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9/27/2016 Investment House Alerts
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Alerts Subscribers:
MARKET ALERTS:
Targets hit: None issued
Entry alerts: ARNA; VIPS
Trailing stops: IDRA
Stop alerts: MSFT
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The REPORTS SCHEDULE is as follows:
MONDAY, WEDNESDAY and the WEEKEND reports contain NEW PLAYS, Market Summary Video, Play Videos, and Play Tables with play annotations.
TUESDAY and THURSDAY reports will contain the market summary, chart links to view the index charts, and updated play tables.
Access to all current videos will remain assessable each day using the play links in the reports.
If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
MARKET SUMMARY
- A decent albeit narrow rebound from the Monday further Fed test
- Large cap indices, particularly NASDAQ large caps, lead the Tuesday rebound.
- Deutsche Bank, Debates, and Department of Justice
- Volatile rotation continues and it can be harsh.
- Chips, big techs lead. Another narrowing rally similar to the FANG rally in 2014/2015? Hope not.
- New Play
Stocks answered the Monday weakness with a recovery, but the move back upside was not nearly as even Monday's selling. NASDAQ, SOX posted the big gains with DJ30, the laggard Monday and one in the pre-market alert we said we wanted to watch, posted a nice third leg for the leadership trio.
SP500 13.83, 0.64%
NASDAQ 48.22, 0.92%
DJ30 133.47, 0.74%
SP400 0.11%
RUTX 0.44%
SOX 1.78%
VOLUME: NYSE +7%, NASDAQ +2%. At least some higher volume on the upside.
A/D: NYSE 1.4:1, NASDAQ 1.9:1. Okay, what the heck? That is pretty darn meager. Oh, take a look at those index percentage gains -- it was all large cap. That kind of move is not that heartening.
Futures were higher from the early pre-market, but they faded much of the gain by the open. They rallied on the bell, however, and continued higher through midday. Stocks then fell into the afternoon doldrums, but held the move to the close.
So, the large cap stock indices posted pretty solid gains. Surely oil was up. No, it was not. Oil lost 1.18. In a shocking development Iran actually said it was not going to freeze its production rate and indeed wanted another 4M bbl/day. Those crazy Persians. On top of that GS cuts its forecast to $43 from $50. Double whammy for oil, but sure didn't stop stocks. Great correlation.
Indeed, stocks showed resilience in other areas as well.
DB: DB gapped lower as worries regarding its capitalization continued. A day after Merkel said no bailouts, DB gave up an early rebound gain, selling 2.8%. It managed to recover in the German session as well as the US session, but that sure looks like an oversold move after over 2 weeks of making warm sauerkraut.
Then there was Commerze Banc, another large German bank, announcing 9,000 layoffs. As we all know, that only happens when things are going great.
Truly there will be no bailout because Germany played the anti-bailout force in all EU negotiations with Greece and other EU countries. Germany appeared to view the other countries as lazy and unworthy of its capital. Justice? Karma? As mountain rescue expert Hal said in the Stallone movie 'Cliffhanger,' gravity is a b**ch. Okay, not a perfect fit, but the sentiment is the same.
Yet, stocks overcame.
Then there was the debate and the early pop attributed to it. Then that faded pre-market and those saying the debate caused the early pop said the debate perhaps didn't matter that much. Maybe that was after all but the CNN poll said Trump won by a lot. Maybe most polled only watched the first 15 minutes or so. That's not a shot at either candidate, just an observation of the typical US voter.
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.
Even so, stocks overcame.
VW: The DOJ is reportedly ascertaining what size of fine it can levy against VW without bankrupting the company. Man, every regulatory agency around the world is threatening with some fine or suit against AAPL, GOOG, etc.
Sure VW did something outside the law, but you almost have to give those guys (oh, sorry for the micro-aggression) a commendation for creative thinking: how do we meet the emission criteria and still keep a car that runs worth a crap and doesn't cost a fortune? Change the software! Brilliant!
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. Just look at the DOJ suit against MSFT during the Clinton years. That suit, whether it was just timing or not, marked the top of the rally.
Oh, and further, the emissions issues are now raising questions about its Audi unit.
Bad day for Germany.
And still, the market overcame.
Hey, it's good to have a Fed. If want to inflate financial assets and don't care about the value of your currency, or need any investment, or want small businesses to start, grow, and prosper.
THE MARKET
It was a large cap session. Good for NASDAQ and SOX, and those two are leaders. Not so good for RUTX and SP400. RUTX is still fine in its pattern, but you want to see it stay in the leadership group. Why? Because the Tuesday move was very selective and if the market narrows its breadth to a few leaders as it did in the FANG days late in the 2015 move, that can signal topping action -- at some point. Best to keep the move broader as that suggests longer life.
