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7/15/2017 Investment House Daily
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Investment House Daily Subscribers:
Targets hit: None issued
Entry alerts: AMGN; DVAX
Trailing stops: None issued
Stop alerts: None issued
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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
prepare for the next session, we will of course issue those plays regardless
of the day of the week.
- Economic data limps in, giving the Fed's new normal dovishness support.
- Stocks take solace, embracing 'bad is good' once again.
- No volume, lousy breadth, new highs for DJ30, SP500, RUTX.
- Thus far rotation is helping all, hurting few. Earnings are coming and
may change that.
Friday saw more weak economic data from the CPI to Retail Sales. I suppose
you can conclude the Fed had this data before Yellen's return to not so
lonesome dove status in her Wednesday congressional address.
The market returned as well, i.e. returned to the 'bad is good' mindset.
Why not? The Fed has its back for economic AND political risk as learned
Wednesday. So, bad news equals good news equals buy.
That sent DJ30 to another new high as SP500 and RUTX joined it. NASDAQ and
SP400 are very close as well. A new normal in normalization of rates and
all is well again in terms of buying stocks.
SP500 11.44, 0.47%
NASDAQ 38.03, 0.61%
DJ30 85.65, 0.39%
VOLUME: NYSE -12%, NASDAQ -11%. Amazingly low volume. Yes, yes, it is
summer and vacation time, but you would think the Fed's 'run to the light'
capitulation this week trade would perk up a bit.
Advance/Decline: NYSE 2.5:1, NASDAQ 1.3:1. Seriously? NASDAQ is punching
at a new high and breadth is not even 3:2? Trying to figure out how NYSE
breadth hit 5:2 given the weak gains in small and midcaps. Suffice it to
say, breadth was a putrid as volume on this move. But, in a 'ignore the
dangers, enjoy the ride' Fed and PPT-induced rally, who cares, right?
It really does appear as if the Fed and the government (through the Plunge
Protection Team established under Reagan) will do anything to keep stock
markets higher. Why? Because likely they know that if this rally ever
stops and the algos that run the big buys and sells (versus the fund
managers that used to move the markets) flip their bias, the selling would
be historic in its descent, both in rate and magnitude.
It appeared the FOMC was on a 'bold' road to normalization. A steady,
methodical pace of modest rate hikes and a reduction in the ballooned
balance sheet thanks to buying any and all junk the financial markets
produced during the financial crisis and beyond.
Ostensibly this was keeping in step with an improving economy, though as we
pointed out for the past several months, the economic activity is not
improving. The reality appeared to be the Fed realized it was way behind
the curve, and if the domestic political and geopolitical stage continued to
worsen in addition to weakening economic data (to which the Fed would not
admit), the Fed did not have enough silver bullets to forestall any new
crises that might threaten the power of those in power. Thus, the need to
Then something happened. The data was worse than expected, even worse than
the Fed could gloss over. Jobs beat expectations and that is always good
for an excuse to look the other way, but jobs lag economic activity, and of
course the jobs report these days, similar to most government economic
reports, is hardly a representation of reality. Wages were still bad,
almost 100M (and some say over 100M) working aged are out of the workforce,
GDP was weak and saw corporate profits (as measured by IRS payments) fall,
retail sales fell for a second month, Inflation remains weak (at least
according to the government), and of course the President's healthcare
reform and tax cut agenda is at best in limbo.
Wednesday Chairman Yellen produced a much more dovish economic assessment
for Congress, lowering the Fed's GDP expectations.
So, no bold move back to normalization of rates? No, just the way the
government normalizes these days: CHANGE THE DEFINITION of normal.
Apparently permanently low growth rates and low interest rates are the Fed's
new normal. As with what you hear from many in Congress and 'expert'
economists, US economic growth is now permanently mired at European levels.
This has been said before about the US. Back in the 1970's when the US went
through stagflation and other woes thanks to overregulation, many said the
US economy was a nice experiment, had a good run, but it had run its course.
