- No real change Friday as NYSE indices test rather normally, NASDAQ and SOX try to hang in. - Jobs Report still shows the same issues with new records, not on unemployment, but on numbers out of workforce and those holding multiple jobs. - Market started to split Wednesday and Thursday, still has great leadership, but is losing the techs and possibly the chips.
What was down Thursday was up Friday, and what was up Thursday was down Friday -- for the most part, and just slightly at that. The problem is for those that fell Thursday, the Friday rebound was nowhere near the strength or ferocity of the downside. Thus, many tech stocks, while recovering some lost ground, made little progress in repairing patterns damaged Thursday.
At the same time, some of the first leaders in the market rally, e.g. steel, enjoyed a solid session: AKS, ZEUS, X. As these early rally leaders resumed the upside, other early leaders that rallied Thursday, e.g. financial and transportation, took a breather.
The mix of recovering tech, chip and softer industrial related stocks left the stock indices flat. Much better situation than Thursday where NASDAQ bombed lower 72 points and SOX lost almost 5%. Again, however, the modest recoveries did nothing to repair Thursday's damage.
VOLUME: NYSE -26%. NASDAQ -16%. Both exchanges saw volume fall back to average. Lower volume on the relief upside sessions keeps the 'pullback' yellow caution flag out for the overall market.
A/D: NYSE 1.2:1, NASDAQ barely positive.
Looking at the Friday action and indeed the action for the past 3 weeks and it is apparent the test that started this week is not over, at least in terms of NASDAQ and likely SOX.
They both suffered some serious damage in the distribution and likely that is not over. SP400, DJ30, SP500 and RUTX look decent enough in tests of the 10 day EMA, but some violent rotation has returned as the technology sector, what should be a growth area if the economy is going to rally, sells. It tried to rally and actually looked pretty solid, but just as fast as it improved it was sold off. Anticipating bad relations with the President elect in terms of visas for cheap overseas labor, building products outside the US? Perhaps, but if the methodology for keeping them in the US is to make the US a place they WANT to be through lower regulation, taxes, and a once-again strong rule of law, that is a good thing for them and for everyone.
Thus it may be that that market further splits given the 10 day EMA tests from the NYSE indices and the damage control on NASDAQ and SOX. If so, we will play those leaders that tested in the week's pullback and start back upside.
On Friday we stepped out and picked up some NFLX as it showed a break higher. Also took some gain on URI and the rest of the gain on ADBE as it tried to break the 200 day SMA, but rebounded to a nice doji with tail.
ECONOMY/NEWS
Another Jobs Report is in the books but unlike the prior jobs reports, this one was no longer billed as 'the most important' jobs report. As noted all week long, the data now coming in is 'old administration' data outside the sentiment indicators that have surged. Despite the supposed changes in the report, the underlying report is still the same: fewer people working, more out of the workforce, earnings still well behind any typical recovery and indeed fell in November.
Jobs Report
Non-Farm Payrolls: 178K versus 179K expected versus 142 prior (from 161K)
Unemployment: 4.6% versus 4.9% prior. Must be a great jobs market!
U6 unemployment: 9.6%, lowest since 2008.
Earnings: -0.1% versus 0.2% versus 0.4% prior. Worst showing since 2014.
Workweek: 34.4 versus 34.4 versus 34.4
PARTICIPATOIN RATE: 62.7% versus 62.8% prior. 446K people LEFT the workforce, bringing the total working aged people outside the labor force at a NEW RECORD 95.1M! THAT is how you get the unemployment rate down 3-tenths in one month: have a huge number leave the workforce, unable to find work.
Full-time versus part-time jobs October: Part-time +90K, Full-time -103K November: Part-time +118K, Fulltime +9K. Hey, at least full-time jobs rose in November.
3-month totals: Part-time +638K, Full-time -99K
Multiple Job Holders: People holding 2 or more jobs as a result of economic necessity.
Seasonally adjusted +61K to 7.8M. Unadjusted +57K to 8.1M, a high for the 2000's.
