Sunday, May 07, 2017

The Daily, Part 1 of 3, 5-6-17

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5/6/2017 Investment House Daily
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annotations will issue Wednesday, Weekend.

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Tuesday and Thursday reports will contain the market summary, chart links to
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- Modest breaks higher Friday look positive for a new breakout, but still
waiting on the French.
- Jobs Report looks better, but without any real economic changes, the same
issues remain.
- SP500 posts a new high, NASDAQ bounces after two day's rest. Trying to
lead higher.
- The stage is set for the next move higher, now we see if the world

There were indeed signs of life Friday in the NYSE indices that had appeared
to be terminally bored to death. SP500, SP400, RUTX put for the respectable
moves off the lows in their pullbacks. Even DJ30 did pretty well
considering IBM was another massive drag upon that index with a 2.5% loss
after Buffett revealed he had sold a third of his position (and since then I
would bet he has sold more of his position but that won't be revealed until
he absolutely has to).

They were not huge breaks higher, but they were showing the right moves as
SP500 cleared the highs in its 2 week lateral consolidation. Volume was
lousy, but we will give it a pass on that for the session.

SP500 9.77, 0.41%
NASDAQ 25.42, 0.42%
DJ30 55.47, 0.42%
SP400 0.83%
RUTX 0.59%
SOX 0.42%

VOLUME: NYSE -17%, NASDAQ -8%. Trade fell to just below average on NYSE,
held just above average on NASDAQ.

A/D: NYSE 2.6:1, NASDAQ 1.4:1. Nothing spectacular, but we also expect
NASDAQ to be a bit weaker than the NYSE because NASDAQ rallied nicely and is
testing while the NYSE indices are attempting a break higher.

Perhaps the jobs report at 211K versus the 180K expected and the paltry 79K
from March was actually a catalyst. I don't think it hurt, but if it was a
catalyst, it didn't have investors jumping for joy. Maybe in combination
with the House passing a healthcare reform bill Thursday and oil not diving
lower for a session it was able to help cobble together a move perhaps help
some new breaks higher in the NYSE indices.

Interesting that the market did hold onto gains ahead of the French election
Sunday. The belief is very US 2016-like in that everyone believes Marcon is
a sure bet, primarily because the polls appeared to be an accurate gauge in
the initial election. Could be, but I am reading a lot of on the ground
reporting about how many groups from the LGBT to the small businesses prefer
Le Pen over the perceived establishment banker candidate. We will see. If
Le Pen does win, then the markets may have a Frexit fit.

As of the Friday close, however, the US markets appeared comfortable with
the lay of the land. The Fed saw the recent economic data slowdowns as
transitory and thus stuck to its rate hike guns. Oil reached way down to
the November, September, and May lows, really the support in its trading
range, and rebounded to positive. Oil could very well be at the bottom of
its range and prepping for a bounce. Despite comments that healthcare was
DOA in the Senate, the House did pass a bill and the Senate will work on its
own bill. The process is in the process of working. Good thing it is.
Maryland's insurer just filed seeking at 50% premium increase in 2018.

Jobs Report

211K versus 180K expected versus 79K March (from 98K)

Unemployment: 4.4% versus 4.6% versus 4.5% prior

Average earnings: 0.3% versus 0.3% expected versus 0.1% March (from 0.2%)
Year/year: 2.5% versus 2.7% March.

Workweek: 34.4 versus 34.3 March. Positive, positive.

Participation: 62.9% versus 63.0% March
94.375M working aged people not in the workforce. Highest level in 2017.

Where the jobs are:
Leisure and hospitality: 55K
Healthcare: 37K
Professional and Business Services: 39K
Food Services: 26K
Mining: 9K
Retail: +6.3K (from -27K March, -29K February)
Manufacturing: 6K (from 13K March)
Manufacturing, Construction, Wholesale Trade, Longshore/Dock: All basically

Okay, okay. The $10B question. How with a 4.4% unemployment rate, called
'full employment by many, are wages unable to rise?

