InvestmentHouse Weekend Market Update
investmenthouse.com
- Dollar sells but even so the midcaps and small caps take the lead.
- Some news, but the key is what the Fed said Wednesday.
- Solid leaders leading, others setting up.
- Heading to earnings the Fed has green-lighted the market, but of course that means be careful.
I am not going to waste your time this weekend with a lot of analysis. The big news for the week was in Wednesday afternoon.
More of the same stories, but the key one is well-known to everyone: the FOMC dropped its patience stance, but only in public. Patient is just a word; the Fed made it clear it was still more than patient.
Thus the market responded with a 'whew' and blasted upside. The dollar broke lower, bonds broke higher. All the trades pre-FOMC rate hike worry were either taken off of limited.
After that the market was set to take what came, pretty confident the Fed still had its back. Maybe not with QE, maybe not with rate hikes, but with keeping rates low, unwilling to upset what it just a month ago called a 'solid' recovery, but now sees as moderating.
So, the rest was pretty much fluff.
Earnings: NKE beat, DRI (restaurants such as Olive Garden) beat and raised guidance. China's CTRP saw more traffic. That overshadowed TIF's miss that was of course blamed on a strong US dollar. Heaven forbid that US citizens can now perhaps afford a bit more from Tiffany versus those with other currencies.
Dollar: Weakened back to 1.0811 after rebounding Thursday from the post-FOMC slaughter.
Oil: Oil rose as the dollar fell though the black gold is still struggling. After all Dennis Gartman stated Friday oil could fall to $15/bbl. Rig counts hit the lowest level in almost four years (5/2011) and show the fastest decline since 1986. The oilfield has lost 100K jobs in the last quarter. Maybe this time around the BLS will actually COUNT those jobs in its monthly report.
Deflation: For some reason deflation has such a bad reputation right now. All central banks are pushing inflation as a sign of health. In the 1970's and 1980's we would have done anything to avoid it. We finally got it right with policies that increased incentives to invest in the United States and create new innovations and technology to ramp up supply as well as some rate hike increases.
Oh well. The problem today, why they so hate deflation and push inflation, is the massive amount of debt on every country's books. Inflation eats away at the value of wages, assets, and currency values. It makes massive amounts of debt easier to repay because you use currency worth less. Good for governments, bad for the citizens. Deflation does the opposite. No good for countries heavy in debt.
That is why the Fed has a difficult task: it wants to avoid deflation at all costs, but it also does not want to raise interest rates either because with rate hikes our dollar firms among other things, and it makes it darn hard to pay back debt because you drain more of your wealth to do it.
None of this really matters to the market, at least short term, i.e. in the next several months. The Fed said it is going to be patient though not using the word. With the economic data still trending lower and Q1 said to be less than 1% in terms of growth, it does not look as if the Fed will be getting in the rate hike game soon, or at least that won't be a concern . . . until the next FOMC meeting.
THE MARKET
Stocks closed mostly higher on quad-expiration. All indices were up nicely with the midcaps leading the charge. Good to see them take over once again.
SP500 18.83, 0.90%
NASDAQ 34.04, 0.68%
DJ30 168.62, 0.94%
SP400 1.13%
RUTX 0.92%
SOX 1.49%
The afternoon was disappointing, however, as stocks peeled back in the afternoon session with some leaders suffering some dings. A lot of that, however, was expiration related as the FOMC's actions really threw some wrenches into plans for the future and just how active the Fed would be.
CHARTS
SP400: Blasting to a new all-time high, the second for the week, leading the market upside. Great to see the midcaps leading.
RUTX: Three new highs on the week, Wednesday to Friday. Good to see the small caps leading as well.
NASDAQ: Try as it might, NASDAQ could not post a new all-time closing high (5032) not to mention an all-time high (5132). Maybe NASDAQ has met its match, maybe it is peaking out. Not likely, not just yet, based upon what the Fed said. No assumptions, but the Fed said what it said (or didn't say).
SOX: Gapped upside to cap a solid week, just missing out on a new high for this rally. This after testing the 50 day EMA not quite two weeks back. Nice, solid.
SP500: Lagging but not bad at all. A good move Wednesday, a Thursday test, then a new upside move Friday. Still off the late February all-time high, but making tracks toward it.
DJ30: Same as SP500, a Thursday test of the Wednesday move, then breaking back above the December high Friday. Now looking at the late February high.
LEADERSHIP
No doubt some good moves Friday. After all the market was hustling upside again. Some 'names,' however, had a hard time closing it out. Some already moved really well, others were just not quite ready.
Chips: Typically solid of late. AVGO, NXPI up 2.5%, SWKS surged again as well.
Software: Not so soft though some leaders struggled late in the week. CRM struggled after a great week. Ditto SPLK. INFA looks good as does GLUU.
