InvestmentHouse - Political surprises still to come this week? (Weekend Newsletter)
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- An upside week with a test as well.
- DJ30 in a solid test while RUTX could be making an important move.
- Goldman says the Fed causes most recessions. Who would have thought?
- Jobs: MCD replacing 2500 cashiers with automated kiosks
- With many leaders at the 50 day MA, it is do or die time for the chips.
- Plenty of leaders to help lift the market.
- Political surprises still to come this week? Comey visits NYT on Friday.
Lynch, Clinton, Soros all in the Senate probe.
Last week started higher with a gap by all the indices. Then it was a
matter of trying to hang on to hold the gains. A break higher then a test.
All in one week.
Gains, but disappointing for sure -- a nice upside break and then the
inability to capitalize on it. A rally deferred.
Nonetheless, the week ended with some interesting patterns. DJ30 is in a
great test of its new high; nice and orderly, holding the 10 day EMA. RUTX,
on a Russell rebalance Friday, posted a very nice upside day after holding
the 20 day EMA on a test into Wednesday. Nice potential in those two.
NASDAQ finished the week decently enough, breaking to a higher weekly high
after it consolidated the Monday upside gap. It is still well off the early
June high but it rescued its trend with a hold of the 50 day MA and that
Monday gap.
The other indices were rather noncommittal in their moves. SP400 held the
50 day EMA test and bounced modestly. SP500 put in an easy test of the new
high scored on the Monday gap and rally. SOX did little after gapping
upside Monday.
SOX is at an important crossroads. Many quality semiconductors are testing
key support at the 50 day EMA: LRCX, SIMO, SMTC, MCHP, AMAT. If they are
going to hold their trends and start moving back up, and by extension SOX,
this is where they should do it. Otherwise at a minimum they slip into a
lengthier consolidation.
SP500 3.80, 0.16%
NASDAQ 28.56, 0.46%
DJ30 -2.53, -0.01%
SP400 0.43%
RUTX 0.73%
SOX 0.32%
VOLUME: NYSE +150%, NASDAQ +90%. Big volume surges on the Russell
rebalance session.
A/D: NYSE 2.2:1, NASDAQ 1.9:1. Nothing like a 0.73% move in the small caps
to put some breadth into the market.
As noted, it was Russell rebalance day and hence a boatload of volume.
Perhaps that is why RUTX posed a solid move as RUTX stocks were bought.
But, in a rebalance there are stocks bought and sold and on balance there is
typically no net movement.
NEWS/ECONOMY
There was not a ton of news Friday, but there is interesting news
nonetheless.
Jobs: Sears is closing another 20 stores in addition to the 200 closures
previously announced. I guess that is the softer side of Sears
MCD: Announces it is laying off 2,500 cashiers to be replaced by ordering
kiosks. The irony is that even as those wanting to make fast-food jobs
career jobs by demanding a $15/hour wage, while they are protesting, those
jobs are disappearing. The past two years I wrote about the inevitability
of the conversion to automation in fast food and other historically low-wage
industries given the push to detach market forces from wages. It is
happening quickly, PARTICULARLY given Amazon's success in entering so many
diverse industries. They have even more incentive to stay lean and cutting
edge, and they are doing it.
Recessions: GS releases a new study with the conclusion that most modern
recessions are caused by . . . the Fed. The surprise factor for that
conclusion? Zero. It is akin to the government grants awarded to determine
if couples who chronically fight are sadder. It is axiomatic.
Goldman joins several others reaching this conclusion, though GS is not
warning of imminent recession as is DB, BAC and others. For most citizens,
the recession is already here, and for many of those it never ended but
instead has been a long depressed period of low paying jobs, ever coming
close to the pre-recession levels of prosperity.
So nice of those 'in the know' to now acknowledge that things are not great.
Indeed, DB notes that though the expansion is the third longest in history
at 32 quarters, it is also has the lowest average growth rate of just 2%.
If you consider the skewed impact of the expansion, i.e. the very top of the
socioeconomic spectrum receiving 90% of the benefits, the anemic 2% level is
even more impressively low.
THE MARKET
CHARTS
DJ30: Still the market leader, gapping to a new high Monday then testing it
all week. Very orderly test to the 10 day EMA, showing a doji with tail
Friday, filling the Monday upside gap. DJ30 is in excellent position to
move higher.
RUTX: A strong move Friday after getting a bit sketchy Tuesday and
Wednesday, giving back the upside gap to start the week. Held and rebounded
Thursday, surged Friday. Perhaps it was the Russell rebalance. With the
economic data as it is and recession worries, small caps would be the
logical group to struggle. Holding well and eying the April and early June
highs if it can continue the rebound.
NASDAQ: Gapped off the 50 day MA test to start the week, went laterally,
then Friday broke upside again. Still off the highs but NASDAQ is making a
move at the highs. The trend is holding with the gap, consolidation, and
Friday bounce. Works for now. Chips bouncing would really help.
SOX: Unlike NASDAQ, SOX could not move up out of the lateral consolidation.
It held the 50 day MA and bounced. Now it needs those stocks at the 50 day
MA to make a bounce as well and continue their uptrends.
