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InvestmentHouse - RUTX Leads Upside Rebound Again (Weekend Newsletter)

http://www.investmenthouse.com/frblog.php

MARKET SUMMARY

- Big expiration volume, quiet action in the indices.
- RUTX leads the upside rebound again, trying to make up some lost ground.
- Trump administration viewed by many as in turmoil, not able to push its
agenda. With the cost scoring of the ACA replacement and the G-20 outcome,
the administration is actually maneuvering to get its agenda passed.
- Plenty of worry about a market top though index uptrends remain and market
keeps finding leaders.

Well, Friday was another day of no follow through. A Wednesday afternoon
break higher after the FOMC raised rates 25BP but was seen as more dovish
sent bonds higher, stocks higher. Of course, that is exactly what the FOMC
did not want to happen. I mean it raised rates again, the third time in 16
months, twice in the past 3 months. It is 'clearly' serious dag nab it.
Yet the market rallies because the Fed was not really that hawkish. No
doubt the FOMC members are confused by the Joe Six Pack market players.
Comes from spending too much time in ivory towers away from the real world.

SP500 -3.13, -0.13%
NASDAQ 0.24, 0.01%
DJ30 -19.93, -0.10%
SP400 0.17%
RUTX 0.40%
SOX 0.18%

VOLUME: NYSE +190%, NASDAQ +70%. Quite an expiration Friday, but of course
that means you cannot put too much emphasis on the trade levels.

A/D: NYSE 1.5:1, NASDAQ 1.4:1. Another ho-hum breadth session. The market
has leaders but Friday many took a breather.


Of course, the rally was for just one day. Thursday and Friday stocks were
overall lethargic, holding the move but unable to provide follow through.
Those two words, follow through, were the most uttered on the end of week
market wraps. No follow through, Fed hiking, economic data not that
impressive as it does, market too high, stocks too extended, internals too
weak, Trump agenda supposedly stymied. Surely hell on earth for financial
markets has arrived.

Hey it's hard to argue against the points; they are all more or less true,
though after this weekend it appears some are less true, i.e. that the Trump
agenda is stymied. If there was ever a time he was going to be shown who
was in charge it was the G20, the gathering of the major economic leadership
countries to affirm allegiance to free trade, climate change, and other
globalist focal points.

Instead, after the US wanted changes and Germany and Canada were ready to
acquiesce, offering amendments to appease the US, amendments that were
rejected by the EU and China, the meeting adjourned with the G-20 dropping
its anti-protectionist, free trade, and financing anti-climate change
pledges. As one G-20 delegate put it tonight, 'Unless there is a last
minute miracle, there is no agreement on trade. This is not a good outcome
to the meeting."

This could roil the FX markets on Sunday night, but this caps a quietly good
week for the Trump administration. The CBO scored the GOP ACA replacement
as reducing federal spending $1.2T and taxes by $900B. That leaves $300B in
deficit reduction and a lot of room to cut deals to get everyone satisfied
and on board for pushing the bill through reconciliation. With the budget
about $1T lower thanks to the 'repeal and replace' of the ACA, the tax
reform plan can be passed under reconciliation as well. Much easier to get
51 senators than 60, and there is plenty of money to again cut deals to get
the job done.

So, while we all read and hear about how the Trump administration is out of
control and losing grip on every situation, the path is there, and those in
Congress know that is the case. So, it is going to be a process of
jockeying for a position at the trough as deals will be made. Now you
understand what all of this means. Now I need to go and hose off.


THE MARKET

A new high put in not quite 3 weeks back followed by a pullback to near
support. Last Wednesday a break higher post-FOMC rate hike. Orderly
pullback, new break upside, then fizzled Thursday and Friday. For some
indices. For some stocks. RUTX is still rebounding even as the other
indices stalled to end the week. Many leader stocks also paused Friday, but
many posted solid upside moves as well. Okay, so it was not a total bust as
it would appear many pundits fear the close to the week shows.

Yes, the uptrends remain in place, but there is a lot of market top guessing
right now as many feel the market is topping. I agree that it is working on
one, has been as for several weeks the internals and sentiment turned weaker
and overdone, respectively. But despite that belief, the stock indices
continue rising and more importantly, good, solid leadership continues to
lead. Perhaps the slow action to end the week marks a market peak, but
there is nothing overt that shows the trends are done.