Still, Tuesday was just one day, and it was an up day. The indices improved their lot overall. Still have not fully answered the question of what happens after the FOMC bounce, but they showed they were not going to just roll over. Janet speaks later in the week anyway. Would not want to disappoint the stock-flation master.
CHARTS
To view charts, click on link or paste URL into browser.
http://investmenthouse1.com/ihmedia/f/charts/sp500.jpg
http://investmenthouse1.com/ihmedia/f/charts/NASDAQ.jpg
http://investmenthouse1.com/ihmedia/f/charts/DJ30.jpg
http://investmenthouse1.com/ihmedia/f/charts/RUTX.jpg
http://investmenthouse1.com/ihmedia/f/charts/SP400.jpg
http://investmenthouse1.com/ihmedia/f/charts/SOX.jpg
DJ30: Maybe gets the nod for the most improved index, but even the Tuesday rebound did not recover the Monday losses and volume appears lower. It held over the early September lows and bounced, so we give DJ30 some due. Just some. But, MACD is trying to turn higher. That's about it.
NASDAQ: Held the 20 day EMA, surged back upside, recovering just about 100% of the Monday lows. Held where it needed to in order to demonstrate the uptrend remains in place, powered upside. Better volume as well. Has rejoined the trend, looking pretty solid on the move.
SOX: Same action as NASDAQ, bouncing off the 20 day EMA and in SOX' case a Monday doji. Recaptured the Monday loss and more, moving to almost a new post-2000 closing high. The chips leading upside again. That is not bad for the market.
SP500: Turned the Monday selling, moved back into the gap form Monday. Did what it had to do but as with DJ30, this doesn't really change its outlook all that much. The financial stocks sold early but made big reversals, and that helped SP500 considerably.
SP400: The midcaps recovered but just modestly, showing a doji at the 50 day EMA. Somewhat in no man's land after gapping upside last week then gapping back down through that upside gap.
RUTX: A modest gain though not trifling, the small caps held the 20 day EMA on the low and bounced back over the 10 day EMA for a gain. Made the test, rebounding back to the trend over the 10 and 20 day EMA, just not that strong a move Tuesday. Still a very solid upside pattern and trend.
LEADERSHIP
Big Names: Impressive. AMZN blasts to a new higher high. AAPL is looking decent for a move higher off this flag. FB posting a 1% gain off the 20 day EMA. NFLX surging off the 50 day SMA and showing some better volume. GOOG recovering pretty nicely from the Monday dive to the 20 day EMA. MSFT jumped off the 50 day EMA with volume. MMM tried to rally, didn't have a lot of success. Kind of a FANG looking move.
Biotech: Bouncing nicely enough, e.g. BIIB. CEMP surged for us. OVAS in a great hammer doji at the 10 day EMA. ACAD starting to bounce again. ENDP looks about done with its pullback (it is a drug stock but will put it here).
Chips/Electronics: Impressive moves resume. MRVL breaking to a higher high. AVGO tested then reversed over the 50 day MA's. SLAB, XLNX bouncing back some. UNXL looks good. NVDA took off again. Looking around for possibilities but this sector is still such that you have very good stocks already in moves or others struggling.
Financial: Most gapped lower then reversed to positive. GS, MS tested just over the 50 day EMA and then reversed positive. The banks did the same, e.g. C, BAC, JPM, though they undercut the 50 day MA's and then reversed.
Utilities: Had some issues, e.g. EQT as it dove lower along with AEE.
Oil: Flattish session given oil's weakness and the off again oil freeze deal/talk. Afterhours oil is down as inventories rose quite a bit more than expected. AXAS was not bad on the day, HAL gapped and sold to a lower low on this move but then reversed to cut the loss.
Retail: JWN still slow but steady. FL still moving higher. Others recovered off of the Monday selling, but not necessarily surging, e.g. HD, RL, DECK.
Metals: Performing fairly well. STLD breaking higher through the 50 day MA's. AKS testing a move higher. CENX trying to consolidate a move over the 200 day SMA.
