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Tuesday, September 27, 2016

Market Alert - Pre-Market

Futures vs FV: SP +1.25; DJ +6.83; NASDAQ +6.05

Futures are positive but off the early session highs. As figured, the debate has not overridden the predominant themes in the market. The betting odds gave Clinton the nod in the debate, something expected given you have a slick 30 year politician versus a bloviating businessman. That said, a command of the facts could have scored a lot of points for either side last night. Just a quick look at the headlines would have provided both sides ample facts to go after the other sides claims. That they didn't is how it works and thus the debate has a short half-life in market terms.

The debate does have the usual interesting fallout. Ford today tweeted regarding a claim that it was moving jobs to Mexico, saying that there would be no impact on US jobs because 2 vehicles would be built where one small vehicle would have been built at the plant in question. Ford's own statements condemn it further: sure it impacts US workers because THREE cars could be made in the US by US workers, not just two. It makes enough difference in employees that Ford is building another plant. It will have to staff that plant will it not? Ford did not say it was a totally automated plant. If it was, then surely it would be just as good for Ford to build it in the US because labor costs would be largely irrelevant.

A few main stories dominate this morning.

DB: A day after Merkel said no bailouts, DB gave up a rebound gain and has traded down 2.8%. Truly there will be no bailout because Germany played the anti-bailout force in all EU negotiations with Greece and other EU countries Germany felt were unworthy of its capital. Justice? Karma? As mountain rescue expert Hal said in the Stallone movie 'Cliffhanger,' gravity is a b**ch.

More German bank woes: Commerze Banc, Germany's second largest bank, announced 9,000 layoffs. That usually happens when all is going well, right?


Oil: Iran shockingly pours cold oil on any notion of a freeze agreement, wanting to increase production 4M bbl/day.

GS cuts its oil target to 43 from 50 on global glut forecasts.


VW: DOJ is reportedly ascertaining what size of fine it can levy against VW without bankrupting the company. Yes, that has had a market impact. When governments talk about possibly bankrupting companies and industries it matters to markets and economies. Just look at the coal business. Further, the emissions issues are now raising questions about its Audi unit.


OTHER MARKETS
Bonds: 1.556% vs 1.584 10 year. Bonds are bouncing as that recovery continues as things are not all that well with the world economies.

EUR/USD: 1.1203 vs 1.1254. Dollar recovering some.

USD/JPY: 100.28 vs 100.279

Oil: 44.61, -1.32

Gold: 1333.50, -10.60


Futures are at session lows as any bounce from the Monday pullback is over at the session start. NASDAQ, RUTX, SOX and their ability to hold the support and thus the trends since late summer is the upside key. Kind of neutral start yes, but the bids have faded from a pre-market bump.

Consumer Confidence is out at 10ET. Case/Schiller came in at 5.0% versus 5.1% prior. The report was hardly noted on the financial stations.

We will see how the upside leaders and plays hold near support and if DJ30, yes the Dow, can find some support for its names after lagging pretty hard Monday.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Monday, September 26, 2016

Market Alert - The Close

Stocks sold off from the open and did a really good job of going nowhere all session. Lower start, lower early afternoon low, then a lateral slide to the close near session lows. All indices suffered downside though on lighter volume. Lower volume trade is more of a buyers' strike than dumping stocks, but on the session the result sure felt like a bit of dumping.

SP500 -18.59, -0.86%
NASDAQ -48.26, -0.91%
DJ30 -166.62, -0.91%
SP400 -0.54%
RUTX -1.09%
SOX -0.99%

VOLUME: NYSE -1.7%, NASDAQ -1.7%

A/D: NYSE -2.5:1, NASDAQ -3.1:1

As you would expect from their relative positions to end last week, NASDAQ, SOX and RUTX ended the day on better footing. Not great, but better. DJ30 is the worst, having landed back in the range from 2 weeks back after that sharp Friday selloff.

Some individual stocks sold hard as well. Not just selling back in the pattern but breaking sharply lower. Some financial big names were in that group, e.g. C, BAC. Some recent leaders in leadership groups struggled as well, e.g. BABY, CELG.

