InvestmentHouse - New Highs on Four Indices (Weekend Newsletter)
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- New High Anxiety takes a back seat Friday.
- NASDAQ gets help from recovering mega caps as it and SP500 move to new
highs, joining SP400, RUTX.
- Software reasserts itself along with a few NASDAQ large caps.
- Industrial-side stocks still in good position, just take a pause on the
week after good moves.
- Economic data continues its recent softening but the majority of the FOMC
is not willing to take notice.
New highs on four indices: SP500, NASDAQ, RUTX, SP400. The midcaps led the
charge to the new highs on the week, hitting it Tuesday followed by RUTX.
SP500, NASDAQ took a bit more time, but got there -- barely. New High
Anxiety stepped aside for the session, but these were not great breaks for
the big cap indices. Perhaps they will follow the RUTX, SP400 lead and put
some mileage on the new highs next week.
DJ30 and SOX were not dogs, they just have farther to go. DJ30 cleared the
late February peak Tuesday, the penultimate high before getting to the
January high, gave it up, but then rebounded Friday. SOX rallied well
Tuesday through Friday, clearing the 50 day MA's with the Friday gap and
rally, holding the gains to the close. As noted, not new highs, but not bad
at all.
Notably, no new high for NASDAQ 100. It is not the big techs, or at least
not a lot of them, moving to highs.
SP500 17.71, 0.62%
NASDAQ 67.52, 0.86%
DJ30 133.37, 0.52%
SP400 0.40%
RUTX 0.50%
SOX 1.46%
NASDAQ 100 0.97%
VOLUME: NYSE -2%, NASDAQ +1%. Volume remained lower on NYSE, below average
all week and very low Wednesday to Friday -- no surge in buying though the
prior week some upside sessions were marked with rising volume. NASDAQ
volume elevated Thursday to just below average after a very low volume prior
5 sessions, and it remained elevated Friday on the breakout move. Better
volume is good, but this was not great volume on a breakout.
ADVANCE/DECLINE: NYSE +2.3:1, NASDAQ +1.8:1. No great shakes on NASDAQ
with its breakout; not a lot of stocks moving to new highs. NYSE was not
bad as the larger and smaller cap indices rallied evenly.
Rah, rah for the new highs. Lots of ebullient spirits Friday post-close, a
bit too ebullient for a Friday. New highs do that, even if they are on
light trade. Then again, the market has moved with light trade for about .
. . ever. So it seems.
There are still plenty of stocks in good patterns, many in the formerly
forgotten group that have received rotation money the past 2 months.
Friday, however, some of the prior leaders that broke came back into their
own. Software had improved, and it continued improving Friday as FFIV,
VRSN, ADBE and others rallied. NVDA continued its heady recovery and NFLX
broke through resistance on volume. V came to life. PYPL also. AMZN and
AAPL were up but massive disappointments given some of the other moves in
the market. Others moving well moved well again, e.g. AMD, DOCU, ROKU.
Moving from all sides of the market, though I note the 'old economy' stocks,
while up in many cases, were not surging.
Lots of somewhat euphoria about the new highs but we only bought one
position (TRMB), took some gain on AMD and DOCU. We will see if the new
highs hold next week as the DJ30-like stocks move up off their tests. For
now with the breakouts, the upside is still predominant, and if they hold we
will get plenty of opportunities.
CHARTS
NASDAQ: Just over a week from the 50 day MA test, NASDAQ finally popped a
new high again after that late July high and its half-session half life.
Perhaps this fate will be better. Hey, NASDAQ held the 50 day EMA for the
third time and this time, unlike early August, punched out a new high.
SP500: A new high Tuesday intraday could not hold. A test of the 10 day
EMA into Thursday, then Friday a gap and rally to that high. Bravo.
Volume -- weak. Can malign it all you want, but it is a new high after a
quick intraday 50 day MA test 8 sessions back. Now it shows if it can hold.
SP400: New high Tuesday on a Thursday to Tuesday run. Held the move
Wednesday, Thursday, then was up again Friday to a higher closing high.
Good sharp break, and now a quick test, looking good.
RUTX: Same action as SP400 with a new high Tuesday. Then RUTX did a bit
better, extending the high Wednesday and again Friday. Key group,
economically sensitive, blah, blah, blah -- you know the drill. Good move,
staying power is the key.
DJ30: Higher high on Tuesday, clearing the late February peak, then faded,
testing the 10 day EMA Thursday. Friday a nice break higher though still
below the Tuesday close. Held the break over the prior highs and now it can
work on the January all-time high. Still plenty of room to work to that
point, and that is good as it does not have to make a break through any
other resistance.
SOX: Tossed a pair of doji at the lower trendline of the triangle Friday
and Monday, then a set of solid moves higher. Broke through the 200 day SMA
Tuesday, made it to the 50 day as of Thursday, then a gap through the 50 day
and rally Friday. Now trading inside the gap zone of the early August gap
lower. The upper gap zone is 1389 (closed at 1376ish).
