Boring across the board. Stocks could not rally off of the volatility that ended last week, but they did not sell either. They just bumbled along with modest, rather even, losses across the board.
SP500 -6.48, -0.30%
NASDAQ -14.34, -0.28%
DJ30 -51.98, -0.29%
SP400 -0.11%
RUTX -0.19%
SOX -0.54%
VOLUME: NYSE -13%, NASDAQ -10%. Very low, below average trade, falling farther below average than Friday. No serious selling denoted from the volume drop.
A/D: NYSE -1.5:1, NASDAQ -1.45:1.
Once again the indices didn't really do anything to establish direction one way or another. All showed weakness though nothing break worthy.
SOX tried the 20 day EMA again but faded, still holding over the 50 day MA's, still holding its trend up the 50 day MA's even though MACD is slipping, putting in a lower high on the September price high.
DJ30, SP500, faded farther from the Friday intraday high that tested the 50 day EMA, but held inside the early September lows that define the bottom of the September/October range.
SP400 faded just slightly, also easily inside that September/October range. RUTX did put in a lower closing low below the September low but hardly noticeable.
NASDAQ slipped a bit farther below the 50 day EMA but is still holding its trend with few issues, similar to SOX holding its trend.
Leadership
Some recent leader groups were under some pressure, e.g. chips. AMAT gapped and reversed and we entered downside. MCHP touched at the 50 day EMA again and faded and we entered it downside. SLAB, NVDA still holding the 50 day MA, but the group is a bit tired at this juncture.
Industrial equipment is still good for the most part as 2 leaders, CAT and CMI, hold their gains.
Financial stocks could not muster anything despite BAC's earnings beat. GS faded back to the 10 day EMA, C showed a doji at its 10 day, JPM tested its 50 day MA on the low. Even BAC could not muster any move upside off its earnings.
Oil stocks struggled as well, also victims of some of their own success. CWEI tested toward the 20 day EMA but recovered to hold the 10 day EMA. Still strong. APC sold down to the 20 day EMA. APA held the 20 day EMA for the third session, showing a nice doji with tail. HOS, WLL continued to test.
Big Names are doing well after hours, at least NFLX. It beat estimates and international growth expectations and is up $14 points. AAPL closed flat after testing a bit lower, recovering to the close. AMZN broke the 20 day EMA on rising, above average volume. GOOG showed another doji at the 50 day SMA. MSFT managed to test and hold the 50 day EMA, still in its lateral move. IBM is getting whacked after hours on its earnings, up off the lows but down almost 4 points.
NEWS/ECONOMY
The data was not good. Makes the Atlanta Fed look quite prescient, but of course it was forecasting 3.6% Q3 GDP at first.
New York Empire PMI: -6.8 versus 2.0 expected versus -2.0 September. 5 month low, negative 11 of the past 15 months with 2 of the 4 positive months just barely getting back over the flat line.
June was so solid, surely a turn for the entire economy. Sadly, the June turn was just another single month outlier as I discussed at the time.
Industrial Production, September: 0.1% versus 0.2% expected versus -0.5% (from -0.4%)
Thirteen month of contraction, the longest string ever without being in a recession. Frankly, I think it is NOT the longest strong without a recession because I believe the US is now in a recession and we will see the that when the revisions come in for the first half of 2016 and most likely the second half as well.
Capacity Utilization, September: 75.4 versus 75.6 expected versus 75.3 prior (from 75.5)
Misses and revisions. Economists are expecting too much, buying too deeply in their own ideas as to the recovery's strength. When you see misses AND revisions to the downside, there is a decline occurring that the experts have not picked up. It is not just a miss but it starts to show their premise, i.e. a second half recovery, is incorrect. At least the Atlanta Fed has sliced its original Q3 forecast in half.
We picked up some puts on AMAT and MCHP, took some nice gain on our AMGN puts. Oil positions tested a bit more but the patterns are good so we left them. Afterhours IBM is trading at 150, off close to 5 points. If the executives cannot talk up the quarter our downside position is below our initial target so we can lock up some gain on them. Nice.
Have a great evening!
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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