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8/19/2017 Investment House Daily
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Investment House Daily Subscribers:
Targets hit: None issued
Entry alerts: SDS
Trailing stops: JWN
Stop alerts: JD
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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.
Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play table.
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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.
- A Thursday and Friday repeat of the prior week.
- A double drop starts changing the market's MO
- NASDAQ, SOX still working on good patterns. DJ30 in a nice ABCD
- Some say Friday was a key, but for this market, Monday and Tuesday and
whether a rebound emerges is very important.
A repeat of the prior week, just a bit lower. Two weeks back the market
dropped Tuesday to Thursday with Thursday a big drop, then a modest Friday
recovery. That was followed by a bounce.
This past week, after a solid Monday, the stock indices struggled, then
dropped hard Thursday. A modest session Friday, indeed a doji on SP500 just
as on the prior Friday.
SP500 -4.45, -0.18%
NASDAQ -5.38, -0.09%
DJ30 -76.22, -0.35%
VOLUME: NYSE +18%; NASDAQ -3%. Expiration saw NYSE volume finally break
average. With SP500 showing a doji after a dump, perhaps this volume
forecasts a rebound. Again. NASDAQ volume held solid at average as the
index shows a doji at the prior week's low. Not bad at all.
ADVANCE/DECLINE: NYSE 1.2:1; NASDAQ 1.1:1.
Now, do they bounce this coming week, repeating the process?
It is true that this is a double drop, not just one sharp drop that then
leads to a new high as seen again and again in this rally, but a sharp drop,
a bounce, then another sharp drop. That is a change in the MO of these
moves in the uptrend and is ugly enough to break the pattern of dip buying.
It was enough of a change for Mr. Gartman to predict Friday could be the
most important day for the markets in the bull run. Why? A market closing
a week at multiweek lows is often a failing market.
A decent argument based in technical analysis, but I would suggest that
Monday and/or Tuesday are more important. Reason: Indeed this pattern has
shown itself many times in this rally, and after the initial selloff then
pause to end a week, the rallies renewed early the next week. Thus, how the
market fares Monday and Tuesday likely tells much more than Friday.
All speculation about the most important day aside, NASDAQ and SOX remain in
quite decent patterns in terms of holding their trends and forming some good
bases. After two hard days of selling, to still be in the pattern is a
positive, using the selling to wring out the weak hands that ultimately sets
up the demand outstripping supply and a new break higher. That is the
theory, and if SP500 along with SP400 and RUTX were not struggling, you
would anticipate they would keep on working through the pattern and make a
new upside break. As it is, you have once again a bifurcated market, and we
saw how they started coming together last time: the large caps tried to
catch down to the small and midcaps. They never got together that time, not
really close. But, they tried to rally, stalled, sold hard Thursday. Do
they come together this time?
There are still good stocks as well. AMAT is setting up a nice pattern and
LRCX' pattern is similar. China stocks turned a bit squirrely on the week
but finished quite well. AAPL and FB in FAANG remain decent. Software
remains strong, e.g. DATA, GLUU, TTWO, VMW. On the flip, some leaders and
those setting up broke, e.g. machinery, financial, and some strong stocks
such as HON are starting to crack. Then you have consumer stocks such as
PG, CLX looking better along with utilities. Oh, that is great -- stocks
that launched many a dull market.
Will the algorithms buy those stocks, just rotate from other groups as in
the past? Doubt it. At least not only those stocks. NASDAQ and SOX are
still in good patterns while RUTX, SP400 are anchor chains. Again, that
puts NASDAQ and SOX in focus and, surprise, puts market performance
paramount on Monday and Tuesday.
SOX: SOX continues working on its 3 month triangle pattern, closing the
week just below the 50 day MA. That leaves SOX working in the pattern and
still, despite the selling, leaving it in position to finish the job and
NASDAQ: Showing a doji over the 2016 trendline, holding at the prior week's
low and the 61% Fibonacci retracement. That has NASDAQ showing a double
bottom at that retracement, and that pattern at that level is a good rally
point. Compare to the action May to early July: Rally, double bottom at the
61%/78% Fibonacci retracement, then a rally to a new high.
DJ30: Yes DJ30 sold off Thursday with the market, Friday as well. This all
inside the July to August run to a new high. DJ30 has stair-stepped back to
the 50 day MA's and the 78% Fibonacci retracement. That, despite the
selling, puts DJ30 in great position to rebound again.