MARKET STATS
NASDAQ
Stats: +48.22 points (+0.92%) to close at 5305.71
Volume: 1.73B (+2.43%)
Up Volume: 1.24B (+731.72M)
Down Volume: 489.53M (-640.47M)
A/D and Hi/Lo: Advancers led 1.91 to 1
Previous Session: Decliners led 3.1 to 1
New Highs: 100 (+41)
New Lows: 44 (+9)
S&P
Stats: +13.83 points (+0.64%) to close at 2159.93
NYSE Volume: 849.9M (+6.62%)
A/D and Hi/Lo: Advancers led 1.43 to 1
Previous Session: Decliners led 2.58 to 1
New Highs: 96 (+29)
New Lows: 26 (+9)
DJ30
Stats: +133.47 points (+0.74%) to close at 18228.3
SENTIMENT INDICATORS
VIX: 13.1; -1.4
VXN: 15.09; -1.35
VXO: 12.94; -1.35
Put/Call Ratio (CBOE): 0.99; -0.16
Twelve 1.0+ Readings in 4 weeks, 8 of the last 13 sessions over 1.0. Plenty of pessimism on the put side but that alone is not enough to turn the market.
Bulls and Bears: Of course bulls tumbled and bears jumped just as the market bottomed.
Bulls: 44.6 versus 49.0
Bears: 24.3 versus 22.6
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: 44.6 versus 49.0
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 versus 40.2% versus 44.3% versus 47.4% versus 41.2% versus 45.4% versus 43.3% versus 47.4% versus 44.4% versus 39.4% versus 36.4% versus 34.7% versus 26.5%
Bears: 24.3 versus 22.6
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% versus 34.3% versus 35.7% versus 39.8% versus 39.2% versus 38.1% versus 35.4% versus 36.1%
OTHER MARKETS
Bonds (10 year): 1.56% versus 1.584%. Bonds still rising, gapping over the 50 day SMA and now in the July/August consolidation. Quite the round trip.
Historical: 1.584% versus 1.62% versus 1.625% versus 1.656% versus 1.693% versus 1.705% versus 1.698% versus 1.70% versus 1.698% versus 1.718% versus 1.671% versus 1.67% versus 1.61% versus 1.53% versus 1.54% versus 1.601% versus 1.57% versus 1.58% versus 1.57% versus 1.57% versus 1.62% versus 1.58% versus 1.56% versus 1.54% versus 1.58% versus 1.53% versus 1.55% versus 1.57% versus 1.558% versus 1.51% versus 1.56% versus 1.51% versus 1.54% versus 1.59% versus 1.585% versus 1.503% versus 1.54% versus 1.558% versus 1.51% versus 1.46% versus 1.50%
EUR/USD: 1.2148 versus 1.1254. Still holding the inverted head and shoulders over the 200 day SMA.
Historical: 1.1254 versus 1.1248 versus 1.12259 versus 1.12061 versus 1.11898 versus 1.1151 versus 1.1177 versus 1.1155 versus 1.12444 versus 1.1245 versus 1.12196 versus 1.12335 versus 1.12318 versus 1.12661 versus 1.1239 versus 1.12554 versus 1.11545 versus 1.11943 versus 1.11572 versus 1.1146 versus 1.11708 versus 1.11949 versus 1.12894 versus 1.1300 versus 1.13045 versus 1.3254 versus 1.13251 versus 1.1342 versus 1.13036 versus 1.12773 versus 1.11824 versus 1.11636 versus 1.11372 versus 1.11803 versus 1.1115 versus 1.1080 versus 1.10882
USD/JPY: 100.55 versus 100.75. Still at the August/July/June lows, a good place to bounce and turn this thing back up. But, need the Fed to actually be believable it could raise rates. Some day.
Historical: 100.75 versus 101.034 versus 101.045 versus 100.386 versus 101.714 versus 101.956 versus 102.280 versus 102.086 versus 102.172 versus 102.155 versus 102.814 versus 101.57 versus 102.685 versus 102.439 versus 102.439 versus 101.698 versus 101.412 versus 103.92 versus 103.226 versus 103.269 versus 102.965 versus 102.160 versus 101.808 versus 100.485 versus 100.306 versus 100.27 versus 100.297 versus 100.21 versus 99.843 versus 100.529 versus 100.953 versus 101.308 versus 101.864
Oil: 44.67, -1.26. Back and forth in big moves the past three sessions. Lots of volatility and that suggests a move. Looks as if that will be down after that afterhours inventory reading.
Gold: 1330.40, -12.70. Fall to the 50 day EMA. Still trying to consolidate and at the midrange of the trading range. This is where it should bounce if it is going to try a breakout move on this leg.
WEDNESDAY
NASDAQ, SOX, RUTX continue their winning ways and perhaps RUTX can post a move more commensurate with the techs. DJ30 is trying to recover, but it and SP500 are still rickety.
The indices did what they needed to do after the Monday loss, i.e. rebounding. The reaction following the post-FOMC move and test is key, and Tuesday the upside answered.
The rub: it was very narrow, very large cap focused. NASDAQ 100 +1.03%, NASDAQ overall 0.92%. Big names pulling it higher while many others did not. Want to see RUTX and SP400 reengage though SP400 is not quite the picture of health. It can make the comeback, however.
