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Tuesday, August 22, 2017

Market Alert - Pre-Market

Futures vs FV: SP +6.48; DJ +55.45; NASDAQ +31.21

Talk of a 'tax reform consensus' developing is credited for helping futures recover. Hmmm. That is not bad news, though some of the 'consensus' details are less than exciting with lots of deduction eliminations (mortgage, state & local taxes) and the corporate rate in the 22.5% to 25% range. Not enough, not enough. Give the big corporations a 15% repatriation, give true small businesses 15%, put the big corps at 25% for now. We need small businesses to start and grow. They create 75% of the jobs. Why are they not the focus of any tax reform? They are the ones crushed by the current tax scheme from the ACA, regulations, etc. Oh, this is the government at work. Never mind.

As noted last night, there is not a lot of scheduled data and there is just not a lot of news. Perhaps it is simply a boredom kind of move: sold hard, then once again, nothing. That allows bids to creep back in and next thing you know there is a recovery underway. Seen it before in this market.

Earnings beats: DSW

Misses: TOL (TL); COTY (BL); MDT (TL)


Trump: Seen as more 'presidential' in his Afghanistan address. Then tonight he goes to Phoenix for a rally. Yen and yang.


FB: An analyst predicts that teen usage (12 to 17) is 'going to' decline over the next year. News flash: they already don't use it. They left at least 2 years ago. I was talking about posting business items on FB back then and the kids told me they hoped I was not trying to reach teens because FB was an 'old folks' social media service and everyone was on Instagram or snapchat. The point: FB was not hurt at all by the exodus of the teens.


OTHER MARKETS

Everything giving back some on their recent trends as stocks show some backbone.

Bonds: 2.208% vs 2.183% 10 year. Bonds are off some after a bounce in their continuing bullish pattern.

EUR/USD: 1.1763

USD/JPY: 109.26

Oil: 47.25, -0.12

Gold 1292.00, -4.70


Okay, futures are off the morning highs hit just under 1 hour back. There is a trend for the morning, however, rising all session versus a gap higher that just hangs out. That is better for the upside showing more staying power. Again, after that Thursday selloff was not pushed by the algos, the market just sat, and now there is a glimmer of decent news and the bids are returning.



Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Monday, August 21, 2017

Market Alert - To the Close

After a sluggish start, a recovery, a fade, then a late rebound. That is pushing some indices positive or pretty close outside of SOX. SOX is definitely lagging.

SP500 4.23, 0.17%
NASDAQ -1.17, -0.02%
DJ30 38.97, 0.18%
SP400 0.02%
RUTX -0.04%
SOX -0.68%

None of the indices are the picture of strength, BUT . . .

SOX tapped at the lower trendline in the triangle and bounced, a bit.

DJ30 shows a doji with tail at the 50 day MA.

NASDAQ tapped its TL on the low and rebounded to a doji.

SP500 showing a doji with tail as well.

SP400, RUTX showing a second doji after the Thursday dramatic break of the 200 day MA.

The takeaway: No new bounce as on the prior Monday following the Thursday rip lower. No continued selloff either. A bit deeper test, a hold of support by several, and, again, leaving NASDAQ, DJ30, SOX in position to try a bounce to lead the market back upside.

Thus far the action is not enough either way to make us take on new positions, though W is one we are considering. Overall, holding where it needs to but leaving the 'what next' question open. The bulls say 'yes, no selling!' The bears say 'yes, no bounce.' Neither has the troops to do anything today.


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

Futures vs FV: SP -1.00; DJ -11.00; NASDAQ -4.00

Today is eclipse day and futures are lower but hardly enough to eclipse the upside? Wow, that was bad. There is an expected loss of $700M for businesses today due to lack of productivity and sales. A natural disaster? You can bet the government and some companies will use that as an excuse for any numbers misses. Some claim thousands will damage or lose their sight from viewing the eclipse. Oh great, burden the system more with the brainiacs.

But, I digress.

Bigger picture: Thursday was a second hard dip in a week. Friday was a modest bounce of sorts, at least not the harsh selling. This market has shown upside off of that setup before. Each time, however, the question is will it bounce again this time? Last Monday was a big day upside. This one is for now looking at bit more modest, but a softer open is not a bad thing. NASDAQ and SOX are still holding support, important indices for the market.

