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3/4/2017 Investment House Daily
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Investment House Daily Subscribers:
Targets hit: APC
Entry alerts: SRPT
Trailing stops: None issued
Stop alerts: MET
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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.
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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.
- Indices settle down, test the SOTU rally, leave themselves in good enough
- Same old story with some new twists in DC
- What is so hard about the health care issue? Free markets do actually
work, unless your goal is control.
- Pundits say market surges, pundits say the end is near. Trend is up, no
sellers, and until leaders break down in quantity, the trend continues.
A bit of a hangover after the Wednesday Trump SOTU rally.
After a big surge such as Wednesday in response to a specific catalyst such
as the excitement over the State of the Union address, you have to see how
the market reacts. Thursday was problematic, particularly on the growth
indices; DJ30 and SP500, not so much.
Friday was no great day for the stock indices, but it was good for the
upside in that the indices held, to different degrees, the Wednesday
breakout. Again it was the large cap NYSE holding up quite well thanks to
their financial components while the other indices almost tested the entire
The end result, however, are some pretty decent charts and definitely the
ability to extend the new, SOTU hope higher.
Of course the same old issues emerged immediately after the hope-inspired
move: AG Sessions accused of lying during confirmation, counter accusations
of the same conduct by all senators and House reps, wiretapping of Trump's
offices and campaign with references to Watergate -- you know, the usual
business in DC. One step forward, one step to who knows where.
That leaves many pundits split. After the Wednesday breakout the bullish of
bulls are supercharged, calling for DJ30 23K by Labor Day. Others are
calling for a drop after a last upside move spurred by this latest breakout.
I believed that there would be a last leg and then a drop; thus far that
last leg is still going. The right answer? The way the market goes.
There are many reasons to anticipate a decline even as the market broke to
new highs last week. There are some breaks in leadership. Okay, 'breaks'
are not really the right word. More like leadership is getting ragged and
it needs to clean itself up or find new leaders. That is what has kept the
move going, and with semiconductors, China, oil, and small caps in general
turning choppy (medium volatility) and sporting some breaks, the market
needs to generate some new leadership.
On top of that there is another week of 60+% bullish sentiment, hitting a
cycle high on its seventh of nine weeks over 60%. Coupled with that,
however, is an interesting phenomena that occurred: wealthy investors for
some big banks, etc. sold out only to have to move back in when the rally
continued. Bulls to bears back to reluctant bulls. That prompted BAC to
opine SP500 hitting 2450 as those clients moved back in. THEN the pullback.
Right now everyone is guessing at the top. Dangerous stuff. As long as the
market pushes new leaders upside it is a good idea to play the trend with
those good moves as your dominant strategy. Pick up some downside as they
set up bearish patterns and break lower, but most money has to be focused
with the trend in place.
Yes DC has and will have its impact. If Trump is stymied in the silent coup
many claim is occurring then there will be a stock price to pay. For now it
appears the market is willing to continue on faith that there is enough
momentum to get the job done. With a poll released this weekend showing
Trump with a 53% approval rating it would seem the detractors have not made
significant inroads, at least not yet. So, the market is holding a pretty
solid uptrend, still is summoning leadership, and thus the bias and
expectation, near term, remains upside.
The news impacting the stock market boils down to this: will Trump be able
to move his marquis programs through Congress: ACA repeal, tax reform.
After that there is immigration, etc., but the first two are key. As well
as one of his apparent new initiatives, reducing the federal government
He has tweeted and/or discussed plans of reducing the State Department by
roughly 40%. If he would do that to ALL federal agencies and demand the
same output in services, the federal government might start loosely
approaching the level of private sector output. No slam against public
sector workers, but in many audits the findings are the same: to much staff
for the job at hand, too much management. Cut the middle out and let the
workers do their work without so many managers supposedly managing. That
would be truly game changing and might be the counter silent coup to the
Anyway, with respect to the ACA, the idiots in control of the House majority
show they have learned nothing after the TTP debacle where the document was
locked in a secret room where no cameras, phones, or any writing or copying
material was allowed. You could take notes about what you read and saw but
you had to leave the notes when you left. Those without impressive
photographic memories were simply SOL. Of course most in Congress NEVER
BOTHERED to even go look at it, so I suppose it doesn't really matter.
Garbage in, garbage out, right?
So, somewhere in DC there is a room with the House majority plan for the
ACA. And it is not a repeal. It is doing the same thing just not as much.