The post-FOMC test/rebound move is still a question, but Tuesday was of course better for the upside. Rotation continues with money definitely moving into certain stocks and sectors and out of others. It can be brutal, however, as seen in the financial stocks with a sharp selloff and then equally sharp rebound. That volatility suggests a change to come, but other sectors are working well regardless.
This volatility is spooking some big money managers. One controlling over $350B says this is the most treacherous time he has seen in his career. Perhaps. That volatility has given us big reward and in some plays has spanked us. A great pattern in a good stock in a solid sector shoots higher or puts in a solid, steady move, then gets hit. You can see the manager's view.
Okay, still watching for the recovery move from the test of the FOMC rally and whether it will improve SP500, DJ30 and SP500. At the same time, if good stocks make breaks higher, we want to play them as solid patterns are still yielding good results.
NEW PLAY
ARAY: Turning off the bottom of a 17 month base, ARAY just broke through the 200 day SMA last week, tested Friday to Monday, and Tuesday was back upside and moving very well. Not a lot of rocket science to this one and we are ready to move in on a continued move higher through the entry point. A run to the May 2015 lower gap point near 7.20 is a good initial target to shoot for given all of those peaks at that level.
EARNINGS: 10/27 after the close
ENTRY: 5.88
TARGET: 7.15
POSITION: Stock and/or NOV 18 2016 6.00 C (48 delta). Options on these low priced stocks don't typically provide as much leverage, but this one looks to be a 100+% gain to the target.
http://investmenthouse1.com/ihmedia/f/charts/aray.jpg
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5305.71
Resistance:
5340 is the recent all-time high.
Support:
5271.36 is the August 2016 intraday prior all-time high
5287.61 is the all-time high from September 2016
5231.94 is the 2015 all-time high
The 50 day EMA at 5183
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
The 200 day SMA at 4883
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
4684 is the May 2016 test low
4637 is the February intraday high
4620 is the February 1 closing high
4615 from September 2014 highs, October 2014 upper gap point, late August 2015 low.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2159.93
Resistance:
The 50 day SMA at 2169
2175 is the June 2016 high
2194 is the August 2016 all-time high
Support:
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
The 200 day SMA at 2061
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
2020 is the September 2015 intraday high
2011 is the September prior all-time high
1995 is the September 2015 recovery peak
1991 is the July 2014 high
Dow: Closed at 18,228.30
Resistance:
18,262 is the upper gap point from the Monday gap lower.
18,288 from March 2015
18,351 is the all-time high from May 2015
The 50 day SMA at 18,416
18,595 is the July 2016 peak
18,669 is the August 2016 all-time high
Support:
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,978 is the November 2015 peak
17,600 is the rough bottom of the April to June range.
The 200 day SMA at 17,595
17,351 is the September 2014 all-time high.
17,265 is a December 2015 closing low
17,245 is the November 2015 closing low
17,152 is the mid-July 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery intraday peak
ECONOMIC CALENDAR
September 26 - Monday
New Home Sales, August (10:00): 609K actual versus 585K expected, 659K prior (revised from 654K)
September 27 - Tuesday
Case-Shiller 20-city, July (9:00): 5.0% actual versus 5.1% expected, 5.1% prior (no revisions)
Consumer Confidence, September (10:00): 104.1 actual versus 98.0 expected, 101.8 prior (revised from 101.1)
September 28 - Wednesday
MBA Mortgage Index, 09/24 (7:00): -7.3% prior
Durable Orders, August (8:30): -1.9% expected, 4.4% prior
Durable Orders, Ex-T, August (8:30): -0.4% expected, 1.5% prior
Crude Inventories, 09/24 (10:30): -6.200M prior
September 29 - Thursday
GDP - Third Estimate, Q2 (8:30): 1.3% expected, 1.1% prior
GDP Deflator - Third, Q2 (8:30): 2.3% expected, 2.3% prior
Initial Claims, 09/24 (8:30): 259K expected, 252K prior
Continuing Claims, 09/17 (8:30): 2113K prior
International Trade , August (8:30): -$59.3B prior
Pending Home Sales, August (10:00): 1.0% expected, 1.3% prior
Natural Gas Inventor, 09/24 (10:30): 52 bcf prior
September 30 - Friday
Personal Income, August (8:30): 0.2% expected, 0.4% prior
Personal Spending, August (8:30): 0.2% expected, 0.3% prior
Core PCE Prices, August (8:30): 0.2% expected, 0.1% prior
Chicago PMI, September (9:45): 52.0 expected, 51.5 prior
Michigan Sentiment -, September (10:00): 90.0 expected, 89.8 prior
End part 1 of 2
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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