Answer: It is the kind of jobs created. Retail returned to positive growth,
but that is a low-wage category. Leisure and hospitality, Food services
combined for 81K. Business services saw 9.9K of those jobs (25%) go to
'services to buildings and dwellings.' As one commentator put it, more
doormen were hired.

These jobs still dominate, and indeed in April they became a larger
percentage of all jobs as they have been for years. March, despite its
lower overall jobs numbers, was qualitatively better as the jobs created
were a much higher percentage of better paying jobs. What does that mean?
The better paying jobs are still not very plentiful, and the swing jobs are
the lower paying jobs in retail and similar sectors.

Thus, even with lower unemployment you get lower wages because those taking
the jobs are taking lower paying jobs, dragging down the hourly average.

Again that begs the question: are more jobs necessarily better, do they show
true economic recovery? If you compare to the jobs lost in the 2007-2009
recession, no. Replacing quality, well-paying jobs with low quality,
low-pay jobs is NOT an equitable trade. Thus all of the gloating about the
jobs created the past 10 years is bunk. We need to create standard of
living improving jobs, and that is where tax, healthcare, and regulatory
play a huge role. Time to get them done and time to start growing real



SP500: A new all-time closing high Friday as SP500 cleared the April/May
flat range/handle. Nice price move but volume lagged, falling back below
average. Okay, not a clear launch higher and Monday is more of a litmus
test after the French election, but it certainly made the right move and
rather timely given the 10 day EMA had just caught up with SP500 Wednesday
and Thursday.

DJ30: Broke higher but could not clear the range as IBM weighed on the Dow
once again. Moved higher up off the 10 day EMA, a good hold of support it
found Wednesday, but there was no volume power here either. Still looks
solid, just needs to expand the move this week.

SP400: Nice doji with tail at the 50 day MA's, Thursday followed by a gap
higher and a close at the session high Friday. Much lower in the handle
formation than SP500 or DJ30, so a 0.83% move did not bring it anywhere near
the prior highs. It did bounce where it technically should have, however.

RUTX: After the Thursday doji that tapped the 50 day MA's on the low and
rebounded, Friday saw some upside as RUTX moved over the interim highs in
the base as well as the tops of the December/February trading range. Held
at an important support level, decent bounce. Now it has to really deliver
upside this week.

NASDAQ: Gapped lower Wednesday but easily held over the 10 day EMA. Friday
NASDAQ gapped back upside edged to a new closing high. Not much of a
rest/test, but NASDAQ did pause. It may want to lead higher from here if
all things remain equal, e.g. the French election.

SOX: Did not really participate in Friday's modest bounce. Upside yes, but
more working laterally over the 20 day EMA than breaking higher, at least
not yet.


Oil stocks: Some may be working on setting a relief move, e.g. BHI, APA,
BTE. We are watching them.

Semiconductors: Still very mixed but some good moves. XLNX, PXLW, SIMO,
BRKS all worked decently to very well on the week. PLAB remains set to move
higher again. AVGO broke higher.

Internet: Continues its strength. BCOR put on a strong showing for us.
LLNW is bouncing off a nice 1-2-3 test. EXPE enjoyed a strong week as did

Biotechs/Drugs: Struggling as many of the prior leaders are trying to hold
onto bids, e.g. CNAT. AUPH still holds a good pattern.

Retail: Still moving higher including the department stores (e.g. DDS,
JWN). DLTR, DG pausing after a move though WMT continues higher. EBAY is
hanging on while AMZN puts in a good 10 day EMA test to set up the new leg
higher. RH gaped higher Friday.

Financial: Promising, but still not making the moves, e.g. JPM. C, BAC did
break higher midweek but stalled out some to end the week. Others in asset
management look good, e.g. KKR.