Like lessening the tension being used on the 'rack' in a medieval dungeon,
like toning down the level of the 'agony booth' on the parallel universe in
the classic Star Trek episode 'Mirror, Mirror.' Oh, THAT will make us all
What the hell? What about just the good old free market? Look what it did
for the cost of Lasik and other non-insured procedures: costs have
plummeted, quality is excellent, and now everyone can take part. There was
no fixed overhead, no 'insurance will pay for it' cost inflator attached so
those providing the service had to get real and get prices down to what the
market would bear. That capitalism is a pretty amazing thing.
Hmm, but could it work for insurance, without massive government oversight?
How could that possibly happen. Oh, auto insurance works pretty well; not
great, but pretty well because . . . you can shop all over the country for
it. Geico and others are offering plans where you can get the coverage you
want. Oh sure, you have to actually EDUCATE yourself on what you should
have, but we are grownups or at least should be. And by golly, it seems to
work. Prices are way, way down, and frankly could go even lower if the
regulation was further reduced.
How about college accounts? You don't have to go to your state. The first
529 plans were somewhat high priced but then you could buy them anywhere.
Prices plunged, quality was at least as good.
Brokerage and financial services. You probably don't remember when the big
brokers had the market locked up. You could only trade in large blocks,
minimum of 100 shares. Commissions were astronomical so no one wanted to
trade. Then along came Charles Schwab, and after several court fights the
age of the individual investor was born. People could all of the sudden
take control of their investments. They could shop for the best deal as
they built their own wealth. Prices plunged, and competition is STILL at
play 35 years later as Fidelity just dropped its fees again, now charging
just $4.95 per stock trade with very high quality service. Spreads have
narrowed, market information has improved -- so many wonderful things for
Wow, the free market CAN work, and it MOST CERTAINLY can and will work with
health insurance. When we had HSA's that actually were worth having we had
great choices and prices. We chose low premium, high deductible plans and
could save tax free into our account. I am talking for a self-employed
family, less than $300/month with a $5K deductible for the whole family,
100% coverage after deductible was paid, no exclusions. Great healthcare,
and that was WITHOUT the ability to really shop from state to state and have
competition lower it even more. Now we pay almost $3,000/month and suffer
an effective $12,000 deductible with a separate $6K carveout for my wife.
Free market versus controlled markets.
Why then try to control the market process? Control. If you control one of
the large and important areas in a person's life, particularly healthcare,
you have a lot of say over a person's life. The governing class, whether
espousing to be liberals or conservatives, democrats or republicans,
communists or capitalists, all want power and control. What better way to
control the masses than control healthcare, education, communications (the
unchecked ability to eavesdrop on every communication), and money (required
declaration of every penny a person possesses, control of money rates, and
ultimately, eliminating cash altogether). You make the call.
SP500, DJ30: Both are holding the upper gap point from the Wednesday
post-SOTU gap and run, showing tight doji. They are in very good position
to continue the move.
NASDAQ: Faded through the 10 day EMA Friday, but recovered to hold the 10
day EMA and a modest gain. That keeps the breakout intact, the trend up the
10 day EMA in place. Some volatility crept into NASDAQ, but it was on
mostly lower relative volume, and NASDAQ is currently holding that trend. It
can really use the chips to hang onto the trend.
SOX: No new high for SOX on the week as the SOTU address produced a bounce
off the 20 day EMA, but by Friday SOX was right back at the 20 day, closing
with a doji. The trend remains in place using that near support, but over
the past two weeks SOX turned choppy, selling back but it did manage to
close out with the trend. Limping along for now, but it is following the
SP400: Midcaps rallied to a higher high Wednesday on the SOTU but sold half
the gain Thursday. Friday SP400 reached lower but held the 10 day EMA on
the close. That keeps the uptrend in place, but as with NASDAQ, a lot of
volatility the past 2 weeks as SP400 continued the uptrend. Lower MACD
suggests slowing momentum. SP400 will show great surge pops but then it
also shows selling sessions on their heels. Will have to hold the trend,
heal itself, then continue. As with SOX, for now it is holding on and
following the other indices.
