Sunday, November 05, 2017

The Daily, Part 1 of 3, 11-4-17

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11/4/2017 Investment House Daily
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Targets hit: AVGO
Entry alerts: FB; INFI
Trailing stops: DATA
Stop alerts: None issued

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- NASDAQ, SOX find large cap strength and lead higher.
- Big NASDAQ names, FAANG breakout of consolidations, attempting to assume
leadership once again.
- Tax plan leaves small and midcaps mostly out in the cold.
- Jobs report is not good in most respects but the manufacturing jobs
continue to impress and belie the prior administration's claims those jobs
were gone for good.
- Now we see if FAANG and company actually will lead.

The past week solidified more of a turn from the small and midcaps to the
large cap NASDAQ stocks. Not that the small and midcaps rolled over; no,
they are still testing good moves. What we saw, however, was a return to
some of the big names in FAANG and other large cap NASDAQ stocks that led
the market higher into mid-summer, then spent 3 to 4 to 5 months
consolidating in trading ranges. This earnings season broke them out of
their consolidations and they are testing the move (FB, MSFT) and in some
cases already starting back upside after the test (AVGO, AMZN, GOOG, TXN).

That helped push the indices higher with emphasis on SOX and NASDAQ while
SP500, DJ30 put in steady advances up the 10 day EMA. SP400 and RUTX did
not do much; SP400 continued a choppy move up the 10 day EMA while RUTX
continued a very volatile pullback around the 20 day EMA.

SP500 7.99, 0.31%
NASDAQ 49.50, 0.74%
DJ30 22.93, 0.10%
SP400 0.25%
RUTX -0.11%
SOX 1.77%

VOLUME: NYSE -10%, NASDAQ -3%. Above average volume on NASDAQ as it surged
to a new high. Volume faded to just above average on NYSE as it posted a
new high.

ADVANCE/DECLINE: NYSE -1.1:1; NASDAQ -1.02:1. It was all the large caps on
Friday. All large caps.

The tax proposal may still help small business and thus move RUTX and SP400
up out of their tests, but in reviewing the proposed tax plan the small
business pass-through tax treatment is rather complex (so much for the
postcard tax form Ryan touted) and is not as generous as that paid out to
the big C corporations. So, I guess you form a C corp to try and get the
20% rate (and have to worry about double taxation) or just take a modest tax
cut on the uppermost income the business makes and try to cram it into what
they consider 'capital income' and the 25% rate versus 'wage income' at the
39.6% rate. As the movie starring Alec Baldwin and Meryl Streep was titled,
"It's Complicated." Oh that is rich: more complex and not that much, if any

But, I digress. The key for the market was the big name FAANG and other
NASDAQ stocks broke out from their consolidations/trading ranges. They look
as if they are ready to take back some leadership.

The key to any rally is a continued stream of leadership. These big names
led into the summer, small caps and midcaps took over along with industrial
names of all market caps, chips were in their own world as they rotated
among themselves higher and higher, and now the big names are back in the
leadership mix. Along the way China stocks led, biotechs made good
leadership moves, but then faded back in many cases. All of that is
rotation as some fall while others pick up the slack. That is healthy for
the market.

Throw into this that there are some potential new areas working upside, e.g.
new entries shaping up in retail, some telecom showing life, oil making some
moves -- and you have even more potential leaders or at least supporting
roles setting up to try and add to the upside.

Thus, though the stock market's rally seems rather implausible in that it is
still going after avoiding the traditional September and October weakness,
with the reemergence of the big names it appears the stock indices could
rally into yearend even without that traditional early fall selloff. A
tightening but gradual Fed, lower regulation making a difference (as seen in
the productivity numbers), still tax reform hope are all still driving
upside momentum.


Yes there was a jobs report Friday but it was an afterthought, something
that did not inhibit the action and would not unless it was too extreme one
way or the other. As it was the report was not that great. That was okay
for the market; I guess it assumed the Fed would be held to its prior

October Jobs Report

Non-farm Jobs: 261K vs 300K vs 18K (from -33K); Aug revised up 39K, so 99K
jobs added back the 2 prior months.

Unemployment: 4.1 vs 4.2 vs 4.2. But, it was an exodus from the workforce
that caused the drop. Very similar to the Obama years; want to lower
unemployment, lower the number of workers. Magic.

Wages: 0.0 vs 0.1 vs 0.5 prior. Terrible wage performance in terms of the
drop off. Just no consistency.

Participation: 62.7%. Labor force -765K; total out of work force -968K.
'Yewge' drop out from the workforce with now a new record 95.385M people are
out of the work force.

