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8/5/2017 Investment House Daily
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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
- Jobs report beats, shows some decent improvement (though still not that
great), market goes nowhere. Again.
- Another piece of good news cannot break the indices higher, but they also
don't break lower and remain in position to bounce.
- Jobs market will never change with these policies in place.
- Plenty of bulls, lots of expert bears, but no one saying a correction is
imminent. Does that mean it is?
- Indices in position, good leadership remains as does the Fed. Have to
respect that.
Futures were up a bit before the July Jobs Report. They were up a bit after
the July Jobs Report. By the end of the session the stock indices were up a
bit. DJ30 put in yet another new high. SP500 continued to walk laterally
on the 10 day EMA and just below the 2009 upper channel line. NASDAQ and
SOX show doji over the 50 day EMA. SP400 and RUTX bounced to test the break
below the 50 day MA, below some resistance but still in the ballpark to hold
and resume the upside. In position, they just couldn't make the move even
after a pretty solid jobs report, strong AAPL earnings, and of course, a
continued benevolent Federal Reserve.
SP500 4.67, 0.19%
NASDAQ 11.22, 0.18%
DJ30 66.71, 0.30%
SP400 0.24%
RUTX 0.50%$
SOX 0.06%
NASDAQ 100 0.15%
The close looks better than it was 10 minutes before the close. SOX was
negative, SP500 was flirting with negative -- then a late bid bounced things
to a better finishing look.
VOLUME: NYSE -6%; NASDAQ -10%. Upside session volume failure with both
NYSE and NASDAQ dropping below average. Even with a jobs report. But, it
was a Friday in late summer and volume can be lower.
ADVANCE/DECLINE: NYSE 1.3:1; NASDAQ 1.4:1. About in line with lackluster
gains.
It was a do nothing session in terms of overall movement and in terms of
altering the index patterns of the past 1 to 2 weeks.. Sometimes, however,
doing nothing can be the better option, particularly on a Friday after some
downside weeks.
Specifically, SP500, NASDAQ, and SOX are in very good position to start a
new upside leg. SOX is showing a doji at the 50 day EMA. NASDAQ a doji at
the 20 day EMA as it sits on top of the June prior high. SP500 is still
below its 2009 upper channel line, riding the 10 day EMA. A good
consolidation of the last highs, a nice quiet test.
SP400 and RUTX are not as neat and tidy, but they are at least holding near
the 50 day MA after breaking them Thursday. Not perfect but if the other
indices move up, they will likely follow. Likely. The economic data,
July's Jobs Report notwithstanding, is not good. ISM Services managed to
hold expansion territory, but dropped to the lowest in a year. Services led
the expansion. That puts it more in perspective. Then there are June's
Factory Orders that were all Boeing. Without those planes, orders were
negative. Capex investment was flat. Small and midcaps are domestically
economically sensitive. Thus it is not surprising their patterns have sold
more and harder than the large cap indices.
Leadership remains good enough. AAPL, FB and even NFLX are solid enough.
The financials are hanging in. China stocks ditto. Software had a good
week on some solid earnings. Large drugs and biotechs are good enough.
Large manufacturing, e.g. CAT, HON. After a week or more of selling chips
may be ready to attempt a bounce. It is no surprise the large cap leaders
are in better shape: look at what indices are in better shape.
In sum, the action leaves the non-DJ30 large cap indices in good position to
bounce. Leadership is good enough and after a test others are in position
to rebound. The small and midcaps are weaker but nothing a new general
market bounce cannot overcome.
NEWS/ECONOMY
June Jobs Report beats, is not bad, but it is not great.
The jobs report was stronger than expected across the board: wages, jobs,
participation, and revisions. "A little bit of a pickup" says CNBC's Kelly
Evans, hating the number. Okay, economist Mark Zandi says, after his ADP
report Thursday, the jobs market is in "high gear." The report blows out
anticipated non-farm numbers and CNBC says it is a 'little bit' better.
What is it? It is decent, but it is also likely lagging the economic data
that is sliding lower. Without tax reform, healthcare reform, or some kind
of meaningful reform, the numbers will regress because expectations of
economic increase will temper even more.
Non-Farm Payrolls: 209K vs 175K exp vs 231K June (from 187K)
Averages: 195K jobs last 3 months, 184K/month in 2017
Unemployment Rate: 4.3 vs 4.3 vs 4.4
Wages/earnings: 0.3% vs 0.2%. +2.5% year/year. Same gains as before.
Average Workweek: 34.5 vs 34.5
U-6 (less than full employed though wanting full employment): 8.6% vs 8.6%
Participation: 62.9% vs 62.8%. Workforce +349K, increasing the last 4
months. Some said this was because of increased confidence in the jobs
market. Perhaps, but it also doesn't hurt that the Trump administration
tossed out the Obama changes to what constitutes looking for work in order
to qualify for assistance. No longer is reading the classified ads looking
for work. Nor is bed rest, or taking sick kids to the doctor, signing up
for AA, etc. Looking for work is not actually looking for work, and thus
people must get off the non-working 'work' assistance program.
