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3/25/2017 Investment House Daily
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The REPORT SCHEDULE is as follows:
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.
Access to all current videos will remain assessable each day using the play
links in the reports.
If any market circumstances arise where we see additional plays we want to
prepare for the next session, we will of course issue those plays regardless
of the day of the week.
MARKET SUMMARY
- Stocks hang on for a vote, and when one does not come give back some gains
but not all.
- A somewhat muted reaction to the healthcare bill failure.
- We will see how resilient the investors are even as US citizens have to
gird for the failure of all our leaders to help solve the healthcare
problem.
- Still some very good leadership but we must be ready either direction when
the market shows its decision.
We are going to see just how much hope there is, just how resilient the
investor psyche is. President Trump is, deserved or not, now 0 for 2 in his
major initiatives.
The immigration ban was ruled unconstitutional by a few judges. Ironically
a majority of the Ninth Circuit justices (5) have said the ORIGINAL order,
despite their philosophical objections, was constitutional. Why the DOJ did
not ask for a rehearing en banc, i.e. of the entire court, is beyond me.
Second, the House could not even come up with a healthcare replacement bill
after seven years vowing it would, including dozens of Don Quixote-esque
House votes repealing the ACA. The stumbling block: the establishment GOP
convinced Trump there had to be a multi-stage replacement, that most of the
bill could not be handled in reconciliation. That is flat out wrong from
what the House parliamentarian and constitutional experts (experts, not
scholars; the two are completely different) are saying.
As a result, what the House got to vote on (well, actually not), was Ryan's
secretly written, insurer-welfare establishment baby, a bill that maintains
federal control over healthcare, the very thing many of the republicans were
elected NOT to do. Ironically, many of those in the GOP fervently
supporting the bill this process generated were those indignant that the
democrats wrote the ACA in secret and forced it upon them with no input,
discussion or amendments. Contrast that to those elected in the past three
cycles who actually have a conscience and actually vow to uphold their
promises. The President disappointed many in that he was, in many views,
hoodwinked by the establishment and simply did not do what he said he would
do and then make the republican majority hold to their promises to the
people who elected them.
Thus, healthcare reform is off the table, and we are told it will just be
left to crash as Obama knew it would crash after he left office given the
enforcement delays and multitudes of waivers granted. That is somewhat
true, but it is not an acceptable solution as it only continues, and
according to the administration's own statements will worsen, the burdens on
the Middle Class already crushed by the ACA. As it is they are forced to
buy incredibly expensive insurance and then have no money to pay the
deductibles. They buy something they cannot hope to use and thus are FORCED
to forgo medical care even though they are FORCED to have insurance to cover
that medical care. The utter lack of free choice in a supposedly free
enterprise system is shocking in America. The ironies are the sharpest I
have ever seen. They are also the most bitter: the life expectancy of
Americans is declining under this system, something that should never and
until now has NEVER happened in the history of the US.
With healthcare now in limbo, the Administration turns to tax reform,
something Trump says it would have been nice to do first but that it really
needed the ACA out of the way. Yes, nice because the ACA is a tax feeding
trough, taxing Americans at every turn. Repealing the ACA would eliminate
$1T+ in taxes over the next 10 years, but that is now moot, taken off the
table. So with those taxes still in place the question arises: will Trump
have any more success with other taxes? Will there truly be tax reform
versus the usual band aids applied to a horrendous system where the due
process protections of the fifth and fourteen amendments no longer apply?
Given the fixes proposed, this is highly doubtful.
Perhaps this is the art of deal, not playing the game that the establishment
plays. Maybe lifting the bill was the shock result that brings them back to
the table. Waiting until the system collapses is what many of the ACA
proponents wanted, a stepping stone to total single payer healthcare
designed to fail in the first place while making it impossible to fix.
Mission accomplished! Regardless, we all suffer in the interim as the
promises of the election are deferred. During this period awaiting
collapse, many small businesses and families will collapse under the
financial burdens. Already strapped to the maximum, they do not have the
time or resources to wait it out. A bill that was supposed to help save
families and businesses from catastrophic events has become the catastrophic
event that has sucked away their livelihoods and lives. Another bitter
irony.
Back to the market and its resilience.
With that backdrop, how will the market react to this pivot to tax reform?
As noted, an 0 for 2 start is not encouraging. Is Trump 'due' as they say
in baseball? Will the market wait around to see if he gets a hit or avoid
the Christmas rush and wait and see? Yes, yes, I mixed my metaphors.
Friday was a toss up. A stronger start to the session ran into afternoon
trouble as stories started to leak the Ryan bill would be pulled, that there
would be no vote.
SP500 -1.98, -0.08%
NASDAQ 11.05, 0.19%
DJ30 -59.86, -0.29%
SP400 0.12%
RUTX 0.09%
SOX 0.75%
VOLUME: NYSE -2%, NASDAQ +5%.