Food and Drink: +89K

Biz Professional +50K

Manufacturing +24K. This is still pretty amazing as the percentage of
manufacturing jobs and not just the total number is WAY above the Obama
years when we were told thee jobs were gone for good. Hmm.

Retail -8400. Wow this happened relatively fast did it not? From being one
of the leading hiring groups to bleeding jobs the past six months.

Mining -2000. Back to negative after some gains.



SOX: The past two Fridays saw chips scream upside. The prior week it was
earnings from INTC, TXN. This past Friday it was QCOM and AVGO as they
screamed higher on word AVGO may acquire QCOM. So AVGO came back to the US
with a lot of fanfare in order to buy QCOM? Hmm.

NASDAQ: Also a big mover over the Fridays with a general trend higher in
between. Rising above the 10 day EMA as NASDAQ looks impressive, not
surprising given the breakouts in the large caps on their earnings.

SP500: New closing high as it continues rising up the 10 day EMA. Not a
huge move but is working through its volatility, keeping the move higher

DJ30: A slower week after leading the move two weeks back, still trending
up the 10 day EMA but letting others take the lead.

RUTX: Holding near the 20 day EMA in now the fifth week of pullback, and
struggling with a lot of volatility. The sellers and buyers are still
evenly matched as RUTX trades in big intraday ranges but holds its near

SP400: Volatile as well, but working up the 10 day EMA nonetheless. Not as
volatile as RUTX and it is also maintaining its uptrend while it bounces
around intraday.


FAANG: AMZN started back up after the test of its earnings report breakout.
FB showing a nice doji test of its break higher. AAPL gapped upside on its
earnings. GOOG continued higher on still not much volume. NFLX just
sliding modestly higher along the 10 day EMA.

Semiconductors: The potential AVGO/QCOM deal had the group very excited as
those stocks surged. AVGO was already better on the AAPL earnings as was
SWKS. ON, BRKS still moving higher as did TXN. MU remains solid. Some
wild moves, e.g. COHU sold off hard then reversed to hold its trend. QRVO
is interesting and some of the solar stocks such as JASO, FSLR look good.

Software: Tested more on the week e.g. VMW, but CRM moved higher on the
week. FFIV still looks as if it could move upside and CALD did blast
higher. DATA was a big disappointment on its earnings.

Oil: Some good setups again, but will they move? DO testing its earnings
move, SN looks really good to move higher. ESV, DVN and others look good.

Financial: Overall testing the moves, holding at the 10 day EMA, e.g. JPM,
BAC, though they are getting ready to move.

Retail: WMT continues higher. AMZN started to bounce from its test. CONN
looks ready to bounce. TLRD still in a nice test. Some very solid, some
not, some trying to hang on, e.g. HD.

Machinery/Manufacturing: Started cracking as EMR, TEX, CMI really struggled
on the week. CAT, HOLI still nice.

Telecom: setting up in some key names. CAMP looks very good. GLW in a cup
with handle after a surge two weeks back.


Stats: +22.93 points (+0.10%) to close at 23539.19

Stats: +49.49 points (+0.74%) to close at 6764.44
Volume: 2.2B (-3.08%)

Up Volume: 1.34B (+250M)
Down Volume: 812.21M (-337.79M)

A/D and Hi/Lo: Decliners led 1.02 to 1
Previous Session: Advancers led 1.3 to 1

New Highs: 156 (+28)
New Lows: 83 (+7)

Stats: +7.99 points (+0.31%) to close at 2587.84
NYSE Volume: 810.6M (-9.93%)

A/D and Hi/Lo: Decliners led 1.08 to 1
Previous Session: Decliners led 1.02 to 1

New Highs: 138 (-17)
New Lows: 80 (-12)


VIX: 9.14; -0.79
VXN: 13.90; -0.80
VXO: 8.09; -0.69

Put/Call Ratio (CBOE): 0.94; +0.07

Bulls and Bears: Bulls continue rising for the fourth week over 60.0 and
bears fall to lows not seen since 2014 and 2015. 60+ has been a governor on
market rises, but it is not an immediate cause and effect. In other words,
you hit the levels, but the market can continue to rally.

Bulls: 63.5 versus 62.3

Bears: 14.4 versus 15.1

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: 63.5 versus 62.3
62.3 versus 60.6 versus 60.4 versus 57.5 versus 54.3 versus 50.5 versus 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

Bears: 14.4 versus 15.1
15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 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
versus 24.3


Bonds: 2.332% versus 2.349%. Bonds rallied for another week, making it to
the 50 day SMA and the mid-October high. Okay, serious resistance here.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.349%
versus 2.358% versus 2.378% versus 2.37% versus 2.419% versus 2.456% versus
2.435% versus 2.421% versus 2.366% versus 2.383% versus 2.318% versus 2.341%
versus 2.30% versus 2.302% versus 2.275% versus 2.321% versus 2.345% versus
2.345% versus 2.361% versus 2.348% versus 2.327% versus 2.326% versus 2.341%
versus 2.339% versus 2.312% versus 2.307% versus 2.236% versus 2.222% versus
2.253% versus 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%

EUR/USD: 1.16092 versus 1.16575. After moving up to the 10 day EMA in a
recovery move, Friday the euro started lower again. The rounded top looks to
be in against the dollar and the euro is heading lower.