Causes? Remember, the FOMC just last week opted to pass on any rate moves because it just wasn't something the chairman wanted to do at this time. The market liked that, at least initially. Friday was no great upside move and we just saw the Monday result.

Some speculated some cold feet ahead of the first presidential debate. Recall Mark Cuban stating that if Trump wins the market collapses. Is the Donald's recent success in the polls playing that hand? Doubt it.

Others cited DB and its woes. Germany's Merkel stated that DB would not get any bailout to which DB responded it hadn't asked for one and didn't need one. After dropping almost 10% Monday alone before rebounding to just a whisker of a loss at -7%, it would appear DB's optimism isn't shared by investors. Indeed, DB's comments are eerily similar to other banks just in front of the financial crisis. Of course what would you expect DB to say, that the bank was going to hell in a hand basket? Its shareholders, but just the pickiest ones of course, might have an issue with that kind of disclosure. It is the case of where there is smoke there is fire, and you can see the smoke swirling out the bank doors.

The financials sold on higher volume while the overall market sold on lower volume. Perhaps a general buyers strike with a blend of some dumping of financial stocks because of DB's woes and others just stepping back to see just what happens in the debate and in general in the post-FOMC market.

That makes some sense, and now that there is a pullback to test the post-FOMC move (and indeed a complete give back of that move for NASDAQ and SOX (RUTX hanging in with some gains), it will be time to see if those 3 indices can provide the kind of leadership needed to rebound from this test of that move and propel further upside.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Last Hour

Not a great market session with stocks lower almost across the board. Started weaker of course, held in a range through midday, then hit a new session low at 1:30ET. Since then mostly a lateral move.

SP500 -17.34, -0.80%
NASDAQ -43.52, -0.82%
DJ30 -152.89, -0.94%
SP400 -0.43%
RUTX -0.79%
SOX -0.91%

Pretty evenly down across the indices though SP400 is a relative strength leader.

Banking worries are truly an issue as those watching DB and its access to capital, state support, etc. comment it sure feels like 2008. Marvelous.

Oil remains nicely higher (45.66, +1.18) even as the markets suffer significant downside. Nice correlation between oil prices and stock prices: it works when the financial stations notice oil and stocks are both higher.

With oil higher some energy is higher but a lot of oil stocks are not enjoying upside today.

I guess then that the lower prices must mean Trump does better than expected at the debate and surely a Trump presidency would mean a market crash as Mark Cuban bloviated.

SPY is heading back near its session lows. Some plays have sold off and are not recovering all that well if at all. TIVO, HIMX, INVN need to look sharper, a lot sharper, to avoid the axe. FFIV looks interesting downside, but not seeing a lot of trade behind the day's downside.


Jon Johnson, Chief Market Strategist
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Market Alert - Pre-Market

Futures vs FV: SP -8.78, DJ -80.45; NASDAQ -25.46

Futures are lower but are off the opening lows and trending slightly higher since that lower open. Still fairly significant losses.

The purported reasons: DB worries continue or even build as Merkel says there will be no bailout. Of course DB retorts it doesn't need any bailouts. That kind of makes you nervous; how many times did you hear that from banks during the financial plunge? DB is down 6% pre-market.

Other world markets are lower, particularly Europe, the home of DB.

Fed: Lacker talked to Fox Business and was again pushing for hikes, concluding the Fed needs to "get on with it." He did say that the US needed more cap investment to help increase productivity, and offered that he believes the regulatory environment has 'swamped' businesses. That is certainly part of the problem.

Profits: Set for sixth straight quarter of declining profits. Usually a recession indicator though this one is blamed on the drop in the oil sector for most of the down quarters.

Oil: Oil is rising as OPEC gets ready to meet and there are rumors of a production deal and others saying it is not going to happen. Gasoline prices in the US are up 0.04/gallon to 2.25.

Oh, and oil is up so why are stocks lower? I thought they went hand in hand . . .