Then Reagan came along, implemented pro-growth policies, reduced regulation,
returned the power regarding investment decisions (in other words, money)
back to the people, and voila, a 20 year boom started.
The US population ran full circle from free markets and the boom they
produced to largess and entitlement expectation in the almost 40 years since
the Reagan era that Clinton helped keep alive with some good policy
decisions that overcame bad policy decisions, at least for awhile. After 8
years of massive, massive regulation and taxation, the votes came in for a
return to again freer markets, less regulation, less taxation.
The sad thing is, the Administration's propensity to self-inflict wounds
combined with an organized and motivated opposition and an utterly hapless,
power-consumed Congress has road-blocked what most people in the US want:
less regulation, less taxation, and a return of the power regarding
important life decisions such as healthcare.
Thus, perhaps Yellen's and the FOMC's read on the outlook is correct.
Realizing the politics are swinging against any real reform, the Fed was
compelled to adjust its view, fearing that in Yellen's twilight the markets
might actually roll over because of the political obstacles blocking what
sparked the November to early Summer stock market rally. Yellen cannot have
that blemish on her record just before Trump appoints another for the Chair.
Alas, the Fed is political as well. Who would have thought?
The upshot, however, is the Fed again has the market's back. It was
comfortable with letting the market correct a bit, but with these new
potential perils to Yellen's legacy it is taking no chances. So, the Fed
now has the market's back for economics and politics. And Yellen's legacy.
Of course the market responded upside. A new high for DJ30 on Wednesday,
the day of Yellen's new normal. SP500 and RUTX joined in with new all-time
highs on Friday. NASDAQ and SP400 midcaps are knocking on the new high
Excruciatingly light volume and not even a lot of breadth on the move to the
highs, even after the Yellen capitulation. Yet stocks climb. There is no
reason, again, to go lower if the Fed is going to back the stock market for
all reasons. Even Yellen's putative replacement, Mr. Kohn, is viewed by the
financial markets as uber-market friendly. That thought simply added
further giddiness to the upside.
Now the big names are second-guessing whether there will be a late
summer/early fall selloff as they alter their rate hike forecasts. Of
course those forecasts are worthless, but the market, despite rather
terrible internals, continues higher because the Fed has its back and there
is nowhere else to go. Savings? The Fed just knifed the elderly again;
banks should clone the democrat's healthcare commercial of a Paul Ryan
look-alike wheeling granny off the cliff and give the person doing the
pushing a Yellen look. Gold? You can buy it again. The dollar? It just
broke to a lower low out of the bottom of its channel. Hmmm. Perhaps
SP500: New all-time high as SP500 gapped off the 50 day EMA Wednesday and
rallied straight up. No volume, lousy breadth, but it made the new high
without the help from financials as their earnings were met with selling,
but they all recovered nicely. New high, lousy internals. Technically
something of a nightmare, but the market continues to move higher.
RUTX: New high as well though losing as much off the high on the close as
it gained. Still trying to figure out NYSE breadth gains with this kind of
move, a kind of 'excuse me' new high.
DJ30: Another new high here as well, its third straight. On no volume.
NASDAQ: Gapped higher and rallied close to a new high, just 9 points off
the early June closing high. No volume and it will be interesting to see
how NASDAQ reacts at the prior all-time high.
SOX: Broke higher over the June highs, still well off the early June peak.
Up 6 of 8 sessions.
SP400: The small caps touched the June all-time high then faded the gain.
5 of 6 days up, moving off the 50 day MA double bottom formed in June. Not
a bad pattern, new all-time high appears imminent, even with pathetic volme.
Biotechs/Drugs: Overall solid on the week with some good moves Friday, e.g.
DVAX, AMGN. TTPH, AGEN, MNTA and others still look very good.
China: Some very good moves on the week and some on Friday. BABA continued
upside through Friday. YY is one we picked up Wednesday and it shot higher
9% Friday. YNDX gapped massively; could not buy it. NTES started a good
move though Thursday tested back to the 10 day EMA. Solid overall.