CHARTS

SOX: Put in a higher high Wednesday, the only index to do so on the week.
Despite the stall to end the week, there was no give back of the new high.
Chips remain solid though many are extended after good rungs, but many
others have set up great patterns to move higher and help keep the sector as
a leader.

RUTX: Best mover Friday with a 0.40% gain. That pushes RUTX back over the
December to February trading range. Positive step but will there be . .
follow through?

NASDAQ: Came close to a higher high Wednesday but no cigar, sliding
laterally through Friday. A double top some are calling it. Premature even
if MACD is a bit lower as it tests the prior peak.

SP400: Solid break higher Wednesday off the short double bottom test of the
50 day MA, just could not keep the move going to end the week. SP400 still
looks promising after testing and holding the 50 day MA, producing a good
bounce.

SP500: SP500 put in a double test of the 20 day EMA and broke higher
Wednesday as well. Closed the week at the 10 day EMA, still trending
higher, still in great position to move. Will there be a continued upside
break after the quick test -- still looks solid but as of yet no catalyst to
drive the move.

DJ30: Same action as SP500, testing the 20 day EMA with a short double
bottom, bouncing Wednesday, then sliding laterally to end the week. No new
high, but has tested the SOTU high from 3 weeks back and is in position to
continue higher. Question is, will it.


LEADERSHIP

A pause in the market for a second session but there were still stocks
rising as many recent leaders took a day off.

Semiconductors: An early and continuing market leader saw some stocks
surge, others hold their moves. MXWL surged almost 10%. AAOI, RTEC, PLAB,
SLAB were up and look good. Others are holding the moves, e.g. SWKS, MU.
Others have come a long way and look ready to test, e.g. AVGO, possibly
QRVO.

Biotech/Drugs: Some huge moves up, some of those moves testing, but overall
a lot of good patterns. IDRA showed excellent upside action as did INFI.
IMMU remains solid. INVA, CNAT look very good to go. Others are testing
good moves, e.g. CORT, PLX.

Materials: Enjoyed a good end of the week, e.g. CX, LPX.

Software: Remains strong. VMW up nicely on the week. CALD surged
Thursday, held the move Friday. FFIV still moving higher and to a new high.
BLKB still rising. EBIX looks good to make a new move higher.

China: A mixed sector with some strong moves, e.g. VIPS, YY, BIDU. Others
look very good, e.g. CTRP, SOHU, YNDX.

Financial: Struggled post-FOMC as apparently the Fed was not hawkish enough
on rates. C broke the 20 day EMA Friday, BAC and JPM holding the line for
now.

Struggling: Oil, trucking, trains, metals, construction.


MARKET STATS

DJ30
Stats: -19.93 points (-0.1%) to close at 20914.62

Nasdaq
Stats: +0.24 points (0%) to close at 5901
Volume: 2.967B (+69.85%)

Up Volume: 1.36B (+280M)
Down Volume: 1.73B (+1.092B)

A/D and Hi/Lo: Advancers led 1.43 to 1
Previous Session: Advancers led 1.49 to 1

New Highs: 177 (-17)
New Lows: 34 (-11)

S&P
Stats: -3.13 points (-0.13%) to close at 2378.25
NYSE Volume: 2.3B (+188.65%)

A/D and Hi/Lo: Advancers led 1.49 to 1
Previous Session: Advancers led 1.26 to 1

New Highs: 147 (-25)
New Lows: 17 (+1)


SENTIMENT INDICATORS

VIX: 11.28; +0.07
VXN: 10.57; -0.39
VXO: 9.15; -0.14

Put/Call Ratio (CBOE): 0.96; +0.05


Bulls and Bears: Impressive back to back drops in bulls all the way to
53.4, almost 10 points in just two weeks. Market pulls back in a normal
test and sentiment plunges. Wall of worry as USB says? Hmmm . . .