M&A: CBOE buying BATS

Downgrades: DIS, TWTR

Upgrades: FL on JPM's focus list. So I guess we should focus on FL?

Syria: Peace deal is said to be wholly over as US accuses Russia of barbarism while the Russian UN envoy says there is no chance for peace.


OTHER MARKETS
Bonds: 1.599% versus 1.62% 10 year

EUR/USD: 1.1265 VS 1.12259

USD/JPY: 100.478 vs 101.045

Oil: 45.34, +0.86

GOLD: 1343.00, +1.30


Futures continue well below FV toward the open but are off their lows and trending modestly back upside. Not huge, but an upside trend is better for the index uptrends overall that are trying to hang on particularly on SP500, DJ30, SP400.

A new week with NASDAQ, SOX, RUTX providing leadership through Friday as their patterns still show uptrends and good overall technical action. Thus far rotation has provided leadership as money moves around but does not leave the market. The stage is set for some of that today as the market starts lower but is trying to recover lost ground toward the open.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Friday, September 23, 2016

Market Alert - Pre-Market

Futures vs FV: SP -4.58; DJ -14.46; NASDAQ -4.76

Markets are retrenching some after a post-FOMC jump. Modest losses, however, and futures are recovering some lost ground toward the open. No scheduled US reports and the news is pretty much company specific. After information overload, the market is pausing to take a breath on a light news day.

Oil: S. Arabia offers to cap production if Iran agrees to freeze its output. Iran quickly responded with a less than polite 'no.'

M&A: It is reported GOOG and CRM are considering offers for TWTR. TWTR is up 18% pre-market. Hey, something finally moved the stock!

FB: WSJ reports that FB admits for 2 years it overstated the amount of time video ads were viewed by up to 80%. Supposedly that has been rectified, but not for those that spent money on those ads.

AAPL: Japan is said to be mulling antitrust action.

EU PMI: 52.6 vs 51.5 vs 51.7 prior
Services: 52.1 vs 52.8 exp vs 52.8 prior


OTHER MARKETS
Bonds: 1.613% versus 1.625% 10 year

EUR/USD: 1.1212 vs 1.1207

USD/JPY: 100.586 vs 100.774

Oil: 45.98, -0.34

Gold: 1340.60, -4.10


The US stock market has enjoyed a 2-day rally on the FOMC's inability to raise rates. Now the markets have to think about what comes next week, and the item getting the most print and air time is the first presidential debate. It is going to be just Trump and Clinton, though I think Johnson should be there as he is pulling 10% in many states. Oh well.

Anyway, there is the idea that a Trump win is bad for markets and the theory is that if Trump does well the stock market does not in the debate aftermath. Who knows about those short-term gyrations? Trends tend to stay in place without substantive change, and after the 1980 election where Reagan was said to promote 'voodoo' economics, it became apparent that his ideas worked. Thus I don't take too much stock in those kind of predictions, particularly when Clinton's economic plans are to levy even more taxes than those already crushing the small businesses.

So, near term today is soft at the open, but not that soft. Bids could easily return after some giveback of the Wednesday/Thursday post-FOMC gains. Watching SOX' performance, but that will be a multi-day event as to whether its heavy look starts to act as a drag.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Pre-Market

Futures vs FV: SP -4.58; DJ -14.46; NASDAQ -4.76

Markets are retrenching some after a post-FOMC jump. Modest losses, however, and futures are recovering some lost ground toward the open. No scheduled US reports and the news is pretty much company specific. After information overload, the market is pausing to take a breath on a light news day.

Oil: S. Arabia offers to cap production if Iran agrees to freeze its output. Iran quickly responded with a less than polite 'no.'

M&A: It is reported GOOG and CRM are considering offers for TWTR. TWTR is up 18% pre-market. Hey, something finally moved the stock!

FB: WSJ reports that FB admits for 2 years it overstated the amount of time video ads were viewed by up to 80%. Supposedly that has been rectified, but not for those that spent money on those ads.

AAPL: Japan is said to be mulling antitrust action.