Fiat Chrysler denies China's Great Wall auto is pursuing it. Sure it isn't. Great Wall confirms it IS interested.

HLF announces a buyback of 10% of its shares.

WMT: filed a patent for a blimp warehouse with drones docking and leaving to make deliveries. The AMZN/WMT duel just got interesting.


OTHER MARKETS
Bonds: 2.182% vs 2.197%. Bonds continue their move higher

EUR/USD: 1.1763

USD/JPY: 108.98

Oil: 48.54, +0.03

Gold: 1294.60, +3.00


Futures are off their morning highs hit an hour back, as nothing inspires buying early on. The key, however, is also that nothing is inspiring selling. The worst action is opening down 100+ Dow points. For now the upside remains because the sellers are not pushing their advantage. Will see if the lack of sellers produces some bids.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Friday, August 18, 2017

Market Alert - To the Close

SP500 is showing the same pattern as the prior week where there was a sharp Thursday decline, then a doji, then a rebound. Do you bank that this one is different and go in with the SDS calls? Well, NASDAQ and SOX remain in their patterns and trends, holding over support. That means we are not going against them today.

But for SP500? It might gap downside Monday -- that happens at times. The market has, however, once again absorbed a lot of bad news from the terror bombings to the Trump self-inflicted bombings and the markets sold just as last week. With that, perhaps it is best to hold off, though we might open just a small part of the position.

The usual DC drama. Today Bannon leaves the White House after submitting his resignation on 8/7. Now I suppose his website will 'out' those in the administration he feels are not conservatives. The pot is stirred some more and nothing constructive gets done, just as some want, others don't.

Most quality stocks are not bad. Chips are working on new patterns, e.g. AMAT. Other leaders are holding at near support after a week that saw more late week weakness. They did it before and bounced. Again, is it different this time? Yes, a bit, but this far not making the break.

So, with many positions holding support, we are at status quo. JD is not rebounding so we likely dump it. SDS is fading so we may pick up just a few calls on it.

SP500 -3.37, -0.14%
NASDAQ -2.18, -0.04%
DJ30 -66.66, -0.31%
SP400 -0.17%
RUTX 0.08%
SOX 0.30%

Mixed market, overall holding the line.

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

Futures vs FV: SP -1.26; NASDAQ -11.27; NASDAQ +5.03

Stock futures are somewhat shrugging in a relief move after the Thursday thump. Last Friday stocks held their ground post-thumping, and then proceeded to move higher the next week. That is the history lesson.

This even as the craziness amplifies:

North Korea predicts 'catastrophe' after US/Japan war games to start Monday.

Elected official in MO calls for the President's assassination. What is that knock on the door? Hello? Oh, the Secret Service.

CNBC anchor opines as to why wouldn't stocks just rebound right back; all is wonderful, after all. Right?

Dennis Gartman: Could be the most important day for the market. It is important: will it hold as last Friday or will it end lower, coughing up this early bounce attempt, and closing at the lows of the week and then past weeks. That is a negative signal.

Beats: EL; GPS; ROST; AMAT does well.

Misses: FL (TL, BL -- TB); HIBB (TL); DE (TL)


OTHER MARKETS
Bonds 2.1775 vs 2.185. Continues rallying in uncertainty

USD/JPY: 108.89 vs 109.339

Oil: 47.24, +0.15

Gold 1302.90, +0.192


Okay, we see how the flat to -- now lower -- start holds. A rollover is market negative for next week. That seems obvious.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Thursday, August 17, 2017

Market Alert - Pre-Market

Futures vs FV: SP -6.77; DJ -47.87; NASDAQ -26.17

Thursday a change in the pre-market as futures meet the bell lower. The prior 2 sessions futures were higher but the market really struggled to hold gains and indeed gave much of them back by the close. Still trending higher, but finding it difficult to hold the initial gains.

Today perhaps a lower market lets the bids build into the session.

