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Monday, April 17, 2017

Market Alert - The Close

There was not a lot of great news out Monday, but the lack of a thermonuclear war over the Easter weekend appeared enough to put a bit of an upside bid under the market. The upside started in the pre-market and kept pushing stocks higher, with a last hour sprint to the close notched 1+% gains in the smaller indices and close to 1% gains in the large cap indices.

SP500 20.06, 0.86%
NASDAQ 51.64, 0.89%
DJ30 183.67, 0.90%
SP400 1.17%
RUTX 1.18%
SOX 1.31%

VOLUME: NYSE -9%, NASDAQ -14%. Of course on an upside day volume puts in its lowest session of the year. Oh that is great, not a lot of strength on a rebound after a weak price week.

A/D: NYSE +2.9:1, NASDAQ +2.3:1. The small and midcap stocks helped push up the breadth, but it was not blowout as you would expect to see with 1+% gains on the growth indices in a rebound. Solid, just not affirming a new upside move.

China's GDP topped expectations on a year/year basis (6.9% versus 6.8% expected and prior) even though it missed month/month (1.3% vs 1.7% prior.).

New York Empire PMI, April missed its mark: 5.2 versus 13.0 expected versus 16.4 March. It would appear the soft sentiment data is catching back down to the actual hard data.

In light of this development, the Atlanta Fed lowered its Q1 GDP outlook to a whopping 0.5%. High praise indeed.

The stock move played off of a bit of oversold anxiety to end last week where DJ30 and SP500 undercut the 50 day MA. Both rebounded to hold over 50 day EMA. NASDAQ, the only index to hold the 50 day last week, held that level and bounced. RUTX and SP400 recovered off the selling as well, holding the March lows. Possible double bottoms off their pullbacks. Indeed, SP500 and DJ30 show the same action.

SOX gapped higher off the Thursday gap lower to a hammer doji and recovered some lost ground, but it is still well below the 50 day MA's as well as the closing just below the June/November up trendline. SOX is an important barometer for the market, and while it was up on the session it did not reverse the late week action.

SOX is still lagging the other indices, though all were down last week and up on Monday. There is potential for some double bottoms at support for several indices and how they continue to respond after holding that support Monday of course will tell that story. Many semiconductors have to show they can hold the line and move higher, thus keeping an important leadership group actually leading.

In the end there were some really solid moves Monday in many sectors, not all of which were just rebounds off last week's selling. Biotechs showed good action again, even with the rest of the market rallying, a good sign of strength in that sector. EXAS, CORT, BLUE put in good moves, others look solid, e.g. FOLD, IMMU.

FAANG rallied nicely. Retail is holding its gains, Software is decent.

Others rebounded without a lot of strength. Machinery such as CAT, CMI bounced but had nothing else. Industrial metals did not bounce at all.

Very mixed session even though it was up. Good sectors still look good overall, those that have struggled were up but didn't necessarily turn any patterns around. That makes Monday another day where the indices did what they had to do to keep the move going, but the move in itself was not conclusive.

That has been the market's story, however, and thus far each attempt at selling has failed. Sure there are many saying it has to fail and this is the time it will fail. Yes, it certainly has to fail, the question is always when. The indices have yet another chance to show they can hold support and continue higher just as they have done many times in this rally. Perhaps the times are a changing given the inability to put forth tax and healthcare reform, but there continue to be tidbits of news that a new healthcare plan is on the make. That, of course, is offset by comments such as those from Mnuchin today saying that his prior August timetable may not work out.

Well, we picked up some upside in biotech, a chip (NVDA), and NUS (anti-aging personal care products). Now we see if the sellers stay away yet again and see another market recovery.

Have a great evening!

Jon Johnson, Chief Market Strategist
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