FAANG: FB testing the 10 day EMA in a rather normal move. AAPL announced
earnings, tested the 10 day EMA, then Friday was at a new all-time high.
AMZN putting in a nice flag test. NFLX rallied nicely on the week though
off some Friday. GOOG rested Friday but enjoyed a very strong week as it
extended its earnings run.

Machinery: Tested a bit deeper but the bases are still good, e.g. CMI, CAT.


Stats: +55.47 points (+0.26%) to close at 21006.94

Stats: +25.42 points (+0.42%) to close at 6100.76
Volume: 1.9B (-7.77%)

Up Volume: 1.29B (+391.16M)
Down Volume: 582.97M (-547.03M)

A/D and Hi/Lo: Advancers led 1.39 to 1
Previous Session: Decliners led 1.17 to 1

New Highs: 183 (+46)
New Lows: 75 (-7)

Stats: +9.77 points (+0.41%) to close at 2399.29
NYSE Volume: 826.7M (-17.33%)

A/D and Hi/Lo: Advancers led 2.62 to 1
Previous Session: Decliners led 1.76 to 1

New Highs: 183 (+40)
New Lows: 28 (-67)


VIX: 10.57; +0.11
VXN: 12.31; +0.13
VXO: 9.93; -0.63

Put/Call Ratio (CBOE): 1; +0.09. 2 of the last 3 days were 1.0 or better.
A little market lateral movement and the put buyers rush in.

Bulls and Bears: Somewhat disconcerting to see the bulls charging back near
60 so quickly. That string of 60+ closes is still hanging over this rally,
and 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: 58.5 versus 54.7

Bears: 17.9 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: 58.5 versus 54.7
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: 17.9 versus 17.9
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): 2.354% versus 2.322%. Holding at the 50 day SMA with a
doji. The FOMC indicated all is 'go' for a June rate hike. Bonds
predictably sold but then held the 50 day, looking as if they want to try a
bounce. For some reason, perhaps economic data, bonds are not breaking down.

Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.09994 versus 1.09086. Euro continues the breakout versus the
dollar. Now would it not be rather hilarious of Le Pen won the French
election. The euro would reverse violently.

Historical: 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: 112.683 versus 112.495

Historical: 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: 46.22, +0.70. Oil reached way down to 43.80 then reversed to a gain.
It tested the lows in the range from November 2016 and reversed. An upside
roll in the range looks very possible.

Gold: 1226.90, -1.70. Gapped lower and sold Thursday, unable to hold a
bounce Friday. Gold has gapped sharply lower through support and does not
look well.


Friday gave the appearance the NYSE indices were ready to make the next
break higher. SP500 led the move with a solid advance through the highs of
the recent range. That was about all there was. That is not bad, but a
Friday move on lighter volume is not necessarily a harbinger of a continued
and stronger move the following week.

That is true, but then again, the market is not giving up the moves.
Indeed, it has consolidated in a tight range and is starting to break
higher. NASDAQ even bounced upside after a very brief respite. The right
kind of moves off this setup. Now will they still be there Monday post
French election and continue higher?

We have some great upside plays we are looking at to start the week. It
even looks as if some oil stocks will be ready to move as the week
progresses, predicated in large part on oil's selloff to the bottom of its
range. There are indeed several possible sectors to help push the market
higher if the status quo, and that includes the French election, continue
falling in place.

Have a great weekend!


NASDAQ: Closed at 6100.76


The 10 day EMA at 6046
5937 is the all-time high from April, hit intraday
The 50 day SMA at 5904
The 50 day EMA at 5897
The 2016 trendline at 5801
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 5495
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 2399.29

2401 is the March 2017 all-time high
The 2016 trendline at 2409

The 50 day SMA at 2366
The 50 day EMA at 2357
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 2246
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 21,006.94

21,169 is the March 2017 all-time high

The 50 day SMA at 20,784
The 50 day EMA at 20,675
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 19,449
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 highs

End part 1 of 3
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