SP500: Gapped higher Monday as did DJ30 then spent the week testing, giving
it all back with a gap fill. Held the 10 day EMA on the closes, however,
and leaves itself in good position to move higher this coming week.
SP400: Gapped higher Monday then sold hard Tuesday and Wednesday, dropping
to the 50 day MA. Doji Thursday, bounced modestly Friday. Not showing much
power, and this index may be a truer read on the smaller cap stocks versus
RUTX given there was no S&P rebalance.
LEADERSHIP
Metals: Came to life Friday after a good week of consolidation. AKS bounced
5+%. SCHN +6.9%. CENX 8.8%. Getting some money their way.
Biotechs/Drugs: Strong week. Some of the laggard big names in the group
rallied, e.g. CELG, BIIB. DVAX, IMGN rallied well for us. We are looking
at some others with new plays this week.
China: A nice though somewhat volatile week. NTES strong again, surging on
the week. BABA solid on the week. SINA a bit volatile but held. SOHU
still working a good pattern. JD broke higher for us. Solid group.
Software: Very solid. CALD is surging for us, up 14% on the week. DATA
rallied nicely for us. ORCL, ADBE, RHT all strong post-earnings.
Financial: Very interesting though still back and forth. C in a great
breakout test. BAC, however, is struggling lower. GS looked good then fell
to the 200 day SMA.
Materials: Very solid week. USCR on a rope upside. MAS looks ready to
move again after testing the 10 day EMA and its last high.
Chips: Some in great position: HIMC, MRVL. Indeed, if the chip uptrend
remains, many are ready to move up off the 50 day EMA: MCHP, LRCX, SMTC,
SIMO, SWKS.
FAANG: FB held the 10 day EMA and jumped to a new closing high Friday.
AMZN still creeping up the 10 day EMA. AAPL still bumping against the 50
day MA. NFLX surged through the 50 day MA. GOOG up modestly Friday. Very
mixed, but some solid moves such as FB.
MARKET STATS
DJ30
Stats: -2.53 points (-0.01%) to close at 21394.76
Nasdaq
Stats: +28.56 points (+0.46%) to close at 6265.25
Volume: 4.16B (+91.71%)
Up Volume: 2.43B (+1.26B)
Down Volume: 1.69B (+762.8M)
A/D and Hi/Lo: Advancers led 1.85 to 1
Previous Session: Advancers led 1.42 to 1
New Highs: 123 (+15)
New Lows: 36 (-8)
S&P
Stats: +3.8 points (+0.16%) to close at 2438.3
NYSE Volume: 2.1B (+150.36%)
A/D and Hi/Lo: Advancers led 2.17 to 1
Previous Session: Advancers led 1.4 to 1
New Highs: 104 (+11)
New Lows: 39 (-30)
SENTIMENT INDICATORS
VIX: 10.02; -0.46
VXN: 14.47; -0.33
VXO: 9.78; +0.55
Put/Call Ratio (CBOE): 0.96; +0.16
Bulls and Bears: Bulls come back some after a sharp drop from almost 56.
Bears climb to the highest level in 4 months. A bit more bullish, a bit
more bearish.
Bulls: 51.5 versus 50.0
Bears: 19.4 versus 18.6
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: 51.5 versus 50.00
50.00 versus 55.8 versus 50.00 versus 51.9 versus 58.1 versus 58.7 versus
58.5 versus 54.7 versus 51.9 versus 56.3 versus 55.8 versus 49.5 versus 56.7
versus 53.4 versus 57.7 versus 63.1 versus 61.2 versus 61.8 versus 62.7
versus 61.8 versus 58.2 versus 60.6 versus 58.6 versus 60.2 versus 59.8
versus 59.8 versus 59.6 versus 58.8 versus 56.3 versus 55.6 versus 51.0
versus 42.9 versus 41.7 versus 47.1 versus 42.9 versus 46.1 versus 46.7
versus 45.2
Bears: 19.4 versus 18.6
18.3 versus 19.2 versus 18.3 versus 17.1 versus 17.3 versus 17.9 versus 17.9
versus 18.3 versus 17.5 versus 18.3 versus 18.1 versus 17.3 versus 13.75
versus 17.3 versus 16.5 versus 17.5 versus 17.6 versus 16.7 versus 17.6
versus 17.5 versus 17.3 versus 18.3 versus 18.4 versus 19.6 versus 19.6
versus 19.2 versus 19.6 versus 22.3 versus 21.6 versus 23.5 versus 25.7
versus 24.3 versus 23.1 versus 23.8 versus 23.1 versus 22.8 versus 23.1
versus 24.3
OTHER MARKETS
Bonds: 2.140% versus 2.148%. Gapped higher Tuesday and moved higher into
Friday. The bond yield curve is its flattest since the recovery.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.148%
versus 2.165% versus 2.156% versus 2.191% versus 2.155% versus 2.162% versus
2.209% versus 2.21% versus 2.21% versus 2.19% versus 2.176% versus 2.14%
versus 2.183% versus 2.154% versus 2.21% versus 2.20% 2.26% versus 2.255%
versus 2.252% versus 2.287% versus 2.254% versus 2.233% versus 2.229% versus
2.223% versus 2.32% versus 2.34% versus 2.34% versus 2.393% versus 2.401%
versus 2.394% versus 2.381% versus 2.354% versus 2.322% versus 2.289% versus
2.322% versus 2.30% versus 2.31% versus 2.33% versus 2.275% versus 2.236%
versus 2.234% versus 2.21% versus 2.15% versus 2.248% versus 2.232% versus
2.264% versus 2.30% versus 2.36%
