Market Alert - The Close

The major stock indices all closed with gains. Decent moves, but no new blast higher. At least there was no selloff after the Friday Fed barrage. High praise indeed. The NYSE indices, large cap to small cap, led the moves with twice the gain of NASDAQ and SOX on a percentage basis. FB posted a nice move, but the rest of the NASDAQ big names did not throw in, at least enough, to make a difference for that index. Basically the moves were decent enough but did not alter the index patterns in any respect.

SP500 11.34, 0.52%
NASDAQ 13.41, 0.26%
DJ30 107.59, 0.58%
SP400 0.71%
RUTX 0.56%
SOX 0.28%

VOLUME: NYSE -19%, NASDAQ -11%. A typical hallmark of upside moves in this rally it seems.

A/D: 2.7:1 NYSE, 1.7:1 NASDAQ. Solid enough on NYSE while NASDAQ was rather lame all around.

That means SP500 bounced from last week's fade, recovering the 20 day EMA but still below the prior August highs. DJ30 even gapped upside off of Friday's 50 day EMA test, recovering the 20 day as well and trying a higher low as discussed over the weekend. SP400 bounced off the 20 day EMA hold and came close to a new closing high, thus far keeping the trend up the 20 day intact. RUTX also bounce off of near support at the 10 day EMA but no new highs here, just keeping that trend going. SOX gapped to a higher closing high as it too trends up the 10 day EMA. NASDAQ recovered the 10 day EMA, and the big names were fairly decent, but as noted above, not enough to change the pattern from a near term heavy look over the 20 day EMA. Again, the indices moved higher with no change from the recent trends, volume, breadth.

The news was heralded a victory though some was decent, some was not.

July Income and Spending were in line with expectations (0.4% and 0.3% respectively) with June written higher on each by a tenth (0.3%, 0.5%). That means the savings rate was up as Americans saved more of what they made. That 5.7% savings rate was the first gain since March. Year/year income was up while spending was lower. They are both trying to bottom and rise after a long decline. That is somewhat positive but there is only so far it can go with the kinds of jobs predominantly produced in the current US economy.

Dallas Fed, August: -6.2 versus -1.3 in July versus -18 in June. Hopes for a turn had cold water splashed on them as the numbers headed lower again and now show 20 straight months of contraction. One respondent said that after the election is over and the 2016 economic data is reviewed, the conclusion will be that 2016 was a recession year. How about that economy?!

We picked up some positions in STX and VIP. Really considered AMZN, but it came off the session high on lower trade, hitting the prior August closing high and falling away. With the volume and that action we opted to wait and see if that acts as a barrier. Unfortunately, SOHU gapped higher again and ran away. We had some good moves in AGEN, APC, CWEI, FB, MMM, P, PLAY and others while still other plays remain set up well. With the majority of plays showing good price and pattern moves I guess we don't need no stinking volume -- for now. If they move higher and hit our targets, volume or not, that works.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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