SP500: Broke the 2016 trendline Thursday, sold farther Friday, showing a
doji -- just as the prior Friday. Of all the large cap indices, SP500 shows
the most Gartman-like concern: new low to end the week after a new low the
prior week. We went ahead and picked up a partial downside position on
SP500 to end the week.
SP400: After bouncing off the 200 day SMA the prior Friday and Monday,
SP400 rolled over and suffered another Thursday thumping. That selling took
SP500 through the 200 day SMA. Friday a gap lower, but showing a doji.
Similar to SP500, SP400 fits the lower weekly close in a series of lower
RUTX: Same action as SP400, just sharper. Held the 200 day the prior week,
bounced, rolled back over and crashed the 200 day Thursday. A big selloff
Friday with a gap lower, but recovering off the low to a doji with tail. On
the Friday low it tested the May and some of the April lows. RUTX is in a
range where it can find support to bounce. It likely attempts a recovery
early week, stalls at the 200 day, then heads down to test the January,
March, April lows.
Some areas losing bids, others holding up well enough.
Semiconductors: AMAT and LRCX somewhat reflect the SOX and its triangle
pattern. AMAT posted earnings Friday and they were good enough to keep it
working on the pattern. MCHP lost some luster but still holding the 50 day
in a decent pattern. SLAB is setting up decently as is ON, BRKS. AVGO is
testing and holding the 50 day MA in a 3 month consolidation. QRVO
struggled some to end the week but is holding the 50 day. Many are at best
'mushy': AMD, XLNX, MU.
China stocks: Turned choppy the past two weeks but held on and some good
moves to end the week. BABA gapped on earnings, added more Friday. BIDU
tested, but is setting up well at the 20 day EMA. HTHT, BZUN enjoyed strong
weeks again. SOHU is set up very well to break higher. SINA looks solid
still. YY recovering from a gap lower on earnings. BITA looks good to go.
Not all is great. JD broke lower, NTES continues to struggle.
Software: Excellent for the most part. VMW holding its earnings gap,
seeing up well for a new move GLUU broke sharply higher Friday. DATA is
setting up well as is TTWO.
FAANG: AAPL down to end the week, but holding the 20 day EMA and May/June
high. FB holding near the 20 day EMA in a 4 week lateral move after gapping
higher. NFLX holding the 50 day SMA and the June prior high. AMZN sold back
for the 50 day MA but held at the prior week's low. GOOG showed the same
move. If the bids return, all are in decent position to move.
Financial: C is the best of the group, holding the 50 day MA's with a doji.
BAC broke the 50 day MA. GS sold off. JPM trying to hold the 50 day MA's.
Machinery: Outside of CAT, a lot of carnage, e.g. CMI, DE, TEX. HON is
struggling, falling through the 50 day MA on another strong volume session.
Stats: -76.22 points (-0.35%) to close at 21674.51
Stats: -5.39 points (-0.09%) to close at 6216.53
Volume: 1.98B (-2.94%)
Up Volume: 838.77M (+336.63M)
Down Volume: 1.11B (-410M)
A/D and Hi/Lo: Advancers led 1.04 to 1
Previous Session: Decliners led 3.89 to 1
New Highs: 29 (-6)
New Lows: 124 (+5)
Stats: -4.46 points (-0.18%) to close at 2425.55
NYSE Volume: 900M (+17.48%)
A/D and Hi/Lo: Advancers led 1.15 to 1
Previous Session: Decliners led 4.4 to 1
New Highs: 38 (-15)
New Lows: 164 (+19)
VIX: 14.26; -1.29
VXN: 17.85; -0.75
VXO: 12.91; +0.09
Put/Call Ratio (CBOE): 1.11; +0.04. Second session over 1.0 after several
weeks below. Enough of these and the market can rebound, but typically this
is after some serious selling, not what we have seen the past few weeks.
Bulls and Bears: Significant drop in bulls, falling 10 points in two weeks.
It hit 60+ for twi straight weeks, enough to set up a drop due to
overexuberance. Bears back up to 18.1, last hit 5 weeks earlier.
