* * * *
3/30/2018 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: None issued
Entry alerts: AMAG
Trailing stops: None issued
Stop alerts: YNDX
The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
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
- DJ30, SP500 hold again at support, start to move higher.
- A bounce on volume to end the week and quarter, but was it just the
quarter end driving the action?
- Bounce or no, the market is in need of a few, indeed more than a few, good
leaders.
After another down week the market indices posted gains Friday on some
better volume. They held where the needed, DJ30 and SP500 at the February
closing lows, NASDAQ at one of the early 2016 trendlines. Some leaders held
the 50 day EMA and rebounded a bit, e.g. NFLX, SQ, LRCX, MU, INTC.
SP500 35.87, 1.38%
NASDAQ 114.21, 1.64%
DJ30 254.69, 1.07%
SP400 1.35%
RUTX 1.08%
SOX 2.24%
NASDAQ 100 1.86%
VOLUME: NYSE +2%, NASDAQ +7.5%. Solid above average trade on NASDAQ after a
jump in trade Wednesday as it tested the 2016 trendline. That holds some
promise similar to how NASDAQ bounced off the trendline in early February.
NYSE trade moved above average as NYSE recaptured the 200 day SMA and SP500
moved up off the 200 day. As with NASDAQ, SP500 showed similar action on
the February intraday low that tapped the 200 day and reversed on rising,
above average volume.
ADVANCE/DECLINE: NYSE +3.6:1, NASDAQ +2.2:1.
Was this the start of a bounce from support similar to the NASDAQ and SP500
February bounces from similar support levels as noted above, OR was it
simply end of the quarter ahead of a 3-day market holiday position squaring?
The answer to that question will play out this week. There needs to be more
leadership in the market, pure and simple. Some of those names above, e.g.
MU, NFLX, are at the 50 day MA that should act as support and perhaps they
move up from there to lead a rally. Many stocks that were recently leaders
or leader wannabes, however, don't have the patterns, at the moment, to
lead. If the market bounces gratis some leaders such as MU, then they can
have time to work on rebuilding their patterns. Again, that will play out
in the coming week and next.
The gist of last week was a test of the February lows on DJ30 and SP500 as
well as a hold of those lows, i.e. they did not sink lower. Now they have
to show the new break higher. Thursday was an upside relief session, but
again, with the quarter end you cannot put that much faith in it. If good
quality stocks start breaking higher and provide the move support, then the
historical pattern of corrections in otherwise good economies and markets
holds. If not, then the economy is likely not as strong as believed or
there is some other issue out there the stock market is worried about, e.g.
war -- trade or otherwise -- political upheaval, etc.
CHARTS
DJ30: After piercing lower to almost the February intraday low the prior
Friday, The Dow held at the February closing low as a floor all last week.
That keeps the Dow over the 200 day, at the prior lows, and the 61%
Fibonacci retracement of the September to January rally. Lots of support,
lots of reasons to hold and rally based upon this pattern. Now it shows if
it can.
SP500: Very similar to DJ30, testing the February closing low the prior
Friday, holding over that level all last week. In addition, that keeps
SP500 over the 200 day SMA and a potential double bottom near the 78%
Fibonacci retracement. The technical pattern is there, but SP500 needs to
find the leadership.
NASDAQ: Tried to rally early week, failed as a lot of its leaders broke
their patterns. Faded to the uptrend from early 2016, held it Wednesday on
strong volume, rallied Thursday on strong volume. NASDAQ can hold its
uptrend if it finds some leaders. NFLX, GOOG, INTC are possibilities, but
others such as NVDA just do not look that good. NASDAQ could stand to find
some other stocks to lead. STX is not NASDAQ, but it is tech and is in good
shape.
SOX: Three week fade off the top of channel trendline. No doubt that acted
as resistance and sent SOX lower. It is below the closer trendline, now at
a lower trendline off the August low. At this point everyone is watching
for where SOX makes its stand. Can do it here, will need INTC, LRCX, MU to
make good on some good patterns.
RUTX: Not many good things to say about RUTX other than it held the early
March low and the October peak. The pattern is not generating warm fuzzies
as it has a head and shoulder-ish look.
SP400: Very similar to RUTX but it is holding over the 200 day SMA and a
trendline off the August and February lows. Some possibility there with
this test, but at this juncture it will have to show it -- just as all the
indices.
LEADERSHIP
FAANG: With FB under heavy scrutiny and AMZN feeling the problems of a
President that doesn't like you, FAANG is struggling. AAPL is still
range-bound. NFLX is pretty decent at the 50 day EMA. GOOG is trying to
put in a bounce at the 200 day SMA and off the summer range highs.
Chips: Struggled as a group the past three weeks after SOX hit the top of
the range and some are not in great shape. MU is solid, NPTN is breaking
higher. INTC continues looking good. LRCX is trying to bounce off the 78%
Fibonacci retracement. KLIC looks very interesting in an inverted head and
shoulders. Some solid patterns there; they need to take the lead.
Biotechs/Drugs: Ran into trouble. There are some that are setting up, e.g.
TLGT. Drug-related stocks are working, e.g. AMAG, and now IDXX is setting
up.
Retail: Continues to look better with the President taking shots at AMZN.
DDS still looks solid to move higher. TJX, TLRD, M, KSS as well. If they
can continue it looks as if we will be buying retail. What about AMZN? It
gapped below the 50 day MA's and has yet to recover.
China: As with many sectors, Chinese stocks have some solid leaders, e.g.
ATHM, QIWI, BZUN. BABA has possibilities as it looks as if it is going to
move higher off a higher low. Others are really struggling, e.g. NTES,
BIDU, SINA, SOHU. Hot or cold.
Metals: A bit of an interesting look to keep watching, e.g. STLD, FCX. SCHN
has a potential double bottom at the 61% Fibonacci retracement. FCX is
showing one at the 61% Fibonacci retracement.
Oil: Remains in the game. MRO shook us out Wednesday but was back in the
game Thursday. APC is not bad. Many are, however.
MISC: HLF remains ready to move. SQ is holding the 50 day MA's and could
be a new entry.
MARKET STATS
DJ30
Stats: +254.69 points (+1.07%) to close at 24103.11
Nasdaq
Stats: +114.22 points (+1.64%) to close at 7063.44
Volume: 2.59B (+1.97%)
Up Volume: 1.76B (+836.25M)
Down Volume: 792.28M (-797.72M)
A/D and Hi/Lo: Advancers led 2.23 to 1
Previous Session: Decliners led 1.24 to 1
New Highs: 45 (+19)
New Lows: 80 (-33)
S&P
Stats: +35.87 points (+1.38%) to close at 2640.87
NYSE Volume: 995.465M (+7.39%)
A/D and Hi/Lo: Advancers led 3.6 to 1
Previous Session: Advancers led 1.08 to 1
New Highs: 33 (+14)
New Lows: 59 (-55)
SENTIMENT INDICATORS
VIX: 19.97; -2.90
VXN: 26.68; -3.51
VXO: 22.05; -1.74
Put/Call Ratio (CBOE): 0.95; -0.39
Bulls and Bears: Bulls dove, bounced, then dove once more. Getting a bit
out of the stratosphere, a good thing to happen, but not that low yet.
Bears are up, but still relatively weak compared to bulls.
Bulls: 49.5 versus 55.5
Bears: 17.5 versus 16.8
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: 49.5 versus 55.5
55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4
versus 66.00 versus 64.7 versus 66.7 versus 64.4 versus 61.9 versus 64.1
versus 64.2 versus 62.3 versus 61.5 versus 63.5 versus 64.4 versus 63.5
versus 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
Bears: 17.5 versus 16.8
16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5
versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1
versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4
versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1
versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.714% versus 2.781%. Bonds continue rallying after breaking up
through the 50 day MA's.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.781%
versus 2.775% versus 2.854% versus 2.813% versus 2.814% versus 2.881% versus
2.90% versus 2.852% versus 2.826% versus 2.819% versus 2.844% versus 2.866%
versus 2.896% versus 2.872% versus 2.879% versus 2.863% versus 2.879% versus
2.868% versus 2.799% versus 2.875% versus 2.893% versus 2.864% versus 2.866%
versus 2.934% versus 2.952% versus 2.893% versus 2.873% versus 2.904% versus
2.913% versus 2.833% versus 2.857% versus 2.8577% versus 2.844% versus
2.813% versus 2.805% versus 2.707% versus 2.841% versus 2.792%
EUR/USD: 1.23234 versus 1.2302. Still in the lateral move along the 50 day
MA.
Historical: 1.23234 versus 1.2406 versus 1.24494 versus 1.2351 versus
1.23301 versus 1.23467 versus 1.22478 versus 1.2342 versus 1.2287 versus
1.2304 versus 1.23782 versus 1.2392 versus 1.23412 versus 1.2305 versus
1.2305 versus 1.24017 versus 1.2411 versus 1.2344 versus 1.23187 versus
1.22822 versus 1.21894 versus 1.21893 versus 1.23257 versus 1.2296 versus
1.2324 versus 1.22820 versus 1.23431 versus 1.2411 versus 1.25083 versus
1.2450 versus 1.23528 versus 1.22887 versus 1.22524 versus 1.2273 versus
1.2377 versus 1.24573 versus 1.2502 versus 1.2404 versus 1.2402 versus
1.23832 versus 1.24308 versus 1.24159 versus 1.24340 versus 1.23083 versus
1.22567
USD/JPY: 106.286 versus 106.81
Historical: 106.81 versus 105.397 versus 105.473 versus 104.789 versus
104.829 versus 105.892 versus 106.478 versus 105.945 versus 105.946 versus
106.344 versus 105.846 versus 106.42 versus 106.335 versus 106.77 versus
106.41 versus 106.105 versus 105.752 versus 106.359 versus 105.734 versus
106.03 versus 106.695 versus 107.381 versus 106.96 versus 106.886 versus
106.85 versus 107.581 versus 107.435 versus 106.294 versus 106.153 versus
106.782 versus 107.77 versus 108.669 versus 108.669
Oil: 64.94, +0.56. Setting up a handle to a 2 month cup, forming up right
below the January peak.
Gold: 1327.30, -2.70.
MONDAY
After 3 days off and the quarter end there are a few things to watch for.
First, does new money enter and help keep the Thursday move alive. Higher
volume gains that session, but that could be due to adjusting positions
ahead of quarter end. New money is good and needed, but it can run out
after a session or two.
Second, do gains hold versus the high to low action.
Third, does volatility calm down. That shows the buyers and sellers are
resolving their issues. Of course volatility can end with stocks rallying
or selling off. One side or the other will win out.
Fourth, do leaders emerge upside? Will new leaders, perhaps from metals or
drug-related , emerge? Will current leaders testing key levels reengage as
leaders? A market rally has to have leadership. A market can start a
rally, but if significant leadership fails to emerge, the rally fails as
well. Will MU, HLF, STX, NFLX, metals, drugs, retail emerge to lead?
Okay, plenty to watch for but the Dow and SP500 have set up in the double
bottom at the early February lows at the 61% and 78% Fibonacci retracement,
respectively. If these leadership stocks start to make a new break higher
with volume, we will play them based upon their patterns and the index
patterns.
Have a great weekend!
End part 1
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Saturday, March 31, 2018
Sunday, March 25, 2018
The Daily, Part 1 of 3, 3-24-18
* * * *
3/24/2018 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: None issued
Entry alerts: None issued
Trailing stops: None issued
Stop alerts: None issued
The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
********************************************************************
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
- Stocks make the mistake of trying to rally early, pay for it with another
large decline.
- DJ30 at the February lows, SP500 at the doorstep as the test is on.
- After all this selling there are stocks, very good stocks, still in
position to rally after a routine test if the indices can find bottom at the
February lows.
Friday stocks sold again, not early as wanted as the Dow actually started
positive. Indeed, it rallied upside around 140 points. All that did was
give the sellers their shot and they took it. The Dow reversed 575 points
high to close.
SP500 -55.43, -2.10%
NASDAQ -174.01, -2.43%
DJ30 -424.69, -1.77%
SP400 -1.94%
RUTX -2.19%
SOX -3.29%
NASDAQ 100 -2.61%
VOLUME: NYSE +11%, NASDAQ +1%. NYSE trade higher but still just barely
above average. NASDAQ trade above average for a second session and a bit
higher, really picking up Thursday and Friday.
ADVANCE/DECLINE: NYSE -4:1, NASDAQ -3.7:1. Solid again but still not
blowout that a -10:1 reading shows you.
Ugly move, panic was induced. Heard the afterhours financial stations
talking about the selling. We heard the phrase that pays: this is different
from the early February selling, a pundit explained, because the news was
different: tariffs, changes in the Trump administration that were more
confrontational, raising the risk of confrontation.
Ah, the old 'it's different this time' statement. When you hear it in
conjunction with ugly selling, it has meaning. Usually that means it is not
different this time. Whatever the cause, humans react the same way. Thus
the machines they program with their trading styles react the same way.
That means that patterns typically work and repeat the past.
Is there a pattern? We think so. There is the test of the prior low that
so often happens after some serious downside. There is also a pattern
setting up. There are also still stocks in quite good position despite the
2 weeks of selling and this week's gash lower.
Okay, so how about a closer look at the Dow. The 575 point high to low move
took the Dow below the February closing low and within 173 points of the
intraday low. That also takes DJ30 just over the 200 day SMA (23,357;
closed at 23,533). It also puts DJ30 at the October/November lateral
consolidation. Further, that has the Dow back near the 61% Fibonacci
retracement of the September 2017 to late January all-time high.
Meaning? You look for a test of the prior low at key levels. You look for
a pattern to establish. Key levels: 61% Fibonacci retracement, prior
February low, October/November consolidation, 200 day SMA. Pattern:
potential double bottom. Potential because the Dow is at the level, but it
is not showing signs of slowing the selling as of the Friday close. That
likely comes early next week with a reach lower that then recovers to a doji
near these support levels.
That is the outline.
SP500 is very similar as DJ30 and SP500 have moved rather lockstep though
DJ30 is the weaker. SP500 is spot on the February closing low and the 200
day SMA. It is also putting in its own potential double bottom just over
the 78% Fibonacci retracement of the September to January rally. Closed on
the low so no indication of a bounce yet, but lots of support at this level.
A dip lower, recovery to a doji or better is a good bottoming indication.
SP400 midcaps are near the 200 day SMA and the October/November 7 week
consolidation. Still well above the closing and intraday lows from
February.
NASDAQ broke its December to March trendline and is 72 points from the
longer term trendline from early 2016. It is also closing in on the 50%
Fibonacci retracement of the September to January run. That trendline is
going to be important, particularly if DJ30 and SP500 fall early week and
reverse at the February lows. NASDAQ could then put in a higher low, albeit
not that much higher than the February closing low.
SOX broke the 50 day MA and the lower channel line Friday. It is still al
long way from the February low -- it was the market leader so it put in a
lot of upside. With DJ30, SP500 at the February lows already, if they
reverse SOX will be in position to lead again.
RUTX exploded lower Friday in a move made dramatic by how well it had held
up to then. Broke the October high, still holding over the early March low
hit on that dip/test of the initial move off the February low. Pretty
amazing drop, at some support, kind of problematic now after holding up so
well.
Why the detailed index rundown right out of the gate? You have to start
looking for reversals after this kind of selling, and particularly when the
indices get near the prior selloff low. Different this time? It could be,
but we are not playing it as different.
LEADERSHIP
FAANG: AMZN and NFLX started showing cracks as the former broke the 20 day
EMA and is halfway to the 50 day MA on strong volume. NFLX broke the 20 day
but volume remained well below average. Testing, not breaking. FB sold hard
again; broken. AAPL is almost to the 200 day SMA; back to the drawing board
for it in its 5 month range. GOOG dove lower again and is near the 200 day
SMA. At least it is near a potential support level.
Chips: Not all candy and nuts with some big names breaking lower, e.g. MU,
AMAT. XLNX sold to the 50 day EMA in one move from the 20 day. LRCX is a
the 50 day EMA. INTC broke the 20 day MA though is not tanking. SMTC is
back to testing the 10 day EMA. ON at the 20 day. Many are starting to
sell harder and we will see if they find new bids to start the week.
Drugs/biotech: Smaller remains better, e.g. PTCT, IMGN, ARRY (nice 50 day
MA test). Some are not, e.g. INFI. The big names are terrible, e.g. AMGN,
BIIB.
Software: Cracking. CRM went on through the 50 day MA. RHT broke the 20
day MA; it was in need of a test. VMW is holding up relatively well. DATA
testing the 50 day MA.
Retail: Holding up better than most. DDS still holding a very nice test.
TJX did slip to the 50 day MA, but low volume. KSS is holding its pattern
while M fell to test the 50 day EMA in a not bad pullback. LULU not bad.