Historical: 1.16575 versus 1.15480 versus 1.1644 versus 1.16091 versus
1.16330 versus 1.18163 versus 1.17570 versus 1.1759 versus 1.17798 versus
1.18476 versus 1.17995 versus 1.1771 versus 1.17932 versus 1.1823 versus
1.1834 versus 1.18662 versus 1.1813 versus 1.17460 versus 1.17352 versus
1.17100 versus 1.1754 versus 1.17676 versus 1.17315 versus 1.1812 versus
1.17817 versus 1.1746 versus 1.17852 versus 1.18540 versus 1.19476 versus
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

USD/JPY: 114.064 versus 114.010. Rallied back to the prior week's high and
the July high. First real test of the new move upside.

Historical: 114.010 versus 114.010 versus 113.845 versus 113.640 versus
113.175 versus 113.675 versus 114.071 versus 113.607 versus 113.913 versus
113.31 versus 113.530 versus 112.561 versus 113.031 versus 112.21 versus
112.20 versus 111.852 versus 112.25 versus 112.413 versus 112.41 versus
112.700 versus 112.653 versus 112.818 versus 112.79 versus 112.667 versus
112.716 versus 112.442 versus 112.86 versus 112.289 versus 111.649 versus
1.12125 versus 111.995 versus 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

Oil: 55.64, +1.10. Breaking through the top of the range. Okay, oil is
now trying the breakout.

Gold: 1269.20, -8.90. Still trying to get off the second bottom at the 200
day SMA.


A huge week of data and decisions and earnings, and now another week of
earnings as the season, similar to professional basketball, seems

As noted in the opening, despite all the data and the Fed intrigue and
earnings, it is the action in the NASDAQ large caps that held the week's
key. Earnings certainly aided: these stocks were set to move and the
earnings helped them make the breaks. Good tests have them set to move
higher. We picked up some FB Friday, looking at AMZN this week, and still
looking at GOOG as well.

Other big names in chips, software, even drugs worked and we let positions
run, picked up new ones, and plan on picking up more.

Yes that sounds bullish, and with sentiment over 60.0 for a month, that is a
bit worrisome. The market, however, keeps rotating and finding new
leadership or should I say recycled leadership in the case of the NASDAQ
large caps and FAANG? It appears that way.

That keeps us looking for upside plays -- with a smattering of downside here
and there in those sectors that were leading but are in the process of

There is news this weekend as Saudi Arabia, under its new prince, cleans
house in what is described as fighting corruption. That has Prince CNBC
(Alwaleed Bin Talal) arrested on corruption charges. Saudi also said it
intercepted a missile from Yemen aimed at one of Saudi's airfields near its
capitol. Maybe that means something, but it won't to this market.

Plenty of bullishness for certain, but as I noted last week again after
discussing it over a month ago, all of those billionaire money managers that
so loudly proclaimed they were out of the market because it was surely ready
to crash those that followed their advice are being forced back into the
market. That provides the fuel to continue the move because their billions
are now what helps drive the market higher.

Have a great weekend!


NASDAQ: Closed at 6754.44

More new highs

6641 is the October high
The 20 day EMA at 6637
The 50 day EMA at 6534
6477 is the September intraday high
6461 is the July 2017 prior all-time high
6450 is the early September high
The 2016 trendline at 6446
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 200 day SMA at 6164
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

S&P 500: Closed at 2587.84

New highs again

The 20 day EMA at 2563
2531 is the upper channel line from the March 2009 uptrend channel
The 50 day EMA at 2530
2491 is the August all-time high
2480 the late August and early August highs
2453.46 is the June prior all-time closing high
The 200 day SMA at 2426
2409 is the July 2017 closing low
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
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 23,539.19


The 10 day EMA at 23,384
The 50 day EMA at 22,736
22,420 is the September high
22,179 is the August 2017 all-time high
22,086 is the mid-August lower high
21,681is the July prior all-time high
21,638 is the July 2017 closing high
21,529 is the June 2017 high
The 200 day SMA at 21,338
21,169 is the March 2017 all-time high

End part 1 of 3
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