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5/13/2017 Investment House Daily
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of the day of the week.
- Friday a microcosm of the recent action.
- NASDAQ, SOX lead higher while the NSYE indices continue to test.
- Same group of leaders into the weekend.
- CPI cooler but inflation is not in the prices.
- Retail sales are decent, but decent only.
- Move remains narrow but the market is throwing you winners.
Friday another off session for most of the market -- nothing new for the
NYSE indices, but for NASDAQ and SOX, it would be. Only, it wasn't. Both
NASDAQ and SOX managed gains, modest, but still gains. Apparently, when in
doubt, go for the status quo leaders: some FAANG (AAPL, AMZN, NFLX), some
chips (AVGO, MXL, NVDA), China (BITA, BABA, VIPS, YNDX), and a mix of
miscellaneous stocks (SSYS, SPLK, ZBRA).
Thus, while the overall market was again flat, there were again leaders.
That of course leads to questions about the market's ability to further
generate further upside, and indeed, it has lacked a major break higher --
if you discount NASDAQ and SOX. Both of those broke to higher highs of
late, and that is where the leaders are coming from.
SP500 -3.54, -0.15%
NASDAQ 5.27, 0.09%
DJ30 -22.81, -0.11%
VOLUME: NYSE -11%, NASDAQ -11%. Dipping back below average after a very
nice string of above average volume, at least on NASDAQ's rise. NYSE trade
is lower on its lateral move, also better price/volume action.
A/D: NYSE -1.3:1, NASDAQ +1.4:1. Flat as you would expect.
So, no change, just the same leaders moving higher, the same indices moving
higher (kind of), and the same indices not going anywhere. Still in
position to move, but not finding any reason to do so.
Even so, when the market is down early, its tendency is to move back to the
upside. Did it Wednesday, Thursday, and indeed Friday, though Friday was
all over the map before it recovered.
Okay, so it finds the upside bias thanks to a group of leaders, it just
still cannot find reason enough to capitalize on some good NYSE index
pullbacks. Keep looking for NASDAQ and SOX to pull them up, still not
Not necessarily an easy task with the economic data coming in, though the
Friday data was a bit better though still passable.
Retail Sales grow, but at a 2017 low.
Retail Sales, April: 0.4% versus 0.6% expected versus 0.1% prior
(from -0.3%). 4.5% year/year growth.
Control Group: 0.2% versus 0.4% expected versus 0.7% prior (from 0.5%).
Some upside revisions helped paper over some rather disappointing April
numbers. Retail sales are yes still growing, but this no consumption
renaissance. Sales were at the 2017 low. JCP, JWN same store sales
plunged. Plunged. Department stores are in a sad death spiral. Hardly the
stuff of legendary months.
CPI heads the opposite way of PPI
CPI: 0.2% versus 0.2% expected versus -0.3% prior. 2.2% year/year versus
Core: 0.1% versus 0.2% versus -0.1% prior. 1.9% year/year. This after 18
consecutive months over 2.0%, falling to a 19 month low.
So much for a stagflation argument -- this month. Thus far no pressure
pushing over from the PPI, and to be fair, often it does not cross over as
sellers try to absorb costs to avoid losing customers.
Ah, but that is kind of a lie isn't it? While they may not be raising
prices, they are 'getting even' in other ways. Have you noticed the
so-called silent inflation? You pay the same amount for an item to but the
package is slightly smaller or perhaps the same size but less contents? I
have noticed some manufactured products, while the same size, are 25% to 30%
lighter, using less steel to fabricate the same item. The thickness is
lessened, thus allowing for less material used. Of course it costs the SAME
as before, just made of less material. THAT is how manufacturers 'absorb'
the higher costs -- by passing them along to the consumer in a way other
than an overt price hike.
A similar inflation technique was used in the time of European kings and
monarchies: 'sweating' coins, i.e. putting coins in a leather bag and
violent shaking them to flake off gold from the coins, then collecting the
gold flakes and dust. The coin, after several sweating sessions, was well
short of the original amount of gold used to mint it.
So, yes, consumer inflation may appear low or lower, but it is all around
you, just not in the traditional price sense. So, once again we reveal that
the government numbers, the data painstakingly put together by the
professionals in the multitudinous government agencies is really not all
that helpful. Not knocking the job those people are doing, but I am
wondering why we are paying so many to put out data that does not accurately
measure what we are all experiencing. And believe me, those jobs will be
there long after all of the private sector jobs are burned away by events
such as the financial crisis and the 'recovery' we experienced the past 10
years. How on earth could the US have experienced such a great recovery as
we were told and still be losing more businesses per year than created? Of
course it cannot. Again, it is just numbers manipulated to make everyone
SOX: Modest gain but nonetheless continuing the Wednesday gap to a new
post-2000 high. The chips continue as one of the best leadership groups,
rallying again after a bit of volatility during the late April/early March
NASDAQ: NASDAQ gained modestly Friday, continuing the move up the 10 day
EMA after its breakout to a new high in late April. NASDAQ has slowed its
ascent, but the move remains as the same leadership stocks continue to show
gains as noted at the first of the report. FAANG and friends still
garnering the bids.