What about selling as the futures indicate? Sure the sellers could take over the market after the disbanding of the CEO councils (again, no issue with that given they were all the same group that the prior administration used to box out the small and midcap businesses from the recovery) and the future of this administration's agenda, but the sellers have been unsuccessful sustaining even the vicious downside sessions. I know, so ma say it is going to happen, about to happen, is happening, but it has not.


Philly Fed, August: 18.9 vs 17.0 exp vs 19.5 prior. Weakest since the election but some really good sub-numbers.

New orders: 39.2 vs 2.0

Workweek: 27.4 vs 3.8

Prices paid and prices received both went up commensurate amounts so no profits squeeze.


Industrial Production, July: 0.2 vs 0.3 exp vs 0.4 June.

Manufacturing production: -0.1. Auto production -3.6%

Capacity Utilization: 76.7 vs 76.7 exp vs 76.7 prior (from 76.6)


Earnings beats: BABA surges; WMT (barely); LB (but guides 2017 lower); NTAP (guides lower)

Misses: CSCO (TL); BKE (TL); VIPS (BL)


ECB Minutes: Euro getting slammed on a fear of the currency "overshooting" even if its current value, according to the ECB, reflects "fundamentals in the euro vis- -vis the rest of the world." Again, that has hit the euro as it is considered hawkish.


OTHER MARKETS
Bonds2.236% vs 2.225%

EUR/USD: 1.16991 vs 1.1778

USD/JPY: 110.16 vs 109.893

Oil: 46.60, -0.18

Gold: 1290.30, +7.40


BABA is going to perhaps lead the China stock leaders higher. Outside of that, we see if the bids return after the market tries a softer open this time around.




Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Wednesday, August 16, 2017

Market Alert - The Close

The news is still not great, but that is nothing new for the market. Considering the possibility of thermonuclear war just last week, this week's problems are a walk in the park. Retail Sales beat expectations Tuesday -- ostensibly a good thing, but in this 'perhaps good is not good' market, the news didn't really help stocks. The President continues to shotgun tweets about everything, the country is as divided as ever, Housing Starts and permits tumble, and the FOMC didn't appear quite so ambivalent to the market's rise according to the minutes of its last meeting. A mix of good and bad, nothing too good, nothing too bad. Perfect for the market, right?

Not quite perfect. The stock indices rose Wednesday, adding to the rebound from last week's selling. The gains were not much, however, as early upside was punted. The result were unsatisfying gains that did not change the market's condition.

That condition? DJ30 holding the 10 day EMA just below the prior high. NASDAQ, SP500, SOX holding over the 20 day EMA with the bounce off support. SP400 and RUTX holding a bounce off the 200 day SMA, still working to get through the 10 day EMA, the most meager of resistance.

SP500 3.50, 0.14%
NASDAQ 12.10, 0.19%
DJ30 25.88, 0.12%
SP400 0.23%
RUTX 0.02%
SOX 0.15%

VOLUME: NYSE +4%, NASDAQ +14%. Neither exchange made it to average, just some higher trade on a move higher that was pushed back. Perhaps a slight negative bias to the price/volume action, but it was no reversal.

A/D: NYSE 1.5:1, NASDAQ 1.3:1. Blah breadth, matching the market action.


FOMC Minutes: more hawkish than expected. Contrary to Mr. Dudley's comments this week, the FOMC confirmed it would pare the balance sheet in September: 'most Fed officials backed B/sheet move at "an up coming meeting."'

At the same time, however, the usual core worried about the lack of inflation and argued for 'patience.' Of course the Fed's official position is still that inflation will pick up over "the next couple of years from its current low level," something the Fed has droned in each of its last 20 or so meetings.

The big issue: asset valuations. At least one member stated 'a tighter monetary policy than otherwise was warranted' due to other factors influence the financial markets besides the Fed's gradual removal of accommodation. In other words, the Fed believes asset price gains thanks to the Fed policies may not provide much more in terms of economic stimulus, and thus the Fed is entertaining that the markets could move lower without a deleterious impact on the economy. Wow, pretty loose talk for a Fed that owes all of the economic and market gains (mostly market gains) to financial asset inflation making finite parts of the populace very wealthy. Surely it has to keep that going to keep the house of cards intact.

Ah, but the Fed always suffers from the same malady: in the end it actually believes IT was the reason for any prosperity that occurred.