Biotech: CELG, TXMD surged. XON is setting up well.
Internet related: GOOG gapped but could not put in a big session. WWWW rallied 3%. FB continued higher. LNKD is setting back up. VIPS surged Thursday and Friday.
MARKET STATISTICS
NASDAQ
Stats: +34.04 points (+0.68%) to close at 5026.42
Volume: 2.524B (+53.77%)
Up Volume: 1.93B (+1.081B)
Down Volume: 872.31M (+61.56M)
A/D and Hi/Lo: Advancers led 1.5 to 1
Previous Session: Advancers led 1.11 to 1
New Highs: 234 (+72)
New Lows: 37 (+4)
S&P
Stats: +18.83 points (+0.9%) to close at 2108.1
NYSE Volume: 2.3B (+211.4%)
A/D and Hi/Lo: Advancers led 3.83 to 1
Previous Session: Decliners led 1.82 to 1
New Highs: 271 (+143)
New Lows: 23 (-11)
DJ30
Stats: +168.62 points (+0.94%) to close at 18127.65
SENTIMENT INDICATORS
VIX: 13.02; -1.05
VXN: 13.82; -0.89
VXO: 12.94; -1.25
Put/Call Ratio (CBOE): 0.81; -0.08
Bulls and Bears: Broke lower as expected in the selling. Not low enough but heading in the right direction.
Bulls: 52.0% versus 53.46% versus 58.7% versus 59.5% versus 56.6% versus 52.5% versus 49.0%
Continuing the slide from the spike, making a round trip of sorts down to 52.
Bears: 14.3% versus 14.1% versus 14.1% versus 14.1% versus 14.1% versus 15.2% versus 16.3%
Wow, an actual move higher, though still basically flat-line.
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: 52.0%
53.6% versus 58.7% versus 59.5% versus 56.6% versus 52.5% versus 49.0% versus 53.1% versus 49.0% versus 48.0% versus 50.5% versus 56.4% versus 52.5% versus 49.5% versus 51.5% versus 53.4% versus 56.5% versus 56.4% versus 55.5% versus 54.6% versus 47.0% versus 35.3% versus 37.8% versus 45.5% versus 47.5% versus 48.0% versus 52.5% versus 57.6% versus 56.1% versus 52.5%
Background: Last undercut 35%, the threshold for bullishness, in early June 2012.
Bears: 14.3%
14.1% versus 14.1% versus 14.1% versus 14.1% versus 15.2% versus 16.3% versus 16.3% versus 17.4% versus16.3% versus 15.2% versus 14.9% versus 15.8% versus 14.9% versus 14.8% versus 13.9% versus 13.8% versus 14.9% versus 14.8% versus 15.1% versus 16.3% versus 18.2% versus 17.3% versus 14.1% versus 15.1% versus 15.3% versus 15.2% versus 14.1% versus 13.3% versus 15.1% versus 16.2%
Background: Over 35% for bears is the threshold to be really be a good upside indicator. The best indication is when bears cross up through bulls as the two merge. Right now bulls are coming back down from the 60 level that has consistently marked market tops over the past two years. The rapid decline in progress is pushing the bulls/bears lines toward one another. Still far from a cross with bulls falling faster than bears are rising, but bears are warming up to the notion of market weakness.
OTHER MARKETS
Bonds (10 year): 1.927%. Unreal week and close to the week as TLT bounced off a double bottom at the 61% Fibonacci Retracement.
1.97% versus 1.95% versus 2.06% versus 2.09% versus 2.10% versus 2.12% versus 2.10% versus 2.12% versus 2.11% versus 2.13% versus 2.20% versus 2.245% versus 2.11% versus 2.12% versus 2.12% versus 2.08% versus 1.98% versus 2.04% versus 1.96% versus 1.98% versus 2.06% versus 2.09% versus 2.11% versus 2.08% versus 2.14% versus 2.03% versus 1.99% versus 1.98% versus 1.99% versus 1.95% versus 1.94% versus 1.81% versus 1.77% versus 1.78% versus 1.68% versus 1.67% versus 1.76%
Oil: 46.58, +1.08. Solid bounce off of that potential double bottom, but still below near resistance. Has to show the breakout and show it can make it stick.
Gold: 1184.50, +15.20. Good bounce off of that double bottom, moving up through the 20 day EMA for the first time since breaking below it in early February.
$/JPY: 120.02 versus 120.855 versus 120.04 versus 121.34 versus 121.39 versus 121.43 versus 121.28 versus 121.50 versus 121.80 versus 121.60 VERSUS 120.72 versus 120.14 versus 119.71 versus 119.74 versus 120.179 versus 119.63 versus 119.48 versus 118.86
Back to the fade, breaking toward the 50 day EMA again.