FAANG: Helped lead NASDAQ higher Friday, adding more gains. GOOG filled
the late June gap lower. AMZN is in a very nice test after approaching the
prior high. AAPL continued higher to the 50 day SMA. FB gapped a bit higher
to a doji. NFLX added more upside on its rebound.
Financial: Gapped lower on the JPM, C, WFC, GS earnings, these stocks did a
credible job of recovering off the opening lows. C puts in a very nice doji
with tail at the 20 day EMA. JPM gapped to the 20 day EMA then rebounded
sharply. Not bad, still showing good patterns.
Chips: Still recovering. LRCX edged higher on low volume in its week-plus
move. AMAT edged higher as well along with SWKS. AMD, MU faded some on the
week, moved higher Friday.
Metals: Faded some Friday but overall a solid week, maintaining good
patterns. SCHN, STLD, CENX, FCX.
Manufacturing, Machinery, Construction, Materials: Overall a decent week
though not hugely powerful. TEX broke to a higher rally high. MDR rallied
nicely on the week. HOLI rallied, still holding a good pattern.
Energy: Still well down in its selling but once again attempting to build a
foundation to move up. APA, HOS, SPN, PTEN, HAL. Possible, we will see.
Stats: +84.65 points (+0.39%) to close at 21637.74
Stats: +38.03 points (+0.61%) to close at 6312.47
Volume: 1.62B (-10.5%)
Up Volume: 1.11B (+167.28M)
Down Volume: 483.29M (-351.3M)
A/D and Hi/Lo: Advancers led 1.3 to 1
Previous Session: Advancers led 1.01 to 1
New Highs: 151 (+45)
New Lows: 36 (-9)
Stats: +11.44 points (+0.47%) to close at 2459.27
NYSE Volume: 674.3M (-12.22%)
A/D and Hi/Lo: Advancers led 2.49 to 1
Previous Session: Advancers led 1.09 to 1
New Highs: 187 (+66)
New Lows: 8 (-4)
VIX: 9.51; -0.39
VXN: 13.8; -0.82
VXO: 8.64; +0.24
Put/Call Ratio (CBOE): 0.84; -0.03
Bulls and Bears: Bulls slip to match the lows of 2017. Hit highs in early
2017, now bulls are falling but surely the Fed's largesse will bounce them
back up. Right?
Bulls: 50.0 versus 52.5
Bears: 18.6 versus 18.8
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: 50.0 versus 52.5
52.5 versus 54.9 versus 51.5 versus 50.00 versus 55.8 versus 50.00 versus
51.9 versus 58.1 versus 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: 18.6 versus 18.8
18.8 versus 18.6 versus 18.3 versus 19.2 versus 18.3 versus 17.1 versus 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
Bonds: 2.332 versus 2.346%. Bonds gapped sharply higher, hitting 2.28% on
the 10 year, before failing at the 50 day MA and falling back to close at
the 200 day MA. Tried to rally on the Yellen dovishness but having a hard
time advancing the move.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.346%
versus 2.316% versus 2.361% versus 2.375% versus 2.375% versus 2.368% versus
2.34% versus 2.304% versus 2.268% versus 2.20% versus 2.140% versus 2.140%
versus 2.148% versus 2.165% versus 2.156% versus 2.191% versus 2.155% versus
2.162% versus 2.209% versus 2.21% versus 2.21% versus 2.19% versus 2.176%
versus 2.14% versus 2.183% versus 2.154% versus 2.21% versus 2.20%
EUR/USD: 1.14672 versus 1.13986
Historical: 1.13986 versus 1.14335 versus 1.14682 versus 1.13964 versus
1.14010 versus 1.14220 versus 1.13508 versus 1.13710 versus 1.13510 versus
1.14208 versus 1.14432 versus 1.13786 versus 1.13409 versus 1.11834 versus
1.11928 versus 1.11484 versus 1.11670 versus 1.11346 versus 1.11419 versus
1.11968 versus 1.11466 versus 1.12213 versus 1.12086 versus 1.11930 versus
1.11965 versus 1.1199 versus 1.12491 versus 1.12798 versus 1.12684 versus
1.12811 versus 1.12181 versus 1.12547 versus 1.11768 versus 1.11810 versus
1.12148 versus 1.12240 versus 1.11868 versus 1.12390 versus 1.11916 versus
1.23077 versus 1.10985 versus 1.11557 versus 1.10862 versus 1.09833 versus
1.09328 versus 1.08655 versus 1.08671
USD/JPY: 112.536 versus 113.314. Dollar tested on the week then fell hard
Frida through the 200 day SMA.