But, the market still holds its trends.

In any event, at some point you would think the alienation of the President and Congress would impact the stock market. You would think that the back and forth of the FOMC would impact the market. Maybe it is trying as shown in the various sharp breaks lower time and again. If so, it is not strong enough to overcome those working to keep the uptrend going, whether your day to day market participants or some other actors with very specific reasons that the market rally continue on and on.

Thus while the Wednesday action was unsatisfying for the upside, it weathered the disbanding of the truly worthless business councils and the FOMC turning more hawkish. Yes, the councils were a joke: the same companies that benefitted from the Obama stimulus, the ACA (remember those waivers THEY got), the hundreds of thousands of regulations are the same ones advising the President. On what? How to keep the same policies in place that give them the competitive advantage and block access to companies with good ideas to challenge them? Good riddance!

Instead, the President, as his predecessor, has a phone and a pen. Or was it a pen and a phone? If the cronies in Congress won't help the average US citizen that received NOTHING from the stimulus, the ACA, the tax increases, the hundreds of thousands of regulations -- start to work on what WILL work.

1) Instead of going to Congress with a 15% corporate tax rate for the HUGE corporations that already received all the benefits the past 10 years and more, move that rate to 15% for TRUE small businesses, the ones with 1, 2, 3, 5, 10, 20, 50, 100, 200 employees. Leave it as it is for the others. THAT would pass.
2) Grant ACA waivers to those small businesses. Heck, the huge companies all got a pass on the ACA; give it to the small guys.
3) At the same time, write and EO that allows insurance companies to sell across state lines.
4) Write an EO that grants waivers and credits and block grants to doctors who form direct medical associations. Those are the groups where you pay $50/month and get all of your healthcare for that $50 except for tests such as MRI's, but those are provided at DRAMATICALLY reduced prices.
5) Divert the hundreds of billions used to subsidize insurance companies to offer insurance under the ACA to the small business people to set up health savings accounts for their businesses and employees to pay for those medical expenses and premiums.
6) Grant tax credits to insurers that write low premium, high deductible catastrophic policies that provide the backstop protection for the big events the direct medical associations cannot handle. Of course, high deductible is relative; back in 2000, $5K was considered very high. Now $10K is quite normal. The point: you used to buy a very good catastrophic plan for $300/month for a family with a $5K deductible and 100% coverage once the deductible was met. That plan today costs $1500/month with a minimum $10K deductible and only covers 80% post-deductible. We need to provide incentives to get the insurance companies to again write those policies.

That is a start. A good start. Go for it.

But I digress. The action was lackluster, but the trends remain in place. I remain skeptical of the move, but that has proved to be poor judgment in the history of this market. Thus, if the moves are there, we move in. Thing is, not to many great moves today. FCX was solid along with a few moves here and there, but nothing we got that excited about. Several low volume melts higher that we are avoiding, but also letting other good moves continue their upside. For now, that pretty much has to be the game plan.

Have a great evening!

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

Futures vs FV: SP +5.49; DJ +65.01; NASDAQ +15.27

Another day futures will start higher with a morning setup very similar to Monday and Tuesday, i.e. a gap higher early morning, holding a relatively tight range to the open. Tuesday that pre-market move higher was sold. Similar fate? The bids continue to show up despite the political intrigue, despite no real change re NKorea other than a bit softer talk. But, that seems to work for the market as, at least at the open, the upside continues.

FOMC: Statement at 2:00ET


Housing Starts, July: -4.8% vs +0.4% expected

Permits: -4.1%

Multi-family starts: -35.2% year/year. That makes sense after the huge boom in apartments. It had to slow at some point and should slow in a recovery. Not really a great recovery, because you know what? Home buyers are now putting down less and less on homes as we revisit some of the issues that caused problems in the financial crisis.


ECB: Draghi is supposedly NOT going to deliver a new policy message at Jackson Hole. Just going for the scenery and fishing I suppose.


Earnings beats: TGT (and raises guidance); URBN; A


OTHER MARKETS
Bonds: 2.275% vs 2.264%. Deflating bonds pushing yields back up.

