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9/23/2017 Investment House Daily
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Investment House Daily Subscribers:
Targets hit: None issued
Entry alerts: None issued
Trailing stops: PACB; XXII
Stop alerts: None issued
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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.
- Overall flattish session into the weekend but RUTX joins the large caps
with its own new closing high.
- A bit too much geopolitical intrigue and still digesting the Fed's moves
for the market to rally into the weekend.
- SOX is certainly set up to move higher but the other indices appear
extended on this move.
- Why is the yield curve now so flat and suggesting economic trouble ahead?
- Rally is longer in the tooth in terms of the rally cycles, but SOX looks
ready to break higher, SP400 has more room, and DJ30 is testing nicely. If
they show great upside moves then we play the move, but still cautiously.
Stocks were mushy all Friday perhaps outside of the semiconductors. Once
again there is just a bit too much happening in the geopolitical sense to
initiate any major buys ahead of the weekend. Trump, the alleged dotard,
references the serious issues the Rocket Man will face if he continues his
ways. Mr. Pajamas 2 responds that he might just carry out an above ground
H-bomb test in the Pacific. There is also the Germany election Sunday with
Mother Migration Merkel expected to win but not to get the kind of coalition
she has abused, I mean enjoyed, in the past.
At the same time, though stocks may be a bit mushy, they still hold solid
gains as well as their trends, certainly not selling off because of any
weekend worries. And why should they? After all Jeremy Seigel predicts the
market has another 10% gain to year end. Why sell when you have that going
Well, perhaps, just perhaps, there will be a selloff to end September and
carry into October before that 10% rally kicks in. Would not be surprised
to see that happen as that is the historic market pattern for this time of
year AND there is that algorithm market pattern as well that kicks in after
the indices hit new highs and rally a bit more. Then, after selling back,
the cycle starts over to the upside. Those two patterns dovetail right now,
an appropriate metaphor given it is dove season in many places right now.
Thus, the indices finished the session decently and finished the week quite
decently, showing few signs of melting down or otherwise selling off. Some
stocks struggled into the weekend and we closed those positions that
reflected some of those struggles. We also, however, let the strong
continue to work and will see if next week brings the algorithm down cycle
or a renewed upside move if this rather mild test runs its course.
SP500 1.62, 0.06%
NASDAQ 4.23, 0.07%
DJ30 -9.64, -0.04%
VOLUME: NYSE flat; NASDAQ -7%. Very noncommittal ahead of the weekend
with trade again just below average on NYSE, below average on NASDAQ.
ADVANCE/DECLINE: NYSE 1.8:1; NASDAQ 1.9:1. Not bad given the modest
action. Obviously related to the better showings in the small and midcaps.
The index action is somewhat split, but none of the indices are in any kind
of trouble at all. More precisely, they are at different stages of their
rallies, some on the upswing still, playing catchup to the large cap indices
at new highs. Those that hit the highs are on the test.
The nagging question is whether the algorithms kick in again given all
indices but SP400 have hit new highs on this move. That, however, is almost
fearing things that may or may not be in the shadows. If you go for a walk
in the woods in the north you may run into a bear. Does that mean you don't
walk in the woods? No, you just take the proper precautions and know what
to do if you see that bear -- or more importantly, if he sees you.
Still, the bear has struck relatively regularly after new highs are hit.
Nothing suggests a change in that pattern, so for now we take advantage of
great patterns if they present themselves for solid moves, don't let any
positions get too errant on us, and try to let the solid trends keep working
through any chop. If stocks such as NFLX, bucking the trend against all the
FAANG, HON, BABA, LRCX start breaking support with sharp, high volume moves
lower, then it is time to clear out. Not there yet.
SOX: Breakout to a new all-time high Monday, then tested the move into
Friday. Held the 10 day EMA and the prior high from June and managed a
Friday close over that June peak. Not a bad quick test of the breakout,
leaving SOX in good position to continue the breakout. Some good looking
semiconductors are set up well.
RUTX: New all-time closing high, closing just below the July highs..
Impressive second leg of the run from the July/August selloff, recovering
the entire loss. Made the move without another rest. 55 points off the
early September test lows, almost the exact number of points off the August
selloff low. With that kind of move and sitting at the prior high, it makes
sense the small caps test here.