LEADERSHIP
A week where some of the leaders in the prior rally reversed breaks in their
uptrends, some surging to higher highs (e.g. software, NVDA), others
clearing some important near term resistance (e.g. NFLX), and others trying
to become leaders tested though remain set up very well (e.g. PFE, EMR,
JNJ). The market looks to have leadership.
fAang: AMZN, AAPL toyed with new highs but just could not find sustained
bids to close the week. Modest gains, nothing that great. NFLX rallied
through the 50 day EMA. GOOG worked laterally all week, started upside
Friday though volume still low. FB went really nowhere.
Software: Some great new moves from TTWO, FFIV, VRSN. ADBE close to a new
high. VMW gapped lower on earnings, but managed a decent comeback. CRM
broke higher Friday to a nice new high. MSFT is even trying to move up
after a 50 day MA test.
Drugs/Healthcare: Good looks. PFE, MRK, LLY still in good lateral moves
testing the 10 day EMA near support. SRPT is still interesting. JNJ tested
the 10 day EMA after a good move, starting upside. UNH tested and is
bouncing. Not bad.
Industrials: Mixed performances. HON upon the week, faded modestly Friday.
EMR tested the 10 day, started to bounce. CMI gapped lower, reversed to
flat. UTX testing after failing to break to a new high early week.
Chips: NVDA a new high. AMD an 11+ year new high. XLNX fighting back to
the late July high. TXN continues to recover, moving up through the 50 day
MA. INTC trying to bounce off the late July low. Improving but sporadic.
Financial: V broke higher, clearing to a new high. C, JPM, BAC in decent
tests. GS is interesting, setting up a short inverted head and shoulders
over the 50 day MA's.
Retail: Another week showing some big earnings surges (e.g. WSM, TJX, TGT),
earnings selloffs (e.g. GPS). Some gapped lower and recovered, e.g. ROST.
Others just moved higher, e.g. BBY, RH. WMT looks ready to move back
upside.
Transports: CSX still moving higher. Airlines still in good setups, e.g.
AAL, DAL.
Misc: PYPL surged higher after dormancy. SQ continued its weeklong move
higher above the 10 day EMA. GRUB continued its move, breaking to a new
high. DOCU hit a higher high, we took some gain after a solid week. DIS
still testing in a lateral move.
MARKET STATS
DJ30
Stats: +133.37 points (+0.52%) to close at 25790.35
Nasdaq
Stats: +67.52 points (+0.86%) to close at 7945.98
Volume: 1.89B (+0.53%)
Up Volume: 1.35B (+628.29M)
Down Volume: 512.05M (-627.95M)
A/D and Hi/Lo: Advancers led 1.76 to 1
Previous Session: Decliners led 1.42 to 1
New Highs: 194 (+31)
New Lows: 34 (+5)
S&P
Stats: +17.71 points (+0.62%) to close at 2874.69
NYSE Volume: 609.624M (-1.62%)
A/D and Hi/Lo: Advancers led 2.29 to 1
Previous Session: Decliners led 1.87 to 1
New Highs: 112 (+19)
New Lows: 38 (-4)
SENTIMENT
VIX: 11.99; -0.42
VXN: 15.16; -0.63
VXO: 10.98; -0.06
Put/Call Ratio (CBOE): 0.92; -0.11
Bulls and Bears:
Bulls continue upside toward the 60 level that is associated with pullbacks.
Bears faded modestly but are still holding the 2018 move higher.
Bulls: 57.7 versus 57.3
Bears: 18.3 versus 18.4
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: 57.7 versus 57.3
57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1
versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1
versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2
versus 49.5 versus 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
Bears: 18.3 versus 18.4
18.4 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6
versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2
versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8
versus 18.6 versus 17.5 versus 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: 2.813% versus 2.828%. Bonds are rallying, yields are falling even
as the stock market hits new highs. TLT gapped lower, tested the 200 day on
the low, then rallied back up to a recovery high and earning the July peaks.
Bond yields should be rising, not falling, particularly with Powell saying
the Fed should and will keep hiking. Perhaps it is a case of the market
knowing the Fed always overshoots. Perhaps.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.828%
versus 2.821% versus 2.819% versus 2.819% versus 2.864% versus 2.871% versus
2.879% versus 2.882% versus 2.873% versus 2.928% versus 2.963% versus 2.977%
versus 2.977% versus 2.945% versus 2.95% versus 2.986% versus 3.005% versus
2.962% versus 2.975% versus 2.958% versus 2.982% versus 2.965%
EUR/USD: 1.16216 versus 1.15390. Euro up for the second week and Friday
actually cleared the 50 day MA's on the close.
