that the problem at Disney?'
Recall management called much of the senior staff into a meeting and
abruptly told them they were going to be laid off. Moreover, they had to
train their replacements, and if they did not, no severance. Many of the
Disney employees told reporters that the people brought in from overseas to
replace them knew NOTHING about the jobs they were hired to fill. No
I would also have to ask about the tens upon tens of thousands of US
citizens, educated at US universities in STEM degrees (science, technology,
engineering, mathematics) who do not have jobs and are living with their
parents. What about them filling those jobs? Even if it is not a perfect
match, these are highly educated, and presumptively highly intelligent
people who could, with minimal training, do the job. I mean Disney had to
force terminated employees to train their clueless replacements. How hard
could it be to teach someone already in the country to do the job?
Beyond that, they need to get to the root of the problem as to why companies
feel compelled to choose America last for workers: the ability to compete
internationally thanks to our tax code. The US taxes citizens and
corporations no matter where they live in the world. You could live in
Spain for five years, never coming to the US during that time, and the US
would still say you owed the US taxes on what you earned in that country.
That applies to corporations as well. Talk about building in a massive
disadvantage and yes disincentive to for US companies.
Instead of importing a bunch of foreign workers, go ahead and lower the
taxes, change the foreign collection practices, and make it where US
companies are more competitive without feeling the need to cut out American
workers for cheaper foreign workers. Sure that is not a dollar for dollar
trade with a cheaper worker, but there are other ways to level the playing
field. 0% corporate rates would help the corporations and the consumer,
lowering prices all around.
That, of course, makes too much sense. Instead they are playing with a
border tax that only raises prices to US consumers and does not help US
exporters move goods to our NAFTA partners due to taxes that make end runs
around that trade agreement. Negotiate to get trade truly free between our
countries so US companies, small and large alike, can compete and sell their
goods across borders.
Trump needs to meet with a bunch of small business owners, several times, to
see what the real obstacles and the changes that would benefit all
businesses versus just the big corporations and their lobbying that gets
them the best deals.
A bit volatile on the week, but in the end holding near support, either the
10 or the 20 day EMA. If that is the best the sellers can do . . . Of
course it is not and the internals and sentiment are at levels with a
negative bias for stocks. A bit of volatility with those indications adds
to some of the negatives, but then again, the trends refuse to give up at
NASDAQ: Looked a bit toppy starting Wednesday, but after a Thursday test of
the 10 day EMA and Friday opening back at that level, NASDAQ rebounded to
post a slightly higher week. Still moving up the 10 day EMA.
SP500: Same action as NASDAQ, putting in new highs then flattening out,
selling to the 10 day EMA, but recovering to hold the moves.
DJ30: Pretty much rising each session with no signs of topping out.
SOX: Surged to a new high Tuesday, stalled Wednesday, sold Thursday and on
the Friday open. Rebounded to flat Friday, holding the trend rising above
the 20 day EMA. Many chips struggled, but closed out the week looking
promising once again.
SP400: Same action as SOX, i.e. a new high Tuesday, fading back Wednesday
and Thursday and to start Friday. Bounced Friday off the 20 day EMA.
RUTX: Solid Tuesday move as well then a drop Wednesday to the Friday low,
but held the 20 day EMA Friday and rebounded to a nice tight doji with tail.
Tested the top of the lateral range from late 2016, early 2017 and held.
That looks quite solid.
Metals: Breaking down late last week and didn't recover much Friday. AKS,
SCHN, STLD, FCX.
Materials: From great moves higher to rolling over. LPX gapped lower
Friday. CX is struggling but has set up an ABCD. EXP is trying to hold the
50 day MA's.
Industrial machinery: Weak Thursday, tried to recover Friday with not a lot
of success. CMI, CAT, TEX.
Chips: NVDA tried to recover some Friday and did a decent job but the
pattern is still damaged. MU, XLNX testing the 50 day MA's. Some solid
leaders struggled some late week but held up quite well: AMD, MCHP, SWKS,
SLAB. Others are in great position: MVIS.
China: Some remain solid: JD, YNDX, ATHM, BABA. Others had a tougher week,
e.g. SINA, BIDU, both on earnings. Some were weak but managed to recover,
FAANG: FB looks ready to start upside again. AAPL continues trending
upside. NFLX trying to hold the 20 day EMA and bounce. GOOG is trying to
take on the late January peak.
Financial: All tested late week on the bond rally and rate drop. All okay
in their patterns, just knocked around some.