RUTX: Closed lower Friday but fractionally, holding the 20 day EMA on the
low and showing a tight doji. That is a good hold of support, but as with
SP400, the small caps turned volatile the past 1.5 weeks after moving to a
higher high. Another new high Wednesday was immediately sold. Thus far,
however, no breakdown as it tests and holds the break over the December to
Materials: Still volatile, surging post-SOTU, selling after that. Friday a
move higher, but not taking on the Wednesday highs. Example: CX.
Interesting thing, CX says it will bid for concrete on the border wall. LPX
is testing the 10 day EMA, looking a bit heavy after lethargic trading on
the week. USCR (concrete) rallied up to the late January high on low MACD,
some decent volumes. Trying to work, but very choppy.
Metals: Weak to end the week but some are still holding support, e.g. STLD.
Have to get the patterns back together, however. AKS showed a doji on
Friday after falling down away from resistance Thursday. AKS is not bad,
but is not the best pattern in the market by a long shot. Precious metals
suffered another week as the Fed appears ready to actually hike rates.
Semiconductors: Ups and downs. AVGO reported strong earnings on the week
and was up though even the surge was sold some. AMD gapped below the 20 day
EMA Friday, holding the mid-February closing low so we see if it can bounce.
XLNX still cannot break the pull of the 50 day MA. SWKS, MCHP, LRCX, QRVO
remain in their trends, but they have been on those trends for some time.
Financial: All financials rallied Wednesday then tested the move Thursday,
Friday rebounding to hold much of the move. C, BAC, JPM all show the same
testing action. GS similar as well. The group is in good shape.
FAANG: FB continued a trend ups the 10 day EMA but rather slow in the
uptake last week. AAPL broke higher Wednesday, held the move to the
weekend. AMZN never made it to a higher high, but did hold the 10 day EMA
on the close. NFLX broke lower Thursday, but showed a doji Friday over the
upper gap point. GOOG rallied to the January highs Wednesday, tested to the
10 day EMA Friday.
Drugs/Biotech: Still looks to be, again, an up and coming group. CELG
rallied early week, tested to the 10 day EMA Friday in a 1-2-3 test, then
rallied higher Friday off that test. AMGN is working on a nice trend up the
10 day EMA. JAZZ is in a nice 3 week test of a run higher into early
February. IMMU still looks as if it wants to break higher while CORT
continues its impressive climb up the 10 day EMA toward the target.
Oil: Breaking down as a group. APC sold to a lower low on this fade. HAL
is struggling below the 50 day MA's. CVX is trying to hold the line and MRO
is trying to set a base over the 200 day SMA, but those are works in
progress. SN is interesting in a pullback to the 50 day MA, but many have a
lot of work to do.
China: Mixed and that is a change for the worse. CTRP still looks good
over the 10 day EMA. SOHU can still pull off a nice break higher as can
VIPS and BABA. BIDU is still in the tank. SINA is struggling. NTES
struggled on the week but held the 20 day EMA Thursday.
Stats: +2.74 points (+0.01%) to close at 21005.71
Stats: +9.53 points (+0.16%) to close at 5870.75
Volume: 1.843B (-8.96%)
Up Volume: 893.07M (+255.89M)
Down Volume: 905.84M (-474.16M)
A/D and Hi/Lo: Decliners led 1.04 to 1
Previous Session: Decliners led 2.23 to 1
New Highs: 80 (-69)
New Lows: 38 (-7)
Stats: +1.2 points (+0.05%) to close at 2383.12
NYSE Volume: 825.3M (-2.38%)
A/D and Hi/Lo: Advancers led 1.07 to 1
Previous Session: Decliners led 2.73 to 1
New Highs: 65 (-61)
New Lows: 38 (+7)
VIX: 10.96; -0.85
VXN: 11.77; -0.94
VXO: 10.08; -1.92
Put/Call Ratio (CBOE): 0.94; -0.08. Jumped over 1.0 Thursday and Tuesday.
At this juncture that simply looks like some protection buying.
Bulls and Bears: Bulls rallied to a new cycle high while bears slipped back
a whole point. 7 of 9 weeks over 60%. Not at cycle lows for bears, but
Bulls: 63.1 versus 61.2
Bears: 16.5 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: 63.1 versus 61.2
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: 16.5 versus 17.5
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%
Bonds (10 year): 2.48% versus 2.46%.
Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.60266 versus 1.05214. Jumped late week even though Yellen pretty
much confirmed a rate hike. Could it be Commerce Secretary Ross talking
about a "sensible" NAFTA deal?