RL also holding at the 50 day MA in its consolidation.
China: Really struggling. ATHM is not bad, testing the 20 day on lighter
volume. QIWI not bad, testing a bit lower on light trade. YNDX sold Friday
to the bottom of the range but on very light trade. BABA sold hard a second
session, BIDU sold to the 200 day MA, BZUN
Transports: Very good relative strength. KSU holding well in its range.
SAIA in trucks at the 50 day. JBHT holding its pattern. Airlines cracked
Thursday and sold more Friday.
Oil: Paused after a solid Thursday move. APC surged but gave up most of
the move. MRO Testing its very nice Wednesday surge. DO testing its nice
break higher as well. Not bad.
Financial: Crushed. JPM, BAC. GS almost at the 200 day SMA already.
MISC: HLF still holding very well. GRUB holding the 20 day EMA. STX
cracked for a deeper test. SQ fell to the 20 day EMA.
MARKET STATS
DJ30
Stats: -424.69 points (-1.77%) to close at 23533.20
Nasdaq
Stats: -174.01 points (-2.43%) to close at 6992.67
Volume: 2.39B (+1.27%)
Up Volume: 425.8M (-79.16M)
Down Volume: 1.94B (+100M)
A/D and Hi/Lo: Decliners led 3.74 to 1
Previous Session: Decliners led 4.09 to 1
New Highs: 25 (-14)
New Lows: 109 (+47)
S&P
Stats: -55.43 points (-2.10%) to close at 2588.26
NYSE Volume: 1B (+11.11%)
A/D and Hi/Lo: Decliners led 3.97 to 1
Previous Session: Decliners led 4.23 to 1
New Highs: 16 (-9)
New Lows: 215 (+87)
SENTIMENT INDICATORS
VIX: 24.87; +1.53
VXN: 28.35; +1.72
VXO: 24.70; +2.59
Put/Call Ratio (CBOE): 1.54; +0.32
Bulls and Bears: Bulls rebounded, but bears saw a substantial rise in
pessimism. Bulls more bullish, bears more bearish. It would appear the
bears had the better take on it.
Bulls: 55.5 versus 54.9
Bears: 16.8 versus 15.7
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: 55.5 versus 54.9
54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus
66.00 versus 64.7 versus 66.7 versus 64.4 versus 61.9 versus 64.1 versus
64.2 versus 62.3 versus 61.5 versus 63.5 versus 64.4 versus 63.5 versus 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
Bears: 16.8 versus 15.7
15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6
versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2
versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4
versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0
versus 20.2
OTHER MARKETS
Bonds: 2.813% versus 2.806%. Bonds up on the week, moving to the 50 day MA,
trying to reverse trend.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.814%
versus 2.881% versus 2.90% versus 2.852% versus 2.826% versus 2.819% versus
2.844% versus 2.866% versus 2.896% versus 2.872% versus 2.879% versus 2.863%
versus 2.879% versus 2.868% versus 2.799% versus 2.875% versus 2.893% versus
2.864% versus 2.866% versus 2.934% versus 2.952% versus 2.893% versus 2.873%
versus 2.904% versus 2.913% versus 2.833% versus 2.857% versus 2.8577%
versus 2.844% versus 2.813% versus 2.805% versus 2.707% versus 2.841% versus
2.792%
EUR/USD: 1.2351 versus 1.23301. Back and forth but still in the lateral
move over the 50 day EMA.
Historical: 1.23301 versus 1.23467 versus 1.22478 versus 1.2342 versus
1.2287 versus 1.2304 versus 1.23782 versus 1.2392 versus 1.23412 versus
1.2305 versus 1.2305 versus 1.24017 versus 1.2411 versus 1.2344 versus
1.23187 versus 1.22822 versus 1.21894 versus 1.21893 versus 1.23257 versus
1.2296 versus 1.2324 versus 1.22820 versus 1.23431 versus 1.2411 versus
1.25083 versus 1.2450 versus 1.23528 versus 1.22887 versus 1.22524 versus
1.2273 versus 1.2377 versus 1.24573 versus 1.2502 versus 1.2404 versus
1.2402 versus 1.23832 versus 1.24308 versus 1.24159 versus 1.24340 versus
1.23083 versus 1.22567
USD/JPY: 104.789 versus 104.829. Broke hard lower from the 20 day EMA
Wednesday to Thursday, then held the line Friday. Already weak.
Historical: 104.829 versus 105.892 versus 106.478 versus 105.945 versus
105.946 versus 106.344 versus 105.846 versus 106.42 versus 106.335 versus
106.77 versus 106.41 versus 106.105 versus 105.752 versus 106.359 versus
105.734 versus 106.03 versus 106.695 versus 107.381 versus 106.96 versus
106.886 versus 106.85 versus 107.581 versus 107.435 versus 106.294 versus
106.153 versus 106.782 versus 107.77 versus 108.669 versus 108.669
Oil: 65.88, +1.58. Surging upside and now putting the moves on the January
peak at 66.66.
Gold: 1339.90, +22.50. Big breakout Friday toward the January and February
highs.
MONDAY
Friday did not have that opening dive we were looking for followed by short
covering. Instead it rallied then had to reverse, and there were no bids
ready in the afternoon as they were used in the morning.
Monday we watch to see if the DJ30, SP500 February lows act as support and
work a reversal. The setup is there, the historical pattern is there,
enough leaders are still in decent enough patterns to put forth a serious
leadership effort if DJ30 and SP500 are close to reversal levels. Now, if
it is only not different this time.
If there is the reversal we will be looking at leadership quality stocks
that are still in decent enough patterns over support. LRCX, ON, SMTC,
MLNX, BZUN, MRO, DO, ARRY, PANW, NTNX -- testing but in very good position.
We would even add to others such as NFLX, some China stocks, etc.
If it is different this time, there will still be a rebound move, a relief
move. After this much selling you want to play the downside after a relief
move upside fails versus attempting to get on board after Thursday and
Friday.
Have a great weekend!
End part 1 of 3
_______________________________________________________
Customer Support: http://www.InvestBilling.com
1153 Bergen Pkwy - Suite I #502 - Evergreen, CO 80439
3/24/2018 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: None issued
Entry alerts: None issued
Trailing stops: None issued
Stop alerts: None issued
The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
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********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
********************************************************************
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
- Stocks make the mistake of trying to rally early, pay for it with another
large decline.
- DJ30 at the February lows, SP500 at the doorstep as the test is on.
- After all this selling there are stocks, very good stocks, still in
position to rally after a routine test if the indices can find bottom at the
February lows.
Friday stocks sold again, not early as wanted as the Dow actually started
positive. Indeed, it rallied upside around 140 points. All that did was
give the sellers their shot and they took it. The Dow reversed 575 points
high to close.
SP500 -55.43, -2.10%
NASDAQ -174.01, -2.43%
DJ30 -424.69, -1.77%
SP400 -1.94%
RUTX -2.19%
SOX -3.29%
NASDAQ 100 -2.61%
VOLUME: NYSE +11%, NASDAQ +1%. NYSE trade higher but still just barely
above average. NASDAQ trade above average for a second session and a bit
higher, really picking up Thursday and Friday.
ADVANCE/DECLINE: NYSE -4:1, NASDAQ -3.7:1. Solid again but still not
blowout that a -10:1 reading shows you.
Ugly move, panic was induced. Heard the afterhours financial stations
talking about the selling. We heard the phrase that pays: this is different
from the early February selling, a pundit explained, because the news was
different: tariffs, changes in the Trump administration that were more
confrontational, raising the risk of confrontation.
Ah, the old 'it's different this time' statement. When you hear it in
conjunction with ugly selling, it has meaning. Usually that means it is not
different this time. Whatever the cause, humans react the same way. Thus
the machines they program with their trading styles react the same way.
That means that patterns typically work and repeat the past.
Is there a pattern? We think so. There is the test of the prior low that
so often happens after some serious downside. There is also a pattern
setting up. There are also still stocks in quite good position despite the
2 weeks of selling and this week's gash lower.
Okay, so how about a closer look at the Dow. The 575 point high to low move
took the Dow below the February closing low and within 173 points of the
intraday low. That also takes DJ30 just over the 200 day SMA (23,357;
closed at 23,533). It also puts DJ30 at the October/November lateral
consolidation. Further, that has the Dow back near the 61% Fibonacci
retracement of the September 2017 to late January all-time high.
Meaning? You look for a test of the prior low at key levels. You look for
a pattern to establish. Key levels: 61% Fibonacci retracement, prior
February low, October/November consolidation, 200 day SMA. Pattern:
potential double bottom. Potential because the Dow is at the level, but it
is not showing signs of slowing the selling as of the Friday close. That
likely comes early next week with a reach lower that then recovers to a doji
near these support levels.
That is the outline.
SP500 is very similar as DJ30 and SP500 have moved rather lockstep though
DJ30 is the weaker. SP500 is spot on the February closing low and the 200
day SMA. It is also putting in its own potential double bottom just over
the 78% Fibonacci retracement of the September to January rally. Closed on
the low so no indication of a bounce yet, but lots of support at this level.
A dip lower, recovery to a doji or better is a good bottoming indication.
SP400 midcaps are near the 200 day SMA and the October/November 7 week
consolidation. Still well above the closing and intraday lows from
February.
NASDAQ broke its December to March trendline and is 72 points from the
longer term trendline from early 2016. It is also closing in on the 50%
Fibonacci retracement of the September to January run. That trendline is
going to be important, particularly if DJ30 and SP500 fall early week and
reverse at the February lows. NASDAQ could then put in a higher low, albeit
not that much higher than the February closing low.
SOX broke the 50 day MA and the lower channel line Friday. It is still al
long way from the February low -- it was the market leader so it put in a
lot of upside. With DJ30, SP500 at the February lows already, if they
reverse SOX will be in position to lead again.
RUTX exploded lower Friday in a move made dramatic by how well it had held
up to then. Broke the October high, still holding over the early March low
hit on that dip/test of the initial move off the February low. Pretty
amazing drop, at some support, kind of problematic now after holding up so
well.
Why the detailed index rundown right out of the gate? You have to start
looking for reversals after this kind of selling, and particularly when the
indices get near the prior selloff low. Different this time? It could be,
but we are not playing it as different.
LEADERSHIP
FAANG: AMZN and NFLX started showing cracks as the former broke the 20 day
EMA and is halfway to the 50 day MA on strong volume. NFLX broke the 20 day
but volume remained well below average. Testing, not breaking. FB sold hard
again; broken. AAPL is almost to the 200 day SMA; back to the drawing board
for it in its 5 month range. GOOG dove lower again and is near the 200 day
SMA. At least it is near a potential support level.
Chips: Not all candy and nuts with some big names breaking lower, e.g. MU,
AMAT. XLNX sold to the 50 day EMA in one move from the 20 day. LRCX is a
the 50 day EMA. INTC broke the 20 day MA though is not tanking. SMTC is
back to testing the 10 day EMA. ON at the 20 day. Many are starting to
sell harder and we will see if they find new bids to start the week.
Drugs/biotech: Smaller remains better, e.g. PTCT, IMGN, ARRY (nice 50 day
MA test). Some are not, e.g. INFI. The big names are terrible, e.g. AMGN,
BIIB.
Software: Cracking. CRM went on through the 50 day MA. RHT broke the 20
day MA; it was in need of a test. VMW is holding up relatively well. DATA
testing the 50 day MA.
Retail: Holding up better than most. DDS still holding a very nice test.
TJX did slip to the 50 day MA, but low volume. KSS is holding its pattern
while M fell to test the 50 day EMA in a not bad pullback. LULU not bad.
RL also holding at the 50 day MA in its consolidation.
China: Really struggling. ATHM is not bad, testing the 20 day on lighter
volume. QIWI not bad, testing a bit lower on light trade. YNDX sold Friday
to the bottom of the range but on very light trade. BABA sold hard a second
session, BIDU sold to the 200 day MA, BZUN
Transports: Very good relative strength. KSU holding well in its range.
SAIA in trucks at the 50 day. JBHT holding its pattern. Airlines cracked
Thursday and sold more Friday.
Oil: Paused after a solid Thursday move. APC surged but gave up most of
the move. MRO Testing its very nice Wednesday surge. DO testing its nice
break higher as well. Not bad.
Financial: Crushed. JPM, BAC. GS almost at the 200 day SMA already.
MISC: HLF still holding very well. GRUB holding the 20 day EMA. STX
cracked for a deeper test. SQ fell to the 20 day EMA.
MARKET STATS
DJ30
Stats: -424.69 points (-1.77%) to close at 23533.20
Nasdaq
Stats: -174.01 points (-2.43%) to close at 6992.67
Volume: 2.39B (+1.27%)
Up Volume: 425.8M (-79.16M)
Down Volume: 1.94B (+100M)
A/D and Hi/Lo: Decliners led 3.74 to 1
Previous Session: Decliners led 4.09 to 1
New Highs: 25 (-14)
New Lows: 109 (+47)
S&P
Stats: -55.43 points (-2.10%) to close at 2588.26
NYSE Volume: 1B (+11.11%)
A/D and Hi/Lo: Decliners led 3.97 to 1
Previous Session: Decliners led 4.23 to 1
New Highs: 16 (-9)
New Lows: 215 (+87)
SENTIMENT INDICATORS
VIX: 24.87; +1.53
VXN: 28.35; +1.72
VXO: 24.70; +2.59
Put/Call Ratio (CBOE): 1.54; +0.32
Bulls and Bears: Bulls rebounded, but bears saw a substantial rise in
pessimism. Bulls more bullish, bears more bearish. It would appear the
bears had the better take on it.
Bulls: 55.5 versus 54.9
Bears: 16.8 versus 15.7
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: 55.5 versus 54.9
54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus
66.00 versus 64.7 versus 66.7 versus 64.4 versus 61.9 versus 64.1 versus
64.2 versus 62.3 versus 61.5 versus 63.5 versus 64.4 versus 63.5 versus 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
Bears: 16.8 versus 15.7
15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6
versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2
versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4
versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0
versus 20.2
OTHER MARKETS
Bonds: 2.813% versus 2.806%. Bonds up on the week, moving to the 50 day MA,
trying to reverse trend.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.814%
versus 2.881% versus 2.90% versus 2.852% versus 2.826% versus 2.819% versus
2.844% versus 2.866% versus 2.896% versus 2.872% versus 2.879% versus 2.863%
versus 2.879% versus 2.868% versus 2.799% versus 2.875% versus 2.893% versus
2.864% versus 2.866% versus 2.934% versus 2.952% versus 2.893% versus 2.873%
versus 2.904% versus 2.913% versus 2.833% versus 2.857% versus 2.8577%
versus 2.844% versus 2.813% versus 2.805% versus 2.707% versus 2.841% versus
2.792%
EUR/USD: 1.2351 versus 1.23301. Back and forth but still in the lateral
move over the 50 day EMA.
Historical: 1.23301 versus 1.23467 versus 1.22478 versus 1.2342 versus
1.2287 versus 1.2304 versus 1.23782 versus 1.2392 versus 1.23412 versus
1.2305 versus 1.2305 versus 1.24017 versus 1.2411 versus 1.2344 versus
1.23187 versus 1.22822 versus 1.21894 versus 1.21893 versus 1.23257 versus
1.2296 versus 1.2324 versus 1.22820 versus 1.23431 versus 1.2411 versus
1.25083 versus 1.2450 versus 1.23528 versus 1.22887 versus 1.22524 versus
1.2273 versus 1.2377 versus 1.24573 versus 1.2502 versus 1.2404 versus
1.2402 versus 1.23832 versus 1.24308 versus 1.24159 versus 1.24340 versus
1.23083 versus 1.22567
USD/JPY: 104.789 versus 104.829. Broke hard lower from the 20 day EMA
Wednesday to Thursday, then held the line Friday. Already weak.
Historical: 104.829 versus 105.892 versus 106.478 versus 105.945 versus
105.946 versus 106.344 versus 105.846 versus 106.42 versus 106.335 versus
106.77 versus 106.41 versus 106.105 versus 105.752 versus 106.359 versus
105.734 versus 106.03 versus 106.695 versus 107.381 versus 106.96 versus
106.886 versus 106.85 versus 107.581 versus 107.435 versus 106.294 versus
106.153 versus 106.782 versus 107.77 versus 108.669 versus 108.669
Oil: 65.88, +1.58. Surging upside and now putting the moves on the January
peak at 66.66.
Gold: 1339.90, +22.50. Big breakout Friday toward the January and February
highs.
MONDAY
Friday did not have that opening dive we were looking for followed by short
covering. Instead it rallied then had to reverse, and there were no bids
ready in the afternoon as they were used in the morning.