EU PMI: 52.6 vs 51.5 vs 51.7 prior
Services: 52.1 vs 52.8 exp vs 52.8 prior


OTHER MARKETS
Bonds: 1.613% versus 1.625% 10 year

EUR/USD: 1.1212 vs 1.1207

USD/JPY: 100.586 vs 100.774

Oil: 45.98, -0.34

Gold: 1340.60, -4.10


The US stock market has enjoyed a 2-day rally on the FOMC's inability to raise rates. Now the markets have to think about what comes next week, and the item getting the most print and air time is the first presidential debate. It is going to be just Trump and Clinton, though I think Johnson should be there as he is pulling 10% in many states. Oh well.

Anyway, there is the idea that a Trump win is bad for markets and the theory is that if Trump does well the stock market does not in the debate aftermath. Who knows about those short-term gyrations? Trends tend to stay in place without substantive change, and after the 1980 election where Reagan was said to promote 'voodoo' economics, it became apparent that his ideas worked. Thus I don't take too much stock in those kind of predictions, particularly when Clinton's economic plans are to levy even more taxes than those already crushing the small businesses.

So, near term today is soft at the open, but not that soft. Bids could easily return after some giveback of the Wednesday/Thursday post-FOMC gains. Watching SOX' performance, but that will be a multi-day event as to whether its heavy look starts to act as a drag.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Thursday, September 22, 2016

Market Alert - Pre-Market

Futures vs FV: SP +9.98; DJ30 +93.30; NASDAQ +26.40

Stocks are set to open higher on top of the Wednesday surge to the close post-FOMC and its 'decided just to wait' even if all criteria is met mindset.

CNBC is running cover for the Fed because of a '6-week weak stretch' preceding the meeting. Wow. If a slight slowing for 6 weeks makes such a large difference in the big picture of a Fed believing it needs to hike, then this economy is not the juggernaut that the CNBC anchors and the Administration say it is. Oh, by the way, it is not.

Jobless Claims: 253K vs 262K vs 260K.
CNBC headline: "Jobless claims fall to two month lows as labor market firms." This as the number men age 26 to 54 not working, the strongest earning years in their lives, hits an all-time high. Firming indeed.

Earnings beats: JBL; RHT
Earnings misses: AZO (TL, BL), BBBY (TL, BL), RAD (TL)


OTHER MARKETS
Bonds: 1.643% versus 1.656% 10 year

EUR/USD: 1.1237 vs 1.1188. Dollar falling harder versus euro

USD/JPY: 100.641 vs 100.33. Dollar rebounds some after Wednesday spanking.

Oil: 46.22, +0.88

Gold: 1340.50, +9.10


Not a lot of news out this morning, mostly the aftermath of the FOMC meeting and the Mylan Labs Epipen hearing Wednesday. It amazes me how members of Congress fail to tie the loose ends together in their questioning. I watched the hearing because it was on all of the financial stations (lack of choice?) and I was struck how the MYL CEO kept talking about the company's cost of good sold for the product but no one asked her to break that number down and show what part was for the huge advertising campaign MYL initiated to get schools, governments, etc. to stock the pens. It would have been interesting to see how a $5 device and delivery system's cost was impacted by the advertising to get the device into public places just in case someone developed allergic shock for the first time -- versus those who have a known reaction and have to carry the device with them. See? Slow news day.

Stocks are holding at their morning highs and are set to gap open. It looks for all intents and purposes that the Fed has managed to turn another selloff that was starting to make inroads into the upside back to buying.

We will see how the initial move higher is tested, but there is no buyer's remorse from Wednesday showing up at all.

Jon Johnson, Chief Market Strategist
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Wednesday, September 21, 2016

Market Alert - To the Close

The Fed did nothing because it just didn't feel like it. Rules don't apply at the Fed other than the gut rule, i.e. don't make your stomach hurt. So, no action. Hurray!

