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InvestmentHouse Weekend Market Summary:

http://www.investmenthouse.com/weekendmarketsummary.htm

- Stocks rebound from Thursday selling, but looks like afternoon short covering on expiration Friday.
- Housing starts jump thanks again to multifamily.
- Michigan Sentiment slips, but at these levels, who cares?
- Stocks head into next week with the same issues: in position to bounce but bigger picture still dealing with weak growth patterns.

AS NOTED THURSDAY, I WILL BE OUT STARTING FRIDAY EVENING ON A BOY SCOUTS 'ORDEAL' EVENT. THE REMAINDER OF THE REPORT WILL ISSUE ON SUNDAY WITH SOME NEW PLAYS. I APPRECIATE YOUR UNDERSTANDING AND HOPE THAT I CAN PASS THE ORDEAL WHATEVER IT WILL BE, E.G. tomahawks at 20 paces, arm wrestling a gray squirrel, sleeping on hard ground. . .

Stocks finished May expiration on the upside but off of the week, the second straight week of losses for SP500. Stocks held where they had to on Thursday and bounced Friday, but it was not a powerful move. Indeed most of the move occurred in the afternoon session, starting with two hours left. Without that run the indices would have muddled home flat. With the Tuesday to Thursday selloff, the late Friday push higher looked more like short covering ahead of the weekend more than anything else.

SP500 7.01, 0.37%
NASDAQ 21.30, 0.52%
DJ30 44.50, 0.27%
SP400 6.74, 0.50%
RUTX 0.63%
SOX 1.05%

Volume: Mixed on expiration and low in any regard. 1.31% NYSE, -16% NASDAQ.

SOX led the move in percentage terms, recovering the 50 day EMA lost on the Thursday close. The move was decent but it was nearly all attributable to AMAT with its improved earnings and 8% gain. Overall the bounce did not put SOX back inside the channel and thus SOX remains problematical. As such the market remains problematical as well. Well, it is for more reasons than just the SOX, but SOX is a good one.

CHARTS

SP500 bounced a bit more off of the Thursday 50 day EMA test. Solid rising volume, but it was expiration so you would expect it to be higher, and even so it was not that high. SP500 held where it had to and has kept the trend in place. That is about all it did on the week.

DJ30 bounced off the 50 day EMA as well as the blue chips held where they needed to. Putting in a modestly higher low in an attempt to keep the trend trending. So far it is up. Nothing exciting but keeping the trend in place.

NASDAQ reached lower once more to that range of lows that has helped bounce it up, at least temporarily, over the past 6 to 7 weeks. Trying to hammer out a bottom along the 4020 to 4050 level, but bigger picture is still a head and shoulders, still a bit bearish overall though trying to set up a bounce from this support.

SOX gapped upside and rallied through the 50 day EMA. That keeps it just below the next trendline but if it holds also puts in another higher low as SOX slowly works higher though from a lower channel than the one through early April.

RUTX bounced off Thursday's lower low, though a low that held the late January 2014 low that set off the solid February to March surge. Lightning can strike twice. Not counting on it, but if there are buyers interested after 12 weeks of selling, this is the place they would enter and thus makes this an interesting bounce possibility for next week.

THE NEWS

More of the same with a mixed bag in the headlines and a mixed bag within the reports themselves. Gee, sounds like the stock market's volatility both day to day and intraday.

Housing Starts April: +13.2% to 1.072M annualized. Sounds great but single family rose just 0.8% while multifamily jumped 40% to 30% of all starts. That is a four year high and frankly if the housing market was recovering as it typically would, multifamily should have died out and given way to single family. That, however, requires households getting good jobs and rebuilding their savings, but as this recovery has shown, the middle class is disappearing as fast as the breadwinner jobs disappeared after 2007. The jobs have not come back and thus the middle class has not come back. Sad legacy of a sad economic chapter that has seen the very rice get even richer and the poor get more and more benefits. In short, not as much demand for single family homes and the builders are putting their money where the demand is, i.e. multifamily housing.