Monday we watch to see if the DJ30, SP500 February lows act as support and
work a reversal. The setup is there, the historical pattern is there,
enough leaders are still in decent enough patterns to put forth a serious
leadership effort if DJ30 and SP500 are close to reversal levels. Now, if
it is only not different this time.
If there is the reversal we will be looking at leadership quality stocks
that are still in decent enough patterns over support. LRCX, ON, SMTC,
MLNX, BZUN, MRO, DO, ARRY, PANW, NTNX -- testing but in very good position.
We would even add to others such as NFLX, some China stocks, etc.
If it is different this time, there will still be a rebound move, a relief
move. After this much selling you want to play the downside after a relief
move upside fails versus attempting to get on board after Thursday and
Friday.
Have a great weekend!
End part 1 of 3
_______________________________________________________
Customer Support: http://www.InvestBilling.com
1153 Bergen Pkwy - Suite I #502 - Evergreen, CO 80439
Saturday, March 17, 2018
The Daily, Part 1 of 3, 3-17-18
* * * *
3/17/2018 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: None issued
Entry alerts: PII
Trailing stops: ARRY; NVDA
Stop alerts: ARRY
The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
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
- Expiration shows a lot of volume but still not a lot of movement.
- RUTX, SP400 show buying interest on expiration, bouncing off their tests.
- SOX, NASDAQ remain in position to try for new highs once more while SP500
and DJ30 remain quite problematic.
- If FAANG, with its current patterns, breaks higher, the entire group
likely goes higher, with chips, big tech, China stocks going as well.
- FOMC is the headline data point for the week, and a hike of 25BP is
expected.
- Lots of upside setups as the indices test the recovery moves. Can they
break higher, and if so, will the sellers re-enter and sell as on Tuesday?
And the market goes . . . nowhere. Still. Stocks tried to continue higher
early week but reversed Tuesday. NASDAQ and SOX gave up new highs. Sellers
came into the market as the leading indices hit fresh highs. Not promising.
The stock indices mostly sold the balance of the week. It was not, however,
a continuation of the Tuesday high volume selloff. Volume dropped, the
selling intensity mitigated. Indeed, after Tuesday it would be a
misrepresentation to say the selling had any intensity at all. The sellers
left, volume dropped, and stocks edged lower and laterally. After a rude
slap Tuesday with NASDAQ and SOX trying to break the top of their channels,
it was a very ordinary pullback. Ordinary and somewhat encouraging.
With SOX and NASDAQ at the top of their channels, however, the market will
have to once again defy the odds and beat the channel resistance. Thus far
they have beat the odds by avoiding a drop back to the February lows. Of
course after Tuesday they looked primed to go find them. Then the selling
intensity stalled. They are not free of that monkey on their back just yet,
but they consolidated instead of selling off, and that let a lot of stocks
form some pretty good pullbacks to support. Not new bases, just testing the
recovery runs higher. Thus, as with SOX and NASDAQ, they are in nice
consolidations, one that can break higher again, but they are also still
sitting on top of nice moves already. This has to be a real bull run to
break them all higher again. They look darn good to do it, but as noted,
they have to continue defying the odds.
Friday the indices were basically flat, except for RUTX and SP400. The
small caps and midcaps jumped nicely off the 10 day EMA and 50 day SMA,
respectively. At expiration big money was moving into domestically
sensitive areas. And it was not selling off the recent leaders either.
SP500 4.68, 0.17%
NASDAQ 0.25, 0.00%
DJ30 72.85, 0.29%
SP400 0.70%
RUTX 0.60%
SOX 0.03%
NASDAQ 100 -0.16%
VOLUME: NYSE +208%, NASDAQ +55%. Expiration, rebalance, tons of trade,
doesn't mean anything.
ADVANCE/DECLINE: NYSE +2:1, NASDAQ +1.7:1
The consensus, at least what we are reading and hearing, is that the market
is not supposed to go up anymore. The Fed is engaged in what is being
called 'quantitative tightening' (QT), it is also going to hike rates next
Wednesday and purportedly 2, maybe 3 more times this year, interest rates
are rising. There is likely more, it is just not worth reciting them.
At the same time here in the office we see a lot of patterns that look
really good to move higher. Some have not made big moves, others have put
in solid upside but have great tests in progress. While history indicates a
test of the prior lows is still a possibility, it would be foolish to ignore
good setups. The market makes a habit of not doing what everyone expects of
it. Thus we are watching these stocks and indeed buying some this past week
on the pullback when some good moves were made. We will see if those pan
out and if more join them next week off what looked to be a sharp reversal
that, at least for last week, died on the vine and allowed some really good
pullback setups.
Thursday I said the indices were at a key pullback, a lick log for some.
Still that way after Friday, though RUTX and SP400 bounced off support. We
will see if next week they can continue and other indices move with them.
Then, most importantly, can they hold any new breaks higher without getting
the Tuesday treatment. That will be the key tell for the next attempt to
move higher.
THE MARKET
CHARTS
NASDAQ/SOX: Both of these indices broke to new highs last week. SOX broke
through its upper channel line, NASDAQ likely touched what could be the
upper channel line for a new channel. Both indices faded in a sharp Tuesday
high to low reversal session. The rest of the week they were lower, but the
sellers basically left. After Tuesday there was no heavy selling. None of
the indices could hold an early gain, but there was no high volume dumping
as on Tuesday. That leaves NASDAQ and SOX in tight lateral consolidations
over the 10 day EMA and in position to defy the odds and continue with more
upside. As noted Thursday, an important time for these two indices. And
all the other indices.
RUTX: Three-session test to the 10 day EMA, a bounce Friday. Expiration,
cannot make too much of it, but it is notable that the index approached the
January high, put in a rather normal test of the 10 day, then started to
bounce as it was bought more than other indices. It too is at an important
point, but it too is also showing promise.
SP400: Midcaps showed buying Friday as well, even more so than RUTX.
Cleared the 50 day SMA and the December high the prior Friday, then came
back to test that move and held. Still inside the selloff from January to
February, and that makes all moves inside that level suspect, particularly
one of these with the lack of an upside base or pattern. Still this is
promising and how the midcaps react this week, as with the other indices, is
quite important.
SP500: SP500 definitely looks better than it did early week as it managed
to hold the 50 day SMA with a pair of tight doji Thursday and Friday. It
broke through the 50 day two Fridays back and then this fade. It set itself
up for a possible bounce, but overall the pattern makes me a skeptic. You
can see the outline of an upward pointing wedge from the February selloff to
present, all contained inside that selloff. That is not a bullish pattern.
We will see how SP500 performs this week off the 50 day SMA test.
DJ30: DJ30's pattern is even harder to interpret. The selloff, then a slow
rise in arguably a channel and arguably a triangle. Last week it put in a
lower high and faded to the lower trendline. Still looks weak, but it has
put itself in a position where it could bounce near term.
LEADERSHIP
Chips: And still testing. Some have put themselves in position to move
higher, e.g. ON, SLAB, TXN, MU, XLNX. Others are almost there but appear to
need more work, e.g. LRCX, SWKS. As with SOX, they are getting into
position to bounce, but can they do so at these levels?
FAANG: This group poses the same question as chips, even to a higher
degree: can they move at these levels. If so, then I would say the entire
group is a buy. FB has set up something of a double bottom with handle.
AAPL is in a nice 10 day EMA test after breaking to a new high. AMZN is in
a 1-2-3-4 test of the 10 day EMA after a new high. NFLX is holding the 10
day EMA in a tight range after the breakout was tossed back Monday. GOOG is
very similar to FB with a double bottom with handle. Again, if the market
is going to move up, these patterns are ones that can make that move.
China: NTES broke higher Thursday, held it Friday. BIDU is testing the 10
day, looks good to go. BABA gapped up off the 50 day MA Thursday. YNDX is
in excellent position to break higher. ATHM is in very good position. CTRP
is showing buying and VIPS is in a good consolidation. HTHT gapped lower
Wednesday, not helping us at all, but it did hold the prior low and is
bouncing.
Drugs/Biotechs: Up and down but overall still working well. IMGN with a
new high Friday. VCEL in a great pennant. PTCT moved higher last week.
IMMU, ARRY stumbled and we exited. Big names continue to underperform the
smaller ones, e.g. AMGN, GILD.
Internet: LLNW continues the nice tight lateral move, but it is time to
make the break. AKAM started upside Thursday, waffled Friday, but still
looks as if it will give an entry.
Software: Holding up well enough, not inspiring with new entry points just
yet. VMW has set up the FB/GOOG double bottom -- of sorts -- pattern. FFIV
is still holding the 20 day MA. RHT consolidated laterally on the week as
the 10 day EMA caught up to it. CRM testing the 10 day EMA. MSFT near the
20 day EMA, still trending higher.
Retail: There are some that look as if they can make new breaks higher.
DDS, M, KSS, TJX. WSM did break higher Thursday. TGT is trying to form up
a pattern. WMT sold to the 200 day SMA and Friday bounced; will see if
anything comes of that. There are also some good moves, e.g. PII as it
broke higher Friday. Note the PII pattern: it is very similar to FB, GOOG,
CAT -- will they break higher as well from this pattern?
MARKET STATS
DJ30
Stats: +72.85 points (+0.29%) to close at 24946.51
Nasdaq
Stats: +0.25 points (0.00%) to close at 7481.99
Volume: 3.08B (+54.77%)
Up Volume: 1.88B (+1.124B)
Down Volume: 1.15B (-50M)
A/D and Hi/Lo: Advancers led 1.67 to 1
Previous Session: Decliners led 1.31 to 1
New Highs: 109 (+26)
New Lows: 41 (-9)
S&P
Stats: +4.68 points (+0.17%) to close at 2752.01
NYSE Volume: 2.5B (+207.77%)
A/D and Hi/Lo: Advancers led 2.03 to 1
Previous Session: Decliners led 1.71 to 1
New Highs: 40 (+8)
New Lows: 90 (-46)
SENTIMENT INDICATORS
VIX: 15.80; -0.79
VXN: 17.64; -0.81
VXO: 14.11; -0.62
Put/Call Ratio (CBOE): 0.96; +0.07
Bulls and Bears: The rally to new highs on NASDAQ and SOX two weeks back of
course brought the bulls back in with a solid bump of over six points.
Heck, that is a big bump. Bears were not convinced, and they actually rose
0.2 even as the market rallied.
Bulls: 54.9 versus 48.6
Bears: 15.7 versus 15.5
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: 54.9 versus 48.6
48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00 versus
64.7 versus 66.7 versus 64.4 versus 61.9 versus 64.1 versus 64.2 versus 62.3
versus 61.5 versus 63.5 versus 64.4 versus 63.5 versus 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
Bears: 15.7 versus 15.5
15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8
versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1
versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1
versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.844 versus 2.826%. Bonds rallied last week, clearing the 20 day
EMA Tuesday. Rallied to the 50 day EMA then lost some ground Friday. The
move leads some to speculate if bonds are about to rally. A break through
the 50 day MA's would be the most important move for that direction.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.826%
versus 2.819% versus 2.844% versus 2.866% versus 2.896% versus 2.872% versus
2.879% versus 2.863% versus 2.879% versus 2.868% versus 2.799% versus 2.875%
versus 2.893% versus 2.864% versus 2.866% versus 2.934% versus 2.952% versus
2.893% versus 2.873% versus 2.904% versus 2.913% versus 2.833% versus 2.857%
versus 2.8577% versus 2.844% versus 2.813% versus 2.805% versus 2.707%
versus 2.841% versus 2.792% versus 2.713% versus 2.72% versus 2.72% versus
2.66% versus 2.66% versus 2.639% versus 2.617% versus 2.656% versus 2.661%
versus 2.618% versus 2.587% versus 2.535% versus 2.55% versus 2.559% versus
2.551% versus 2.482%
EUR/USD: 1.2287 versus 1.2304. Euro fell to the 50 day EMA on the week,
but it continues a 2 month lateral move that is consolidating the prior
rally.
Historical: 1.2304 versus 1.23782 versus 1.2392 versus 1.23412 versus 1.2305
versus 1.2305 versus 1.24017 versus 1.2411 versus 1.2344 versus 1.23187
versus 1.22822 versus 1.21894 versus 1.21893 versus 1.23257 versus 1.2296
versus 1.2324 versus 1.22820 versus 1.23431 versus 1.2411 versus 1.25083
versus 1.2450 versus 1.23528 versus 1.22887 versus 1.22524 versus 1.2273
versus 1.2377 versus 1.24573 versus 1.2502 versus 1.2404 versus 1.2402
versus 1.23832 versus 1.24308 versus 1.24159 versus 1.24340 versus 1.23083
versus 1.22567 versus 1.22169 versus 1.2241 versus 1.2198 versus 1.22698
versus 1.22060 versus 1.20608 versus 1.19507 versus 1.19322 versus 1.19662
versus 1.20313 versus 1.20756 versus 1.20177 versus 1.20573 versus 1.2001
versus 1.1936 versus 1.1936 versus 1.18998
USD/JPY: 106.00 versus 106.344. Dollar is in a 4 week lateral range below
the 10 day EMA, trying to find some support for a break higher through the
20 day EMA that has held it in check since early January.
Historical: 106.344 versus 105.846 versus 106.42 versus 106.335 versus
106.77 versus 106.41 versus 106.105 versus 105.752 versus 106.359 versus
105.734 versus 106.03 versus 106.695 versus 107.381 versus 106.96 versus
106.886 versus 106.85 versus 107.581 versus 107.435 versus 106.294 versus
106.153 versus 106.782 versus 107.77 versus 108.669 versus 108.669 versus
108.797 versus 108.88 versus 109.33 versus 109.58 versus 108.651 versus
110.001 versus 109.46 versus 109.50 versus 108.77 versus 108.84 versus
108.601 versus 109.411 versus 109.033 versus 110.159
Oil: 62.41, +1.22. Still in the lateral move that started with the
February selling.
Gold: 1312.30, -5.5. Unable to hold near the 50 day EMA and breaking lower
again.
MONDAY
It is FOMC week and this time it is expected the Fed will hike rates 25 BP,
one of those 3 hikes for 2018. More important than the hiking is the QT,
the 'quantitative tightening' as the Fed removes the buys of the junk assets
from its balance sheet, the 'give us your poor, your wretched junk assets
yearning for a buyer of last resort' program. As with that immigration
period, there comes a time when you don't need them anymore, and just as
immigration was shut down in the 1930's until the 1960's, the asset buying
program is unneeded.
Okay, so FOMC is the big dog but there is also Existing Home Sales, Leading
Economic Indicators, Durable Goods Orders, and New Home Sales. Enough to
keep things interesting as the Fed digests the stronger than expected
Industrial production for February (1.1% vs 0.3% exp vs -0.3% January) and
Capacity Utilization (78.1% vs 77.7% exp vs 77.4% January). Michigan
sentiment was also up at 102.0 from 99.7 in February. If the FOMC raises as
expected, that should at least not rattle markets.
This is one of those situations where we see a lot of really interesting
upside patterns, but most of which are tests of upside moves. The leading
indices have recovered much or all of the February losses. They rallied to
new highs or close thereto and are now testing those moves.
The big question, the huge question, is whether they can use the
consolidations to break higher yet again, putting in new highs that can
hold. If there is a fail at this point, it is likely an epic one that leads
to a test of the February low. If not, then there will be some good buys
and moves to profit from, even if they are at higher highs and leave you
with that uncomfortable feeling that there is that low still hanging out
there.
Recall in October I wrote that we just had to get used to the idea of buying
the FAANG and letting them work for us even if not much else was working?
That paid off huge for us. This is developing into one of those situations
where we just have to accept it for what it is, and if the moves are made,
buy them. Heck, isn't that what we ALWAYS do? We can contemplate,
postulate, speculate, and other 'ates that we want, but when it comes down
to it, you look at good patterns up or down, and if they make the moves,
then you follow the moves.
Key for this area, given the Tuesday action, is how any new breaks higher,
to new highs particularly, are treated. If they get the same old smack in
the face that Tuesday saw, that shows the sellers are still ready, willing,
and able to sell at this level. Breaks higher that fail shortly thereafter
are of course not good action, and if they start popping up all over the
place, that tells you the sellers are using each move higher to unload
shares and that a downturn is coming.
Thus, Tuesday was a warning, but just a warning because the sellers left and
stocks consolidated nicely. The next breaks higher off these pullbacks,
however, will really be the moves that tell the market's near-term tale.
Have a great weekend!
End part 1 of 3
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3/17/2018 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
- Expiration shows a lot of volume but still not a lot of movement.
- RUTX, SP400 show buying interest on expiration, bouncing off their tests.
- SOX, NASDAQ remain in position to try for new highs once more while SP500
and DJ30 remain quite problematic.
- If FAANG, with its current patterns, breaks higher, the entire group
likely goes higher, with chips, big tech, China stocks going as well.