SP500 24.47, 1.15%
NASDAQ 55.85, 1.07%
DJ30 173.74, 0.96%
SP400 1.30%
RUTX 1.16%
SOX 1.49%

At the press conference Yellen did nothing to change the statement. Every FOMC meeting was 'live,' no one believes her, no rules apply, inflation speed limit at 2% means nothing because the core has been over 2% for 10 months. Most importantly, the Fed does not discuss any politics in its meetings. Of course it doesn't! Those have records kept. Thus any of those discussions would be outside official meetings. Oh well.

Of course stocks are surging on the free money train still running. The indices are testing the prior highs and indeed NASDAQ is moving to a new high. The other indices are pushing higher but we will see how they close.

Here is the issue: what is the day after? That is always the problem after FOMC decisions. This one appears guns are blazing. Again, it is over 2 months until the next real meeting (November is a week before the election--i guess if the Fed is really apolitical then it is 'live') so out of sight, out of mind.

SOX is back at the early September high. NASDAQ at a higher high. RUTX bouncing decently after its 50 day MA test. SP500, DJ30, SP400 also up, testing the 50 day MA's. Definitely a recovery this session and looking at some possible buys but knowing that the day after can see swings. This does look strong as noted.

Jon Johnson, Chief Market Strategist
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Market Alert - FOMC rate decision

No change in interest rates (surprise!) 0.25% to 0.50%.

Case for increasing FFRate has strengthened, but waiting for further progress toward objectives.

Near term risks balanced versus leaning to the positive

3 dissents: Boston, Cleveland, and another northern district that escapes me.

Dot plots: Very wide dispersion between no hikes and 2 hikes.

2016 -0.25%

2017 growth -0.5%

2018 growth -0.5%

Long-Range growth rate is now below 2.0%, now at a meager 1.8%

Labor market continues to strengthen.

Pace picked up from modest pace at first of year.

Fixed investment soft.

Inflation remains below Fed's 2% target. Really?


Immediate reaction is up and down, but mostly up. Still to shake out, but with over 2 months until a possible rate hike.

SP500 7.49, 0.35%
NASDAQ 17.28, 0.33%
DJ30 62.94, 0.35%
SP400 0.32%
RUTX 0.20%
SOX 0.67%

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Pre-Market

Futures vs FV: SP 4.89; DJ +54.04; NASDAQ +18.63

Things are not so quiet ahead of the FOMC announcement this afternoon. Futures are higher, gapping upside in the overnight session, aided by some good company specific news on earnings and company buys. Over teh past 2 hours some gains have eroded but they still sport good gains heading toward the open.

Things are apparently all well according to CNBC given some big companies are reporting earnings beats: ADBE, FDX, KBH, GIS.

BUT, those earnings from huge companies do not tell the story of the US. The Gallup surveys provide a completely different picture. The middle class invisible and for some reason silent decimation as adults who were in the middle class lost their jobs, and even though they got another full-time job the pay is half of what they made before. They are 'fully employed' in the BLS' report but they have suffered personal economic collapse. On top of that, the percentage of full time workers in the US is just 48%, the lowest since early 1983 as the US emerged from a recession as bad as the great recession. Multiply the plight of the struggling former middle class worker by millions and you see why the US wealth has made a dramatic shift and why so many are suffering in the 'wonderful' US economy that is producing 1% GDP growth.

No wonder as company destruction moved ahead of company creation in 2008, now averaging -30K businesses per year versus averaging +120K new businesses per year for the prior 30 years.

Ah, what a lead in to the FOMC trying to decide whether to raise rates. The irony is, if it kept rates low for the above reasons it would still be the wrong thing to do because low rates are part of the overall policy problem that is causing such economic hardship in such a 'wonderful' economy.

Japan: BIG NEWS. Changed its stimulus. No change on rates but increased ETF purchases AND bond yield curve controls. Japan is attempting to force the yield curve to steepen. As with all artificial means, however, it does not solve the problem. Japan's problem is a lack of growth. Low rates have not helped. Buying bonds has not helped. Buying equities has not helped. It needs to go full capitalist and let the money go where it needs to go. As the US is Japan now, the US needs to do the same.

Oil: Up after API showed -7.5M bbl

Mortgages: -7.3% on the week. Higher rates blamed.