Where the jobs are: -Business and Professional: +63K -Healthcare: +28K -Food service and drinking establishments: +19K -Construction: +19K (second nice gain) -Temporary: +14.3K. This has not been a good sign for the economy in this recovery. -Government: +22K -Mining/Logging: +2K. First gain in many months and it comports with what we are seeing in oilfield activity and in machine shops servicing the industry. An OPEC deal, if it sticks, only helps. -Information Tech: -10K (second straight decline) -Retail: -8K (second straight decline) -Manufacturing: -4K
SUMMARY: As the internals show, this is the same report as the one before it, and the one before that, the one before that . . . you can go as far back as you want. Fewer people working, more people forced to hold multiple jobs, wages falling. How on earth can that be spun as a positive? I said it years ago in analyzing one of the same over-hyped jobs reports: is creating 180K, 500K, 1M or even millions of low wage, part-time jobs the equivalent of the same number of full-time, high-wage jobs? Half that number? The answer is of course, 'no.'
THE MARKET
CHARTS
DJ30: Very modest move lower Friday but the advance has slowed. Slowed versus selling hard a la NASDAQ. Still trending up the 10 day EMA, now 6.3% over its 200 day SMA. That gives DJ30 some more upside potential, but a 10 day EMA (19,062; closed 19,170) test would not be surprising. Straight up, more or less, for 4 weeks, sure a bit oversold, and again, a 10 day EMA test, even a 20 day down to 18,900 where the November lateral consolidation occurred, is not out of the normal realm. Thus far, however, nothing indicates DJ30 is due for a major rollover outside of a major turn in sentiment about the rally. For now we watch for a test as described and use that as an entry if the leaders hold and set up again.
SP500: Similar to DJ30 but already on the test. Faded to the August lateral consolidation Thursday and Friday, just below the 10 day EMA. Nice run to a higher high, nice test to a logical point, the August consolidation. The 20 day at 2180 is another. The 38% Fibonacci retracement is at 2164 (and the 50 day EMA as well). Thus far an orderly test as financial, energy, and industrial stocks are helping hold SP500's gains.
NASDAQ: Bombed on Wednesday and Thursday, Friday posted a modest gain and a doji just below the 50 day MA's and just below the 38% Fibonacci retracement of the November rally. This leaves NASDAQ at the early August highs, a potential support level, but at this point, even with the Friday band aid, NASDAQ has not showed it has made the low on this selling. It is in a logjam of prices from August to mid-November, but again, it has not showed it is ready to rally from here.
SP400: As noted earlier in the week, a textbook rally test, using the entire week to fade a test to the 10 day EMA. One of the very impressive runs of the smaller cap indices, this test is equally impressive in its order. Still way, way over the 38% Fibonacci retracement (1577; closed 1625). Doubt it would fall that far, but have to see when and how hard the bids return.
SOX: A Friday bounce after Thursday's 4.85% dive bomb to the 61% Fibonacci retracement. That wiped away the entire higher high gains over the early October peak. Friday's bounce recovered the October peak but a lot of damage was inflicted and after that we want to see how the chips can recover. Friday saw many in a modest relief move, but still suffering unrepaired damage from the Thursday drop.
RUTX: Russell spent the week testing the wholly impressive 15 session rally from the early November low, holding at the 10 day EMA Friday with a doji. Some symmetry in the move, up 15 days, testing back 5 days. Still way over the prior highs at 1264 and the 38% Fibonacci retracement (1274; closed at 1314). Thus far orderly, but still not convinced the small caps hold at this level.
LEADERSHIP
As discussed Thursday, leadership narrowed when techs and semiconductors were dropped Thursday. While there were rebounds Friday, the rebounds did little to repair the Thursday damage or the split in the market that occurred Wednesday and particularly Friday.
Metals: While most traded indecisively Friday, metals decisively moved higher. AKS, X, ZEUS, STLD posted nice moves. Early market leader in the lead again.
Financial: After great Wednesday and Thursday success, financial stocks tested Friday. GS, JPM, BAC posted modest losses. C fell harder, but managed to hold the 10 day EMA.