Michigan Sentiment May Preliminary: 81.8 versus 84.5 expected versus 84.1 April final. Not so excited as they were in April, but frankly at these levels sentiment means little. It needs to be at extremes to make a difference and it is nowhere near an extreme upside or downside.

NEXT WEEK

The indices put in another choppy, volatile week, but also put in another test of lows that held and leave open the possibility of a bounce. Most of the volatility and chop was of course in the growth indices, but late week SP500 and DJ30 joined in the selling and fell hard, landing on the 50 day EMA. They held and bounced modestly Friday. They look fairly normal.

The worry has to remain around NASDAQ, SOX, RUTX and anything growth. The week saw Mr. Tepper announce he was nervous about stocks. Friday Ralph Acampora was suffering morning sickness, stating he had a "sick feeling a 25% crash is ahead." Seems the volatility is wearing on the big guys as well.

Hmmm. Now that NASDAQ, RUTX, SP400 are at levels that yielded bounces in the past just in time for these guys to get queasy, perhaps you look for a bounce in the week ahead. Three tries in the past four weeks have all failed to find lasting traction. It is getting harder to believe they can successfully pull off a 2 to 3 week upside move. THAT, however, is exactly when you have to keep an open mind and if you see it happening you take advantage of it.

There are no doubt some good looking upside plays still, just that they are fewer in number, a characteristic of a market that is under selling pressure. Overlaying any bounce, even a 2 to 3 week tradable rebound, is the overall volatility and bearish patterns on the growth indices. That is the governor on any upside and has thus far successfully thwarted bounce attempts. Hasn't taken down the market, but has thwarted upside bounce tries.

Thus with the Friday move upside but not very convincing, we also will look at some more downside plays just as we did this past week. Upside and downside mix, still watching for which way the volatility turns the market. As noted Thursday, it can be a resumption of the trend upside, a long lateral trading range, or a deeper correction giving rise to Acampora's morning sickness. Volatility usually leads to a trend change. NASDAQ and RUTX have broken their trends. SOX will be a key harbinger as to whether the other indices do the same in the weeks to come.

Have a great weekend!

OTHER MARKETS

Euro/Dollar: Dollar bounced nicely.

1.3698 versus 1.3716 versus 1.3713 versus 1.3702 versus 1.3754 versus 1.3853 versus 1.3914 versus 1.3928 versus 1.3878 versus 1.3875 versus 1.3865 versus 1.3868 versus 1.3814 versus 1.3851 versus 1.3839 versus 1.3831 versus 1.3817 versus 1.3805 versus 1.3794 versus 1.3815 versus 1.3815 versus 1.3814 versus 1.3820 versus 1.3883 versus 1.3886 euro

Dollar/Yen: Dollar a bit weaker once more.

101.49 versus 101.52 versus 101.84 versus 102.27 versus 102.15 versus 101.73 versus 101.81 versus 101.53 versus 101.73 versus 101.68 versus 102.11 versus 102.24 versus 102.30 versus 102.22 versus 102.62 versus 102.49 versus 102.13 versus 102.32 versus 102.44 versus 102.61 versus 102.62 versus 102.44 versus 102.27 versus 101.80 versus 101.72 versus 101.43 versus 102.00 versus 101.70 versus 102.59 versus 103.10 versus 103.24 versus 103.92 versus 103.76 versus 103.68 versus 103.21 versus 102.81 versus 101.24

Bonds: Faded to test after a big move.

10 year: 2.51% versus 2.50% versus 2.54% versus 2.61% versus 2.66% versus 2.62% versus 2.60% versus 2.59% versus 2.59% versus 2.61% versus 2.59% versus 2.67% versus 2.69% versus 2.70% versus 2.67% versus 2.68% versus 2.69% versus 2.73% versus 2.71% versus 2.72% versus 2.64% versus 2.62% versus 2.64% versus 2.62% versus 2.65% versus 2.69% versus 2.68% versus 2.70% versus 2.73% versus 2.79%

Oil: 102.01, +0.55. holding the move up over the 200 day SMA on the week.