Fed: Larry Summers tweets 11 reasons the Fed should not raise rates. Ironically, 'not to hurt democrat chances in the November election' was not one of them.


OTHER MARKETS
Bonds: 1.686% vs 1.693% 10 year

EUR/USD: 1.1147 vs 1.1157

USD/JPY: 100.86 vs 101.729

Oil: 44.85, +0.80

Gold: 1332.40, +14.20


Futures have firmed from their slide toward the open, and as such futures hold a pretty decent level heading toward the bell. Stocks will start higher, may struggle some to hold the move -- that happened Monday and Tuesday.

May. The widely held belief is the Fed does nothing, and thus there may be short covering ahead of the FOMC result. SP500, DJ30, SP400 are down over the past 2 weeks, after all.

Trading around the FOMC, before and immediately after, is tough. A lot of the trade is hedge driven, and thus when the news comes out there can be wide volatility before the trend settles in. It should be upside given the Fed likely does nothing, but it could take some gyrations getting there. Of course maybe this is the inflection point where Fed largesse is no longer rewarded? Looking at Japan, the answer would have to be, for the moment, 'Nah.'

We will try to play as loosely as possible this morning, watching the downside plays and how they are acting. MSFT is up because of its $40B stock buyback, no doubt using a lot of its recent bond offering cash to BUY those shares back. Wow, what great use of a bond offering! Watching MSFT as it could be a leading market indicator given it has good news. If it is a ho-hum session or even fades, that is telling.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Tuesday, September 20, 2016

Market Alert - Pre-Market

Futures vs FV: SP +9.48; DJ +76.84; NASDAQ +8.22

A dearth of news as the Fed starts its 2-day rate decision meeting. Futures, on the other hand, are up and at session highs as they anticipate no Fed action Wednesday.

Indeed, the WSJ's Hilsenrath, a reputed mouthpiece of the FOMC, has called a December hike with the Fed passing in September. Really going out on a limb there, taking the 91% probability side of the bet. But, he has history behind him as well. History of Yellen, that is.

Housing Starts, August: -5.8%
Permits: -0.4%
Don't worry. Homebuilder sentiment jumped higher recently so all must be well. Perhaps for the next 10 years as they all said back in 2005 -- right at the housing market peak.

M&A: TSRA buying DTSI


OTHER MARKETS
Bonds: 1.689% versus 1.70% 10 year

EUR/USD: 1.1178 VS 1.1177. Flat ahead of fed

USD/JPY: 101.85 vs 101.854. Flat ahead of Fed.

Oil: 42.83, -0.47

Gold: 1317.30, -0.50


Okay futures are holding their gains -- even with oil lower by the way (where are those oil down/market down folks today?) -- as the market apparently views a Fed pass as a market positive. So, we plod along and wait out the Fed. Keep in mind that Monday the early market upside did not hold. Today looks a bit stronger, but we will see.

Biotech still looks interesting in its turn off of the lows and bases that have formed. Financials should be a bit weak if the Fed is going to pass; they have held near support and are showing a higher open. Doesn't make a lot of sense, does it. It would appear this is a general 'buy most everything ahead of FOMC rate hike pass' kind of morning. Again, we see how it holds.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Monday, September 19, 2016

Market Alert - The Close

Stocks caught a bid from the start of the pre-market session and held the bid to the open. Stocks rallied through the first half hour. That was, however, the peak for the session. Stocks slid lower into early afternoon with 3 down legs. A bounce starting early afternoon carried stocks off the lows to the start of the last hour. The last hour stocks faded but managed to hold off the earlier session lows. That left a mixed close with the small and midcaps doing the work for the session.

SP500 -0.04, -0.001%
DJ30 -9.54, -0.18%
DJ30 -3.63, -0.02%
SP400 0.75%
RUTX 0.63%
SOX 0.19%

VOLUME: NYSE -61%, NASDAQ -35%. Remarkable drops but post-expiration.

A/D: NYSE 2.1:1, NASDAQ 1.5:1.