Employment +345K. Unemployed +4K
The Mix: Where are the jobs and who is getting them?
There is change occurring, and it is without any tax or healthcare reform.
Regulatory reduction and change is helping, one example just being who is
considered looking for work in order to receive assistance.
Structural changes, however, remain and are still occurring as retail has to
adjust on top of all other areas. Retail continues to show weak growth as
retailers shutter stores and try to figure out how to compete with Amazon.
Manufacturing shows solid gains. Those latter are high paying jobs. Some
improvement, but still the same, serious problems.
Part-time: +349K
Full-time: -54K
Food & Beverage (waiters): +53K
Prof/Business services: +49K
Healthcare: +39K
Manufacturing: +16K
Construction: +6K
Retail: +9K
If the job distribution above is not convincing, consider the following
complied by the New York Federal Reserve:
Education distribution of people obtaining jobs growth.
Less than high school education: +0.4% year/year
High School education: +0.9% year/year
College Educated and/or post-graduate degree: -0.2% year/year
This is the year/year trend. The trend lower in college and higher
education has been ongoing.
Consider the following:
The biggest problem according to major tech companies is finding qualified
people to hire. That may or may not be the case (studies show there are
tens of thousands of US educated STEM graduates who cannot find work), but
even if so, look at the jobs per industry distribution above. The economy
is still producing mostly low wage, hourly service jobs and thus most jobs
filled are in those areas.
Just look at the part-time jobs versus fulltime: 349K versus -54K. Even
now we are STILL killing off full-time jobs. The legacy of the ACA
continues as the Senate cowardly fails to act. Hopefully Trump will go
ahead and end insurance subsidies and have the complete failure of the ACA
rapidly come about.
Just look at US Productivity: with so many low-wage, menial jobs dominating
the economy, is there any wonder productivity has collapsed so sharply the
past four years?
Despite more jobs being created, they are the same kind of jobs. The
economy is not morphing into a new small business creating dynamo. Indeed,
we are still killing more businesses than creating, and until the ACA is
repealed as THE major step, then remove most all of the regulations from the
prior 8 years, and then put in meaningful tax reform to get investment in
the US going again (remember, capex is still virtually nonexistent), there
will be no change for most Americans.
Why? The bifurcation in wealth will necessarily continue because the Fed
will have no choice but to continue its low interest rate policies in
attempts to keep the markets afloat -- just as it did after the financial
crisis. No real gains, just inflated financial assets making certain
portions of society wealthier to spend and keep the economy moving. No
money to invest in small businesses to create the next new great jobs, just
keeping the old line of companies alive as well as the few newer companies
that run the communications everyone uses. The result is endless stagnation
and the hope that the debt bubble will not burst.
Greenspan still in denial.
But, according to Allen Greenspan, the Bond bubble is about to burst due to
'abnormally low' rates. Ironic. Greenspan was the main proponent of the
debt-financed economy. Is he now remorseful? No, he still does not
acknowledge his role. He is blaming others for expanding what he started.
That makes perfect sense in our society today: it is always someone else's
fault.
THE MARKET
LEADERSHIP
Tech: Not a bad session. MSFT gapped modestly upside off its test. AAPL
started back up after a brief test of its earnings gap higher. ORCL holds
its 7 week lateral move after gapping upside. Not bad.
Software: Remains solid. DATA adds more upside after its earnings gap.
VMW trying to make the break higher. GLUU continues upside. CALD gapped to
a higher high, faded some but still strong.
Chips: Those that sold back the past 1-2 weeks are trying to set up for a
bounce, e.g. AMAT, LRCX, AMD. SWKS held up longer but then broke and still
dos not look great. XLNX gapped upside Friday, but to a doji below the 10
day EMA on low trade. Not a lot of power. Important group, will see if it
can put in a decent move.
Drugs/biotech: JNJ still solid as is CELG. Large caps okay, small caps
still struggling, e.g. AXGN, IMGN, IMMU.
China stocks: Overall okay but some issues. YY remains strong as does
HTHT, BZUN, SINA, SOHU, BIDU. NTES fell under some pressure. JD looks
great.
Industrials: Large cap industrials were fine. HON continued its run for the
week. CAT bounced off a 10 day EMA test. HOLI, small cap, was not bad with
a bounce off the 20 day EMA.
Financial: WFC dropped hard but closed down just 1%. More fake accounts,
irregularities handling mortgages, and other issues surfaced again. Jerks.
C still edging up the 10 day EMA. BAC jumped off support and scored a nice
gain. JPM gapped but gave back a pretty good part of it. GS put in a solid
break higher on volume.