NASDAQ: Hit a new high on the week, then faded into Friday to the 20 day
EMA. Held that level then rebounded modestly to end the week. Bumped
resistance, could not make any real inroads, but if NASDAQ holds the 20 day
EMA and bounces, it has put in a great higher low and is well-positioned to
break higher and move to a real new high. Nothing nefarious, but thus far
unable to put in a solid new high as in prior rallies. Perhaps that is
still in front of it, but at this point we have some good positions, some
good gain built in, and we can afford to let NASDAQ show if it can make that
next break higher.
DJ30: Broke to a new high through Wednesday, faded Thursday and Friday to
test just over the 10 day EMA. Impressive, same move it made in late
July/early August, normal test. That was the case in the last move, then
suddenly the 10 day EMA didn't hold. Thus far, very good looking test.
SP500: Spent the week slow dancing with the upper channel trendline from
way back in 2009, yes the trendline established after the Fed went full
frontal QE. Bumped the TL Monday through Thursday, backing off Thursday and
Friday. Backed off but held the 10 day EMA; not much backing down.
Financial stocks really helped SP500 on the week, but now we have to see how
they perform now they are at the top of their range.
SP400: The midcaps may have put in a good part of their test already.
Working laterally after Monday, waiting on the 10 day EMA to catch up to the
move. Surpassed the 1750 level, now at the next high, the June high at
1771, and trying to consolidate at that level. Another 20 points to the
prior all-time high, trying to consolidate the last move to make that run.
Still plenty of quality stocks leading the way, and indeed, breaking higher
after tests. That shows continuing bids, not indicating a turn back down is
imminent. Still, some that were performing are struggling. Perhaps just
Manufacturing: HON the outstanding stock in the group, breaking sharply
higher Thursday and Friday to a higher high. CAT, TEX still strong. ITW
testing a strong 2 week run higher. Strong.
Semiconductors: Volatile week but closed well. LRCX tested its breakout,
held over the 20 day, surged Friday. AMAT tested, managed to hold support.
SLAB looks good. XLNX has made a nice short test. MRVL ditto. They don't
look bad at all. AVGO, QRVO need some work. NVDA gapped lower on the
AMD/TSLA AI chip news but is holding support.
Retail: Tested good moves on the week, some look ready to move higher:
KORS, GPS, HD. DLTR broke higher again.
China stocks: This group rotates amongst itself. YNDX, YY started upside
Friday. BABA, BIDU remain solid. BITA testing its strong break higher.
SINA making a good test.
Financial: BAC, JPM, GS all moved higher on the week with some nice moves
but ended the week bumping the top of the range.
Drugs/biotechs: AMGN, BIIB remain in good 2-week tests of near support.
Smaller issues are struggling just a bit though hanging in at support: BLRX,
IMGN, IMMU holding well. PFE continues to move higher.
Software: Not bad tests setting up the next legs from the look of it: CRM;
VMW. TTWO continues up the 10 day EMA. GLUU sold to the 20 day EMA but
bounced Friday on more good volume.
Oil: APC added some more after that big buyback announcement. DVN still
moving upside. SAM and others are setting up patterns.
Stats: -9.64 points (-0.04%) to close at 22349.59
Stats: +4.23 points (+0.07%) to close at 6426.92
Volume: 1.64B (-6.82%)
Up Volume: 881.72M (+303.89M)
Down Volume: 717.87M (-412.13M)
A/D and Hi/Lo: Advancers led 1.91 to 1
Previous Session: Decliners led 1.25 to 1
New Highs: 124 (+5)
New Lows: 24 (-5)
Stats: +1.62 points (+0.06%) to close at 2502.22
NYSE Volume: 722M (-0.21%)
A/D and Hi/Lo: Advancers led 1.77 to 1
Previous Session: Decliners led 1.32 to 1
New Highs: 149 (+16)
New Lows: 18 (+6)
VIX: 9.59; -0.08
VXN: 13.81; +0.10
VXO: 7.89; -0.02
Put/Call Ratio (CBOE): 0.98; +0.14
Bulls and Bears: Bulls make their Pavlovian response. They dropped just as
the rally started, now are jumping up just as the rally may be hitting its
Bulls: 50.5 versus 47.1
Bears: 19.0 versus 20.2
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 47.1
47.1 versus 49.5 versus 49.5 versus 48.1 versus 50.5 versus 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: 19.0 versus 20.2
20.2 versus 19.1 versus 19.1 versus 18.3 versus 18.1 versus 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
Bonds: 2.253% versus 2.276%. 10 year yields fell as the yield curve
flattened again. The curve post-FOMC fell hard towards flat. Oh no, a
Greenspan conundrum is developing. Or is it here? Yellen this week said
she did not understand inflation. Oh THAT is great.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.276%
versus 2.273% versus 2.246% versus 2.234% versus 2.201% versus 2.186% versus
2.19% versus 2.167% versus 2.134% versus 2.042% versus 2.105% versus 2.072%
versus 2.166% versus 2.210% versus 2.136% versus 2.129% versus 2.175% versus
2.169% versus 2.189% versus 2.217% versus 2.183% versus 2.197% versus 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%
EUR/USD: 1.19476 versus 1.19420. Tested the 50 day MA midweek, held.