There was little news on the session. Homebuilders once again show a lot of optimism for the housing market. That means the housing market is done for now.

China reported housing price increases that were "quite hard to believe" as many commentators noted. For good measure China devalued the yuan a good chunk.

Oil: Venezuela, home of the $150/dozen egg special, commented that it sure looked as if the OPEC and non-OPEC members were going to come to a deal on production. That these comments even made the headlines outside of the comics section is absurd. What number of false flag OPEC agreement stories have come from Venezuela? Three I can recall offhand. That poor country is so desperate it has to try whatever it can to help -- except, of course, free market policies that would actually help it. No, in a very Mao-like response when Mao was confronted with the starvation deaths of 60M Chinese citizens, keep those communist policies working. With the Venezuelan president doubling, tripling, quadrupling down on his socialist policies and citizens roaming the streets eating garbage, it looks as if it will take an all out revolution. But, I digress yet again.

Oh, oil did finish higher by 0.28 at 43.90, but it was well off the intraday high.

All of this news trades in the vacuum of the Wednesday FOMC rate decision, now sporting a solid 9% chance of a September rate hike.

Looking at the index charts, however, for the most part they look as if they are deathly afraid the FOMC may indeed just 'surprise' the market and hike rates.

CHARTS

SP500 and DJ30 both look very shaky. Sure they are not dropping like stones but their patterns would allow that. But for the FOMC decision Wednesday AND a market that currently lives and dies by the Fed's actions, we would be looking at seriously shorting these two. We have downside plays on them and they are right at the entry point, but with the FOMC on Wednesday, you are betting on Yellen to pull a surprise in order for the downside play to work. It might indeed be worth putting a little bit of money to work ahead of the FOMC decision on those downside plays, but it would also be money that you could very easily never see again when the 'one and done' FOMC decides to do nothing (that 91% chance category). That leaves SP500 and DJ30 grubbing along laterally just below the 50 day MA's after that sharp break lower 2 Fridays back. Primed to drop for sure, but if the Fed does nothing they are not so far down as to be damaged goods.

NASDAQ: Gapped higher, rallied close to the early September all-time high. Then NASDAQ reversed to negative. Did hold the 10 day EMA on the low and rebounded modestly. No serious damage done and it likely would not take much to continue NASDAQ back upside, but the point is that NASDAQ rallied back to the prior peak (or darn close) and then reversed quickly off of that initial move higher. There was not a lot of volume so it was not so much the sellers swarming but bids just dying off. As such, it was not that negative.

SOX: Same action as NASDAQ, rallying up to and indeed through the 9/2 post-2000 high. SOX could not hold the move, however, fading back to close just positive. A move higher ran out of gas and faded most of that move. Not a lot of volume overall so as with NASDAQ there was no big reversal move; just a drop off in bids that you often see with indecision about an upcoming event. That said, MACD is lower as SOX tests the prior highs and fades. Potential double top here but right now, just potential.

RUTX: Still rather solid. Closed off its intraday high but held decently enough to its pattern that saw a test through last Wednesday then a bounce higher. Rallied up the 10 day EMA, fell to the 50 day MA in a test, rebounding. That is not bad and indeed quite good action.

SP400: The midcaps gapped upside then rallied to the 50 day SMA. That was the peak. SP400 faded off of that move, losing just 8.5 points off the high as it gained 11.4 points on the session. That move higher tapped the 50 day EMA on the high and then retreated. Looks a lot like a bear flag at this juncture.


LEADERSHIP

Big Names: Overall still good, just a bit off on the session. AAPL finally sold back some after its spurt higher. FB gapped higher, closed lower, still holding the 10 day EMA trend. AMZN gapped higher, faded to a modest loss on low volume, also holding over the 10 day EMA. NFLX gapped higher but reversed to give up the 200 day SMA again. GOOG gapped and faded as well, posting a modest loss but still in a good lateral pattern. MSFT rallied higher as well then flipped and faded to close at the 50 day MA.