- FOMC is the headline data point for the week, and a hike of 25BP is
expected.
- Lots of upside setups as the indices test the recovery moves. Can they
break higher, and if so, will the sellers re-enter and sell as on Tuesday?
And the market goes . . . nowhere. Still. Stocks tried to continue higher
early week but reversed Tuesday. NASDAQ and SOX gave up new highs. Sellers
came into the market as the leading indices hit fresh highs. Not promising.
The stock indices mostly sold the balance of the week. It was not, however,
a continuation of the Tuesday high volume selloff. Volume dropped, the
selling intensity mitigated. Indeed, after Tuesday it would be a
misrepresentation to say the selling had any intensity at all. The sellers
left, volume dropped, and stocks edged lower and laterally. After a rude
slap Tuesday with NASDAQ and SOX trying to break the top of their channels,
it was a very ordinary pullback. Ordinary and somewhat encouraging.
With SOX and NASDAQ at the top of their channels, however, the market will
have to once again defy the odds and beat the channel resistance. Thus far
they have beat the odds by avoiding a drop back to the February lows. Of
course after Tuesday they looked primed to go find them. Then the selling
intensity stalled. They are not free of that monkey on their back just yet,
but they consolidated instead of selling off, and that let a lot of stocks
form some pretty good pullbacks to support. Not new bases, just testing the
recovery runs higher. Thus, as with SOX and NASDAQ, they are in nice
consolidations, one that can break higher again, but they are also still
sitting on top of nice moves already. This has to be a real bull run to
break them all higher again. They look darn good to do it, but as noted,
they have to continue defying the odds.
Friday the indices were basically flat, except for RUTX and SP400. The
small caps and midcaps jumped nicely off the 10 day EMA and 50 day SMA,
respectively. At expiration big money was moving into domestically
sensitive areas. And it was not selling off the recent leaders either.
SP500 4.68, 0.17%
NASDAQ 0.25, 0.00%
DJ30 72.85, 0.29%
SP400 0.70%
RUTX 0.60%
SOX 0.03%
NASDAQ 100 -0.16%
VOLUME: NYSE +208%, NASDAQ +55%. Expiration, rebalance, tons of trade,
doesn't mean anything.
ADVANCE/DECLINE: NYSE +2:1, NASDAQ +1.7:1
The consensus, at least what we are reading and hearing, is that the market
is not supposed to go up anymore. The Fed is engaged in what is being
called 'quantitative tightening' (QT), it is also going to hike rates next
Wednesday and purportedly 2, maybe 3 more times this year, interest rates
are rising. There is likely more, it is just not worth reciting them.
At the same time here in the office we see a lot of patterns that look
really good to move higher. Some have not made big moves, others have put
in solid upside but have great tests in progress. While history indicates a
test of the prior lows is still a possibility, it would be foolish to ignore
good setups. The market makes a habit of not doing what everyone expects of
it. Thus we are watching these stocks and indeed buying some this past week
on the pullback when some good moves were made. We will see if those pan
out and if more join them next week off what looked to be a sharp reversal
that, at least for last week, died on the vine and allowed some really good
pullback setups.
Thursday I said the indices were at a key pullback, a lick log for some.
Still that way after Friday, though RUTX and SP400 bounced off support. We
will see if next week they can continue and other indices move with them.
Then, most importantly, can they hold any new breaks higher without getting
the Tuesday treatment. That will be the key tell for the next attempt to
move higher.
THE MARKET
CHARTS
NASDAQ/SOX: Both of these indices broke to new highs last week. SOX broke
through its upper channel line, NASDAQ likely touched what could be the
upper channel line for a new channel. Both indices faded in a sharp Tuesday
high to low reversal session. The rest of the week they were lower, but the
sellers basically left. After Tuesday there was no heavy selling. None of
the indices could hold an early gain, but there was no high volume dumping
as on Tuesday. That leaves NASDAQ and SOX in tight lateral consolidations
over the 10 day EMA and in position to defy the odds and continue with more
upside. As noted Thursday, an important time for these two indices. And
all the other indices.
RUTX: Three-session test to the 10 day EMA, a bounce Friday. Expiration,
cannot make too much of it, but it is notable that the index approached the
January high, put in a rather normal test of the 10 day, then started to
bounce as it was bought more than other indices. It too is at an important
point, but it too is also showing promise.
SP400: Midcaps showed buying Friday as well, even more so than RUTX.
Cleared the 50 day SMA and the December high the prior Friday, then came
back to test that move and held. Still inside the selloff from January to
February, and that makes all moves inside that level suspect, particularly
one of these with the lack of an upside base or pattern. Still this is
promising and how the midcaps react this week, as with the other indices, is
quite important.
SP500: SP500 definitely looks better than it did early week as it managed
to hold the 50 day SMA with a pair of tight doji Thursday and Friday. It
broke through the 50 day two Fridays back and then this fade. It set itself
up for a possible bounce, but overall the pattern makes me a skeptic. You
can see the outline of an upward pointing wedge from the February selloff to
present, all contained inside that selloff. That is not a bullish pattern.
We will see how SP500 performs this week off the 50 day SMA test.
DJ30: DJ30's pattern is even harder to interpret. The selloff, then a slow
rise in arguably a channel and arguably a triangle. Last week it put in a
lower high and faded to the lower trendline. Still looks weak, but it has
put itself in a position where it could bounce near term.
LEADERSHIP
Chips: And still testing. Some have put themselves in position to move
higher, e.g. ON, SLAB, TXN, MU, XLNX. Others are almost there but appear to
need more work, e.g. LRCX, SWKS. As with SOX, they are getting into
position to bounce, but can they do so at these levels?
FAANG: This group poses the same question as chips, even to a higher
degree: can they move at these levels. If so, then I would say the entire
group is a buy. FB has set up something of a double bottom with handle.
AAPL is in a nice 10 day EMA test after breaking to a new high. AMZN is in
a 1-2-3-4 test of the 10 day EMA after a new high. NFLX is holding the 10
day EMA in a tight range after the breakout was tossed back Monday. GOOG is
very similar to FB with a double bottom with handle. Again, if the market
is going to move up, these patterns are ones that can make that move.
China: NTES broke higher Thursday, held it Friday. BIDU is testing the 10
day, looks good to go. BABA gapped up off the 50 day MA Thursday. YNDX is
in excellent position to break higher. ATHM is in very good position. CTRP
is showing buying and VIPS is in a good consolidation. HTHT gapped lower
Wednesday, not helping us at all, but it did hold the prior low and is
bouncing.
Drugs/Biotechs: Up and down but overall still working well. IMGN with a
new high Friday. VCEL in a great pennant. PTCT moved higher last week.
IMMU, ARRY stumbled and we exited. Big names continue to underperform the
smaller ones, e.g. AMGN, GILD.
Internet: LLNW continues the nice tight lateral move, but it is time to
make the break. AKAM started upside Thursday, waffled Friday, but still
looks as if it will give an entry.
Software: Holding up well enough, not inspiring with new entry points just
yet. VMW has set up the FB/GOOG double bottom -- of sorts -- pattern. FFIV
is still holding the 20 day MA. RHT consolidated laterally on the week as
the 10 day EMA caught up to it. CRM testing the 10 day EMA. MSFT near the
20 day EMA, still trending higher.
Retail: There are some that look as if they can make new breaks higher.
DDS, M, KSS, TJX. WSM did break higher Thursday. TGT is trying to form up
a pattern. WMT sold to the 200 day SMA and Friday bounced; will see if
anything comes of that. There are also some good moves, e.g. PII as it
broke higher Friday. Note the PII pattern: it is very similar to FB, GOOG,
CAT -- will they break higher as well from this pattern?
MARKET STATS
DJ30
Stats: +72.85 points (+0.29%) to close at 24946.51
Nasdaq
Stats: +0.25 points (0.00%) to close at 7481.99
Volume: 3.08B (+54.77%)
Up Volume: 1.88B (+1.124B)
Down Volume: 1.15B (-50M)
A/D and Hi/Lo: Advancers led 1.67 to 1
Previous Session: Decliners led 1.31 to 1
New Highs: 109 (+26)
New Lows: 41 (-9)
S&P
Stats: +4.68 points (+0.17%) to close at 2752.01
NYSE Volume: 2.5B (+207.77%)
A/D and Hi/Lo: Advancers led 2.03 to 1
Previous Session: Decliners led 1.71 to 1
New Highs: 40 (+8)
New Lows: 90 (-46)
SENTIMENT INDICATORS
VIX: 15.80; -0.79
VXN: 17.64; -0.81
VXO: 14.11; -0.62
Put/Call Ratio (CBOE): 0.96; +0.07
Bulls and Bears: The rally to new highs on NASDAQ and SOX two weeks back of
course brought the bulls back in with a solid bump of over six points.
Heck, that is a big bump. Bears were not convinced, and they actually rose
0.2 even as the market rallied.
Bulls: 54.9 versus 48.6
Bears: 15.7 versus 15.5
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: 54.9 versus 48.6
48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00 versus
64.7 versus 66.7 versus 64.4 versus 61.9 versus 64.1 versus 64.2 versus 62.3
versus 61.5 versus 63.5 versus 64.4 versus 63.5 versus 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
Bears: 15.7 versus 15.5
15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8
versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1
versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1
versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.844 versus 2.826%. Bonds rallied last week, clearing the 20 day
EMA Tuesday. Rallied to the 50 day EMA then lost some ground Friday. The
move leads some to speculate if bonds are about to rally. A break through
the 50 day MA's would be the most important move for that direction.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.826%
versus 2.819% versus 2.844% versus 2.866% versus 2.896% versus 2.872% versus
2.879% versus 2.863% versus 2.879% versus 2.868% versus 2.799% versus 2.875%
versus 2.893% versus 2.864% versus 2.866% versus 2.934% versus 2.952% versus
2.893% versus 2.873% versus 2.904% versus 2.913% versus 2.833% versus 2.857%
versus 2.8577% versus 2.844% versus 2.813% versus 2.805% versus 2.707%
versus 2.841% versus 2.792% versus 2.713% versus 2.72% versus 2.72% versus
2.66% versus 2.66% versus 2.639% versus 2.617% versus 2.656% versus 2.661%
versus 2.618% versus 2.587% versus 2.535% versus 2.55% versus 2.559% versus
2.551% versus 2.482%
EUR/USD: 1.2287 versus 1.2304. Euro fell to the 50 day EMA on the week,
but it continues a 2 month lateral move that is consolidating the prior
rally.
Historical: 1.2304 versus 1.23782 versus 1.2392 versus 1.23412 versus 1.2305
versus 1.2305 versus 1.24017 versus 1.2411 versus 1.2344 versus 1.23187
versus 1.22822 versus 1.21894 versus 1.21893 versus 1.23257 versus 1.2296
versus 1.2324 versus 1.22820 versus 1.23431 versus 1.2411 versus 1.25083
versus 1.2450 versus 1.23528 versus 1.22887 versus 1.22524 versus 1.2273
versus 1.2377 versus 1.24573 versus 1.2502 versus 1.2404 versus 1.2402
versus 1.23832 versus 1.24308 versus 1.24159 versus 1.24340 versus 1.23083
versus 1.22567 versus 1.22169 versus 1.2241 versus 1.2198 versus 1.22698
versus 1.22060 versus 1.20608 versus 1.19507 versus 1.19322 versus 1.19662
versus 1.20313 versus 1.20756 versus 1.20177 versus 1.20573 versus 1.2001
versus 1.1936 versus 1.1936 versus 1.18998
USD/JPY: 106.00 versus 106.344. Dollar is in a 4 week lateral range below
the 10 day EMA, trying to find some support for a break higher through the
20 day EMA that has held it in check since early January.
Historical: 106.344 versus 105.846 versus 106.42 versus 106.335 versus
106.77 versus 106.41 versus 106.105 versus 105.752 versus 106.359 versus
105.734 versus 106.03 versus 106.695 versus 107.381 versus 106.96 versus
106.886 versus 106.85 versus 107.581 versus 107.435 versus 106.294 versus
106.153 versus 106.782 versus 107.77 versus 108.669 versus 108.669 versus
108.797 versus 108.88 versus 109.33 versus 109.58 versus 108.651 versus
110.001 versus 109.46 versus 109.50 versus 108.77 versus 108.84 versus
108.601 versus 109.411 versus 109.033 versus 110.159
Oil: 62.41, +1.22. Still in the lateral move that started with the
February selling.
Gold: 1312.30, -5.5. Unable to hold near the 50 day EMA and breaking lower
again.
MONDAY
It is FOMC week and this time it is expected the Fed will hike rates 25 BP,
one of those 3 hikes for 2018. More important than the hiking is the QT,
the 'quantitative tightening' as the Fed removes the buys of the junk assets
from its balance sheet, the 'give us your poor, your wretched junk assets
yearning for a buyer of last resort' program. As with that immigration
period, there comes a time when you don't need them anymore, and just as
immigration was shut down in the 1930's until the 1960's, the asset buying
program is unneeded.
Okay, so FOMC is the big dog but there is also Existing Home Sales, Leading
Economic Indicators, Durable Goods Orders, and New Home Sales. Enough to
keep things interesting as the Fed digests the stronger than expected
Industrial production for February (1.1% vs 0.3% exp vs -0.3% January) and
Capacity Utilization (78.1% vs 77.7% exp vs 77.4% January). Michigan
sentiment was also up at 102.0 from 99.7 in February. If the FOMC raises as
expected, that should at least not rattle markets.
This is one of those situations where we see a lot of really interesting
upside patterns, but most of which are tests of upside moves. The leading
indices have recovered much or all of the February losses. They rallied to
new highs or close thereto and are now testing those moves.
The big question, the huge question, is whether they can use the
consolidations to break higher yet again, putting in new highs that can
hold. If there is a fail at this point, it is likely an epic one that leads
to a test of the February low. If not, then there will be some good buys
and moves to profit from, even if they are at higher highs and leave you
with that uncomfortable feeling that there is that low still hanging out
there.
Recall in October I wrote that we just had to get used to the idea of buying
the FAANG and letting them work for us even if not much else was working?
That paid off huge for us. This is developing into one of those situations
where we just have to accept it for what it is, and if the moves are made,
buy them. Heck, isn't that what we ALWAYS do? We can contemplate,
postulate, speculate, and other 'ates that we want, but when it comes down
to it, you look at good patterns up or down, and if they make the moves,
then you follow the moves.
Key for this area, given the Tuesday action, is how any new breaks higher,
to new highs particularly, are treated. If they get the same old smack in
the face that Tuesday saw, that shows the sellers are still ready, willing,
and able to sell at this level. Breaks higher that fail shortly thereafter
are of course not good action, and if they start popping up all over the
place, that tells you the sellers are using each move higher to unload
shares and that a downturn is coming.
Thus, Tuesday was a warning, but just a warning because the sellers left and
stocks consolidated nicely. The next breaks higher off these pullbacks,
however, will really be the moves that tell the market's near-term tale.
Have a great weekend!
End part 1 of 3
_______________________________________________________
Customer Support: http://www.InvestBilling.com
1153 Bergen Pkwy - Suite I #502 - Evergreen, CO 80439
Sunday, March 11, 2018
The Daily, Part 1 of 3, 3-10-18
* * * *
3/10/2018 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: RHT; SQ
Entry alerts: INFI; TXN
Trailing stops: None issued
Stop alerts: QID
The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
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 just right, NKorea disarmament prospects provide solid upside
catalyst.
- 'Not since 1980's' statistics showing up in the jobs report.
- Household survey says: 1.006M jobs added in February.
- 224K manufacturing jobs in 12 months came back when they were never coming
back.
- SOX, NASDAQ leads the way. SOX is so successful it is almost at its upper
channel line.
- Will SP500, DJ30 finally come around to help the move?
- Many stocks are extended, but looking for others that have had time to
base to come up with some leadership.
Two words come to mind describing the market. I used 'resilient' to
describe the market after the tariff fears and the Cohn resignation could
not take it down. Friday the first word I said when the Jobs Report was
released was 'goldilocks.' One of the other words (okay, a third word) was
'remarkable' when the prospect of NKorea disarming was broached.
The market proved resilient despite the headwinds, and with a goldilocks
jobs report and the possibility of NKorea denuclearizing it proved it could
defy the odds: SOX broke to a new high midweek, and Friday NASDAQ and NASDAQ
100 joined it as they all powered to new all-time highs. The other indices
are not there yet, but the RUTX continues to scream higher and it will be
there soon enough after 5 of 6 days sharply higher.
SP500 47.60, 1.74%
NASDAQ 132.86, 1.79%
DJ30 440.53, 1.77%
SP400 1.64%
RUTX 1.60%
SOX 2.08%
NASDAQ 100 1.93%
VOLUME: NYSE +6%, NASDAQ +1%. No great shakes but NASDAQ moved farther
above average though NYSE remained low.