Gold: 1293.30, -0.40. Still clustered around the 200 day SMA in a tightening range.

MARKET STATISTICS

NASDAQ
Stats: +21.3 points (+0.52%) to close at 4090.59
Volume: 1.719B (-16.23%)

Up Volume: 1.04B (+467.39M)
Down Volume: 674.52M (-785.48M)

A/D and Hi/Lo: Advancers led 1.56 to 1
Previous Session: Decliners led 2.14 to 1

New Highs: 11 (-5)
New Lows: 82 (-38)

S&P
Stats: +7.01 points (+0.37%) to close at 1877.86
NYSE Volume: 670M (+1.21%)

A/D and Hi/Lo: Advancers led 2.07 to 1
Previous Session: Decliners led 2.3 to 1

New Highs: 91 (+27)
New Lows: 82 (-19)

DJ30
Stats: +44.5 points (+0.27%) to close at 16491.31

SENTIMENT INDICATORS

VIX: 12.44; -0.73
VXN: 15.25; -0.81
VXO: 11.93; -0.92

Put/Call Ratio (CBOE): 0.89; -0.12

Bulls and Bears:

Bulls continue the move: 55.1% versus 55.8% versus 54.7%. A bit of a fade, but just a bit. Never hit an extreme yet.

Bears fade yet again: 19.4% versus 19.7% versus 20.6

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.

Note the extreme bullishness: it was this high in 2007 at the crash, in early 2005 as well.

Bulls: 55.1% versus 55.8 versus 54.7
51.6 versus 50.5 versus 54.6% versus 50.5 versus 54.7% 52.0% 54.6% 53.5% 46.5% 41.8% 45.9% 53.1% 57.6 56.1 60.6% 61.6% 60.0% 58.2% 57.1% 55.7% 53.6% 52.6% 55.2% 52.6 49.5 42.3% 45.4 46.4% 44.3% 42.3% 37.1% 37.1% 38.1% 43.3%.

Background: Last undercut 35%, the threshold for bullishness, in early June 2012.

Bears: 19.4% versus 19.7% versus 20.6%
21.7% versus 20.6 versus 18.6% 18.6% 17.5% 17.4% 15.1% 17.2% 17.2% 17.4% 17.4% 15.3% 15.1 15.3% 15.2% 15.2% 14.0 14.3 14.3% 14.4 15.5 15.5% 15.6% 16.5% 18.5 21.6% 20.6% 18.6% 20.6% 21.6% 22.7% 23.7% 23.8% 21.6%.

Background: Over 35% is the threshold to be really be a good upside indicator. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.

SUPPORT AND RESISTANCE

NASDAQ: Closed at 4069.29

Resistance:
4104 is the lower gap point from 12/20/13
4131 is the March 2014 low
The 50 day EMA at 4137
4246.55 is the January 2014 peak
4277 is the March lower gap point
4289 is the July 2000 recovery high
4318 is the lower November 2012 trendline
4372 is the March 2014 high
4413 is the upper channel line for the November 2012 to present uptrend.

Support:
4070 is the series of highs from late November/early December
The 200 day SMA at 4000
3991 is the prior November 2013 high and the post-bear market high.
3968 is the February 2014 low
3946 is the April 2014 intraday low
3855 is the November low
3819 is the early October high
3801 is the September 2013 high.
The October low at 3750
3697 is the August high and a prior post-bear market high in the recovery.

S&P 500: Closed at 1870.85

Resistance:
1884 is the December 2012 up trendline
1883.57 is the early March high.
1897 is the all-time high hit in April 2014 and is giving way.