Euro/$: 1.0811 versus 1.0648 versus 1.0874 versus 1.0590 versus 1.0568 versus 1.0494 versus 1.0635 versus 1.0546 versus 1.0700 versus 1.0829 versus 1.0849 versus 1.1030 versus 1.1079 versus 1.1175 versus 1.1182 versus 1.1197 versus 1.1195 versus 1.1362 versus 1.1337 versus 1.1385 versus 1.1379 versus 1.1366
All over the map last week gratis FOMC. Sold Wednesday, rebounded Thursday, then back down Friday. Still at near term support so not a certainty that the dollar breaks here. Not positive given the FOMC revitalized anti-high rates position.
MONDAY
Moving toward earnings with the FOMC still very patient though not admitting it. Stocks are pushing to new highs in terms of the indices with smaller caps leading. Not a bad scenario for a continued move higher into earnings. Of course you cannot assume that to be the case, but the ground work is there to do it.
This weekend we have several plays to take advantage of a continuing move. We have some great positions that have made us great money, others in the process, and others just getting going. We plan to augment those existing plays with some more upside if they can show the moves they are set to show.
Nothing really fancy, nothing really nuanced. Of course, that is ALWAYS the time to watch out, to be careful. Okay, it is ALWAYS time to be careful in the market lest you get your head handed to you. If the stocks make the moves we play them. If stocks struggle we protect what we made this last run. Earnings are coming; no reason to be cute or coy. Just play the moves that we get, and as always, take what the market gives us.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5026.42
Resistance:
5132.52 is the 3/2000 all-time high
Support:
5008.57 is the March 2015 post-bear market high
The 50 day EMA at 4854
The March low at 4843
4816 is the 38% Fibonacci retracement of the February run
4815 is the December 2014 prior market peak
4811 is the November 2014 peak (intraday)
4774 is the January high
4751 is the January 2015 lower high
4631 is the October 2014 upside gap point
4610 is the September 2014 post-bear market high.
The 200 day SMA at 4597
4566 is the lower gap point from late October
4563 and 4567 are the January lows
4547 is the December low
4486 is the July 2014 high
4372 is the March 2014 high
The August low at 4321
4316 is the lower gap point from October 2014
4289 is the July 2000 recovery high
4277 is the March lower gap point
4246.55 is the January 2014 peak
S&P 500: Closed at 2108.10
Resistance:
2119 is the lower trendline from 11/2012
2119.59 is the all-time high
2182 is the December 2012 up trendline
Support:
2094 is the December 2014 high, the prior all-time high
2079 is the intraday all-time high from November
2076 is the all-time high from November
The 50 day EMA at 2070
2062 is the January 2015 lower high
2011 is the September prior all-time high
The 200 day SMA at 2008
1991 is the July 2014 high
1972 is the December 2014 low
1905 is the August 2014 low
1902 from early May was the intraday all-time high.
1897 is the prior all-time high hit in April 2014
1883.57 is the early March high.
The December and January highs at 1848
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high
Dow: Closed at 18,127.65
Resistance:
18,289 is the all-time high
Support:
18,104 is the December high
17,991 is the early December interim
17,923 is the January 2015 lower high
The 50 day EMA at 17,861
The March low at 17,620
17,351 is the September 2014 all-time high.
The 200 day SMA at 17,299
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,736 is the penultimate all-time high from May 2014
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,341 is the May low
16,334 is the August 2014 low
16,257 is the January 2014 low
16,179 is the November 2013 peak.
15,855 is the October 2014 low
15,739 is the December 2013 low
ECONOMIC CALENDAR
March 23 - Monday
Existing Home Sales, February (10:00): 4.90M expected, 4.82M prior
March 24 - Tuesday
CPI, February (8:30): 0.2% expected, -0.7% prior
Core CPI, February (8:30): 0.1% expected, 0.2% prior
FHFA Housing Price I, January (9:00): 0.8% prior
New Home Sales, February (10:00): 470K expected, 481K prior
March 25 - Wednesday
MBA Mortgage Index, 03/21 (7:00): -3.9% prior
Durable Orders, February (8:30): 0.5% expected, 2.8% prior
Durable Goods -ex tr, February (8:30): 0.3% expected, 0.0% prior (revised from 0.3%)
Crude Inventories, 03/21 (10:30): 9.622M prior
March 26 - Thursday
Initial Claims, 03/21 (8:30): 293K expected, 291K prior
Continuing Claims, 03/14 (8:30): 2425K expected, 2417K prior
Natural Gas Inventor, 03/21 (10:30): -45 bcf prior
March 27 - Friday
GDP - Third Estimate, Q4 (8:30): 2.4% expected, 2.2% prior
GDP Deflator - Third, Q4 (8:30): 0.1% expected, 0.1 prior
Michigan Sentiment - Final, March (10:00): 91.2 prior |