ADVANCE/DECLINE: NYSE 2.8:1, NASDAQ 2.8:1. Not huge, but the upside A/D has
been very solid to very good during the run higher.
Jobs are 'just right'
Why the goldilocks moniker? Because it gave the market everything it
wanted. Much stronger than expected jobs created, a jobs mix not seen in
the 8 years of the prior administration, jumping participation, record lows
in minority unemployment, a rising workweek, and . . . wage growth lower
than expected. For the market, that is goldilocks.
Wages are unfairly and wrongly labeled as impacting inflation. That is the
Phillips Curve myth. However, given that the Fed is controlled by those
from Princeton versus those from Chicago or Austrian scholars, the Phillips
Curve is the idol the current Fed worships. Thus the market knows that what
is pleasing to the PCurve keeps the Fed calmer.
Shades of the early 1980's: yes, history does repeat in economics as well.
Before I go into the jobs report details I want to note one thing: the
number of workers added to the workforce. +806,000. That is the highest
since June 1983. That is a significant year. The Reagan Emergency Economic
Recovery Act was enacted and the benefits were showing up. After a decade
of economic dormancy during high tax and high regulation policies had the
rest of the world and even many in the US thinking the US would no longer be
a world growth leader, the regulations were rolled back, taxes were cut, tax
incentives to invest were in place, and the economy took off. GDP surges,
jobs surges, earnings surges, stock surges. Indeed, in one month in that
recovery 1,000,000 jobs were created.
The most recent cycle is matching that prior one. A decade or more of
anti-growth policies in the form of more regulations (yes, Bush was a
regulator and a taxer with poor economic policies, and Obama was worse by a
factor of 10) had the US economy again in a no-growth zone. The prior
administration excused its poor performance with the old 'things were so bad
of course you get a weak recovery' lie (when the opposite is true -- when
you use the right policies) and the 1970's 'hey, we just cannot grow the way
we used to' nonsense.
No, when you enact the right policies in our system you get growth. Yes we
have strayed far from capitalism, so much so that when we have periods like
the 1970's and 2000's to 2016 where we move even more toward socialism,
capitalism gets the blame. Yet when we move again away from socialism and
back toward more free enterprise, i.e. less government regulation, letting
people keep more of their money -- in other words getting back to freer
markets where people have the incentive to take risk and invest (improving
the risk/reward equation) -- we see economic activity jump, jobs are
created, the standard of wealth rise. Wages are still lagging, but they
will come -- IF we stay on the path of incentives that foster investment in
the US and thus the creation of new companies out of new ideas, new
technologies, and new inventions. It happened in the 1980's and into the
1990's, and there is no reason it cannot and should not happen again.
Now, on with the countdown.
The Jobs Numbers
Non-Farm Payrolls, February: 313K vs 210K exp vs 239K prior (from 200K)
Unemployment: 4.1% vs 4.0% exp vs 4.1 prior.
Black unemployment: 6.9% versus 7.8% January. Another record low, smashing
the prior record low. Hispanic unemployment also at a record low.
Household survey:
785K jobs added
Unemployed: +22K
Full-time jobs: 729K, a near record (794K September 2017)
Part-time jobs added: 277K
Total jobs added: 1,006,000. That is the largest monthly gain in the 2000's
and harkens back to the mid-1980's when under Reagan the US produced over
1,000,000 monthly jobs but that was via the Non-Farms number, the company
reported numbers, not the household survey.
Wages: 0.1% vs 0.2% exp vs 0.3% January. 2.6% year/year versus 2.8%
(revised from 2.9%).
This was the 'light inflation' aspect of the report that let the market
appreciate the other good numbers.
Average Workweek: 34.5 vs 34.4 expected vs 34.4 January (from 34.3)
This is very welcome and out of this the higher wages will emerge.
Remember, under the ACA workers with more than 29 hours/week were subject to
the tax. With that eliminated (less regulation, right?) workers are free to
work as many hours as they can, and employers will let them work as many as
they want because there is no additional tax for letting someone work.
I bet you NEVER heard it put that way did you? The ACA taxes work. If you
work too much you are taxed. The government created a disincentive for
employers to let its employees work full time. And then the government
complained to companies as to why wages were lower (the tax) and why
employees were unable to work as much (the tax).
Kind of like our entitlement system: if you actually work too much, you get
a lot less. So, people who are anywhere close to that level of work won't
do it or else suffer a lot more penalty from losing benefits from working
'too much.' It is not their fault; the system was set up that way and they
are making a rational economic decision. To avoid this, why on earth would
you make benefits for not working available to someone who is fully able to
work? Our system is full of reverse incentives created by people who wanted
to help out but had no earthly concept of economic cause and effect. Or
human nature for that matter.
Participation: 63.0%, +0.3% mo/mo. This is one of the biggest jumps in
participation since 2016. Recall rates were heading lower, and lower, and
lower under the Obama administration because why? The incentives were not
to work. "You see, there is only one constant. One universal. It is the
only real truth: causality. Action, reaction. Cause and effect."
The Merovingian, aka the Frenchman in 'The Matrix Reloaded.'
Workers entering the work force: 806,000. As noted, the highest since June
1983 as the US embarked upon over 20 years of remarkable expansion.
This is where the jobs are:
Construction 61K
Manufacturing: 31K (224K 12 months, greatest since 1998; 263K since
election)
Retail: 50K
Professional: 50K
Mining: 9K
Information tech: -12K
Overall Goods producing: +100K
Overall services: +187K
This report was termed by Rick Santelli as 'great.' Rick doesn't put out
words lightly. Forgive me; I have to say it: is America getting great
again?
THE MARKET
THE CHARTS
NASDAQ was up sharply and put in a new high, but have to go with SOX first
as it led the way. This is not just another move. The indices defied
history in moving to higher highs. This does not mean that SP500, DJ30 have
to hit new highs, but there is strength showing that is not usual for these
patterns.
SOX: SOX edged to a new high midweek, then Friday sealed the deal with a
gap and rally. Nice move and SOX is clearly the market leader. It set up a
potential head and shoulders top but blasted that apart with this last
rally, turning a potential negative into just another rotation in the
uptrend channel from the fall. It got dicey early February, but with many
chips selling ahead of the market, they had already formed bases and were
ready to lead. That said, SOX is now closing in on the top of its channel,
closing at 1431 with the upper trendline at 1445 to 1450. Success means you
have to test at times.
NASDAQ: Gap and rally past the January high, closing out at the high on
rising, above average trade. NASDAQ defies the typical selling pattern thus
far. New highs are no guarantee they have to hold, but it has plenty of
leadership including many chip stocks.
RUTX: Not a new high but a strong 5 of 6 sessions has it past the 78%
Fibonacci retracement and on the way to the high (1616, closed at 1597). As
with NASDAQ, the 78% level did not stop the move though it still could form
an ABCD top given it is below the prior high. Just observing and noting
that is still a possibility, but the small caps are acting very positive,
suggesting the economics are better.
SP400: The midcaps broke through a resistance level themselves Friday,
clearing the November/December levels as well as the 50 day SMA and the 61%
Fibonacci retracement. Already right at the 78% level (1951) where there is
price resistance as well. That said, it is following and if the others move
up, it does as well. It is not helping out, however, and if things falter
it has its own ABCD pattern that could lead to some interesting downside.
SP500: A definite laggard, and though it was up, volume was still tepid as
SP500 matched the late February peak. It is a pattern similar to what
NASDAQ showed and rallied from so it is not necessarily a bag of chopped
liver. Perhaps its time will come this week and it follows in NASDAQ's
footsteps after SOX hits the upper channel line and needs to take a breather
along with NASDAQ.
DJ30: Could not even muster a move to match the late February high a la
SP500. Stalled at the 50 day SMA on a bit better trade, though nothing near
average. Even the DJ20 transports are matching the late February high right
now.
LEADERSHIP
The same groups keep leading higher: Chips, FAANG, biotech, tech.
Chips: A banner session of course. LRCX, AMAT, TXN, QRVO, SLAB. Perhaps a
bit overstretched in some cases while others are still solid with room to
run.
FAANG: NFLX surged to another higher high as did AMZN. FB overcame a report
that usage was down 24%; FB still does not look great. AAPL rallied to
match the February and January twin peaks. GOOG gapped and rallied past the
late February peak and is at the upper gap point from the first big and
nasty gap lower to start February.
China: Quiet though BIDU put in a good move. BABA up on the week along
with QIWI, while HTHT, SINA, YNDX were quiet or down to end the week.
Drugs/Biotechs: Mixed but still solid. Some are testing already after good
moves, others starting upside. AMGN rallied well Friday. BLUE added upside
all week. PTCT looks great. ARRY taking a pause. INFI started back
upside.
Software: RHT added more all week but we decided Friday to take the last of
a big 450%ish gain. FFIV is trying to hang on at the 20 day EMA after
flopping to there Thursday. MSFT at a new high on volume Friday. VMW
recovered on the week, but is at the 50 day MA and has slowed a bit.
Retail: Decent to struggling. DDS remains solid but COST, ROST wandering.
JWN at the 50 day MA in a test. DLTR bombed lower on the week. TGT sold
through the 50 day MA's. Not a great week for the retail sector.
Financial: JPM bounced from the 50 day EMA on the week as did BAC. WFC is
trying its hand at a double bottom from the 200 day SMA. GS is again
bumping at the January high as it slowly, slowing trends higher.
MARKET STATS
DJ30
Stats: +440.53 points (+1.77%) to close at 25335.74
Nasdaq
Stats: +132.86 points (+1.79%) to close at 7560.81
Volume: 2.3B (+1.32%)
Up Volume: 1.61B (+280M)
Down Volume: 662.82M (-254.57M)
A/D and Hi/Lo: Advancers led 2.82 to 1
Previous Session: Advancers led 1.15 to 1
New Highs: 250 (+66)
New Lows: 16 (-10)
S&P
Stats: +47.60 points (+1.74%) to close at 2786.57
NYSE Volume: 812.332M (+6.20%)
A/D and Hi/Lo: Advancers led 2.75 to 1
Previous Session: Advancers led 1.37 to 1
New Highs: 132 (+29)
New Lows: 45 (+5)
SENTIMENT INDICATORS
VIX: 14.64; -1.90
VXN: 17.30; -1.96
VXO: 13.91; -2.22
Put/Call Ratio (CBOE): 0.81; -0.09
Bulls and Bears: Of course there was a huge drop in bulls the past several
weeks, with no real improvement the past week, as the market started back
upside. SOX is up 3 of 4 weeks as sentiment plunged. NASDAQ the same.
Sentiment is quite obviously a contrary indicator.
Bulls: 48.6 versus 48.1
Bears: 15.5 versus 14.4
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: 48.6 versus 48.1
48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00 versus 64.7 versus
66.7 versus 64.4 versus 61.9 versus 64.1 versus 64.2 versus 62.3 versus 61.5
versus 63.5 versus 64.4 versus 63.5 versus 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
Bears: 15.5 versus 14.4
14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7
versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1
versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2
versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.896% versus 2.872%
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.872%
versus 2.879% versus 2.863% versus 2.879% versus 2.868% versus 2.799% versus
2.875% versus 2.893% versus 2.864% versus 2.866% versus 2.934% versus 2.952%
versus 2.893% versus 2.873% versus 2.904% versus 2.913% versus 2.833% versus
2.857% versus 2.8577% versus 2.844% versus 2.813% versus 2.805% versus
2.707% versus 2.841% versus 2.792% versus 2.713% versus 2.72% versus 2.72%
versus 2.66% versus 2.66% versus 2.639% versus 2.617% versus 2.656% versus
2.661% versus 2.618% versus 2.587% versus 2.535% versus 2.55% versus 2.559%
versus 2.551% versus 2.482% versus 2.456% versus 2.463% versus 2.464% versus
2.405% versus 2.434% versus 2.412% versus 2.474% versus 2.485% versus 2.484%
versus 2.501% versus 2.459% versus 2.398% versus 2.351%
EUR/USD: 1.2305 versus 1.2305
Historical: 1.2305 versus 1.24017 versus 1.2411 versus 1.2344 versus 1.23187
versus 1.22822 versus 1.21894 versus 1.21893 versus 1.23257 versus 1.2296
versus 1.2324 versus 1.22820 versus 1.23431 versus 1.2411 versus 1.25083
versus 1.2450 versus 1.23528 versus 1.22887 versus 1.22524 versus 1.2273
versus 1.2377 versus 1.24573 versus 1.2502 versus 1.2404 versus 1.2402
versus 1.23832 versus 1.24308 versus 1.24159 versus 1.24340 versus 1.23083
versus 1.22567 versus 1.22169 versus 1.2241 versus 1.2198 versus 1.22698
versus 1.22060 versus 1.20608 versus 1.19507 versus 1.19322 versus 1.19662
versus 1.20313 versus 1.20756 versus 1.20177 versus 1.20573 versus 1.2001
versus 1.1936 versus 1.1936 versus 1.18998 versus 1.18593 versus 1.18628
versus 1.18658 versus 1.18792 versus 1.18408 versus 1.17703 versus 1.1752
versus 1.17798 versus 1.18392 versus 1.17430
USD/JPY: 106.77 versus 106.41
Historical: 106.41 versus 106.105 versus 105.752 versus 106.359 versus
105.734 versus 106.03 versus 106.695 versus 107.381 versus 106.96 versus
106.886 versus 106.85 versus 107.581 versus 107.435 versus 106.294 versus
106.153 versus 106.782 versus 107.77 versus 108.669 versus 108.669 versus
108.797 versus 108.88 versus 109.33 versus 109.58 versus 108.651 versus
110.001 versus 109.46 versus 109.50 versus 108.77 versus 108.84 versus
108.601 versus 109.411 versus 109.033 versus 110.159 versus 110.159 versus
110.70
Oil: 62.04, +1.92. After breaking below the 50 day MA, Oil rebounded, but
still in a lateral move along the 50 day MA the past four weeks.
Gold: 1324.00, +2.30. Gold has stalled out at the 50 day MA's as well, but
is still in a pretty good pattern.
MONDAY
Big moves on all the indices with some to new highs, others still dealing
with old highs. Many stocks have moved very well in their leadership rolls,
e.g. chips. There are still stocks out there with potential to rally but
some of the leadership groups such as SOX are nearing resistance and will
need a test.
Those stocks that have sprinted won't present a lot of good new buys, but
perhaps other areas that have lagged are getting the time they need to
complete patterns and can join the move higher, giving it some breadth and
perhaps taking the lead on the upside move.
With the market moving you want to continue moving into stocks that are
setting up then breaking higher. If more continue to do so, then you will
see RUTX, SP400 and even the large cap NYSE make new highs as well.
Leadership will have to fan out more to get all to new highs.
There is also the possibility that SOX hits the top of its channel and falls
along with NASDAQ, and that results in the NYSE indices breaking back lower.
RUTX, SP400 still have potential ABCD downside patterns while SP500 and DJ30
have mid-recovery double tops. Have to keep that in mind if inflation
worries come back around.
What may happen Monday is a bit of give back after such a huge end to the
week on such an emotional high (jobs, NKorea). That would be just fine as
we can use that perhaps to get some better entries on stocks that started to
break higher but we did not want to chase on a Friday. Buy on Monday, sell
on Friday, right? Okay, there are a few twists in there of course, but
after such good happy time moves to end a week, then a bit of give back
early week is normal. Again, we want to use that to enter well-positioned
stocks that made a break higher but are testing it.
Again, the market was resilient, buying time, holding gains, letting
patterns set up in the recovery. Then when good news hit, it was upside
again. We bought positions on the week, had positions working, and are for
the most part pleased with the moves. Some are just not performing with the
market as is the case sometimes, and those are disappointing, e.g. LULU.
Nice break higher, gave it back, holding support but could not participate
Friday. Will see if money shifts back their way this week as we let winners
work and look for new areas, preferably after a brief pullback, to put money
to work.
Have a great weekend!
End part 1 of 3
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The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
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 just right, NKorea disarmament prospects provide solid upside
catalyst.
- 'Not since 1980's' statistics showing up in the jobs report.
- Household survey says: 1.006M jobs added in February.
- 224K manufacturing jobs in 12 months came back when they were never coming
back.
- SOX, NASDAQ leads the way. SOX is so successful it is almost at its upper
channel line.
- Will SP500, DJ30 finally come around to help the move?
- Many stocks are extended, but looking for others that have had time to
base to come up with some leadership.
Two words come to mind describing the market. I used 'resilient' to
describe the market after the tariff fears and the Cohn resignation could
not take it down. Friday the first word I said when the Jobs Report was
released was 'goldilocks.' One of the other words (okay, a third word) was
'remarkable' when the prospect of NKorea disarming was broached.