SP500: Lower Friday, still fading from the high set just a week before.
SP500 gapped and rallied higher in late April, consolidated, rallied
modestly higher, and is not consolidating again, holding near the 10 day
EMA. Still in excellent position to make a new break higher. Still of
course waiting for that to happen. Friday C looked better; perhaps it can
lead a group of financials and thus help the SP500 make a breakout.
DJ30: Tight doji Friday at the 20 day EMA as the Dow tests back from its 2
week lateral consolidation. This perhaps is the shakeout that finally
launches DJ30 higher out of its three month consolidation.
SP400: The midcaps struggled to close the week after looking so good
Wednesday as they attempted a break higher. Once again that failed, and
they are at the 50 day MA's. Possibly a double bottom at that level that is
also at the 50% Fibonacci retracement of the April rally. Okay, the midcaps
tried an inverted head and shoulders that didn't pan out. put in a double
bottom that broke higher, and now are testing that move with another double
RUTX: Same action as the midcaps, fading the hew high the past 2+ weeks,
falling to the 50 day MA's and 50% Fibonacci retracement Friday. That makes
for a small double bottom similar to SP400 and now we see if RUTX can make a
new upside break.
Chips: AVGO breaking sharply higher. MXL ditto. Many quality stocks here
looking very good.
China: Another group that was strong, got a bit shaky, and now is looking
mostly good. BITA, VIPS, YNDX, SINA. SOHU is kind of the monkey in the
wrench, and NTES failed to hold an initial nice move on earnings.
FAANG: FB is in good shape to move and we are putting on a new play. AMZN,
AAPL, NFLX all moved well Friday and indeed on the week. GOOG was resting
with a nice 1-2-3 pullback to the end of the week.
Internet: Saw some rocks to end the week. LLNW surged Thursday but purged
to the 10 day EMA Friday. BCOR is still fine. GOOG looks good. VIPS up
big all week.
Machinery: Weaker to end the week but not bad at all with good test that
might set up good buys, e.g. CAT, CMI.
Oil stocks: Still setting up some decent patterns. HFC looks very good for
us. GPOR is set up well. JONE is slipping. BTE, however, is setting up
Retail: Still Anti-leadership as JCP dove lower, JWN down even harder. M
still falling. For the non-department stores, WMT is testing a nice move,
AMZN is still moving up. Eateries are testing nicely, e.g. WEN, SONC.
Stats: -22.81 points (-0.11%) to close at 20896.61
Stats: +5.27 points (+0.09%) to close at 6121.23
Volume: 1.74B (-11.22%)
Up Volume: 806.58M (-16.83M)
Down Volume: 907.31M (-202.69M)
A/D and Hi/Lo: Decliners led 1.38 to 1
Previous Session: Decliners led 1.73 to 1
New Highs: 118 (-3)
New Lows: 76 (+14)
Stats: -3.54 points (-0.15%) to close at 2390.9
NYSE Volume: 768.9M (-10.7%)
A/D and Hi/Lo: Decliners led 1.28 to 1
Previous Session: Decliners led 1.61 to 1
New Highs: 74 (-9)
New Lows: 41 (-2)
VIX: 10.4; -0.2
VXN: 12.3; -0.46
VXO: 9.56; -0.35
Put/Call Ratio (CBOE): 0.85; -0.06
Bulls and Bears: Despite the negativity, bulls rose and bears fell. Again,
still near that 60 level that has launched selloffs in the past, and there
is that string of 60+ closes still hanging over this rally. A return to 60+
would have us looking at a possible end to the upside after SP500, DJ30
break higher from their current pullbacks. Of course, with the rallying
bulls it could be that they don't breakout.
Bulls: 58.7 versus 58.5
Bears: 17.3 versus 17.9
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: 58.7 versus 58.5
58.5 versus 54.7 versus 51.9 versus 56.3 versus 55.8 versus 49.5 versus 56.7
versus 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
Bears: 17.3 versus 17.9
17.9 versus 17.9 versus 18.3 versus 17.5 versus 18.3 versus 18.1 versus 17.3
versus 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
Bonds (10 year): 2.34% versus 2.393%. Bonds certainly rallied Friday after
trending lower all week. Gapped higher and moved back through the 50 day
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.393%
versus 2.401% versus 2.394% versus 2.381% versus 2.354% versus 2.322% versus
2.289% versus 2.322% versus 2.30% versus 2.31% versus 2.33% versus 2.275%
versus 2.236% versus 2.234% versus 2.21% versus 2.15% versus 2.248% versus
2.232% versus 2.264% versus 2.30% versus 2.36% versus 2.37% versus 2.34%
versus 2.33% versus 2.34% versus 2.33% versus 2.35% versus 2.40% versus
2.41% versus 2.382% versus 2.418% versus 2.376% versus 2.40% versus 2.41%
versus 2.40% versus 2.43% versus 2.463% versus 2.50% versus 2.529% versus
2.502% versus 2.602
EUR/USD: 1.09328 versus 1.08665. Euro makes a big jump higher off the 20
day EMA test. Still ready to continue the break higher.