Bulls: 50.5 versus 57.5
Bears: 18.1 versus 17.0
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: 50.5 versus 57.5
57.5 versus 60.0 versus 60.2 versus 57.8 versus 50.0 versus 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: 18.1 versus 17.0
17.0 versus 16.2 versus 16.5 versus 16.7 versus 18.6 versus 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: 2.197% versus 2.185%. Up week for bonds, bouncing off the 50 day EMA
to a higher recovery high. Friday up but then faded to flat. Still heading
higher despite a supposedly more hawkish Fed and better economy. White House
turmoil? Geopolitical tensions? Sure, but the latter are not all the
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.185%
versus 2.225% versus 2.264% versus 2.24% versus 2.191% versus 2.201 versus
2.246% versus 2.262% versus 2.257% versus 2.264% versus 2.221% versus 2.266%
versus 2.253% versus 2.296% versus 2.291% versus 2.303% versus 2.287% versus
2.330% versus 2.255% versus 2.241% versus 2.270% versus 2.261% versus 2.318%
versus 2.331% versus 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%
EUR/USD: 1.17595 versus 1.17107. Still in the 2.5 week test of the high
logged in early August.
Historical: 1.17107 versus 1.17812 versus 1.17445 versus 1.17751 versus
1.18216 versus 1.17652 versus 1.17596 versus 1.17619 versus 1.17975 versus
1.1774 versus 1.18718 versus 1.18457 versus 1.18072 versus 1.18281 versus
1.18293 versus 1.1683 versus 1.17419 versus 1.1646 versus 1.1637 versus
1.16640 versus 1.16271 versus 1.15280 versus 1.15549 versus 1.14735 versus
1.14672 versus 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
USD/JPY: 109.205 versus 109.333. Rallied through Tuesday, sold back to the
June and August lows as of Friday. Showed a big doji with tail Friday so
may be ready to try the upside again. Definitely bouncing up and down in
Historical: 109.333 versus 109.842 versus 110.6621 versus 109.927 versus
109.183 versus 109.177 versus 110.03 versus 109.09 versus 110.09 versus
110.757 versus 110.689 versus 109.963 versus 110.717 versus 110.368 versus
110.28 versus 110.704 versus 111.07 versus 111.166 versus 111.897 versus
111.176 versus 111.128 versus 111.863 versus 111.89 versus 112.096 versus
112.582 versus 112.536 versus 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
Oil: 48.73, +1.64. Nice break higher after a week and more fading back to
the 50 day SMA. Strong upside move as rig count falls to a multiweek low.
Gold: 1290.30, -2.10. After bumping back up to the April and June highs
last week, gold sold to the 20 day then rebounded into Thursday. Again
having issues at the April and June highs. Definitely in the range for now.
There is a lot more of the same in terms of news and economics. The
political discourse descended to new lows the past week and the market sold
with it, but that could easily have been worse. Perhaps the market starts
factoring in the Trump administration is going to get little accomplished
with the Goldman people in control. They will push the same old policies
that benefit the big businesses and not much else, and in this climate no
democrat, and likely many republicans, will vote for something that would
benefit big corporations. My plan from last week would appeal to those
wanting to help small businesses, but then again, the Goldman people are in
charge of the White House now and that kind of initiative has a snowball's
chance in hell of getting even mentioned.
That is all the backdrop anyway. The market factors this in and it shows up
in the patterns. We will play the patterns that take control as the indices
trade Monday and Tuesday.
Ironically, if the indices bounce early week, the question then shifts to
whether they hold the move and continue or roll over again. If they sell,
no question. If they bounce, I would hazard that the indices will hold the
move this time off the double bottom test of NASDAQ, the ABCD from DJ30, the
We are looking at plays in line with the positive patterns on NASDAQ and
SOX, but of course cannot ignore the downside in the event this time the
algorithms do not buy the dip, this time a double dip.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6256.56
The 50 day EMA at 6263
6300 is the mid-June interim high
6341.70 is the all-time high from early June.
6461 is the June 2017 prior all-time high
6205 is the late May all-time high
The 2016 trendline at 6141
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
The 200 day SMA at 5838
5800 from the February consolidation lows
5661 is the late January upper gap point
5601 is the January lower gap point
S&P 500: Closed at 2441.32
The 50 day EMA at 2446
2453.46 is the June prior all-time closing high
2487 is the upper channel line from the March 2009 uptrend channel
2439 is the early June all-time closing high
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
The 200 day SMA at 2339
2329 is the March and April twin lows
2322 is the March 2017 low
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 21,858.32
21,681is the July prior all-time high
22,179 is the August 2017 all-time high
The 20 day EMA at 21,836
The 50 day EMA at 21,574
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
The 200 day SMA at 20,484
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
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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