The market proved resilient despite the headwinds, and with a goldilocks
jobs report and the possibility of NKorea denuclearizing it proved it could
defy the odds: SOX broke to a new high midweek, and Friday NASDAQ and NASDAQ
100 joined it as they all powered to new all-time highs. The other indices
are not there yet, but the RUTX continues to scream higher and it will be
there soon enough after 5 of 6 days sharply higher.
SP500 47.60, 1.74%
NASDAQ 132.86, 1.79%
DJ30 440.53, 1.77%
SP400 1.64%
RUTX 1.60%
SOX 2.08%
NASDAQ 100 1.93%
VOLUME: NYSE +6%, NASDAQ +1%. No great shakes but NASDAQ moved farther
above average though NYSE remained low.
ADVANCE/DECLINE: NYSE 2.8:1, NASDAQ 2.8:1. Not huge, but the upside A/D has
been very solid to very good during the run higher.
Jobs are 'just right'
Why the goldilocks moniker? Because it gave the market everything it
wanted. Much stronger than expected jobs created, a jobs mix not seen in
the 8 years of the prior administration, jumping participation, record lows
in minority unemployment, a rising workweek, and . . . wage growth lower
than expected. For the market, that is goldilocks.
Wages are unfairly and wrongly labeled as impacting inflation. That is the
Phillips Curve myth. However, given that the Fed is controlled by those
from Princeton versus those from Chicago or Austrian scholars, the Phillips
Curve is the idol the current Fed worships. Thus the market knows that what
is pleasing to the PCurve keeps the Fed calmer.
Shades of the early 1980's: yes, history does repeat in economics as well.
Before I go into the jobs report details I want to note one thing: the
number of workers added to the workforce. +806,000. That is the highest
since June 1983. That is a significant year. The Reagan Emergency Economic
Recovery Act was enacted and the benefits were showing up. After a decade
of economic dormancy during high tax and high regulation policies had the
rest of the world and even many in the US thinking the US would no longer be
a world growth leader, the regulations were rolled back, taxes were cut, tax
incentives to invest were in place, and the economy took off. GDP surges,
jobs surges, earnings surges, stock surges. Indeed, in one month in that
recovery 1,000,000 jobs were created.
The most recent cycle is matching that prior one. A decade or more of
anti-growth policies in the form of more regulations (yes, Bush was a
regulator and a taxer with poor economic policies, and Obama was worse by a
factor of 10) had the US economy again in a no-growth zone. The prior
administration excused its poor performance with the old 'things were so bad
of course you get a weak recovery' lie (when the opposite is true -- when
you use the right policies) and the 1970's 'hey, we just cannot grow the way
we used to' nonsense.
No, when you enact the right policies in our system you get growth. Yes we
have strayed far from capitalism, so much so that when we have periods like
the 1970's and 2000's to 2016 where we move even more toward socialism,
capitalism gets the blame. Yet when we move again away from socialism and
back toward more free enterprise, i.e. less government regulation, letting
people keep more of their money -- in other words getting back to freer
markets where people have the incentive to take risk and invest (improving
the risk/reward equation) -- we see economic activity jump, jobs are
created, the standard of wealth rise. Wages are still lagging, but they
will come -- IF we stay on the path of incentives that foster investment in
the US and thus the creation of new companies out of new ideas, new
technologies, and new inventions. It happened in the 1980's and into the
1990's, and there is no reason it cannot and should not happen again.
Now, on with the countdown.
The Jobs Numbers
Non-Farm Payrolls, February: 313K vs 210K exp vs 239K prior (from 200K)
Unemployment: 4.1% vs 4.0% exp vs 4.1 prior.
Black unemployment: 6.9% versus 7.8% January. Another record low, smashing
the prior record low. Hispanic unemployment also at a record low.
Household survey:
785K jobs added
Unemployed: +22K
Full-time jobs: 729K, a near record (794K September 2017)
Part-time jobs added: 277K
Total jobs added: 1,006,000. That is the largest monthly gain in the 2000's
and harkens back to the mid-1980's when under Reagan the US produced over
1,000,000 monthly jobs but that was via the Non-Farms number, the company
reported numbers, not the household survey.
Wages: 0.1% vs 0.2% exp vs 0.3% January. 2.6% year/year versus 2.8%
(revised from 2.9%).
This was the 'light inflation' aspect of the report that let the market
appreciate the other good numbers.
Average Workweek: 34.5 vs 34.4 expected vs 34.4 January (from 34.3)
This is very welcome and out of this the higher wages will emerge.
Remember, under the ACA workers with more than 29 hours/week were subject to
the tax. With that eliminated (less regulation, right?) workers are free to
work as many hours as they can, and employers will let them work as many as
they want because there is no additional tax for letting someone work.
I bet you NEVER heard it put that way did you? The ACA taxes work. If you
work too much you are taxed. The government created a disincentive for
employers to let its employees work full time. And then the government
complained to companies as to why wages were lower (the tax) and why
employees were unable to work as much (the tax).
Kind of like our entitlement system: if you actually work too much, you get
a lot less. So, people who are anywhere close to that level of work won't
do it or else suffer a lot more penalty from losing benefits from working
'too much.' It is not their fault; the system was set up that way and they
are making a rational economic decision. To avoid this, why on earth would
you make benefits for not working available to someone who is fully able to
work? Our system is full of reverse incentives created by people who wanted
to help out but had no earthly concept of economic cause and effect. Or
human nature for that matter.
Participation: 63.0%, +0.3% mo/mo. This is one of the biggest jumps in
participation since 2016. Recall rates were heading lower, and lower, and
lower under the Obama administration because why? The incentives were not
to work. "You see, there is only one constant. One universal. It is the
only real truth: causality. Action, reaction. Cause and effect."
The Merovingian, aka the Frenchman in 'The Matrix Reloaded.'
Workers entering the work force: 806,000. As noted, the highest since June
1983 as the US embarked upon over 20 years of remarkable expansion.
This is where the jobs are:
Construction 61K
Manufacturing: 31K (224K 12 months, greatest since 1998; 263K since
election)
Retail: 50K
Professional: 50K
Mining: 9K
Information tech: -12K
Overall Goods producing: +100K
Overall services: +187K
This report was termed by Rick Santelli as 'great.' Rick doesn't put out
words lightly. Forgive me; I have to say it: is America getting great
again?
THE MARKET
THE CHARTS
NASDAQ was up sharply and put in a new high, but have to go with SOX first
as it led the way. This is not just another move. The indices defied
history in moving to higher highs. This does not mean that SP500, DJ30 have
to hit new highs, but there is strength showing that is not usual for these
patterns.
SOX: SOX edged to a new high midweek, then Friday sealed the deal with a
gap and rally. Nice move and SOX is clearly the market leader. It set up a
potential head and shoulders top but blasted that apart with this last
rally, turning a potential negative into just another rotation in the
uptrend channel from the fall. It got dicey early February, but with many
chips selling ahead of the market, they had already formed bases and were
ready to lead. That said, SOX is now closing in on the top of its channel,
closing at 1431 with the upper trendline at 1445 to 1450. Success means you
have to test at times.
NASDAQ: Gap and rally past the January high, closing out at the high on
rising, above average trade. NASDAQ defies the typical selling pattern thus
far. New highs are no guarantee they have to hold, but it has plenty of
leadership including many chip stocks.
RUTX: Not a new high but a strong 5 of 6 sessions has it past the 78%
Fibonacci retracement and on the way to the high (1616, closed at 1597). As
with NASDAQ, the 78% level did not stop the move though it still could form
an ABCD top given it is below the prior high. Just observing and noting
that is still a possibility, but the small caps are acting very positive,
suggesting the economics are better.
SP400: The midcaps broke through a resistance level themselves Friday,
clearing the November/December levels as well as the 50 day SMA and the 61%
Fibonacci retracement. Already right at the 78% level (1951) where there is
price resistance as well. That said, it is following and if the others move
up, it does as well. It is not helping out, however, and if things falter
it has its own ABCD pattern that could lead to some interesting downside.
SP500: A definite laggard, and though it was up, volume was still tepid as
SP500 matched the late February peak. It is a pattern similar to what
NASDAQ showed and rallied from so it is not necessarily a bag of chopped
liver. Perhaps its time will come this week and it follows in NASDAQ's
footsteps after SOX hits the upper channel line and needs to take a breather
along with NASDAQ.
DJ30: Could not even muster a move to match the late February high a la
SP500. Stalled at the 50 day SMA on a bit better trade, though nothing near
average. Even the DJ20 transports are matching the late February high right
now.
LEADERSHIP
The same groups keep leading higher: Chips, FAANG, biotech, tech.
Chips: A banner session of course. LRCX, AMAT, TXN, QRVO, SLAB. Perhaps a
bit overstretched in some cases while others are still solid with room to
run.
FAANG: NFLX surged to another higher high as did AMZN. FB overcame a report
that usage was down 24%; FB still does not look great. AAPL rallied to
match the February and January twin peaks. GOOG gapped and rallied past the
late February peak and is at the upper gap point from the first big and
nasty gap lower to start February.
China: Quiet though BIDU put in a good move. BABA up on the week along
with QIWI, while HTHT, SINA, YNDX were quiet or down to end the week.
Drugs/Biotechs: Mixed but still solid. Some are testing already after good
moves, others starting upside. AMGN rallied well Friday. BLUE added upside
all week. PTCT looks great. ARRY taking a pause. INFI started back
upside.
Software: RHT added more all week but we decided Friday to take the last of
a big 450%ish gain. FFIV is trying to hang on at the 20 day EMA after
flopping to there Thursday. MSFT at a new high on volume Friday. VMW
recovered on the week, but is at the 50 day MA and has slowed a bit.
Retail: Decent to struggling. DDS remains solid but COST, ROST wandering.
JWN at the 50 day MA in a test. DLTR bombed lower on the week. TGT sold
through the 50 day MA's. Not a great week for the retail sector.
Financial: JPM bounced from the 50 day EMA on the week as did BAC. WFC is
trying its hand at a double bottom from the 200 day SMA. GS is again
bumping at the January high as it slowly, slowing trends higher.
MARKET STATS
DJ30
Stats: +440.53 points (+1.77%) to close at 25335.74
Nasdaq
Stats: +132.86 points (+1.79%) to close at 7560.81
Volume: 2.3B (+1.32%)
Up Volume: 1.61B (+280M)
Down Volume: 662.82M (-254.57M)
A/D and Hi/Lo: Advancers led 2.82 to 1
Previous Session: Advancers led 1.15 to 1
New Highs: 250 (+66)
New Lows: 16 (-10)
S&P
Stats: +47.60 points (+1.74%) to close at 2786.57
NYSE Volume: 812.332M (+6.20%)
A/D and Hi/Lo: Advancers led 2.75 to 1
Previous Session: Advancers led 1.37 to 1
New Highs: 132 (+29)
New Lows: 45 (+5)
SENTIMENT INDICATORS
VIX: 14.64; -1.90
VXN: 17.30; -1.96
VXO: 13.91; -2.22
Put/Call Ratio (CBOE): 0.81; -0.09
Bulls and Bears: Of course there was a huge drop in bulls the past several
weeks, with no real improvement the past week, as the market started back
upside. SOX is up 3 of 4 weeks as sentiment plunged. NASDAQ the same.
Sentiment is quite obviously a contrary indicator.
Bulls: 48.6 versus 48.1
Bears: 15.5 versus 14.4
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: 48.6 versus 48.1
48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00 versus 64.7 versus
66.7 versus 64.4 versus 61.9 versus 64.1 versus 64.2 versus 62.3 versus 61.5
versus 63.5 versus 64.4 versus 63.5 versus 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
Bears: 15.5 versus 14.4
14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7
versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1
versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2
versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.896% versus 2.872%
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.872%
versus 2.879% versus 2.863% versus 2.879% versus 2.868% versus 2.799% versus
2.875% versus 2.893% versus 2.864% versus 2.866% versus 2.934% versus 2.952%
versus 2.893% versus 2.873% versus 2.904% versus 2.913% versus 2.833% versus
2.857% versus 2.8577% versus 2.844% versus 2.813% versus 2.805% versus
2.707% versus 2.841% versus 2.792% versus 2.713% versus 2.72% versus 2.72%
versus 2.66% versus 2.66% versus 2.639% versus 2.617% versus 2.656% versus
2.661% versus 2.618% versus 2.587% versus 2.535% versus 2.55% versus 2.559%
versus 2.551% versus 2.482% versus 2.456% versus 2.463% versus 2.464% versus
2.405% versus 2.434% versus 2.412% versus 2.474% versus 2.485% versus 2.484%
versus 2.501% versus 2.459% versus 2.398% versus 2.351%
EUR/USD: 1.2305 versus 1.2305
Historical: 1.2305 versus 1.24017 versus 1.2411 versus 1.2344 versus 1.23187
versus 1.22822 versus 1.21894 versus 1.21893 versus 1.23257 versus 1.2296
versus 1.2324 versus 1.22820 versus 1.23431 versus 1.2411 versus 1.25083
versus 1.2450 versus 1.23528 versus 1.22887 versus 1.22524 versus 1.2273
versus 1.2377 versus 1.24573 versus 1.2502 versus 1.2404 versus 1.2402
versus 1.23832 versus 1.24308 versus 1.24159 versus 1.24340 versus 1.23083
versus 1.22567 versus 1.22169 versus 1.2241 versus 1.2198 versus 1.22698
versus 1.22060 versus 1.20608 versus 1.19507 versus 1.19322 versus 1.19662
versus 1.20313 versus 1.20756 versus 1.20177 versus 1.20573 versus 1.2001
versus 1.1936 versus 1.1936 versus 1.18998 versus 1.18593 versus 1.18628
versus 1.18658 versus 1.18792 versus 1.18408 versus 1.17703 versus 1.1752
versus 1.17798 versus 1.18392 versus 1.17430
USD/JPY: 106.77 versus 106.41
Historical: 106.41 versus 106.105 versus 105.752 versus 106.359 versus
105.734 versus 106.03 versus 106.695 versus 107.381 versus 106.96 versus
106.886 versus 106.85 versus 107.581 versus 107.435 versus 106.294 versus
106.153 versus 106.782 versus 107.77 versus 108.669 versus 108.669 versus
108.797 versus 108.88 versus 109.33 versus 109.58 versus 108.651 versus
110.001 versus 109.46 versus 109.50 versus 108.77 versus 108.84 versus
108.601 versus 109.411 versus 109.033 versus 110.159 versus 110.159 versus
110.70
Oil: 62.04, +1.92. After breaking below the 50 day MA, Oil rebounded, but
still in a lateral move along the 50 day MA the past four weeks.
Gold: 1324.00, +2.30. Gold has stalled out at the 50 day MA's as well, but
is still in a pretty good pattern.
MONDAY
Big moves on all the indices with some to new highs, others still dealing
with old highs. Many stocks have moved very well in their leadership rolls,
e.g. chips. There are still stocks out there with potential to rally but
some of the leadership groups such as SOX are nearing resistance and will
need a test.
Those stocks that have sprinted won't present a lot of good new buys, but
perhaps other areas that have lagged are getting the time they need to
complete patterns and can join the move higher, giving it some breadth and
perhaps taking the lead on the upside move.
With the market moving you want to continue moving into stocks that are
setting up then breaking higher. If more continue to do so, then you will
see RUTX, SP400 and even the large cap NYSE make new highs as well.
Leadership will have to fan out more to get all to new highs.
There is also the possibility that SOX hits the top of its channel and falls
along with NASDAQ, and that results in the NYSE indices breaking back lower.
RUTX, SP400 still have potential ABCD downside patterns while SP500 and DJ30
have mid-recovery double tops. Have to keep that in mind if inflation
worries come back around.
What may happen Monday is a bit of give back after such a huge end to the
week on such an emotional high (jobs, NKorea). That would be just fine as
we can use that perhaps to get some better entries on stocks that started to
break higher but we did not want to chase on a Friday. Buy on Monday, sell
on Friday, right? Okay, there are a few twists in there of course, but
after such good happy time moves to end a week, then a bit of give back
early week is normal. Again, we want to use that to enter well-positioned
stocks that made a break higher but are testing it.
Again, the market was resilient, buying time, holding gains, letting
patterns set up in the recovery. Then when good news hit, it was upside
again. We bought positions on the week, had positions working, and are for
the most part pleased with the moves. Some are just not performing with the
market as is the case sometimes, and those are disappointing, e.g. LULU.
Nice break higher, gave it back, holding support but could not participate
Friday. Will see if money shifts back their way this week as we let winners
work and look for new areas, preferably after a brief pullback, to put money
to work.
Have a great weekend!