Historical: 1.15390 versus 1.15709 versus 1.158 versus 1.1487 versus 1.1437
versus 1.13765 versus 1.13731 versus 1.13479 versus 1.14052 versus 1.1413
versus 1.1526 versus 1.16186 versus 1.16001 versus 1.15572 versus 1.15683
versus 1.15864 versus 1.1662 versus 1.1689 versus 1.17074 versus 1.16558
versus 1.17324 versus 1.17385 versus 1.16846 versus 1.16989 versus 1.17214
versus 1.1651 versus 1.16514 versus 1.16603 versus 1.1709 versus 1.1685
versus 1.16608 versus 1.1672 versus 1.17288 versus 1.17578 versus 1.17439
versus 1.1689 versus 1.1665 versus 1.16388 versus 1.1638 versus 1.15634
versus 1.15602 versus 1.16517 versus 1.17031 versus 1.16572 versus 1.16072
versus 1.15762 versus 1.1586 versus 1.15746 versus 1.2624 versus 1.16245
versus 1.15678 versus 1.17973 versus 1.17454 versus 1.17761 versus 1.17737
versus 1.17987 versus 1.1774 versus 1.1762 versus 1.1697 versus 1.166 versus
1.16993
USD/JPY: 111.249 versus 111.351. Reversed off a lower August low Monday
then climbed through the 50 day SMA. Friday tested, still holding the 50
day.
Historical: 111.351 versus 110.766 versus 109.92 versus 110.49 versus
110.935 versus 110.818 versus 111.229 versus 110.737 versus 110.840 versus
111.07 versus 111.361 versus 111.344 versus 111.254 versus 111.621 versus
111.628 versus 111.744 versus 110.990 versus 110.995 versus 110.791 versus
110.871 versus 111.235 versus 111.084 versus 111.451 versus 112.732 versus
112.783 versus 112.896 versus 112.337 versus 112.631 versus 112.093 versus
110.911 versus 110.973 versus 110.474 versus 110.666 versus 110.40 versus
110.854 versus 110.687 versus 110.523 versus 110.223 versus 110.097 versus
109.678 versus 109.980 versus 109.895 versus 110.376 versus 110.03 versus
109.783 versus 110.668 versus 110.578 versus 110.247 versus 110.381 versus
110.314 versus 109.466 versus 109.705 versus 110.164 versus 109.878 versus
109.90 versus 109.53 versus 108.767
Oil: 68.72, +0.89. Rallied from the 200 day SMA to the 50 day SMA the past
two weeks. Moved through the 50 day Friday but could not hold all of that
move. Kind of head and shoulder-ish setup from May.
Gold: 1213.30, _19.30. Trying to break its downtrend from the April high.
Moved upside in a normal downtrend bounce through Wednesday, started to roll
over Thursday, then spiked over the 20 day EMA Friday. Trade? No one
believes Powell? Weaker US economic data?
MONDAY
Consumer Confidence, second GDP read, Personal income and spending, Chicago
PMI are up for next week. The Fed is also getting chatty though there is
not much that will change here given Powell's Jackson Hole commentary.
Friday Bullard defied Powell, stating the Fed should 'stand pat' on rake
hikes for the rest of the year. Ms. Mester, however, raised her GDP
expectations and said the gradual hikes were appropriate.
Classic Fed miscalculation. Economic data has softened on the leading edge
the past 3 weeks with regional PMI's missing, housing looking quite weak,
Durables Orders dropping to 11 month lows (though business investment rose a
nice 1.4%) -- perhaps just a soft patch, but the Fed is acting rather
fatalistic in its need to hike rates. It said it would give deference to
the yield curve, but bonds are rallying as the Fed hikes and stock indices
hit record highs. The Fed is making its same old mistakes: it sees an
overall still strong economy, stocks still strong, and it ignores the yield
curve. When it cannot ignore the curve any longer, it starts making up
reasons the yield curve doesn't mean anything this time. When more reasons
bonds are 'wrong' are heard from the Fed, you know the Fed is going to
overshoot. Okay, that is poor wording. We know the Fed ALWAYS overshoots;
it is more a question of the timing.
With the stock indices hitting new highs, worrying about the Fed seems
rather absurd. Near term it is. Nonetheless, you keep an eye on bonds as
stocks rally, and as bonds and stocks rally you watch how the stronger
stocks act. Reversals from highs, breakdowns, etc. are indications. The
market may still be attempting a top, new highs be damned. Don't assume the
new highs are locked in. The action of SP400 and RUTX is encouraging as
they hit highs, tested, and then put in additional gains. NASDAQ is still
problematic, however, and there is no guarantee it holds its new high.
As noted earlier, given the recovery by some big names and the new highs in
SP500 and NASDAQ, the play is still mostly upside. The rotation stocks
rallied, put in modest tests last week, and look ready to move again. If
chips and techs want to play along the market has plenty of ammunition.
We are still looking at more AAPL and a GOOG position and will see what
other NASDAQ and tech stocks want to come along to the upside. Of course
the more industrial plays still have good looks and we will be ready to play
those as they break back upside off their tests.
Have a great weekend! |