Historical: 1.08655 versus 1.08671 versus 1.08843 versus 1.09286 versus
1.09994 versus 1.09086 versus 1.08923 versus 1.09284 versus 1.090984 versus
1.08987 versus 1.08691 versus 1.09093 versus 1.09358 versus 1.08449 versus
1.07255 versus 1.07255 versus 1.07188 versus 1.0717 versus 1.07304 versus
1.06431 versus 1.06138 versus 1.0671 versus 1.06068 versus 1.05984 versus
1.05906 versus 1.0645 versus 1.06760 versus 1.06804 versus 1.06702 versus
1.06584 versus 1.06855 versus 1.07546 versus 1.0815 versus 1.08640 versus
1.07894 versus 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
USD/JPY: 113.349 versus 113.759. Modest test of the 10 day EMA after the
nice run higher.
Historical: 113.759 versus 114.263 versus 113.771 versus 113.217 versus
112.683 versus 112.495 versus 112.782 versus 112.779 versus 111.793 versus
111.524 versus 111.197 versus 111. 177 versus 111.234 versus 109.704 versus
110.022 versus 109.00 versus 109.357 versus 108.974 versus 108.525 versus
109.150 versus 109.170 versus 108.926 versus 109.691 versus 110.704 versus
111.096 versus 110.85 versus 110.794 versus 110.705 versus 111.386 versus
111.255 versus 111.114 versus 110.581 versus 111.335 versus 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
Oil: 47.84, +0.01. Up on the week though flat Friday, sitting right at the
March lows. Some resistance is there.
Gold: 1227.70, +3.50. Modest bounce Thursday and Friday toward a 10 day
EMA test. Gold still under pressure.
Empire manufacturing Monday. Housing starts, Industrial production and
Capacity Tuesday. Philly Fed to end the week. A bit lighter on the
economic data front. Even earnings are winding on down.
Looks as if the market will be more or less on its own as the NYSE indices
try to follow the path of NASDAQ and SOX, i.e. to higher highs and actually
make them stick.
At the risk of sounding like a broken record, there are still a lot of good
setups out there, a lot of good leaders, at least the stocks we are
following and playing. There are of course many out there doing nowhere,
but there is potential for more to follow as this consolidation is allowing
more stocks to carve out good patterns. Oil stocks, for example, are trying
to make a new move to the upside. Machinery is setting up to rally again
just as chips and China stocks after they suffered a hiatus and some
With plenty to choose from we will continue playing the stocks that are
making moves with the trend. Of course with the NYSE indices again in a
lateral to lower consolidation there is a lot of negativity about the
market's future. As noted last week, that type of sentiment is a positive
for the upside. I recall Tepper being nervous and the market bottoming and
surging. Gundlach is shorting. We will see. I will say when Tepper made
his comments NASDAQ was not punching out new highs.
Now don't get me wrong. Gundlach is very smart and may be right. The thing
is, the market is not showing it yet. Sure leadership is narrower than you
like, but it is also trying to expand some. Yes the stocks moving higher
are a limited group, but they are solid stocks and the indices are not
flopping. That said, this is no broad, lift all boats kind of move. So, we
play the upside because it is paying off, but you always watch for failed
breakouts, good moves that reverse, etc. as a normal course of watching the
market, even more so when leadership is a bit narrow.
Some great plays from a wide swath of sectors. Somewhat belies the
narrowness argument, but it is true the move upside is narrower than not.
Okay, so we play the stocks that are moving.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6121.23
The 10 day EMA at 6092
5937 is the all-time high from April, hit intraday
The 50 day EMA at 5937
The 50 day SMA at 5930
The 2016 trendline at 5835
5800 from the February consolidation lows
5661 is the late January upper gap point
5601 is the January lower gap point
The 200 day SMA at 5521
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
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
S&P 500: Closed at 2390.99
The 2016 trendline at 2419
2401 is the March 2017 all-time high
The 50 day SMA at 2368
The 50 day EMA at 2364
2329 is the March and April twin lows
2322 is the March 2017 low
2319 is the 78% Fibonacci retracement
2301 is the late January 2017 high
2298 is the late January 2017 high
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The 200 day SMA at 2252
The November 2016 all-time high at 2213.25
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
Dow: Closed at 20,896.61
21,169 is the March 2017 all-time high
The 50 day SMA at 20,787
The 50 day EMA at 20,724
20,412 is the March 2017 low
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 19,510
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.
End part 1 of 3
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