A/D: NYSE 1.1:1; NASDAQ 1.3:1
There will be arm-twisting this weekend and the usual DC trick bag will be
opened in an attempt to surprise everyone with an early session Monday vote.
THAT is the art of the deal at work. Appear to pivot then when no one
expects it, pivot right back and get it done.
Perhaps that is why the market did not out and out crash Friday when the
news came out. Perhaps Wall Street traders have all bought a copy of 'The
Art of the Deal' and actually read it. Bully for them.
But this is no business negotiation. The entrenched bureaucracy has no
desire to make any deal with someone who wants to diminish the bureaucracy.
That is a different mindset from business entities and agencies that
actually WANT to make some changes.
THE MARKET
CHARTS
DJ30: Making its way close to the 50 day MA as anticipated, tapping at that
support on the Friday low, rebounding some to close. Low volume, no heavy
selling after that Tuesday drop. Okay, the Dow has made its test, more or
less, and if it is going to continue rallying, this is the range it should
start.
SP500: Similar action to DJ30, testing near the 50 day MA, recovering off
the Friday low to close. Still hanging around the 2016 trendline as well.
Okay, tested support, has held for 3 sessions after the Tuesday drop, and as
with DJ30, will see if it recovers to continue the rally.
NASDAQ: Something of a 1-2-3 bear flag, moving up to the 20 day EMA and
showing a doji. Still trending higher, still easily over the 50 day MA's,
but not a strong upside pattern. Similar to SP500 and DJ30, NASDAQ looks in
line for a 50 day MA test (5750, another 80 points).
SOX: Held the 20 day EMA on the selling midweek, rebounded to test the high
hit Monday. Chips are still strong but some of the key names are extended
and look a bit exhausted.
SP400: Bearish pattern as SP500 fell hard through the 50 day MA Tuesday,
posted a 1-2-3 recovery through Friday. That formed a bear flag just below
the 50 day MA as SP400 builds an 8 week head and shoulders.
RUTX: Showing the same action as SP400, recovering Wednesday to Friday from
the sharp Tuesday drop, but showing a doji below the 10 day EMA in a bear
flag move.
LEADERSHIP
Semiconductors: MU reported great results and gapped higher along with some
other chips, e.g. CY, LRCX. Some look problematic, e.g. SWKS, XLNX, AVGO.
We will see if some of those leaders to this point roll over.
Biotechs/Healthcare: Again a solid group almost across the board with an
emphasis on the lower priced stocks: IDRA, IMMU, IMGN, INVA, XOMA.
China: Struggled on the week with some stocks rebounding (BABA, VIPS,
CTRP), others looking for help (ATHM, BIDU). BITA looks good to move
higher.
Software: Still holding in with CALD posting a good move. Kind of sketchy
outside that with RHT bouncing back up but in a weaker recovery from the
break downside. EBIX fell down to the 50 day EMA. FFIV still hanging on at
the 20 day as it fights to maintain its trend.
Financial: Bear flags around the horn: C, BAC, JPM, KEY.
Oil: Looks as if some oil stocks are going to attempt a bounce, e.g. CRK,
WFT, HAL.
Miscellaneous: PENN surged higher yet again. TSLA has a very nice pattern
going. DIS is still barely trending higher.
MARKET STATS
DJ30
Stats: -59.86 points (-0.29%) to close at 20596.72
Nasdaq
Stats: +11.04 points (+0.19%) to close at 5828.74
Volume: 1.818B (+4.84%)
Up Volume: 1.16B (+234.87M)
Down Volume: 653.04M (-137.44M)
A/D and Hi/Lo: Advancers led 1.29 to 1
Previous Session: Advancers led 1.76 to 1
New Highs: 74 (+10)
New Lows: 44 (-4)
S&P
Stats: -1.98 points (-0.08%) to close at 2343.98
NYSE Volume: 787.8M (-2.17%)
A/D and Hi/Lo: Advancers led 1.08 to 1
Previous Session: Advancers led 1.88 to 1
New Highs: 75 (+7)
New Lows: 33 (0)
SENTIMENT INDICATORS
VIX: 12.96; -0.16
VXN: 12.66; -1.04
VXO: 13.34; +1.12
Put/Call Ratio (CBOE): 1.21; +0.08. 4 of 5 sessions back over 1.0 on the
close, indicating a lot of protection purchases as well as some out and out
playing the downside. Racking up quite a few sessions, and if gets near 10
that would be getting toward an extreme level.
Bulls and Bears: Bulls recovered some lost ground after plummeting off the
cycle high that saw several weeks of bullishness over 60%.