Transports: Similar to financials, transports took a breather Friday but did not harm the patterns. CSX, JBHT, DAL all sluggish on the day but holding gains.
Industrial equipment: Decent though slow. CMI continued its climb. CAT was lower but did not hurt itself. TEX tests the 10 day EMA while EMR holds a strong Wednesday break higher.
Oil: Explosive move Wednesday that quieted down, in some cases, by the weekend. PDS continued higher Friday, along with other oil service companies, e.g. HAL, SLB. Most others took the session off but are still solid, e.g. WLL, APC.
Semiconductors: Bounced Friday but for most that didn't wipe away Thursday. Some are still in their trends even if they sold, e.g. SLAB, XLNX, AMD, MU. Others broke their trends, e.g. SWKS. Will see how this leadership group recovers, if it can.
Software: Tried to recovery Friday, but not that successful. RHT gapped lower but did recover some of the Thursday lost ground. VMW gapped to the 50 day EMA and posted a reversal to a modest gain. Many questions here as well.
Big Names: Still looking something like warmed over horse manure, but not for all. AMZN is still heading lower. AAPL bounced some Friday but very low trade. FB is still in its 78% Fibonacci retracement double bottom. GOOG held the 200 day SMA and is trying to bounce. NFLX posted a nice, higher volume move as it looks to continue the break higher off the 50 day EMA and the D point in its ABCD. Not all are fertilizer.
MARKET STATS
NASDAQ Stats: +4.55 points (+0.09%) to close at 5255.65 Volume: 1.871B (-16.04%)
Up Volume: 1.06B (+510.23M) Down Volume: 766.9M (-893.1M)
A/D and Hi/Lo: Advancers led 1.04 to 1 Previous Session: Decliners led 1.6 to 1
New Highs: 111 (-95) New Lows: 59 (-21)
S&P Stats: +0.87 points (+0.04%) to close at 2191.95 NYSE Volume: 882M (-26.5%)
A/D and Hi/Lo: Advancers led 1.23 to 1 Previous Session: Decliners led 1.63 to 1
New Highs: 94 (-194) New Lows: 167 (-45)
DJ30 Stats: -21.51 points (-0.11%) to close at 19170.42
12 of 25 sessions over 1.0 on the close. Edging closer to 1.0 but as of yet in the rally and now test, still not much downside speculation.
Bulls and Bears: Not the huge surge from the prior week, but another gain by bulls, moving toward that 60 level that, at least during the Obama years, acted as a barrier to the upside moves. That still leaves room to move higher, but definitely in the upper end of the range. Bears actually moved higher on the week, leaving them mid-range and thus not as much an indicator as bulls.
Bulls: 56.3 versus 55.6
Bears: 22.3 versus 21.6
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: 56.3 versus 55.6 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: 22.3 versus 21.6 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): 2.394% versus 2.454%. Rebounded some Friday despite the supposedly better economic data. Still an ugly week for bonds as they continue trending lower below the 10 day EMA.
Historical: 2.454% versus 2.388% versus 2.30% versus 2.31%. versus 2.36% versus 2.355% versus 2.317% versus 2.30% versus 2.34% versus 2.297% versus 2.219% versus 2.22% versus 2.23% versus 2.14% versus 2.077% versus 1.867% versus 1.83% versus 1.778% versus 1.81% versus 1.797% versus 1.827% versus 1.83% versus 1.85% versus 1.84% versus 1.791% versus 1.76% versus 1.76% versus 1.73% versus 1.75% versus 1.74% versus 1.74% versus 1.766% versus 1.80% versus 1.746% versus 1.78% versus 1.723% versus 1.72% versus 1.74% versus 1.72% versus 1.69% versus 1.622% versus 1.60% versus 1.56% versus 1.569% versus 1.56% versus 1.584% versus 1.62%
EUR/USD: 1.06638 versus 1.06631. Modest 2 week recovery up to the 20 day EMA but still in a major downtrend.