End part 1 of 3
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Sunday, March 04, 2018
The Daily, Part 1 of 3, 3-3-18
* * * *
3/3/2018 Investment House Daily
* * * *
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MARKET ALERTS:
Targets hit: MSCC
Entry alerts: ARRY; CAMP
Trailing stops: PTCT; AMZN
Stop alerts: IPXL; SCHN
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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
- Stocks sell farther early Friday, reverse in a pre-weekend short covering
move. All but Dow turn positive.
- Too many stories hit the market: tariffs, Japan QE end, Fed rate hikes,
Putin's bomb.
- Perhaps more upside to the new week, but the probabilities still suggest
another drop.
- Still very good leadership groups and stocks, but that does not guarantee
a climb to a new high from here.
- Market is not in a new trend so we stay with less money in the market as
we wait for the next big move and then the next trend.
After breaking higher the prior Friday and Monday, clearing the weeklong
consolidation, stocks sold Tuesday into Friday. Japan's Kuroda rather
unexpectedly musing it might be time to end QEJ (QE Japan). The US
announcing metals tariffs, others vowing retaliation and the US vowing
retaliation to retaliations. Interest rates, the Federal Reserve gone wild
(supposedly), Russia's Putin bragging my missile is bigger than yours. That
makes for a nice, steady market.
As for the tariffs, after the initial round of outrage, Trump said trade
wars were good and boasted they are easy to win. Oh, that is a relief. I
thought this history thing was a problem. Okay, I see it. For decades the
US has let China and others get away with agreements and 'understandings'
that advantaged them and seriously disadvantaged US producers. When they
have a cushy deal for a long time, and you then come in and say 'it is time
to adjust the terms now that you are on your feet and doing well,' they
squeal like stuck pigs. Or more politically, it 'outrages the global
community.' The nerve. You help them out, they prosper, now you want to
move back to an even playing field. 'Foul' they cry. Okay, I guess we
should have just crushed your businesses into pulp when we had the
advantage. Instead we helped you out and now you cannot admit your good
fortune and continue to work hard.
Instead the WTO threatens sanctions, purportedly to even things back out.
The irony, of course, is that the US is simply attempting to move back to a
deal that is for equals now that the other countries have their industries
working well. The WTO and impacted countries, however, react in a manner
that would make the arrangement even further skewed in their favor. You
truly get no good will for acting with good will toward other countries.
You give, they prosper, you then say there is no longer any need to give,
and then you are a villain to be condemned. Again, why then bother to be
nice in the first place? You get nothing for it. Other than, of course,
'death to America.'
Market action.
Three days hard down, Friday the same with futures opening sharply lower and
stocks selling off through the first hour. In that first hour, however,
they found support and started to recovery. A midmorning test lower put in
a higher low and stocks managed to rally to the close.
Short covering? Sure it was. As noted in the pre-market alert, after the
3+ days downside and ahead of the weekend a short covering bounce could
ensue. It did and stocks made that recovery, though not all made it back to
positive.
SP500 13.58, 0.51%
NASDAQ 77.31, 1.08%
DJ30 -70.92, -0.29%
SP400 1.10%
RUTX 1.71%
SOX 1.76%
NASDAQ 100 0.90%
VOLUME: NYSE -10%, NASDAQ -8%. Lower trade on the rebound from the selling
sessions, though still above average. At least there were a significant
number buying and covering shorts.
ADVANCE/DECLINE: NYSE 1.7:1, NASDAQ 3:1. Decent breadth. Not as strong as
the downside when the selling started, but stronger than the Thursday
downside breadth.
Thursday I discussed NASDAQ and SOX as being in position to bounce. Okay,
they did, just took them a bit longer. And it was a good bounce as SOX
tested farther to the 50 day MA and then reversed smartly. NASDAQ gapped
below the 50 day MA and then reversed. Those were the two we though had a
shot and they made pretty good runs at it, particularly SOX.
If the market is going to rally again from here it is because of those two,
perhaps you can throw in RUTX as well. The small caps out in another
downside session but held the Thursday low and reversed, holding some key
support levels.
SP500 was so-so, gapping lower then recovering to positive, but lower trade
and not taking back any significant levels. DJ30 similar and it did not
even make it back to positive. SP400 put in a decent move, but it closed
still below important levels.
Can SOX and NASDAQ, and perhaps RUTX, drag the others back up? Their
components certainly showed the kind of firepower Friday that could do it,
but they are not the entire market. NFLX moved to a new high on a strong
breakout with volume. INTC bounced sharply off support. CSCO held
beautifully and bounced. MU strong. They can lead, but they have to show
they can drag the others back with them.
We did close some positions and picked up some. Wish we had not closed AMZN
but we did keep one open so we still have some upside exposure there. If
NFLX continues upside on this breakout, you have to look at adding
positions. Even if the market doesn't follow, NFLX doesn't seem to care.
THE MARKET
CHARTS
SOX: Sold into Thursday but bounced off a tap at the 50 day MA. Friday a
gap to the 50 day SMA set up a rebound, taking back all the Thursday loss.
By the way, Thursday's close held the November peak, an important level.
SOX does not look bad, indeed, it looks the best of the group.
NASDAQ: After selling to the 50 day SMA on the Thursday close, NASDAQ
gapped below both 50 day MA. It held 7100, reversed upside. Decent action,
held where it had to, but not the same strength as SOX.
RUTX: Sold again Friday morning, matched the Thursday low, but as on
Thursday, rebounded. This time it did not just hold the October high but
blew past it as well. Nice recovery from a support level, but frankly its
chart is far from providing any upside warm feelings. It sold hard for 2+
sessions and then bounced hard for a session. 1550 is key for it (closed at
1533).
SP400: Sold again Friday, but reversed off support at 1840, posting a solid
gain. Nice relief move, but the pattern is not great, has resistance
overhead at 1900 (closed at 1878), and the pattern is overall bearish until
it can make an important upside break.
SP500: Broke lower in the ABCD downside pattern and solid three sessions
and then into Friday before it recovered to a modest gain. Still at
resistance, so this lower volume bounce is suspect indeed. A move to the 50
day MA's on continued lighter trade than the selling sets up the return trip
to the February low.
DJ30: The only index that did not recover to positive Friday. Gapped,
sold, recovered, but came up short just below the December consolidation
resistance. Not looking great as it sold off in its own ABCD downside
pattern. After a short bounce that perhaps mimics DJ30, it likely rolls
back over.
LEADERSHIP
Chips: Again one of the best upside groups, having come from trash to
tolerable. MU, AMAT, QRVO, XLNX, NVDA have workable patterns. LRCX is
still good and MLNX made a quick test and is looking good to move upside.
FAANG: NFLX is the cream of the crop with its new breakout. FB sold to
near the 200 day SMA and is trying to bounce. AAPL held the 50 day SMA and
rebounded, but is still locked in its range. AMZN fell to the 20 day EMA,
bounced on very solid trade. GOOG gapped lower again, but did reversed to
positive; could not recover the 50 day MA's.
Software: RHT, FFIV bounced nicely off test. BLKB, MSFT not bad bounces
either. VMW gapped sharply lower; great. Overall, however, still a good
group.
Metals: No major move Friday, but with their patterns, that is not bad
news. STLD held the 20 day EMA and bounced some in a nice pattern. RS held
its pattern well. SCHN shook us out unfortunately. FCX has now test up an
interesting pattern.
Drugs/Biotech: Still some good patterns and action. IMGN bouncing off the
10 day EMA test. IMMU moving up off a 50 day MA test. PTCT shook us out of
a position but recovered. VCEL moving back upside on volume. ARRY
bouncing. AMGN reversed off its doji, showing big volume.
Financial: Some 50 day MA tests in progress. BAC, JPM tested and started
to bounce. GS still below the 50 day. C bad.
Retail: Some impressive moves, solid holds, and interesting patterns. DDS
explodes higher again. TGT holding decently in a nice developing pattern
over the 50 day MA. TLRD not gad. ROST keeps hanging on for now. HD
gapped to the 78% Fibonacci retracement for what could be a double bottom at
that level. KSS sold to the 50 day MA then reversed sharply upside Friday.
There is good promise here.
MARKET STATS
DJ30
Stats: -70.92 points (-0.29%) to close at 24538.06
Nasdaq
Stats: +77.31 points (+1.08%) to close at 7257.87
Volume: 2.29B (-8.03%)
Up Volume: 1.66B (+817.87M)
Down Volume: 603.84M (-1.016B)
A/D and Hi/Lo: Advancers led 2.99 to 1
Previous Session: Decliners led 1.42 to 1
New Highs: 64 (+31)
New Lows: 72 (-30)
S&P
Stats: +13.58 points (+0.51%) to close at 2691.25
NYSE Volume: 900M (-10.00%)
A/D and Hi/Lo: Advancers led 1.71 to 1
Previous Session: Decliners led 1.5 to 1
New Highs: 27 (+12)
New Lows: 165 (-4)
SENTIMENT INDICATORS
VIX: 19.59; -2.88
VXN: 21.53; -3.21
VXO: 19.08; -1.36
Put/Call Ratio (CBOE): 1.16; -0.13
Bulls and Bears: The plunge slowed for the bulls, but there is already a
massive drop in place the past three weeks.
Bulls: 48.1 versus 48.5
Bears: 14.4 versus 14.6
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: 48.1 versus 48.5
48.5 versus 41.9 versus 54.4 versus 66.00 versus 64.7 versus 66.7 versus
64.4 versus 61.9 versus 64.1 versus 64.2 versus 62.3 versus 61.5 versus 63.5
versus 64.4 versus 63.5 versus 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
Bears: 14.4 versus 14.6
14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5
versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4
versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1
versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.868% versus 2.799%. After moving higher on the week and a solid
break higher Thursday, bonds sold back from the 20 day EMA test.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.799%
versus 2.875% versus 2.893% versus 2.864% versus 2.866% versus 2.934% versus
2.952% versus 2.893% versus 2.873% versus 2.904% versus 2.913% versus 2.833%
versus 2.857% versus 2.8577% versus 2.844% versus 2.813% versus 2.805%
versus 2.707% versus 2.841% versus 2.792% versus 2.713% versus 2.72% versus
2.72% versus 2.66% versus 2.66% versus 2.639% versus 2.617% versus 2.656%
versus 2.661% versus 2.618% versus 2.587% versus 2.535% versus 2.55% versus
2.559% versus 2.551% versus 2.482% versus 2.456% versus 2.463% versus 2.464%
versus 2.405% versus 2.434% versus 2.412% versus 2.474% versus 2.485% versus
2.484% versus 2.501% versus 2.459% versus 2.398% versus 2.351%
EUR/USD: 1.23187 versus 1.22822. Euro bounced after 2 weeks of selling,
moving back over the 50 day MA Friday after a reversal Thursday.
Historical: 1.22822 versus 1.21894 versus 1.21893 versus 1.23257 versus
1.2296 versus 1.2324 versus 1.22820 versus 1.23431 versus 1.2411 versus
1.25083 versus 1.2450 versus 1.23528 versus 1.22887 versus 1.22524 versus
1.2273 versus 1.2377 versus 1.24573 versus 1.2502 versus 1.2404 versus
1.2402 versus 1.23832 versus 1.24308 versus 1.24159 versus 1.24340 versus
1.23083 versus 1.22567 versus 1.22169 versus 1.2241 versus 1.2198 versus
1.22698 versus 1.22060 versus 1.20608 versus 1.19507 versus 1.19322 versus
1.19662 versus 1.20313 versus 1.20756 versus 1.20177 versus 1.20573 versus
1.2001 versus 1.1936 versus 1.1936 versus 1.18998 versus 1.18593 versus
1.18628 versus 1.18658 versus 1.18792 versus 1.18408 versus 1.17703 versus
1.1752 versus 1.17798 versus 1.18392 versus 1.17430
USD/JPY: 105.734 versus 106.03. Dollar sold off Wednesday to Friday,
testing the mid-February low and showing a doji. Perhaps a double bottom?
Historical: 106.03 versus 106.695 versus 107.381 versus 106.96 versus
106.886 versus 106.85 versus 107.581 versus 107.435 versus 106.294 versus
106.153 versus 106.782 versus 107.77 versus 108.669 versus 108.669 versus
108.797 versus 108.88 versus 109.33 versus 109.58 versus 108.651 versus
110.001 versus 109.46 versus 109.50 versus 108.77 versus 108.84 versus
108.601 versus 109.411 versus 109.033 versus 110.159 versus 110.159 versus
110.70
Oil: 61.25, +0.26. Oil sold on the week from a lower high, holding at some
support at 60.00, bouncing twice off the low there Thursday and Friday.
Looks weaker, however, likely tries an ABCD setup. That means, however, more
near term weakness.
Gold: 1323.40, +18.20. Gold could not make up its mind on the week, though
it was lower. Sold hard Tuesday and again Thursday, falling through the 50
day MA. Friday a bounce, but it did not change the pattern. Very jumbled
right now as it could not hold an easy 50 day MA test.
MONDAY
A flood of data on the week starting with ISM Services Monday followed by
the jobs data Wednesday, Thursday, and Friday.
Important, may make a difference to the market in the end, but right now
stocks are on a bumpy road that is likely not at its end just yet.
SOX looks better and better, NASDAQ is decent, RUTX is trying. There are
still several leadership groups that still sport very nice patterns.
Promising, but the market started to sell again last week and likely it sees
out the historical pattern. The Friday bounce was no doubt short covering,
and perhaps SOX and NASDAQ can help keep the move upside to start the week.
It did sell from an ABCD downside pattern and it is possible the downdraft
is over.
After a day or two, however, I would not be surprised if the move runs out
of gas and the final test toward the February low is on. The leadership
looks good and it could lead the market higher. What likely happens as the
market sells again to test the prior low, and during that time these stocks
can hold up and be ready for the bounce. Other stocks can use that to work
on their bases. That is the usual scenario.
Friday was interesting, a solid short covering move. The next point of note
is how stocks open Monday. A bounce and we see how it holds, for the day or
more. A bounce can turn into something really solid given how many quality
stocks there are in good patterns, but it has to prove it. For those stocks
that bounce but are lagging, using the move higher to exit is not a bad
strategy. Using the move higher to exit some March options is also not a
bad idea.
New positions? There are patterns that look good still and are moving well.
You cannot ignore NFLX. We can play some of them as they bounce, but as
before, knowing any bounce now is still just likely a relief move.
The probabilities are that the market is not through the selling episode
yet. A bounce could turn to a new high but likely stalls out and then makes
that second drop that usually puts an end to a selloff . . . IF the economy
is still solid, if the Fed is not on the path to wreck it, if war does not
erupt, if the trade issues don't explode.
A few ifs, but for now we play the market that has the most probabilities,
and that is a test to the prior lows. The more immediate question is
whether the market can make more upside than just the Friday move before it
stalls and falls. Again, we want to use the move higher to position better
for the likelihood of a second drop.
The reason is this is a tumultuous time in the market. Trends are in flux
and thus moves are for most stocks shorter term. That is why while we have
positions, we don't have a lot of money in the market right now. Too easy
to get whipsawed. When the break lower occurs, if it does, sure we want to
play that downside short term. Then when a new move starts, if there are
very good patterns to play, that is a time to put more money in. If the
move lower does not come, we play leaders upside, and if more and more join
in and the market breaks out, we put more money to work.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 7257.87
Resistance:
7300 from a modest mid-January consolidation
7400 is some price resistance from both sides of the mid-January all-time
high
7438 is the February lower high
7506 is the January 2018 all-time high
Support:
7240, the upper gap point from early February 2018
The 50 day EMA at 7145
6918 - 6980 are price points from November/December 2017
6914 is the late November all-time high
6796 is the early November 2017
6641 is the October high
The 200 day SMA at 6635
6630 is the February 2018 selloff intraday low
6477 is the September intraday high
6461 is the July 2017 prior all-time high
6450 is the early September high
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
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 2691.25
Resistance:
2694 is the mid-December peak
The 50 day EMA at 2713
2744 is the 61% Fibonacci retracement of the selloff
2751 from early January 2018
2762 is the upper gap point from early February
2789 is the February lower high
2808 from the mid-January consolidation. Some support, not that strong.
2850 from a January 2018 gap point
2873 is the January all-time high
Support:
2597 is the November 2017 high
2584 is the upper channel line from the March 2009 uptrend channel
The 200 day SMA at 2561
2532 is the February 2018 intraday selloff low
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
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 May 2017 low
Dow: Closed at 24,538
Resistance:
24,835 is the mid-December consolidation range
The 50 day EMA at 25,000
The 61% Fibonacci retracement at 25391
The lower gap point from February at 25,521
25,800 is the February lower high
26,000 from mid-January consolidation
26,439 is a gap point from the January high
January 2018 all-time high 26,617
Support:
23,608 is the early November high
23,602 is the early November 2017 high
23,360 is the intraday low form the February selloff
The 200 day SMA at 23,077
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
End part 1 of 3
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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
- Stocks sell farther early Friday, reverse in a pre-weekend short covering
move. All but Dow turn positive.