EUR/USD: 1.1669. Mostly flat ahead of today's FOMC meeting.

USD/JPY: 110.86. Flat here as well

Oil: 47.55, 0.00. Wow, flat here also.

Gold: 1276.80, -2.90


Again, the algorithms obviously did not sell. Bids, albeit slight with no volume, are pushing stocks higher, but as Tuesday showed, it is no swoosh higher. Seen that before as well: selling ends, market starts up in a bit of fits and starts, some strong sessions, some weak, but making its way higher.

Now, with the FOMC this afternoon, it may very well be a case of gapping higher then hanging around until the FOMC statement issues.

What the market is showing, despite the rise, is rotation that is taking money from some areas for the benefit of others. Not a lot of new money being committed just yet, but money is still chasing the upside. Small and midcaps are getting hit, so watching their reaction today from the Tuesday selling. Also watch China stocks; overall good but showing some near term chop that could lead to one of their pullbacks.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Tuesday, August 15, 2017

Market Alert - Early Action

The higher open was met with a strong headwind and the indices sold negative. Not major losses and DJ30 is flipping green again, but the bids were quickly abandoned.

We are picking up some JWN puts as it gapped lower from a doji below the 50 day MA.

SP500 -0.02%
NASDAQ -0.14%
DJ30 0.05%
SP400 -0.29%
RUTX -0.15%
SOX -0.26%



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

Futures vs FV: SP +5.21; DJ +48.29; NASDAQ +14.03

Futures are holding near morning highs, rallying ahead of the data, selling some after the reports were stronger, then recovering back to near highs as the open approaches. Good news was almost bad news, but not quite. After Dudley's statements of the data remaining the same -- and after 2 months of down data upside retail sales -- that made some rethink the no balance sheet reduction, 1 2017 hike statement.

Retail Sales, July: 0.6 vs 0.3 exp vs 0.3 prior (from -0.2%). +4.2% year/year.

May and June revised to positive from negative. Those revisions only exacerbate fears anyone may have the Fed might now see things firming. Good grief. Better is better is it not? Oh, not when you have double and triple think going on. But, the Fed is there, the PPT is there, so don't make your head hurt overthinking, right?

Ex-Auto: 0.5 vs 0.3 vs 0.1 (from -0.2)

Control Group: 0.6% vs 0.1 prior (from -0.1%)

Autos: +5.7% vs 1.2% June. Dept stores: 1.0% vs -1.3% June

Only down groups: Clothing -0.2; Electronics/Appliances -0.5%; Gas stations -0.4%


Empire PMI: 25.2 vs 13.0 exp vs 9.8 prior. 3 year high, back up to the top of the long term range

New orders 20.6 vs 13.6 prior

Prices paid: 31.0 from 21.3
Prices Received: 6.2 vs 11.0

Prices: Producer's margins are getting squeezed.


China: Threatens a trade war if the US 'Damages Trade ties.' Not sure what that means, but amorphous as China usually is.


Earnings beats: HD

Misses: DKS caught TB as a TL, BL miss; COH (TL); AAP (BL)


OTHER MARKETS
Bonds: 2.280% vs 2.224%. Bonds selling right back after eco data improves

EUR/USD: 1.1697 vs 1.17775. Dollar bouncing back

USD/JPY: 110.81. Recovering some ground versus yen

Oil: 47.22, -0.37. Oil continues its struggle after bumping 50.00

Gold: 1273.20, -17.20. Heading lower on stronger data after on the verge of breaking higher.


Futures are holding the moves to the upside as the market is set to continue the Monday shake off of last week's plunge. Easing rhetoric on North Korea is credited, but it is, as we have seen, just more of the same where a selloff is arrested and turned.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Monday, August 14, 2017

Market Alert - The Close

What thermonuclear war? Why would we attack Venezuela? And who cares about a trade war with China? Such appeared to be the sentiment Monday as US officials tried to walk back fears of fingers hovering over launch buttons (or wrists warming up to turn launch keys?) or invading the utterly pathetic Venezuela. A China trade war? Sure the Chinese newspapers wrote of a 'poison' relationship between the US and China as a result of the US actually looking into IP theft (the nerve), but China also announced an embargo on importing North Korean lead, coal, and iron -- it would appear China is definitely engaged in efforts to rein in North Korea, taking this action in addition to voting in the Security Council to sanction NK.