Historical: 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
USD/JPY: 114.042 versus 114.169. Rallied on the week just over the 50 day
SMA, then stalled Thursday and Friday.
Historical: 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: 53.33, +0.72. Sold hard to the 50 day EMA then bounced Friday. Tried
the 54-55 level the prior week, stalled, then fell to support. Now it shows
if it can bounce again.
Gold: 1226.50, -6.40. Gold rallied to the 200 day SMA the prior week and
then spent the past week testing the move, falling back to the 50 day EMA
The Fed has moved into its quiet time with a series of statements and
speeches about how the time is appropriate for a rate hike. If the Jobs
Report Friday comes in solid enough, then March is on for a rate hike. At
this stage of the Fed cycle and with the hope trade in place, a good report
should be met with cheer if not much rejoicing. Yea.
As noted, the trends remain in place. There is some chop and moderate
volatility in the smaller indices, but they are following the large cap NYSE
lead, and that is still upside. Financial stocks should still provide
leadership, perhaps biotechs and drugs will continue improving, and we will
see if the chips can pull out of their near term choppy trade. The market
will need more than a narrow group of leaders to seriously rally, but of
course certain indices can still push higher on a narrow band of gainers,
e.g. DJ30, SP500.
The trend remains higher with some signs of wear and tear and internal and
sentiment issues, but there is still a lack of sellers -- seller-itis -- and
without earnest sellers, the downside cannot get a foothold. Sure the
market will fade and test moves with a lack of bids, just as it is doing
now. To this point, however, the shortage of bids has been met with new
buys after a rather modest pullback.
Therefore the majority of plays you have to look at are in line with that
trend. It is noteworthy how many good plays/setups there are as that gives
you a barometer of the life of the current upside leg, i.e. if there are few
it could take more testing to better setup the continuation of the upside
move. It does not mean the uptrend is over; that would take actual
breakdowns in several leading groups, demonstrated usually by breakouts that
fail relatively quickly that then break down the pattern. That is when you
have to worry that the trend is over. Before that, it is usually just a lot
of worry for no real reason.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5870.75
5912 is the March all-time high.
5800 from the February consolidation lows
5661 is the late January upper gap point
The 50 day EMA at 5664
The 50 day SMA at 5640
The 2016 trendline at 5604
5601 is the January lower gap point
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 5270
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 2383.12
The 2016 trendline at 2320
2301 is the late January 2017 high
The 50 day EMA at 2305
The 50 day SMA at 2300
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 2187
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 21,005.71
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
The 50 day EMA at 20,189
The 50 day SMA at 20,170
19,994 - 19,999 (early January high, upper gap point from late January
The 200 day SMA at 18,816
19750 is the lows of the December/January range
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.
March 6 - Monday
Factory Orders, January (10:00): 1.0% expected, 1.3% prior
March 7 - Tuesday
Trade Balance, January (8:30): -$48.5B expected, -$44.3B prior
Consumer Credit, January (15:00): $17.0B expected, $14.2B prior
March 8 - Wednesday
MBA Mortgage Index, 03/04 (7:00): 5.8% prior
ADP Employment Chang, February (8:15): 180K expected, 246K prior
Productivity-Rev., Q4 (8:30): 1.5% expected, 1.3% prior
Unit Labor Costs - R, Q4 (8:30): 1.6% expected, 1.7% prior
Wholesale Inventorie, January (10:00): -0.1% expected, 1.0% prior
Crude Inventories, 03/04 (10:30): +1.5M prior
March 9 - Thursday
Challenger Job Cuts, February (7:30): -38.8% prior
Export Prices ex-ag., February (8:30): 0.1% prior
Import Prices ex-oil, February (8:30): -0.2% prior
Initial Claims, 03/04 (8:30): 240K expected, 223K prior
Continuing Claims, 2/25 (8:30): 2066K prior
Natural Gas Inventor, 03/04 (10:30): +7 bcf prior
March 10 - Friday
Nonfarm Payrolls, February (8:30): 188K expected, 227K prior
Nonfarm Private Payr, February (8:30): 185K expected, 237K prior
Unemployment Rate, February (8:30): 4.7% expected, 4.8% prior
Avg. Hourly Earnings, February (8:30): 0.2% expected, 0.1% prior
Average Workweek, February (8:30): 34.4 expected, 34.4 prior
Treasury Budget, February (14:00): -$192.6B prior
End part 1 of 3
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