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5/19/2017 Investment House Daily
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Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: BITA; EXAS; SOHU
Entry alerts: BTE; TSRO
Trailing stops: MU; PXLW
Stop alerts: BLUE; SWIRs
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alerts relating to the general market conditions, when stocks hit action
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The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
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TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
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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
- Market rebounds Thursday and Friday as political intrigue dies down but
resurfaces late week.
- Fed's Bullard spouts off about too aggressive rate hikes, economic data
very mixed, Comey melodrama continues.
- Volume solid on recovery, but the indices and several leaders are not that
convincing on the bounce.
- Still some solid leaders and the indices have shown what looked to be
downside breaks before only to recover.
Stocks bounced again, but outside of a few of the same leaders and some new
ones, the moves simply were not convincing. Not convincing, that is, in the
sense new highs are to come on this particular move.
Futures started higher, stocks rallied, and the move held into
mid-afternoon, indeed putting in higher highs to that time. James Bullard
of the Fed was talking, always a mistake, and, among other things, noted
market expectations of rate hikes were "too aggressive," and he even
ventured that more QE was a possibility. Well why not rally?
Then the daily dose of White House leaks arrived, this one from another
anonymous source claiming to have seen notes taken from the meeting between
Trump and the Russian representative where Trump called Comey, among others,
a nut job, and said basically Trump was now free to do whatever. I have to
say, I am not a Trump fan nor a Clinton fan, but I have a hard time
believing either would have done the things attributed to them by the
opposition. You just don't get to where they are being so blatantly stupid.
But, that didn't matter for Clinton in the election and it apparently does
not matter for Trump now.
As for the market, perhaps this was what threw the monkey wrench in the
moves higher. Fading chances of tax reform, healthcare reform, regulatory
reform does remove the lion's share of the reason for rallying.
SP500 16.01, 0.68%
NASDAQ 28.57, 0.47%
DJ30 141.92, 0.69%
SP400 1.01%
RUTX 0.46%
SOX 1.09%
VOLUME: NYSE +3%, NASDAQ -10%. NASDAQ trade fell but remained above
average, where NASDAQ has traded most of the past two months on the way up.
That shows a lot of buying. There was a distribution session Wednesday on
that selling, but the market can survive a single distribution day and
continue.
NYSE trade edged higher and was still solidly above average. The last three
sessions of the week were all above average after NYSE trade flipped back
and forth but mostly on light trade before that. Interestingly, volume was
stronger Thursday and Friday than the selling volume Wednesday. Thus, there
was distribution Wednesday, but buying in the wake of that session. Again,
one day typically does not kill a rally though on NYSE, the volume was not
all that stellar on the way up, certainly not the NASDAQ level.
It was also expiration so some volume is attributable to that given there
were violent moves ahead of expiration, necessitating further moves to
adjust positions.
A/D: NYSE 3:1, NASDAQ 1.8:1. Not bad breadth on NYSE as the midcaps posted
a decent move.
CHARTS
The Index action was on some good volume and in the case of NYSE indices, on
solid enough breadth. Two days up in response to the distribution reversal
selling Wednesday is not a bad response. The problem arises in the
technical look. All of the indices rebounded, SP500 and DJ30 recovering the
50 day MA's. NASDAQ bounced from above the 50 day MA's. SP400 never broke
back over them. SOX was never in trouble in terms of breaking support; it
bounced off the 20 day EMA though it was not immune from the Wednesday
distribution session.
The issue is where it leaves the indices heading into next week: A big break
lower with distribution, coming off new highs for SOX, NASDAQ, and SP500,
and no index recovering the losses. It has the look of a rebound in relief
but not a false break lower and then reversal to propel back to new highs.
That said, this has happened before, i.e. technical hiccups that looked very
damaging but then the buyers just outmuscled the sellers. Happened in
November 2016 when NASDAQ moved to a new high then was rocked on high
volume. Held, rebounded, recovered new highs. In late January 2017 there
was that island reversal that did not reverse. A new high in March was sold
hard, but again NASDAQ held the 50 day MA in an 8 week consolidation and
broke to new highs in April.
Of course at some point the magic lamp fails to light. This is another
opportunity for the buyers to show they still want to buy, that there is
still confidence at some level in the ability of the government to pass some
tax, healthcare, and regulatory reform in one shape or another.