Bulls: 56.7 versus 53.4
Bears: 17.3 versus 17.5
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 53.4
53.4 versus 57.7 versus 63.1 versus 61.2 versus 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: 17.3 versus 17.5
13.75 versus 17.3 versus 16.5 versus 17.5 versus 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%
OTHER MARKETS
Bonds (10 year): 2.40% versus 2.41%
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.41%
versus 2.40% versus 2.43% versus 2.463% versus 2.50% versus 2.529% versus
2.502% versus 2.602 versus 2.617% versus 2.58% versus 2.60% versus 2.55%
versus 2.51% versus 2.49% versus 2.48% versus 2.46% versus 2.260% versus
2.367% versus 2.31% versus 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%
EUR/USD: 1.07984 versus 1.07670. Holding the move higher, attempting to
set up for a run at the 200 day SMA.
Historical: 1.07670 versus 1.07920 versus 1.08117 versus 1.0748 versus
1.07395 versus 1.07710 versus 1.0732 versus 1.06070 versus 1.0636 versus
1.06746 versus 1.06746 versus 1.05384 versus 1.0566 versus 1.05764 versus
1.06266 versus 1.05214 versus 1.05327 versus 1.05710 versus 1.05877 versus
1.05616 versus 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
1.0392
USD/JPY: 111.335 versus 111.242. Attempting to hold at 110.60 on the lows.
Historical: 111.242 versus 111.295 versus 111.502 versus 112.289 versus
112.707 versus 113.349 versus 113.447 versus 114.726 versus 114.833 versus
114.807 versus 115.259 versus 114.563 versus 113.498 versus 113.966 versus
114.042 versus 114.169 versus 113.951 versus 112.966 versus 223.982 versus
112.169 versus 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: 47.97, 0.27. Still below the 200 day SMA but perhaps it too attempts
to put in a near term double bottom.
Gold: 1248.50, +1.30. Rallied to near the 200 day SMA through Wednesday,
working laterally to end the week. Okay, back at resistance; what will it do
this time?
MONDAY
Again, how resilient will the market be in the face of a healthcare failure
thus far and the prospects of tax reform package getting the same kind of
treatment? Then again, perhaps some major arm-twisting and side deals can
shock the market with a vote Monday. Maybe; those republicans voting
against Ryan's bill are pretty adamant and steadfast in their reasons for
opposition.
Thus, we are not counting on any kind of deal though that does not mean it
cannot happen. And of course, it is all speculation as to which way the
political river flows. The key is being ready with different plays, upside
and downside, to take advantage of the direction. On top of all of that,
there are great trends in place in some areas, and we have some great
positions still working in very good trends, not just hanging on but showing
very good action.
With that we let the politics work itself out and play the moves that
generate off that. I know that does not sound so wise and sage, but I know
enough not to pretend to know what that outcome will be. I just want to be
ready and take what the market is going to give me.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5828.74
Resistance:
5912
5928 is the March all-time high.
Support:
5800 from the February consolidation lows
The 50 day SMA at 5753
The 50 day EMA at 5750
5661 is the late January upper gap point
The 2016 trendline at 5652
5601 is the January lower gap point
The November prior all-time high at 5404
The 200 day SMA at 5343
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
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
S&P 500: Closed at 2343.98
Resistance:
The 2016 trendline at 2354
2390 is the March interim recovery high
2401 is the all-time high
Support:
The 50 day EMA at 2332
The 50 day SMA at 2331
2301 is the late January 2017 high
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
The 200 day SMA at 2208
2194 is the August 2016 prior all-time high
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 20,596.72
Resistance:
21,100 is the March interim recovery high
21,169 is the all-time high
Support:
The 50 day EMA at 20,472
The 50 day SMA at 20,449
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
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 19,047
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.
ECONOMIC CALENDAR
March 21 - Tuesday
Current Account Bala, Q4 (8:30): -$112.4B actual versus -$128.2B
expected, -$116.0B prior (revised from -$113.0B)
March 22 - Wednesday
MBA Mortgage Applica, 03/18 (7:00)
MBA Mortgage Index, 03/18 (7:00): -2.7% actual versus 3.1% prior
FHFA Housing Price I, January (9:00): 0.0% actual versus 0.4% prior
Existing Home Sales, February (10:00): 5.48M actual versus 5.54M expected,
5.69M prior (no revisions)
Crude Inventories, 03/18 (10:30): +5.0M actual versus -0.2M prior
March 23 - Thursday
Initial Claims, 03/18 (8:30): 258K actual versus 239K expected, 243K prior
(revised from 241K)
Continuing Claims, 03/11 (8:30): 2000K actual versus 2039K prior (revised
from 2030K)
New Home Sales, February (10:00): 592K actual versus 560K expected, 558K
prior (revised from 555K)
Natural Gas Inventor, 03/18 (10:30): -150 bcf actual versus -53 bcf prior
March 24 - Friday
Durable Orders, February (8:30): 1.7% actual versus 1.3% expected, 2.3%
prior (revised from 1.8%)
Durable Goods -ex tr, February (8:30): 0.4% actual versus 0.7% expected,
0.2% prior (revised from -0.2%)
End part 1 of 3
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