InvestmentHouse Weekend Market Update:
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- Stocks again squander a higher open as the rebalance takes more of a toll.
- NASDAQ, SP500 break 2016 trendlines but other indices hold support.
- Most leaders hold nicely, financials even manage a small gain.
- Potential entries still look good post-Friday.
- New plays for the start of 2017
What looked as if it could be a poetic end to 2016 with an up session for an
up market fell to the harsh reality of a rebalance. Stocks sold to end 2016,
a victim of their own success in the post-election rally, necessitating year
end selling to end 2016 with stock funds at each fund's required proportion.
Stocks did open the session higher but were unable to hold the move -- from
almost the opening bell. Stocks sold from the higher open through midday
and to the last hour. A rebound in the last hour cut some losses.
SP500 -10.43, -0.46%
NASDAQ -48.97, -0.90%
DJ30 -57.18, -0.29%
SP400 -0.40%
RUTX -0.44%
SOX -1.60%
VOLUME: NYSE +35%, NASDAQ +15%. Up on the rebalance session to end the
year. The majority of volume occurred in the last 15 minutes with a huge
spike at 3:55ET
A/D: NYSE -1.2:1, NASDAQ -1.6:1
Cut some losses, but there was some damage done. SP500 broke lower, closing
just below the 2016 up trendline. NASDAQ broke the 20 day EMA and its 2016
trendline, led lower by the big name FAANG: GOOG diving below the 50 day MA;
AMZN diving from the 50 day MA's, falling 2%; FB down over 1%. A rather
narrow, finite group of NASDAQ stocks hurt the index.
DJ30 and SOX both closed at the 20 day EMA. SP400 just cracked its 20 day.
RUTX sold to its 20 day EMA as well.
Overall nothing major for most indices, but NASDAQ is under some pressure
and all are still somewhat extended in the overall picture. The difficulty
in quantifying the action given it was year end as well as that portfolio
rebalance.
Most stocks we watch held their patterns. Down on the day (outside of the
financials) but not any real damage to most as they held their patterns and
trends. That leaves many stocks in good position to move higher to start
the year -- if they get the money to start 2017.
NEWS/ECONOMY
Chicago PMI, Dec: 54.6 vs 55.2 vs 57.6 November.
Looking at the progression in the sub-indices as well as the overall PMI, it
looks as if November's spike was an aberration as sentiment jumped but the
hard numbers have dropped right back to prior levels.
New Orders: 56.5 vs 63.2 November vs 52.5 Oct vs 54.1 Sept
Production: 58.5 vs 59.1 Nov vs 54.4 Oct vs 59.8 Sept
Employment: 49.7 vs 49.7 Nov vs 51.1 Oct vs 49.2 Sept
Prices: 58.0 vs 56.8 Nov vs 59.5 Oct vs 55.5 Sept. The trend in prices is
the one area that is up. Others slowing, prices up, stagflation in the air?
Inventories: Below 50, making it 8 months out of 2016 in contraction. Many
respondents commented they did not want to build inventories ahead of year
end.
THE MARKET
CHARTS
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LEADERSHIP
Mostly holding with minor losses, though financial stocks were up and some
chips related to AAPL sold harder.
Financial: Modest gains as these leaders held their positions. C, JPM, GS
all are fine.
Semiconductors: AAPL was reported to be cutting iPhone 7 production
according to an analyst looking at supplier numbers. Thus SWKS, AVGO, as
AAPL related stocks, sold harder, breaking near support. Most others were
lower but held their support, e.g. XLNX, MU, SLAB.
Telecom: For the most part solid enough as CIEN held the 10 day EMA and
other stocks held, e.g. MBT, HLIT.
Oil: Some nice patterns remain, e.g. GST, BTE, HOS, SDLP, RIG.
Tech: Not bad, holding support, e.g. MSFT at the 10 day EMA, JNPR ditto.
Drugs/Biotechs: Struggled. TTPH broke the 200 day SMA. KERX was off but
held the 20 day EMA easily enough, holding its range. BIIB faded to the 200
day SMA and MNKD dropped to the 50 day EMA.
MARKET STATS
NASDAQ
Stats: -48.97 points (-0.9%) to close at 5383.12
Volume: 1.565B (+15.41%)
Up Volume: 415.67M (-177.57M)
Down Volume: 1.11B (+466.94M)
A/D and Hi/Lo: Decliners led 1.48 to 1
Previous Session: Decliners led 1.03 to 1
New Highs: 68 (-23)
New Lows: 53 (-4)
S&P
Stats: -10.43 points (-0.46%) to close at 2238.83
NYSE Volume: 803.6M (+35.47%)
A/D and Hi/Lo: Decliners led 1.21 to 1
Previous Session: Advancers led 1.46 to 1
New Highs: 63 (+8)
New Lows: 27 (+2)
DJ30
Stats: -57.18 points (-0.29%) to close at 19762.6
SENTIMENT INDICATORS
VIX: 14.04; +0.67
VXN: 16.68; +1.12
VXO: 13.43; +0.52
Put/Call Ratio (CBOE): 1.09; +0.15
Second 1+ read of the past 2 weeks as some more protection was purchased.
Elevated into the 0.90's so a bit more caution but nothing major.
Bulls and Bears: Bulls slowed the ascent, up just 0.2 but that much closer
to 60.0. 60 to 65 have signed off on many a market correction since 1998.
Effectively there, so have to watch the technical indications. Bears rose
back up to 19.6 where they were 3 weeks back.