Historical: 113.314 versus 113.152 versus 113.929 versus 114.063 versus
113.913 versus 113.126 versus 113.253 versus 113.270 versus 112.413 versus
111.993 versus 112.340 versus 112.24 versus 111.943 versus 111.299 versus
111.357 versus 111.278 versus 111.470 versus 111.729 versus 110.873 versus
110.854 versus 109.560 versus 110.060 versus 109.97 versus 110.334 versus
110.299 versus 109.355
Oil: 46.54, +0.46. Oil rallied back up to the 50 day MA Friday after
failing at that level two weeks back. Faded, put in a higher low, rallied
back. Now if the range is going to hold, oil should continue the break
higher in the range.
Gold: 1227.50, +10.20. Gold broke below the May low last week, rebounded
to recover it this week, gratis Yellen. Tapped the 200 day SMA on the high
then faded the gain. In a range and trying to roll back up from the lows.
NYSE indices were building patterns but were sluggish, not going anywhere.
NASDAQ and SOX started with a relief move after 2 weeks of selling. Then
that relief move took on new life Wednesday with the release of the Yellen
testimony to Congress. Wednesday to Friday those two put in solid moves.
Friday saw the NYSE indices coming around now as well, indeed beating SOX
and NASDAQ to new highs simply, however, because they did not rally before
or sell; they just were.
NASDAQ will be bumping the early June high to start the week with low, low
volume and MACD well, well lower as NASDAQ tests the prior high.
Technically it doesn't have a lot of power, and indeed the NYSE indices rose
on low volume and narrow breadth. Yet the Fed is there along with the PPT,
and the market has put in another recovery.
They may be ready for a test of the week to the upside though whether it is
more than a test becomes less likely now that the Fed is running cover. So,
we see if there is a test we can use to exit some plays and then set up new
upside buys. If a test is just a test, then we have new upside entries. If
not, if the rebound was just the last bit of fluff and rolls over hard, then
we will have some downside plays as well.
Of course, not everything has to fall. Rotation has given to some, taken
from others. It could return, but again, with the Fed becoming more dovish,
new money may enter the market allowing all areas to rise. That is not all
that evident yet given the very, very light trade, but both scenarios are
something to keep in mind when watching the market action this coming week.
Have a great weekend!
SUPPORT AND RESISTANCE
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6312.47
6341.70 is the all-time high from early June.
6300 is the mid-June interim high
6205 is the late May all-time high
The 50 day EMA at 6153
The 2016 trendline at 6050
5996 is the recent May 2017 low
5937 is the all-time high from April
5915 is the tops of the March to April 2017 range
5910 is the lower gap point from mid-April
5800 from the February consolidation lows
The 200 day SMA at 5729
5661 is the late January upper gap point
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
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 2459.27
2453.46 is the all-time closing high
2439 is the early June prior all-time closing high
The 50 day EMA at 2417
2406 is the all-time high from May 2017
2401 is the March 2017 all-time high
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
The 200 day SMA at 2306
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 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 21,637.74
21,535 is the all-time high
The 50 day EMA at 21,224
21,169 is the March 2017 all-time high
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
The 200 day SMA at 20,121
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
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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