That left it up to better news. Japan's GDP jumped well above expectations (4.0% versus 2.5%) as personal consumption and capex investment both enjoyed solid increases. With easing world tensions, for the day, that is worth some additional upside as well.

Then there was New York Fed president Dudley stating that market expectations were 'unreasonable' regarding the a September balance sheet reduction. Dudley further stated he saw just one more rate hike in 2017 if data stays as it is.

Stocks gapped higher as soon as the premarket commenced, holding the tight gap range into the open. Stocks rallied farther, then entered a session long lateral move. Sellers to a shot mid-afternoon and broke stocks below the tight intraday lateral range. Then Dudley opined and stocks jumped back up into the range where the closed out the session with nice percentage gains all around.

SP500 1.00%
NASDAQ 1.34%
DJ30 0.62%
SP400 1.16%
RUTX 1.46%
SOX 2.58%

VOLUME: NYSE -24%, NASDAQ -6%. Impressively weak NYSE trade, falling to holiday light levels on a 1% NYSE move. Not many buyers all buying. It would not take much selling to turn it. NASDAQ trade faded further below average with volume 33% lower than the Thursday selling volume. The point: IF sellers return in those numbers, they can easily overrun this number of buyers.

ADVANCE/DECLINE: NYSE 3.2:1, NASDAQ 3.3:1. Definitely more buyers than sellers, but again, the it's the numbers. As Eomer said of Merry's fighting prowess in 'The Two Towers,' it is not the size of his heart that is in doubt, but the length of his reach. There were no doubt buyers, but not nearly in numbers as the prior sellers. Perhaps that fear is now over and can be forgotten. If good stocks make good moves, that kind of solves the conundrum, doesn't it?


CHARTS

SP500, SOX and NASDAQ gapped over the 50 day MA and held the moves. SP400 gapped off the 200 day SMA and rallied to near the 10 day EMA. RUTX did the same with a very impressive move. DJ30 gapped up off the 20 day EMA and closed over the 10 day EMA; nothing unexpected about the Dow's move.

LEADERSHIP

FAANG stocks were all up, but they are also in different patterns. AAPL gapped nicely on a story AAPL is meeting with Aetna to get every Aetna insured a watch. FB did a nice job of bouncing off near support. NFLX held the 50 day EMA and the June high. AMZN and GOOG both gapped but they also gapped to resistance and could go no further. All were up, but no relative change to the patterns.

Financial: Up as well, some better than others. C gapped up off the Friday downside gap to a doji. Not bad. BAC gapped back over the 50 day MA's. JPM, WFC also gapped, though WFC's pattern is not great. GS surged higher through the 200 day SMA, but it could not hold that move. Not bad, not blowing higher.

China stocks: BITA posted a nice breakout gap and run. SINA gapped and rallied off the 50 day MA test. Many others were just holding status quo. BZUN continued a nice 3 week pennant formation. SOHU gapped but faded to near flat. BIDU held the Friday reversal off the 20 day EMA. HTHT was flat over the 20 day EMA. JD showed a doji with a big tail after reporting earnings. Not bad overall and very similar to how these stocks tend to perform.

Software: VMW posted a nice gain and run for us. DATA gapped and rallied on a decent volume increase, giving ups a new entry. MSFT gapped off the 50 day MA test. TTWO gapped higher but had zero volume. GLUU rallied . . . then closed near flat. Overall still a solid group.

Semiconductors: DIOD jumped on volume. SWKS, LRCX, AVGO all loved the Apple Watch/Aetna story. MLNX, MXL, XLNX not great. VSH looks interesting at the 50 day EMA. NVDA gapped off the Friday doji at the 50 day MA, showing good volume as well.

Metals/Materials: FCX, SID still not bad at all. CX, LPX not that great in the pattern department.

Manufacturing: HON bouncing off a week of moderate testing. HOLI is matching the late July highs. UTX is showing a somewhat lethargic bounce to test the selling. CAT holding a 3 week lateral move over the 20 day EMA. TEX coming off its 50 day EMA test. All in all, holding their uptrends.