Stats: +11.44 points (+0.05%) to close at 20821.76
Stats: +9.8 points (+0.17%) to close at 5845.31
Volume: 1.668B (-10.52%)
Up Volume: 858.89M (+94.45M)
Down Volume: 767.66M (-312.34M)
A/D and Hi/Lo: Decliners led 1.17 to 1
Previous Session: Decliners led 1.47 to 1
New Highs: 108 (-131)
New Lows: 51 (+15)
Stats: +3.53 points (+0.15%) to close at 2367.34
NYSE Volume: 890M (-0.89%)
A/D and Hi/Lo: Advancers led 1.07 to 1
Previous Session: Advancers led 1.16 to 1
New Highs: 119 (-99)
New Lows: 27 (+11)
VIX: 11.47; -0.24
VXN: 12.75; -0.54
VXO: 10.65; -0.07
Put/Call Ratio (CBOE): 0.83; 0
Bulls and Bears: Bulls backed off again but remain over 61%. 6 of 8 weeks
over 60%. Bears held steady at low levels.
Bulls: 61.2 versus 61.8
Bears: 17.5 versus 17.6
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: 61.2 versus 61.8
61.8 versus 62.7 versus 61.8 versus 58.2 versus 60.6 versus 58.6 versus 60.2
versus 59.8 versus 59.8 versus 59.6 versus 58.8 versus 56.3 versus 55.6
versus 51.0 versus 42.9 versus 41.7 versus 47.1 versus 42.9 versus 46.1
versus 46.7 versus 45.2 versus 44.6 versus 49.0 versus 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
Bears: 17.5 versus 17.6
17.6 versus 16.7 versus 17.6 versus 17.5 versus 17.3 versus 18.3 versus 18.4
versus 19.6 versus 19.6 versus 19.2 versus 19.6 versus 22.3 versus 21.6
versus 23.5 versus 25.7 versus 24.3 versus 23.1 versus 23.8 versus 23.1
versus 22.8 versus 23.1 versus 24.3 versus 22.6 versus 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%
Bonds (10 year): 2.31% versus 2.38%. Bonds gapped upside Friday, matching
the high from early February.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.38%
versus 2.42% versus 2.43% versus 2.42% versus 2.45% versus 2.50% versus
2.473% versus 2.43% versus 2.41% versus 2.398% versus 2.340% versus 2.393%
versus 2.41% versus 2.48% versus 2.474% versus 2.477% versus 2.44% versus
2.49% versus 2.48% versus 2.512% versus 2.52% versus 2.467% versus 2.40%
versus 2.47% versus 2.468% versus 2.422% versus 2.372% versus 2.393% versus
2.358% versus 2.365% versus 2.38% versus 2.962% versus 2.42% versus 2.357%
versus 2.45% versus 2.448% versus 2.42% versus 2.48% versus 2.51% versus
2.56% versus 2.54% versus 2.55% versus 2.54% versus 2.564% versus 2.544%
versus 2.59% versus 2.59% versus 2.52% versus 2.473%
EUR/USD: 1.05616 versus 1.05830
Historical: 1.05830 versus 1.0557 versus 1.05474 versus 1.06108 versus
1.06665 versus 1.06148 versus 1.05762 versus 1.06023 versus 1.06411 versus
1.06557 versus 1.06825 versus 1.06814 versus 1.07219 versus 1.07880 versus
1.07605 versus 1.07892 versus 1.0791 versus 1.07294 versus 1.06957 versus
1.06843 versus 1.0683 versus 1.0756 versus 1.07274 versus 1.0761 versus
1.07027 versus 1.06394 versus 1.06381 versus 1.07114 versus 1.06450 versus
1.0624 versus 1.05982 versus 1.0555 versus 1.0585 versus 1.05346 versus
105837 versus 1.0525 versus 1.03914 versus 1.05289 versus 1.05155 versus
1.04357 versus 1.04636 versus 1.0451 versus 1.04368 versus 1.04412 versus
USD/JPY: 112.169 versus 112.745. Dollar weakened on the week, heading back
near the early February lows.