Bulls: 59.8 versus 59.6
Bears: 19.6 versus 19.2
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: 59.8 versus 59.6
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 versus 44.6
versus 49.0 versus 52.5 versus 55.9 versus 56.7 versus 56.2 versus 54.3
versus 52.9% versus 53.9% versus 54.4% versus 52.5% versus 47.1% versus
41.6% versus 47.5% versus 45.9% versus 47.3% versus 45.4% versus 35.4%
versus 40.2 versus 39.2
Bears: 19.6 versus 19.2
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
versus 22.6 versus 22.8 versus 20.6 Versus 20.2 versus 20.0 versus 20.9%
versus 21.2% versus 21.6% versus 23.3% versus 24.7% versus 24.5% versus
23.8% versus 23.2% versus 23.5% versus 23.8% versus 23.7% versus 24.0%
versus 21.7% versus 21.6% versus 21.7 versus 20.6% versus 21.7% versus 27.8%
versus 27.8% versus 28.9% versus 27.8% versus 30.3% versus 35.4%
OTHER MARKETS
Bonds (10 year): 2.42% versus 2.48%
Historical: 2.48% versus 2.51% versus 2.56% versus 2.54% versus 2.55% versus
2.54% versus 2.564% versus 2.544% versus 2.59% versus 2.59% versus 2.52%
versus 2.473% versus 2.475% versus 2.471% versus 2.40% versus 2.349% versus
2.39% versus 2.396% versus 2.394% versus 2.454% versus 2.388% versus 2.30%
versus 2.31%. versus 2.36% versus 2.355% versus 2.317% versus 2.30% versus
2.34% versus 2.297% versus 2.219% versus 2.22% versus 2.23% versus 2.14%
versus 2.077% versus 1.867% versus 1.83% versus 1.778% versus 1.81% versus
1.797% versus 1.827% versus 1.83% versus 1.85% versus 1.84% versus 1.791%
EUR/USD: 1.05289 versus 1.05155
Historical: 1.05155 versus 1.04357 versus 1.04636 versus 1.0451 versus
1.04368 versus 1.04412 versus 1.0392 versus 1.0407 versus 1.0459 versus
1.0415 versus 1.05094 versus 1.0636 versus 1.06326 versus 1.05586 versus
1.06140 versus 1.07745 versus 1.07194 versus 1.07614 versus 1.06638 versus
1.06631 versus 1.0601 versus 1.0649 versus 1.05699 versus 1.066 versus
1.05910 versus 1.05519 versus 1.0672 versus 1.06265 versus 1.0587 versus
1.0650 versus 1.07026 versus 1.0725 versus 1.07492 versus 1.0858 versus
1.08898 versus 1.09398 versus 1.10186 versus 1.10327 versus 1.11406 versus
1.11059 versus 1.11020 versus 1.10560 versus 1.09646 versus 1.09860 versus
1.08963 versus 1.0895 versus 1.08793
USD/JPY: 116.739 versus 116.456.
Historical: 116.456 versus 116.793 versus 117.41 versus 117.413 versus
117.32 versus 117.537 versus 117.544 versus 117.835 versus 117.453 versus
117.941 versus 118.257 versus 117.397 versus 115.038 versus 115.058 versus
115.20 versus 114.23 versus 113.325 versus 113.993 versus 113.601 versus
113.52 versus 113.945 versus 114.19 versus 112.685 versus 112.44 versus
111.835 versus 113.14 versus 112.445 versus 111.129 versus 110.809 versus
110.905 versus 110.240 versus 109.07 versus 108.164 versus 107.455 versus
106.621 versus 106.814 versus 105.192 versus 101.286 versus 104.386 versus
103.112 versus 102.96 versus 103.350 versus 104.042 versus 104.798 versus
104.710 versus 105.305 versus 104.412 versus 104.2110 versus 104.331 versus
103.83 versus 103.99 versus 103.99
Oil: 53.72, -0.05.
Gold: 1151.70, -6.40.
PLAYS:
LIVE: Testing the 10 day EMA with a doji after a big surge, we are looking
to catch some more upside momentum if LIVE takes off upside again. The
stock put in a reverse 1:6 stock split and that helped it move farther, but
it was already running for us moving into that split. Now we want to catch
any momentum that is left and ride it upside toward the prior high.
EARNINGS: 2/20 after the close
ENTRY: 24.38
TARGET: 32.89
POSITION: Stock
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DIS: in a 2 week test of its last move to a higher rally high that matched
the May 2016 peak. After this test DIS will be ready to rally to a higher
high past that May peak. We will wait for the test to end, watching for a
break higher that holds the move. That is our entry point.
EARNINGS: 2/9 after
ENTRY: 105.09
TARGET: 114
POSITION: Stock and/or MAR 17 2017 105.00 C (49 delta)
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LULU: Gap test. LULU gapped sharply higher in early December on strong
earnings. Nice big gap on strong volume took LULU to the lower gap point
from early September. It has since put in a 3 week test back to the 20 day
EMA and the 50% Fibonacci retracement of the early December move. Strong
breakout move, nice test. MACD broke out on the move. We want to enter as
LULU surges back up through the entry point and holds the move toward the
close. That is the entry signal.
EARNINGS: 3/8 after the close
ENTRY: 65.74
TARGET: 74.94
POSITION: Stock and/or LULU MAR 17 2017 65.00 C (52 delta)
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Have a great New Year's celebration!
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