LEADERSHIP
As a market participant, not only is it the index action, but what you need
to focus on is the action in leadership stocks even more so than the action
in the indices. Many leaders broke to higher highs just ahead of the
Wednesday selling only to face serious reversals downside. AAPL, AMZN,
NFLX, GOOG, AVGO, AMAT, MSFT, TSLA, RHT. All of these stocks hit higher
highs but then reversed. Some are recovering decently but even so they
still have not put that sharp downside session behind them.
Breakouts that reverse is a key element to watch in determining market
health. How these 'name brand' leaders perform in the aftermath of that
reversal will tell a lot. Moreover, it is not just those stocks. Many of
the market leaders in chips and elsewhere suffered the same type of action,
and how they recover is equally important.
Oil stocks: Still trying to become new leaders. BTE broke to a higher high
on better volume, coming off the lows. JONE looks similar. GPOR is setting
up. Others are acting that way but not as good yet, e.g. MRO, CVX.
China: Already leaders. SOHU and BITA surged to initial targets Friday.
NTES held its ground and pattern on a volatile week. BABA sold and
reversed. YNDX bounced off a quick 20 day EMA test.
Drugs: Trying to move off some good patterns but struggling to hold moves,
Friday is a case in point. NVAX looks good. CGIX is setting up. PCRX is
down but still looks good. AUPH is similar. SRPT started higher, had a
hard time holding up Friday, still solid. The theme: still solid but still
struggling to hold the move.
Semiconductors: Struggled but still showing leadership qualities. AVGO up
and down but holding its move and trying to form up for a new move. LSCC in
excellent position to break higher. NVDA gapped back upside to challenge
the Tuesday new high. XLNX is at a new high, ignoring the selling. ON,
NPTN decent enough. SIMO sold off but then surged off the 50 day MA Friday.
Not all are as nice. SLAB, PLAB hit hard times. PXLW is too volatile.
Still showing some buying; will know more this week.
FAANG: Mixed. AAPL, AMZN not bad. FB trying to make a break off the 50
day MA. NFLX, GOOG rebounded from selling but show patterns similar to the
indices.
NOTE: The drugs and medical stocks do not look bad at all. Oil stocks are
attempting to set up. Chemical stocks are not bad. China continues solid
as do many chips. What the market MIGHT be showing is some rotation OUT of
the initial leaders that pushed NASDAQ to those consecutive, day after day
highs. Thus we need to be open to the possibility of these stocks fading as
simply a part of the market still moving upside, just with some other
leaders while these pull back and take a breather.
MARKET STATS
DJ30
Stats: +141.82 points (+0.69%) to close at 20804.84
Nasdaq
Stats: +28.57 points (+0.47%) to close at 6083.7
Volume: 1.91B (-10.33%)
Up Volume: 1.35B (-30M)
Down Volume: 517.08M (-201.72M)
A/D and Hi/Lo: Advancers led 1.75 to 1
Previous Session: Advancers led 1.36 to 1
New Highs: 102 (+51)
New Lows: 58 (-50)
S&P
Stats: +16.01 points (+0.68%) to close at 2381.73
NYSE Volume: 1.08B (+2.86%)
A/D and Hi/Lo: Advancers led 2.95 to 1
Previous Session: Advancers led 1.04 to 1
New Highs: 98 (+60)
New Lows: 43 (-35)
SENTIMENT INDICATORS
VIX: 12.04; -2.62
VXN: 13.86; -1.8
VXO: 11.07; -1.62
Put/Call Ratio (CBOE): 0.99; -0.14. The week saw the ratio jump back over
1.0 Wednesday and Thursday. This is an inverse indicator, i.e. when there
are more puts traded than calls it starts indicating selling is over. It
has to have a series of such closes to mean anything, e.g. 8 to 10.
Bulls and Bears: Bulls faded slightly but not much. Of course the
Wednesday market drop is not factored into these numbers. It will next
week, but that does not change the fact of the string of 60+ closes from
early 2017. That level typically results in selling at some point.
Bulls: 58.1 versus 58.7
Bears: 17.1 versus 17.3
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: 58.1 versus 58.7
58.7 versus 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 versus 45.2
Bears: 17.1 versus 17.3
17.3 versus 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
OTHER MARKETS
Bonds (10 year): 2.233% versus 2.229%. Bonds surged on the week,
particularly Wednesday. Makes sense given the uncertainty. Overall, bonds
are still suggesting issues, e.g. the economy here in the US is just not
that good despite some super huge companies reporting super huge earnings.