Continued the 2.5 week lateral consolidation.
Historical: 1.19420 versus 1.19420 versus 1.19954 versus 1.19436 versus
1.1918 versus 1.1874 versus 1.19706 versus 1.19551 versus 1.20379 versus
1.2025 versus 1.19258 versus 1.19143 versus 1.18621 versus 1.19131 versus
1.18938 versus 1.19731 versus 1.19678 versus 1.19212 versus 1.18 versus
1.17516 versus 1.1813 versus 1.17595 versus 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
USD/JPY: 111.995 versus 111.804. Broke through the 200 day MA Wednesday,
tested to end the week.
Historical: 112.454 versus 111.559 versus 111.435 versus 110.846 versus
110.01 versus 110.62 versus 110.216 versus 109.434 versus 107.847 versus
108.444 versus 109.132 versus 108.747 versus 110.254 versus 110.049 versus
110.289 versus 109.652 versus 108.04 versus 109.160 versus 109.573 versus
109.195 versus 109.648 versus 109.173 versus 109.205 versus 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
Oil: 50.66, +0.11. Held a test of the 200 day SMA early week, edged up the
rest of the week but not a big new surge.
Gold: 1297.50, +2.70. Nasty drop Thursday post-FOMC and not much of a
bounce at all Friday on the worries about the weekend and North Korean
H-bombs. Held the 50 day MA to end the week in the current 2 week pullback.
We will see what the weekend brings and whether that impacts the Monday
trade. Two weeks back it was the lack of any follow through of tensions
between the US and North Korea that sprung a renewed move upside after a
test of the initial move off the August low.
Many are talking about the rally continuing on. It may do so, and if it
does we let our remaining positions run and pick up some new quality
patterns that break higher.
As noted before, however, nothing indicates the market's pattern has
changed, i.e. that after new highs are hit and some more rallying on top of
the new high, the selling kicks in. Indeed, that more fits the season of
the year: September selling leads to an October bottom and a rally to year
That is the move we are anticipating as the most probable but of course the
market will do what it does. We will simply be ready for the route the
market takes. There are still plenty of good entries right now if they make
the moves. Again, be ready for the route the market takes. We believe this
current rally can continue another week or so, but then hits the downside of
the cycle. That will set up the next leg higher, and combined with the
seasonal driver, it could be a good move to the close of the year.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6426.92
6450 is the early September high
6461 is the July 2017 prior all-time high
64.77 is the September intraday high
The 50 day EMA at 6347
6341.70 is the all-time high from early June.
6300 is the mid-June interim high
The 2016 trendline at 6288
6205 is the late May all-time high
The 200 day SMA at 5998
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
5661 is the late January upper gap point
5601 is the January lower gap point
S&P 500: Closed at 2502.22
2508 is the upper channel line from the March 2009 uptrend channel
2491 is the August all-time high
2480 the late August and early August highs
The 50 day EMA at 2467
2453.46 is the June prior all-time closing high
2409 is the July 2017 closing low
2406 is the all-time high from May 2017
2401 is the March 2017 all-time high
The 200 day SMA at 2382
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
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 22,349.59
The 10 day EMA at 22,251
22,179 is the August 2017 all-time high
22,086 is the mid-August lower high
The 50 day EMA at 21,901
21,681is the July prior all-time high
21,638 is the July 2017 closing high
21,529 is the June 2017 high
21,169 is the March 2017 all-time high
The 200 day SMA at 20,962
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
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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