- Too many stories hit the market: tariffs, Japan QE end, Fed rate hikes,
Putin's bomb.
- Perhaps more upside to the new week, but the probabilities still suggest
another drop.
- Still very good leadership groups and stocks, but that does not guarantee
a climb to a new high from here.
- Market is not in a new trend so we stay with less money in the market as
we wait for the next big move and then the next trend.
After breaking higher the prior Friday and Monday, clearing the weeklong
consolidation, stocks sold Tuesday into Friday. Japan's Kuroda rather
unexpectedly musing it might be time to end QEJ (QE Japan). The US
announcing metals tariffs, others vowing retaliation and the US vowing
retaliation to retaliations. Interest rates, the Federal Reserve gone wild
(supposedly), Russia's Putin bragging my missile is bigger than yours. That
makes for a nice, steady market.
As for the tariffs, after the initial round of outrage, Trump said trade
wars were good and boasted they are easy to win. Oh, that is a relief. I
thought this history thing was a problem. Okay, I see it. For decades the
US has let China and others get away with agreements and 'understandings'
that advantaged them and seriously disadvantaged US producers. When they
have a cushy deal for a long time, and you then come in and say 'it is time
to adjust the terms now that you are on your feet and doing well,' they
squeal like stuck pigs. Or more politically, it 'outrages the global
community.' The nerve. You help them out, they prosper, now you want to
move back to an even playing field. 'Foul' they cry. Okay, I guess we
should have just crushed your businesses into pulp when we had the
advantage. Instead we helped you out and now you cannot admit your good
fortune and continue to work hard.
Instead the WTO threatens sanctions, purportedly to even things back out.
The irony, of course, is that the US is simply attempting to move back to a
deal that is for equals now that the other countries have their industries
working well. The WTO and impacted countries, however, react in a manner
that would make the arrangement even further skewed in their favor. You
truly get no good will for acting with good will toward other countries.
You give, they prosper, you then say there is no longer any need to give,
and then you are a villain to be condemned. Again, why then bother to be
nice in the first place? You get nothing for it. Other than, of course,
'death to America.'
Market action.
Three days hard down, Friday the same with futures opening sharply lower and
stocks selling off through the first hour. In that first hour, however,
they found support and started to recovery. A midmorning test lower put in
a higher low and stocks managed to rally to the close.
Short covering? Sure it was. As noted in the pre-market alert, after the
3+ days downside and ahead of the weekend a short covering bounce could
ensue. It did and stocks made that recovery, though not all made it back to
positive.
SP500 13.58, 0.51%
NASDAQ 77.31, 1.08%
DJ30 -70.92, -0.29%
SP400 1.10%
RUTX 1.71%
SOX 1.76%
NASDAQ 100 0.90%
VOLUME: NYSE -10%, NASDAQ -8%. Lower trade on the rebound from the selling
sessions, though still above average. At least there were a significant
number buying and covering shorts.
ADVANCE/DECLINE: NYSE 1.7:1, NASDAQ 3:1. Decent breadth. Not as strong as
the downside when the selling started, but stronger than the Thursday
downside breadth.
Thursday I discussed NASDAQ and SOX as being in position to bounce. Okay,
they did, just took them a bit longer. And it was a good bounce as SOX
tested farther to the 50 day MA and then reversed smartly. NASDAQ gapped
below the 50 day MA and then reversed. Those were the two we though had a
shot and they made pretty good runs at it, particularly SOX.
If the market is going to rally again from here it is because of those two,
perhaps you can throw in RUTX as well. The small caps out in another
downside session but held the Thursday low and reversed, holding some key
support levels.
SP500 was so-so, gapping lower then recovering to positive, but lower trade
and not taking back any significant levels. DJ30 similar and it did not
even make it back to positive. SP400 put in a decent move, but it closed
still below important levels.
Can SOX and NASDAQ, and perhaps RUTX, drag the others back up? Their
components certainly showed the kind of firepower Friday that could do it,
but they are not the entire market. NFLX moved to a new high on a strong
breakout with volume. INTC bounced sharply off support. CSCO held
beautifully and bounced. MU strong. They can lead, but they have to show
they can drag the others back with them.
We did close some positions and picked up some. Wish we had not closed AMZN
but we did keep one open so we still have some upside exposure there. If
NFLX continues upside on this breakout, you have to look at adding
positions. Even if the market doesn't follow, NFLX doesn't seem to care.
THE MARKET
CHARTS
SOX: Sold into Thursday but bounced off a tap at the 50 day MA. Friday a
gap to the 50 day SMA set up a rebound, taking back all the Thursday loss.
By the way, Thursday's close held the November peak, an important level.
SOX does not look bad, indeed, it looks the best of the group.
NASDAQ: After selling to the 50 day SMA on the Thursday close, NASDAQ
gapped below both 50 day MA. It held 7100, reversed upside. Decent action,
held where it had to, but not the same strength as SOX.
RUTX: Sold again Friday morning, matched the Thursday low, but as on
Thursday, rebounded. This time it did not just hold the October high but
blew past it as well. Nice recovery from a support level, but frankly its
chart is far from providing any upside warm feelings. It sold hard for 2+
sessions and then bounced hard for a session. 1550 is key for it (closed at
1533).
SP400: Sold again Friday, but reversed off support at 1840, posting a solid
gain. Nice relief move, but the pattern is not great, has resistance
overhead at 1900 (closed at 1878), and the pattern is overall bearish until
it can make an important upside break.
SP500: Broke lower in the ABCD downside pattern and solid three sessions
and then into Friday before it recovered to a modest gain. Still at
resistance, so this lower volume bounce is suspect indeed. A move to the 50
day MA's on continued lighter trade than the selling sets up the return trip
to the February low.
DJ30: The only index that did not recover to positive Friday. Gapped,
sold, recovered, but came up short just below the December consolidation
resistance. Not looking great as it sold off in its own ABCD downside
pattern. After a short bounce that perhaps mimics DJ30, it likely rolls
back over.
LEADERSHIP
Chips: Again one of the best upside groups, having come from trash to
tolerable. MU, AMAT, QRVO, XLNX, NVDA have workable patterns. LRCX is
still good and MLNX made a quick test and is looking good to move upside.
FAANG: NFLX is the cream of the crop with its new breakout. FB sold to
near the 200 day SMA and is trying to bounce. AAPL held the 50 day SMA and
rebounded, but is still locked in its range. AMZN fell to the 20 day EMA,
bounced on very solid trade. GOOG gapped lower again, but did reversed to
positive; could not recover the 50 day MA's.
Software: RHT, FFIV bounced nicely off test. BLKB, MSFT not bad bounces
either. VMW gapped sharply lower; great. Overall, however, still a good
group.
Metals: No major move Friday, but with their patterns, that is not bad
news. STLD held the 20 day EMA and bounced some in a nice pattern. RS held
its pattern well. SCHN shook us out unfortunately. FCX has now test up an
interesting pattern.
Drugs/Biotech: Still some good patterns and action. IMGN bouncing off the
10 day EMA test. IMMU moving up off a 50 day MA test. PTCT shook us out of
a position but recovered. VCEL moving back upside on volume. ARRY
bouncing. AMGN reversed off its doji, showing big volume.
Financial: Some 50 day MA tests in progress. BAC, JPM tested and started
to bounce. GS still below the 50 day. C bad.
Retail: Some impressive moves, solid holds, and interesting patterns. DDS
explodes higher again. TGT holding decently in a nice developing pattern
over the 50 day MA. TLRD not gad. ROST keeps hanging on for now. HD
gapped to the 78% Fibonacci retracement for what could be a double bottom at
that level. KSS sold to the 50 day MA then reversed sharply upside Friday.
There is good promise here.
MARKET STATS
DJ30
Stats: -70.92 points (-0.29%) to close at 24538.06
Nasdaq
Stats: +77.31 points (+1.08%) to close at 7257.87
Volume: 2.29B (-8.03%)
Up Volume: 1.66B (+817.87M)
Down Volume: 603.84M (-1.016B)
A/D and Hi/Lo: Advancers led 2.99 to 1
Previous Session: Decliners led 1.42 to 1
New Highs: 64 (+31)
New Lows: 72 (-30)
S&P
Stats: +13.58 points (+0.51%) to close at 2691.25
NYSE Volume: 900M (-10.00%)
A/D and Hi/Lo: Advancers led 1.71 to 1
Previous Session: Decliners led 1.5 to 1
New Highs: 27 (+12)
New Lows: 165 (-4)
SENTIMENT INDICATORS
VIX: 19.59; -2.88
VXN: 21.53; -3.21
VXO: 19.08; -1.36
Put/Call Ratio (CBOE): 1.16; -0.13
Bulls and Bears: The plunge slowed for the bulls, but there is already a
massive drop in place the past three weeks.
Bulls: 48.1 versus 48.5
Bears: 14.4 versus 14.6
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: 48.1 versus 48.5
48.5 versus 41.9 versus 54.4 versus 66.00 versus 64.7 versus 66.7 versus
64.4 versus 61.9 versus 64.1 versus 64.2 versus 62.3 versus 61.5 versus 63.5
versus 64.4 versus 63.5 versus 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
Bears: 14.4 versus 14.6
14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5
versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4
versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1
versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.868% versus 2.799%. After moving higher on the week and a solid
break higher Thursday, bonds sold back from the 20 day EMA test.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.799%
versus 2.875% versus 2.893% versus 2.864% versus 2.866% versus 2.934% versus
2.952% versus 2.893% versus 2.873% versus 2.904% versus 2.913% versus 2.833%
versus 2.857% versus 2.8577% versus 2.844% versus 2.813% versus 2.805%
versus 2.707% versus 2.841% versus 2.792% versus 2.713% versus 2.72% versus
2.72% versus 2.66% versus 2.66% versus 2.639% versus 2.617% versus 2.656%
versus 2.661% versus 2.618% versus 2.587% versus 2.535% versus 2.55% versus
2.559% versus 2.551% versus 2.482% versus 2.456% versus 2.463% versus 2.464%
versus 2.405% versus 2.434% versus 2.412% versus 2.474% versus 2.485% versus
2.484% versus 2.501% versus 2.459% versus 2.398% versus 2.351%
EUR/USD: 1.23187 versus 1.22822. Euro bounced after 2 weeks of selling,
moving back over the 50 day MA Friday after a reversal Thursday.
Historical: 1.22822 versus 1.21894 versus 1.21893 versus 1.23257 versus
1.2296 versus 1.2324 versus 1.22820 versus 1.23431 versus 1.2411 versus
1.25083 versus 1.2450 versus 1.23528 versus 1.22887 versus 1.22524 versus
1.2273 versus 1.2377 versus 1.24573 versus 1.2502 versus 1.2404 versus
1.2402 versus 1.23832 versus 1.24308 versus 1.24159 versus 1.24340 versus
1.23083 versus 1.22567 versus 1.22169 versus 1.2241 versus 1.2198 versus
1.22698 versus 1.22060 versus 1.20608 versus 1.19507 versus 1.19322 versus
1.19662 versus 1.20313 versus 1.20756 versus 1.20177 versus 1.20573 versus
1.2001 versus 1.1936 versus 1.1936 versus 1.18998 versus 1.18593 versus
1.18628 versus 1.18658 versus 1.18792 versus 1.18408 versus 1.17703 versus
1.1752 versus 1.17798 versus 1.18392 versus 1.17430
USD/JPY: 105.734 versus 106.03. Dollar sold off Wednesday to Friday,
testing the mid-February low and showing a doji. Perhaps a double bottom?
Historical: 106.03 versus 106.695 versus 107.381 versus 106.96 versus
106.886 versus 106.85 versus 107.581 versus 107.435 versus 106.294 versus
106.153 versus 106.782 versus 107.77 versus 108.669 versus 108.669 versus
108.797 versus 108.88 versus 109.33 versus 109.58 versus 108.651 versus
110.001 versus 109.46 versus 109.50 versus 108.77 versus 108.84 versus
108.601 versus 109.411 versus 109.033 versus 110.159 versus 110.159 versus
110.70
Oil: 61.25, +0.26. Oil sold on the week from a lower high, holding at some
support at 60.00, bouncing twice off the low there Thursday and Friday.
Looks weaker, however, likely tries an ABCD setup. That means, however, more
near term weakness.
Gold: 1323.40, +18.20. Gold could not make up its mind on the week, though
it was lower. Sold hard Tuesday and again Thursday, falling through the 50
day MA. Friday a bounce, but it did not change the pattern. Very jumbled
right now as it could not hold an easy 50 day MA test.
MONDAY
A flood of data on the week starting with ISM Services Monday followed by
the jobs data Wednesday, Thursday, and Friday.
Important, may make a difference to the market in the end, but right now
stocks are on a bumpy road that is likely not at its end just yet.
SOX looks better and better, NASDAQ is decent, RUTX is trying. There are
still several leadership groups that still sport very nice patterns.
Promising, but the market started to sell again last week and likely it sees
out the historical pattern. The Friday bounce was no doubt short covering,
and perhaps SOX and NASDAQ can help keep the move upside to start the week.
It did sell from an ABCD downside pattern and it is possible the downdraft
is over.
After a day or two, however, I would not be surprised if the move runs out
of gas and the final test toward the February low is on. The leadership
looks good and it could lead the market higher. What likely happens as the
market sells again to test the prior low, and during that time these stocks
can hold up and be ready for the bounce. Other stocks can use that to work
on their bases. That is the usual scenario.
Friday was interesting, a solid short covering move. The next point of note
is how stocks open Monday. A bounce and we see how it holds, for the day or
more. A bounce can turn into something really solid given how many quality
stocks there are in good patterns, but it has to prove it. For those stocks
that bounce but are lagging, using the move higher to exit is not a bad
strategy. Using the move higher to exit some March options is also not a
bad idea.
New positions? There are patterns that look good still and are moving well.
You cannot ignore NFLX. We can play some of them as they bounce, but as
before, knowing any bounce now is still just likely a relief move.
The probabilities are that the market is not through the selling episode
yet. A bounce could turn to a new high but likely stalls out and then makes
that second drop that usually puts an end to a selloff . . . IF the economy
is still solid, if the Fed is not on the path to wreck it, if war does not
erupt, if the trade issues don't explode.
A few ifs, but for now we play the market that has the most probabilities,
and that is a test to the prior lows. The more immediate question is
whether the market can make more upside than just the Friday move before it
stalls and falls. Again, we want to use the move higher to position better
for the likelihood of a second drop.
The reason is this is a tumultuous time in the market. Trends are in flux
and thus moves are for most stocks shorter term. That is why while we have
positions, we don't have a lot of money in the market right now. Too easy
to get whipsawed. When the break lower occurs, if it does, sure we want to
play that downside short term. Then when a new move starts, if there are
very good patterns to play, that is a time to put more money in. If the
move lower does not come, we play leaders upside, and if more and more join
in and the market breaks out, we put more money to work.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 7257.87
Resistance:
7300 from a modest mid-January consolidation
7400 is some price resistance from both sides of the mid-January all-time
high
7438 is the February lower high
7506 is the January 2018 all-time high
Support:
7240, the upper gap point from early February 2018
The 50 day EMA at 7145
6918 - 6980 are price points from November/December 2017
6914 is the late November all-time high
6796 is the early November 2017
6641 is the October high
The 200 day SMA at 6635
6630 is the February 2018 selloff intraday low
6477 is the September intraday high
6461 is the July 2017 prior all-time high
6450 is the early September high
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
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 2691.25
Resistance:
2694 is the mid-December peak
The 50 day EMA at 2713
2744 is the 61% Fibonacci retracement of the selloff
2751 from early January 2018
2762 is the upper gap point from early February
2789 is the February lower high
2808 from the mid-January consolidation. Some support, not that strong.
2850 from a January 2018 gap point
2873 is the January all-time high
Support:
2597 is the November 2017 high
2584 is the upper channel line from the March 2009 uptrend channel
The 200 day SMA at 2561
2532 is the February 2018 intraday selloff low
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
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 May 2017 low
Dow: Closed at 24,538
Resistance:
24,835 is the mid-December consolidation range
The 50 day EMA at 25,000
The 61% Fibonacci retracement at 25391
The lower gap point from February at 25,521
25,800 is the February lower high
26,000 from mid-January consolidation
26,439 is a gap point from the January high
January 2018 all-time high 26,617
Support:
23,608 is the early November high
23,602 is the early November 2017 high
23,360 is the intraday low form the February selloff
The 200 day SMA at 23,077
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
End part 1 of 3
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