Most people do not work for those companies.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.229%
versus 2.223% versus 2.32% versus 2.34% versus 2.34% versus 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: 1.12077 versus 1.10985. After a one-day pause Thursday, the euro
rallied to a new recovery high, up 4 of 5 sessions on the week and extending
the breakout after that mid-month test.
Historical: 1.10985 versus 1.11557 versus 1.10862 versus 1.09833 versus
1.09328 versus 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: 111.271 versus 111.584. Dollar trying to hold at the 200 day SMA
after bombing lower Monday and Tuesday.
Historical: 111.584 versus 111.167 versus 112.414 versus 113.074 versus
113.749 versus 113.349 versus 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
Oil: 50.67, +1.01. Oil was up all week, its second week of gains. Moved
through the 200 day SMA Thursday after a pause below that level. Friday a
strong break higher again. Oil continues its rally higher in its range.
Gold: 1253.60, +0.80. Gold broke through the 200 day SMA Wednesday during
that turmoil. Paused Thursday, sold Friday, reversed to hold the 200 day.
Rallied, paused, resumed.
MONDAY
The market certainly took on water Wednesday and did not redeem itself
through Friday. The indices are still trying to swim back upstream. Many
leaders such as NFLX, GOOG mirror that action, up but not strong. Many
other leaders, however, sport very good recoveries or did not fall victim to
the selling in the first place.
So, there are still leaders that look good and sectors that look very good.
Still, the fact that many leaders reversed hard off of new highs, and some
indices as well, raises a caution flag to see how the market responds this
week. In the past it has shrugged off these kind of half-weeks and
continued. Now with the insane, hyperventilating political news
environment, it is especially something to watch. Indeed, the latest story
today is that Comey is now changing his mind about whether there was
attempted political influence. Of course Comey lost whatever credibility he
had during the election by stepping in when he should have just done his job
quietly. Either he is truly a 'nut job' or he is just getting the same
treatment everyone in DC is getting these days.
The end result? It is up to the market to show if it will shake off these
issues and again overcome a market jolt. We have upside positions working
well. We have upside plays that look good if they can show the move. We
have more upside this weekend. We also have downside plays ready to go and
more this weekend. PWR turned in a great downside gain for us; we closed it
Thursday as it showed a bit of life after a 2+ week drop through the 200 day
SMA as we held May options.
As usual, you follow the leaders' lead, playing a bit cautiously right now
given the market jerky moves, but still recognizing good patterns and
potentially emerging leaders. Oil stocks look pretty darn solid in many
cases despite surging US production and more rigs churning; heck, there are
two rigs in my area and one well just completed. Nonetheless, these stocks
are setting up and moving higher. We picked up some BTE Friday and like
JONE if it can hold the move.
Okay, those are specifics. Overall the market has to prove it can hold and
move higher gain, but it does have groups trying to emerge even as it
struggles. Perhaps that is simply some rotation from the big names that
have led the move to this point, perhaps it is more insidious for the upside
than that. It is a positive there are new groups trying to improve and
others still working well, and we will see how the market shakes out this
week.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6083.70
Resistance:
The 10 day EMA at 6088
6170 is the recent all-time high
Support:
5996 is the recent May 2017 low
5937 is the all-time high from April
The 50 day EMA at 5965
The 50 day SMA at 5954
5915 is the tops of the March to April 2017 range
5910 is the lower gap point from mid-April
The 2016 trendline at 5864
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 5544
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 2381.73
Resistance:
The 2016 trendline at 2419
2401 is the March 2017 all-time high
2406 is the all-time high from May 2017
Support:
The 50 day SMA at 2369
The 50 day EMA at 2367
2352 is the recent May 2017 low
2348 is the April 2017 lower gap point
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 2257
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
Dow: Closed at 20,804.84
Resistance:
21,169 is the March 2017 all-time high
Support:
The 50 day SMA at 20,775
The 50 day EMA at 20,738
20,553 is the lows of the week of May 15
20,547 is the lower gap point from late April 2017
20,412 is the March 2017 low
20,400 is the mid-April 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
19,732 is the January 2017 low
The 200 day SMA at 19,571
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
End part 1 of 3
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