Historical: 112.745 versus 113.324 versus 113.399 versus 112.906 versus
113.356 versus 113.880 versus 114.306 versus 113.65 versus 113.856 versus
113.265 versus 113.401 versus 112.207 versus 112.332 versus 111.815 versus
112.567 versus 112.903 versus 112.68 versus 112.50 versus 114.493 versus
115.094 versus 114.469 versus 113.362 versus 113.850 versus 112.736 versus
114.39 versus 114.686 versus 114.538 versus 112.774 versus 114.473 versus
114.57 versus 114.70 versus 115.811 versus 116.023 versus 116.923 versus
115.93 versus 116.46 versus 117.983
Oil: 53.99, -0.46. Tried the breakout again, struggled again at the top of
Gold: 1258.30, +6.90. Strong break higher Thursday and Friday, moving to
the 200 day SMA. As with bonds, surprising strength, based mostly on the Fed
not going to do anything and the notion Trump will not get his policies
A volatile week that started stronger, ended problematic, but the bids were
still ready on the dip and the indices recovered and held the trends. Thus,
a bit more testy, but holding the trends higher with bids returning when
some modest selling hit.
Yes, overall it was modest though some leaders did get hit. Chinese stocks
had some leaders really struggle. Chips had some issues, and though most
recovered, some big names did not and others are still problematic.
Basically the market started to see some leaders struggle: materials,
metals, industrial equipment, some chips, some China. If leaders cannot
hold the line and those struggling roll over, the market rally is in
jeopardy. Makes sense given the issues with internals and sentiment.
Leaders are the last peg and the past week's struggles have to keep everyone
That said, the trends remain in place. There are still plenty of leading
stocks holding up well and more setting up or upside moves. Thus despite
the issues in the struggling leaders, others look ready to step into their
place. So, we have some good-looking upside plays still ready to go. We
will see how they move and how the others hold the line. If the new stocks
cannot break higher and if those hanging on fail, the rally likely tests
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5845.31
5661 is the late January upper gap point
The 50 day EMA at 5620
5601 is the January lower gap point
The 50 day SMA at 5599
The 2016 trendline at 5559
The November prior all-time high at 5404
5340 is the September and October 2016 twin peaks
5287.61 is the September 2016 high
5271.36 is the August 2016 intraday prior all-time high
The 200 day SMA at 5242
5231.94 is the 2015 all-time high
5170 is the October intraday low.
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
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
S&P 500: Closed at 2367.34
The 2016 trendline at 2309
2301 is the late January 2017 high
The 50 day SMA at 2288
The 50 day EMA at 2289
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
The 200 day SMA at 2179
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
2120 is the June 2016 peak
2119 is the September 2016 low; 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
2040 is the March 2015 closing low
Dow: Closed at 20,821.76
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
The 50 day SMA at 20,080
The 50 day EMA at 20,016
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
The 200 day SMA at 18,733
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
18,351 is the prior all-time high from May 2015
18,288 from March 2015
18,262 is the upper gap point from the Monday gap lower.
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
17,992 is the early September low
17,978 is the November 2015 peak
17,960 is the October intraday low
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
February 27 - Monday
Durable Orders, January (8:30): 1.8% expected, -0.4% prior
Durable Goods -ex tr, January (8:30): 0.5% expected, 0.5% prior
Pending Home Sales, January (10:00): 0.9% expected, 1.6% prior
February 28 - Tuesday
GDP - Second Estimate, Q4 (8:30): 2.1% expected, 1.9% prior
GDP Deflator - Second, Q4 (8:30): 2.1% expected, 2.1% prior
Adv. International T, January (8:30): -$65.0B prior
Adv. Wholesale Inventories, January (8:30): 1.0% prior
Chicago PMI, February (9:45): 53.0% expected, 50.3% prior
Consumer Confidence, February (10:00): 111.5 expected, 111.8 prior
March 1 - Wednesday
MBA Mortgage Applica, 02/25 (7:00): -2.0% prior
Personal Income, January (8:30): 0.4% expected, 0.3% prior
Personal Spending, January (8:30): 0.3% expected, 0.5% prior
PCE Prices - Core, January (8:30): 0.2% expected, 0.1% prior
Construction Spendin, January (10:00): 0.6% expected, -0.2% prior
ISM Index, February (10:00): 56.1 expected, 56.0 prior
Crude Inventories, 02/25 (10:30): +0.6M prior
Auto Sales, February (14:00): 4.67M prior
Truck Sales, February (14:00): 9.22M prior
March 2 - Thursday
Challenger Job Cuts, February (7:30): -38.8% prior
Initial Claims, 02/25 (8:30): 244K expected, 244K prior
Continuing Claims, 02/18 (8:30): 2060K prior
Natural Gas Inventor, 02/25 (10:30): -89 bcf prior
March 3 - Friday
ISM Services, February (10:00): 56.5% expected, 56.5% prior
End part 1 of 3
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