Bulls: 53.4 versus 57.7

Bears: 17.5 versus 17.3

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: 53.4 versus 57.7
57.7 versus 63.1 versus 61.2 versus 61.8 versus 62.7 versus 61.8 versus 58.2
versus 60.6 versus 58.6 versus 60.2 versus 59.8 versus 59.8 versus 59.6
versus 58.8 versus 56.3 versus 55.6 versus 51.0 versus 42.9 versus 41.7
versus 47.1 versus 42.9 versus 46.1 versus 46.7 versus 45.2 versus 44.6
versus 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

Bears: 17.5 versus 17.3
17.3 versus 16.5 versus 17.5 versus 17.6 versus 16.7 versus 17.6 versus 17.5
versus 17.3 versus 18.3 versus 18.4 versus 19.6 versus 19.6 versus 19.2
versus 19.6 versus 22.3 versus 21.6 versus 23.5 versus 25.7 versus 24.3
versus 23.1 versus 23.8 versus 23.1 versus 22.8 versus 23.1 versus 24.3
versus 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%


OTHER MARKETS

Bonds (10 year): 2.50% versus 2.529%. After selling to start March, bonds
recovered Wednesday to Friday AFTER the FOMC hiked rates. Hiking into an
economic slowdown or just not as hawkish as many expected? We will see.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.529%
versus 2.502% versus 2.602 versus 2.617% versus 2.58% versus 2.60% versus
2.55% versus 2.51% versus 2.49% versus 2.48% versus 2.46% versus 2.260%
versus 2.367% versus 2.31% versus 2.38% versus 2.42% versus 2.43% versus
2.42% versus 2.45% versus 2.50% versus 2.473% versus 2.43% versus 2.41%
versus 2.398% versus 2.340% versus 2.393% versus 2.41% versus 2.48% versus
2.474% versus 2.477% versus 2.44% versus 2.49% versus 2.48% versus 2.512%
versus 2.52% versus 2.467% versus 2.40% versus 2.47% versus 2.468% versus
2.422% versus 2.372%


EUR/USD: 1.07395 versus 1.07710. Euro rallied into Thursday, sold back
Friday. Will see how currencies react Sunday after the G-20 meeting broke
up.

Historical: 1.07710 versus 1.0732 versus 1.06070 versus 1.0636 versus
1.06746 versus 1.06746 versus 1.05384 versus 1.0566 versus 1.05764 versus
1.06266 versus 1.05214 versus 1.05327 versus 1.05710 versus 1.05877 versus
1.05616 versus 1.05830 versus 1.0557 versus 1.05474 versus 1.06108 versus
1.06665 versus 1.06148 versus 1.05762 versus 1.06023 versus 1.06411 versus
1.06557 versus 1.06825 versus 1.06814 versus 1.07219 versus 1.07880 versus
1.07605 versus 1.07892 versus 1.0791 versus 1.07294 versus 1.06957 versus
1.06843 versus 1.0683 versus 1.0756 versus 1.07274 versus 1.0761 versus
1.07027 versus 1.06394 versus 1.06381 versus 1.07114 versus 1.06450 versus
1.0624 versus 1.05982 versus 1.0555 versus 1.0585 versus 1.05346 versus
105837 versus 1.0525 versus 1.03914 versus 1.05289 versus 1.05155 versus
1.04357 versus 1.04636 versus 1.0451 versus 1.04368 versus 1.04412 versus
1.0392


USD/JPY: 112.707 versus 113.349. Dollar was rising versus the yen, then
last week it broke back below the 50 day MA's.

Historical: 113.349 versus 113.447 versus 114.726 versus 114.833 versus
114.807 versus 115.259 versus 114.563 versus 113.498 versus 113.966 versus
114.042 versus 114.169 versus 113.951 versus 112.966 versus 223.982 versus
112.169 versus 112.745 versus 113.324 versus 113.399 versus 112.906 versus
113.356 versus 113.880 versus 114.306 versus 113.65 versus 113.856 versus
113.265 versus 113.401 versus 112.207 versus 112.332 versus 111.815 versus
112.567 versus 112.903 versus 112.68 versus 112.50 versus 114.493 versus
115.094 versus 114.469 versus 113.362 versus 113.850 versus 112.736 versus
114.39 versus 114.686 versus 114.538 versus 112.774 versus 114.473 versus
114.57 versus 114.70 versus 115.811 versus 116.023 versus 116.923 versus
115.93 versus 116.46 versus 117.983


Oil: 49.31, +0.07. Bounced back after the sharp selloff, moving over the
200 day SMA to test the falling 10 day EMA. Bear flag setup.

Gold: 1230.20, +3.10. 3-day bounce from the selling that started in March.
Still recovering off the December low, and now we see if it can move back up
to the 200 da where it failed to end February.