Chips: AAPL chips took a second session off, e.g. SWKS, AVGO, but not in bad shape at all. XLNX and SLAB, both leaders that peaked in early September, continue to struggle in a weeklong bear flag. NVDA moved to a new high Monday though it gave back most of the move with a big tombstone doji. MRVL held a modest gain while LSCC tried higher but reversed. Hey, it now may put in a nice test.

Biotech: Picked up some IDRA as it continued the Friday surge higher. AGEN rallied higher, faded. EXAS continued upside with a solid move. ACAD moved higher again. Overall a nice group.

Financial: Modest moves higher with many finishing off the session high, e.g. C, JPM. MS continues a nice flag along the 10 day EMA while GS posts a flag as well.

Oil: Oil was higher but the oil stocks were still somewhat mixed. APC was flat after starting higher. CWEI posted a small gain as it too started higher but could not make the move stick. Small names struggling e.g. GPOR.

Retail: Testing a bit. JWN is putting in a nice 2-day test of the Thursday upside break. RH is testing the 20 day EMA. Like ROST's break higher off the 50 day MA test. LULU looks as if it is trying to bounce off the 200 day SMA dive.

Metals: Enjoyed a solid session. AKS gapped higher off the 200 day SMA. SID gapped upside as did CENX.


We picked up some IDLA stock positions as well as some puts on CERN. Closed STLD and RHT. RUTX looks solid enough. NASDAQ and SOX are still high in their ranges, but have had a bit of trouble testing that prior high again, fading off that peak. SP500 and DJ30 do not look so good. That said, as noted last week, all things are possible with a compliant Fed.

Have a great evening!


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - To the Close

Man, SP500 and DJ30 sure look as if they are primed to fall. RUTX is not bad. SOX and NASDAQ: they jumped up and touched the early September high but have backed off to negative or close to flat, getting pushed back as that prior high.

SP500 0.83, 0.05%
NASDAQ -9.28, -0.18%
DJ30 8.21, 0.05%
SP400 0.76%
RUTX 0.52%
SOX 0.24%

If the Fed was not coming out Wednesday and confirming the 91% probability of no rate hike they would look like certain downside entries. Our plan for this week was to let the downside work and clear out ahead of the FOMC decision, more or less. Some downside positions look really good, however, e.g. LH, CERN and of course SPY, DIA.

No real new news this afternoon, just a lot of name calling on the campaign trail. What is the old saying? When the facts and issues are not working for you, go negative. Oh boy, still 50 or so days to go.

Anyway, we are looking at LH and CERN downside. Had to close STLD as it was acting too strong.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Pre-Market

Futures vs FV: SP +7.24; DJ +78.20; NASDQ +11.45

Futures are off the morning highs but not much. Gapped higher to start the session and have traded in the same narrow range since. Thus after last Monday started weaker then moved higher, this one is dropping the lower pretense.

Any big news? It COULD be big were it true.

Oil: Venezuela says that there is a possible deal between OPEC and non-OPEC producers. Yes, with eggs at $150/dozen in the socialist utopia, another gambit to launch oil higher surfaces from Venezuela. You feel sorry for the people there as the socialist leader doubles down on socialist policies. Good luck with that.

Oil is higher, however, and stocks are higher as well. Okay the correlation is now back on according to those on the financial stations. Perhaps, but it is the most tangential of relationships. How often has oil been off but the market higher? At least half the time.

China: Devalues yuan rather sharply. At the same time it reports housing price data that several have said are "quite hard to believe." Shocking.

Bombings in NY, attempts in NJ, knifings in MN. Market does not seem that concerned.


OTHER MARKETS
Bonds: 1.691% vs 1.687% 10 year

EUR/USD: 1.1175 VS 11.58

USD/JPY: 101.81 vs 102.328

Oil: 43.65, +0.62

Gold: 1318.10, +7.90


Futures a bit lighter toward the open, but the Friday upside and the recovery in many of the big names continues this morning into the open. As the futures are hanging in all morning, they likely have some initial staying power and at the present nothing seems ready to stall them with the FOMC announcement Wednesday.



Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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