Support:
The 50 day EMA at 1865
The December and January highs at 1848
1834 is the lower trendline from 11/2012
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
The 200 day SMA at 1786
1775.22 is the October prior all-time high
1768 is the December 3013 low
1738 is the February 2014 low
1730 is the September 2013 peak
1710 is the August 2013 peak.
1698 to 1700 are the July and August interim highs
1687 is the May high and post-bear market high
1685 is the mid-August 2013 upper gap point
1657 is the late August upper gap point
1654 is the June 2013 peak
1646 is the October 2013 low just before the surge into early 2014

Dow: Closed at 16,446.81

Resistance:
16,506 is the March 2014 peak
16,589 is the December 2013 all-time high
16,632 is the April 2014 all-time high
16,816 is a lower trendline off the 11/2012 low

Support:
The 50 day EMA at 16,403
16,257 is the January 2014 low
16,179 is the November 2013 peak.
The 200 day SMA at 15,878
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak
15,542 is the May 2013 intraday high
15,340 is the February 2014 low
15,318 is the June closing high
15,050 from the August 2013 interim recovery high
14,888 is the April peak and prior all-time high
14,844 is the June intraday low
14,762 is the August 2013 low
14,551 is the June 2013 intraday low on the selloff (14,659 closing)

Economic Calendar

May 12 - Monday
- Treasury Budget, April (14:00): +106.9B actual versus +$114.0B expected, +$112.9B prior

May 13 - Tuesday
- Retail Sales, April (8:30): 0.1% actual versus 0.3% expected, 1.5% prior (revised from 1.2%)
- Retail Sales ex-auto, April (8:30): 0.0% actual versus 0.6% expected, 1.0% prior (revised from 0.7%)
- Export Prices ex-ag., April (8:30): -1.2% actual versus 0.8% prior (revised from 0.5%)
- Import Prices ex-oil, April (8:30): 0.0% actual versus 0.3% prior
- Business Inventories, March (10:00): 0.4% actual versus 0.4% expected, 0.5% prior (revised from 0.4%)

May 14 - Wednesday
- MBA Mortgage Index, 05/10 (7:00): 3.6% actual versus 5.3% prior
- PPI, April (8:30): 0.6% actual versus 0.2% expected, 0.5% prior
- Core PPI, April (8:30): 0.5% actual versus 0.2% expected, 0.6% prior
- Crude Inventories, 05/10 (10:30): 0.947M actual versus -1.781M prior

May 15 - Thursday
- Initial Claims, 05/10 (8:30): 297K actual versus 325K expected, 321K prior (revised from 319K)
- Continuing Claims, 05/03 (8:30): 2667K actual versus 2700K expected, 2676K prior (revised from 2685K)
- CPI, April (8:30): 0.3% actual versus 0.3% expected, 0.2% prior
- Core CPI, April (8:30): 0.2% actual versus 0.2% expected, 0.2% prior
- Empire Manufacturing, May (8:30): 19.0 actual versus 4.8 expected, 1.3 prior
- Net Long-Term TIC Fl, March (9:00): $4.0B actual versus $90.3B prior (revised from $85.7B)
- Industrial Productio, April (9:15): -0.6% actual versus 0.0% expected, 0.9% prior (revised from 0.7%)
- Capacity Utilization, April (9:15): 78.6% actual versus 79.2% expected, 79.3% prior (revised from 79.2%)
- Philadelphia Fed, May (10:00): 15.4 actual versus 9.1 expected, 16.6 prior
- NAHB Housing Market , May (10:00): 45 actual versus 48 expected, 46 prior (revised from 47)
- Natural Gas Inventor, 05/10 (10:30): 105 bcf actual versus 74 bcf prior

May 16 - Friday
- Housing Starts, April (8:30): 1072K actual versus 975K expected, 947K prior (revised from 946K)
- Building Permits, April (8:30): 1080K actual versus 1008K expected, 1000K prior (revised from 990K)
- Mich Sentiment, May (9:55): 81.8 actual versus 84.5 expected, 84.1 prior