Retail: Some unable to recover from last week's gaps lower. DDS, KSS both were working higher, nicely so, when they gapped lower last week. Still not recovering. M is sucking on an exhaust pipe and JWN is not better, indeed looking good as a downside play. COST, however, continues setting up an inverted head and shoulders. DG setting up a handle to a 2.5 month cup. WMT in a test of its breakout, holding the 10 day EMA.


TUESDAY

It was clear that the algorithms were not selling. But not a lot were buying despite the impressive percentage gains. Volume lagged dramatically. Of course you have to ask in this market, does volume matter that much? Perhaps in seeing if the algos were heavy buyers, but lack of volume has not stopped this market now or indeed many times in the past during this long rally.

So, despite the volume, if good stocks in good patterns were moving, we participated. Thus we bought some BITA, DATA, and GLUU, all holding good moves but GLUU as it faded much of its session gain. There are still good setups to the upside and, yes, downside. These powerful point surges with no volume tend to bounce stocks up to resistance where they fizzle unless they have legs. A rally after a selloff can be like a bike racer who is really on the limit, loses some ground but then makes a valiant effort to catch back up to the leaders. Once a new serious climb is hit, however, the legs, already marginal, wilt. That makes these weak recovery bounces very enticing as downside plays if they recover only to wilt when they feel resistance.

Yes you note the low breadth in the bounce and how that is symptomatic of relief moves that ultimately fail. You also note that in this long rally, these type of recoveries from sharp selling have tenacity, whether it represents true buying or the more artificial, but nonetheless successful, buying floors put in by the plunge protection group in conjunction with the Fed and the kind of statements you read from Dudley today.

All of this means you look for opportunity from really solid setups, upside or downside, and take what the market is giving.

Have a great evening!

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

Gap higher, a bit more upside, then the indices have worked laterally the balance of the session. Sellers tried to move in mid-afternoon but bids pushed the indices back to the top of the session range. Worries of a trade war with China hold nothing to NY Fed President Dudley stating that investors' are unreasonable to think the Fed will trim its balance sheet in September and that Dudley only sees one more 2017 hike if the data remains as it is.

Ah, the Fed hard at work again to keep the rallies going. I don't recall hearing much of ANYTHING from any Fed members before this selloff. Now Dudley has to make sure a bounce holds.

The bounce is holding. SP500, NASDAQ, SOX are holding over the 50 day MA. RUTX has a nice bounce off the 200 day MA.

So far so good but a lot of stocks gapped to doji below resistance, e.g. GOOG, AMZN. Others such as DATA, BITA, FB look nice.

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

Futures vs FV: SP +14.43; DJ30 +129.68; NASDAQ +42.47

So much for the threat of thermonuclear war. The administration downplays the possibility of imminent war with Korea, Pence also downplays any action against Venezuela. Tensions ease, markets dutifully bounce. One wonders if the softening on China comes after White House said it would open a probe into China's IP theft, China's newspapers protested, but then China banned imports of North Korean coal, lead, and iron.

Futures gapped higher when they opened and they have held there since. No up, no down, just flat line gap higher. That often gives sellers a target to shoot at, but nothing this morning suggests there are cracks in the upside. We will, however, see how that gap holds.

Busy week: Retail Sales Tuesday, FOMC Wednesday, regional PMI's, Housing Starts, Industrial production.

Japan: GDP 4.0% vs 2.5% expected. Growth is domestic-centric. Capital expenditures were double expectations, consumer spending jumps. Coming out of the zombie state? The coma?

VMW: bouncing in the pre-market on some good news. JD struggling, down 1.25


OTHER MARKETS
Bonds: 2.222% vs 2.191% 10 year.

EUR/USD: 1.1797 VS 1.18216

USD/JPY: 109.62 vs 109.183

Oil: 48.59, -0.23

Gold: 1288.10, -5.90


As noted, futures gapped higher early and have held the same tight range for hours. The stories are all on the relief, positive side, and after a troubled week NASDAQ, SP500, SOX are going to move back over the 50 day MA's. The key will be if they can hold the moves, i.e. there is no change in the algos to keep on selling the selling.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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