EUR/USD: 1.11928 versus 1.11484
Historical: 1.11484 versus 1.11670 versus 1.11346 versus 1.11419 versus
1.11968 versus 1.11466 versus 1.12213 versus 1.12086 versus 1.11930 versus
1.11965 versus 1.1199 versus 1.12491 versus 1.12798 versus 1.12684 versus
1.12811 versus 1.12181 versus 1.12547 versus 1.11768 versus 1.11810 versus
1.12148 versus 1.12240 versus 1.11868 versus 1.12390 versus 1.11916 versus
1.23077 versus 1.10985 versus 1.11557 versus 1.10862 versus 1.09833 versus
1.09328 versus 1.08655 versus 1.08671 versus 1.08843 versus 1.09286 versus
1.09994 versus 1.09086 versus 1.08923 versus 1.09284 versus 1.090984 versus
1.08987 versus 1.08691 versus 1.09093 versus 1.09358 versus 1.08449 versus
1.07255 versus 1.07255 versus 1.07188 versus 1.0717 versus 1.07304 versus
1.06431 versus 1.06138 versus 1.0671 versus 1.06068 versus 1.05984
USD/JPY: 111.299 versus 111.357
Historical: 111.357 versus 111.278 versus 111.470 versus 111.729 versus
110.873 versus 110.854 versus 109.560 versus 110.060 versus 109.97 versus
110.334 versus 110.299 versus 109.355 versus 110.038 versus 110.446 versus
111.595 versus 110.909 versus 111.086 versus 111.217 versus 111.828 versus
111.678 versus 111.835 versus 111.076 versus 111.534 versus 111.271 versus
111.584 versus 111.167 versus 112.414 versus 113.074 versus 113.749 versus
113.349 versus 113.759 versus 114.263 versus 113.771 versus 113.217 versus
112.683 versus 112.495 versus 112.782 versus 112.779 versus 111.793 versus
111.524 versus 111.197 versus 111. 177 versus 111.234 versus 109.704
Oil: 43.01, +0.27. Broke the bottom part of the range Wednesday, recovered
some lost ground Thursday and Friday, but did not recover the range. Not
exactly surging upside after breaking the range.
Gold: 1256.40, +7.00. Sold to the 200 day SMA Tuesday followed by a
3-session recovery. Held where it had to, no blowout, but is bouncing.
MONDAY
Talk of a new NYT story on Trump given that Comey visited the NYT Friday,
chips at the key 50 day MA levels, lots of economic reports (durable goods,
GDP 3rd, Personal income and spending, Chicago PMI). Plenty to chew on.
More White House allegations has not treated the stock market well in the
past, though it has recovered.
Still calls the market is too high, too extended, too overvalued,
particularly in light of an economy too weak. Yet, there are some very good
patterns, many in fact, and the stock indices in terms of DJ30, SP500 and
RUTX are not weak at all. NASDAQ is trying to come back as well.
We are looking at more upside plays given the patterns the market is showing
as money moves to new sectors as opposed to leaving the market. We will see
if the RUTX move Friday has staying power, a big boost to the market.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6265.25
Resistance:
6341.70 is the all-time high.
Support:
6205 is the late May all-time high
The 50 day EMA at 6123
5996 is the recent May 2017 low
The 2016 trendline at 5973
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
The 200 day SMA at 5652
5661 is the late January upper gap point
5601 is the January lower gap point
The November prior all-time high at 5404
5340 is the September and October 2016 twin peaks
5287.61 is the September 2016 high
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
5170 is the October intraday low.
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
S&P 500: Closed at 2438.30
Resistance:
2439 is the all-time closing high
The 2016 trendline at 2464
Support:
2406 is the all-time high from May 2017
2401 is the March 2017 all-time high
The 50 day EMA at 2406
2352 is the recent May 2017 low
2348 is the April 2017 lower gap point
2329 is the March and April twin lows
2322 is the March 2017 low
2319 is the 78% Fibonacci retracement
2301 is the late January 2017 high
2298 is the late January 2017 high
The 200 day SMA at 2287
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
Dow: Closed at 21,394.76
Resistance:
21,535 is the all-time high
Support:
21,169 is the March 2017 all-time high
The 50 day EMA at 21,061
20,553 is the lows of the week of May 15
20,547 is the lower gap point from late April 2017
20,412 is the March 2017 low
20,400 is the mid-April 2017 low.
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
19,994 - 19,999 (early January high, upper gap point from late January
The 200 day SMA at 19,895
19750 is the lows of the December/January range
19,732 is the January 2017 low
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
18,351 is the prior all-time high from May 2015 |