MONDAY

Now the market has walked through the Jobs Report the prior Friday, the FOMC
rate decision, and the Dutch elections. This weekend the G-20 meeting
concludes with the US asserting more nationalistic positions. What will the
currencies do now? Could be interesting as the Chinese say.

The market continues dealing with one major story after the next, many with
the capability of moving the market, none really doing so. The FOMC rate
hike started to help, but -- as everyone points out, no follow through.

Even with no follow through the index patterns are quite solid and in
position to continue upside. Leadership keeps finding leaders to step up.
This weekend we are looking at plays from three leading groups:
biotechs/drugs, semiconductors, software. The patterns remain great, and
thus far stocks are not just drawing pretty pictures but are making
breakouts from those patterns. The breakouts are surging then testing just
as they should, no breakouts met with immediate selling. The sellers are
still standing back, thus far unwilling to step in front of the market.

It is interesting the viewpoints. The market faces one report after
another, a Fed decision, geopolitical issues, fiscal economic attempts. It
is maligned for not using these as a catalyst to surge.

Looked at from another viewpoint, however, the market is faced with worries
the Trump deregulation and tax policies are getting pushed back but is not
selling off. Indeed, it produces new leaders to come to the fore.
Leadership has narrowed as oil dropped out, metals are down, and transports
are struggling along with financial stocks.

For now the leadership is enough to keep the market in its trends. Thus for
now we are still playing the really good upside positions that keep setting
up.

Have a great weekend!


SUPPORT AND RESISTANCE

NASDAQ: Closed at 5901.00

Resistance:
5912 is the March all-time high.

Support:
5800 from the February consolidation lows
5661 is the late January upper gap point
The 50 day EMA at 5731
The 50 day SMA at 5723
The 2016 trendline at 5652
5601 is the January lower gap point
The November prior all-time high at 5404
5340 is the September and October 2016 twin peaks
The 200 day SMA at 5321
5287.61 is the September 2016 high
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
5170 is the October intraday low.
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


S&P 500: Closed at 2378.25

Resistance:

Support:
The 2016 trendline at 2340
The 50 day EMA at 2328
The 50 day SMA at 2323
2301 is the late January 2017 high
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
The 200 day SMA at 2202
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
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 September 2016 low; 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
2046 is the July 2015 closing low
2040 is the March 2015 closing low


Dow: Closed at 20,914.62

Resistance:

Support:
The 50 day EMA at 20,424
The 50 day SMA at 20,371
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
The 200 day SMA at 18,977
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
18,351 is the prior all-time high from May 2015
18,288 from March 2015
18,262 is the upper gap point from the Monday gap lower.
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
17,992 is the early September low
17,978 is the November 2015 peak
17,960 is the October intraday low
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.


ECONOMIC CALENDAR

March 17 - Friday
Industrial Production, February (9:15): 0.0% actual versus 0.2%
expected, -0.1% prior (revised from -0.3%)
Capacity Utilization, February (9:15): 75.4% actual versus 75.4% expected,
75.5% prior (revised from 75.3%)
Leading Indicators, February (10:00): 0.6% actual versus 0.5% expected, 0.6%
prior (no revisions)
Michigan Sentiment, Preliminary March (10:00): 97.6 actual versus 96.8
expected, 96.3 prior (no revisions)

March 21 - Tuesday
Current Account Bala, Q4 (8:30): -$128.2B expected, -$113.0B prior

March 22 - Wednesday
MBA Mortgage Applica, 03/18 (7:00)
MBA Mortgage Index, 03/18 (7:00): 3.1% prior
FHFA Housing Price I, January (9:00): 0.4% prior
Existing Home Sales, February (10:00): 5.54M expected, 5.69M prior
Crude Inventories, 03/18 (10:30): -0.2M prior

March 23 - Thursday
Initial Claims, 03/18 (8:30): 239K expected, 241K prior
Continuing Claims, 03/11 (8:30): 2030K prior
New Home Sales, February (10:00): 560K expected, 555K prior
Natural Gas Inventor, 03/18 (10:30): -53 bcf prior

March 24 - Friday
Durable Orders, February (8:30): 1.3% expected, 1.8% prior
Durable Goods -ex tr, February (8:30): 0.7% expected, -0.2% prior