MARKET STATS
DJ30
Stats: +66.71 points (+0.3%) to close at 22092.81
Nasdaq
Stats: +11.22 points (+0.18%) to close at 6351.56
Volume: 1.9B (-9.95%)
Up Volume: 925.29M (-29.44M)
Down Volume: 960.76M (-159.24M)
A/D and Hi/Lo: Advancers led 1.42 to 1
Previous Session: Decliners led 1.45 to 1
New Highs: 89 (0)
New Lows: 74 (-9)
S&P
Stats: +4.67 points (+0.19%) to close at 2476.83
NYSE Volume: 785M (-5.64%)
A/D and Hi/Lo: Advancers led 1.3 to 1
Previous Session: Decliners led 1.34 to 1
New Highs: 146 (+24)
New Lows: 51 (-19)
SENTIMENT INDICATORS
VIX: 10.03; -0.41
VXN: 14.09; -0.6
VXO: 8.9; +0.44
Put/Call Ratio (CBOE): 1; -0.01. Second straight session over 1.0.
Bulls and Bears: Bully. Bulls were lower but still at 60, the key level for
corrections. Of course the market has fade a week or two, but that is not
the kind of correction I am talking about. A real correction. We will see.
Bulls: 60.0 versus 60.2
Bears: 16.2 versus 16.5
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: 60.0 versus 60.2
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: 16.2 versus 16.5
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
OTHER MARKETS
Bonds: 2.264% versus 2.221%. Modest drop in bonds on the jobs report. For
so strong, bonds were not surging. TLT is holding the 50 day MA, bouncing
off the low.
Historical: the last sub-2% rate was in November 2016 (1.867%). 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% 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: 1.17738 versus 1.18718. Wow, the dollar actually rose against the
euro. Sold to the 10 day EMA, the support it has held the past 5 weeks on
the rally.
Historical: 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
1.11965
USD/JPY: 110.689 versus 109.963. Dollar bouncing after a three week drop.
Historical: 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 versus 110.334 versus
110.299 versus 109.355
Oil: 49.58, +0.55. Still bumping up against the 200 day SMA as oil forms a
weeklong pennant testing the last break higher.
Gold: 1264.60, -9.80. Faded to the 10 day EMA in a 3 session pullback
testing the 3 week run off the May low.
MONDAY
NASDAQ, SP500, SOX are all snuggled against near support after just over a
week of a lateral move or a pullback. Not bad positioning, and there is
still leadership to that could throw in upside and break the indices higher
off support.
At the same time the good earnings news could not do that trick. AAPL
'rescued' the market but the indices sat on support. The jobs report was
solid enough but not too great, and the indices sat on support. They did
not break lower, but good news did not break them higher. Perhaps they were
just ignoring the market, doing what they needed to do. Perhaps.
Regardless of how they got there and why they stayed, those key indices are
at support and in position to rally. Now we see if they do.
The interesting aspect: bulls are at 60 for the second week. In early 2017,
bulls were over 60 for 7 weeks. No serious selloff resulted, an aberration
for the market and this indicator. Oh they tried to sell off, and several
times the indices made moves that historically would market a rollover.
Yet, bids came back in and thwarted the selling pressure and the indices
recovered. Magic. Ready to roll over, rolling over, then caught and
supported.
There is also Jim Paulson who said Friday that we can do all we want
"without aggravating inflation and interest rates." Moreover, he added, "if
that's going to continue, I think the bull market could continue forever."
Forever. Indeed.
Back to the interesting aspect. The other one. Even as bulls move over 60
and we see calls for unending bull markets (as I recall some saying in 1998
just before the Dow crashed), more and more expert money managers call for a
serious market correction. Interactive Brokers raised its margin
requirements on trades on volatility products. Friday another joined in.
BAC's Michael Hartnett, citing a euphoric bull/bear level, said a "little
more meaningful" correction, "not your average correction," is coming in the
fall. Still, he says it is not time to move out of equities just yet.
Whew. So this is not THE pullback that leads to that selloff. Gee, it
seems everyone, EVEN THE BEARS, don't think the correction is nigh. Maybe
they are in the know, but the fact that everyone says it is coming but not
yet means they don't have a clue as to the when. History says when everyone
says it isn't happening is when it happens. The experts rarely hit the nail
on the head. Anyone can say a correction is coming because of any number of
factors. We even say that, but at least we are not so arrogant (stupid?) to
say we know when.
So, very bullish, experts cautious, but not THAT cautious just yet. That
just means beware. The indices are in a position where they could bounce,
they just have to show they can do it. As there are still stocks that are
in position to rally as well, you have to be ready for that to happen.
Have a great weekend.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6351.56
Resistance:
6461 is the June 2017 prior all-time high
Support:
6341.70 is the all-time high from early June.
The 20 day EMA at 6333
6300 is the mid-June interim high
The 50 day EMA at 6252
6205 is the late May all-time high
The 2016 trendline at 6117
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 5812
5800 from the February consolidation lows
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 2476.83
Resistance:
2484 is the upper channel line from the March 2009 uptrend channel
Support:
The 20 day EMA at 2465
2453.46 is the June prior all-time closing high
The 50 day EMA at 2443
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
2329 is the March and April twin lows
The 200 day SMA at 2331
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 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 22,092.81
Resistance:
Support:
The 10 day EMA at 21,887
21,681is the July prior all-time high
The 20 day EMA at 21,746
The 50 day EMA at 21,482
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.
The 200 day SMA at 20,388
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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