Historical: 1.06631 versus 1.0601 versus 1.0649 versus 1.05699 versus 1.066 versus 1.05910 versus 1.05519 versus 1.0672 versus 1.06265 versus 1.0587 versus 1.0650 versus 1.07026 versus 1.0725 versus 1.07492 versus 1.0858 versus 1.08898 versus 1.09398 versus 1.10186 versus 1.10327 versus 1.11406 versus 1.11059 versus 1.11020 versus 1.10560 versus 1.09646 versus 1.09860 versus 1.08963 versus 1.0895 versus 1.08793 versus 1.08793 versus 1.08851 versus 1.0928 versus 1.0971 versus 1.0977 versus 1.10217 versus 1.0966 versus 1.10536 versus 1.1032 versus 1.10598 versus 1.1233 versus 1.1183 versus 1.1147 versus 1.12052 versus 1.12091 versus 1.12066 versus 1.1239 versus 1.1218 versus 1.1228 versus 1.2148 versus 1.1254 versus 1.1248 versus 1.12259
USD/JPY: 113.52 versus 113.945. Big week again, testing the move Thursday and Friday.
Historical: 113.945 versus 114.19 versus 112.685 versus 112.44 versus 111.835 versus 113.14 versus 112.445 versus 111.129 versus 110.809 versus 110.905 versus 110.240 versus 109.07 versus 108.164 versus 107.455 versus 106.621 versus 106.814 versus 105.192 versus 101.286 versus 104.386 versus 103.112 versus 102.96 versus 103.350 versus 104.042 versus 104.798 versus 104.710 versus 105.305 versus 104.412 versus 104.2110 versus 104.331 versus 103.83 versus 103.99 versus 103.99 versus 103.602 versus 103.892 versus 103.815 versus 104.201 versus 103.634 versus 103.690 versus 103.698 versus 103.95 versus 103.159 versus 103.984 versus 103.381 versus 102.807 versus 102.035 versus 101.326 versus 101.143 versus 101.322 versus 100.55 versus 100.75 versus 101.034 versus 101.045 versus 100.386
Oil: 51.68, +0.62. Big week up Wednesday to Friday. The move carries oil to its October and June highs. Of course the OPEC deal was the huge event on the week. Ironically, Friday Saudi Arabia commented that they "tend to cheat" on OPEC agreements. Really? No, say it isn't so! Of COURSE it is.
Gold: 1177.80, +8.40. Ugly week as gold continued its trend lower below the 10 day EMA. Gold is now at the gap point from early February and may try to find some support for a bounce.
MONDAY
Over the weekend there is the Italian election and it is feared the Italians, suffering from oppressively high unemployment and the huge costs of the new immigrants, will move toward an 'Italiexit' from the EU. I listened to a short debate on the topic afterhours, and one analyst commented it was better to have the EU than separate countries with different currencies, central banks, etc. because of "all the additional regulation." Hmmm. Go read a history book on just how regulation EXPLODED under the EU versus what was in place in individual countries before joining. I am sure MANY EU countries, basically all but Germany and France, would LOVE to leave. Might see the next shoe drop this weekend.
If it does, of course markets will panic. Will they panic similar to the Trump election, i.e. drop massively in the overnight trade and then erase all signs of worry by morning? Perhaps not, but I am just not too sure how that will hurt the US.
Indeed, it might lead to a bit more testing/consolidating, but that only helps a market already engaged in a much-needed test from the last run higher.
Thus, we will watch for more leadership stocks to consolidate and set up new moves. EMR is one that could be ready with another session or two. Some energy is setting up still. Retail is also still showing nice fades. Perhaps some chips can rally that group such as AVGO that has sold to the 200 day SMA and other support. Or SLAB that hit the 50 day MA and bounced. Software could find some help from VMW, but not sure who else. It would appear the 'safer' plays are in the initial market leaders, but you always have to watch for the next group to arise, e.g. the possibility of retail.
Anyway, we will see how the Italian election plays out as well as new developments in Pennsylvania where supposedly some recounts show Trump losing 22K votes. If the market rally in the current leaders was built on the hope of pro-economic policies versus the same old policies that produced this most recent jobs report, then that rally could be facing a new reality.
Always interesting, eh? Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5255.65
Resistance: The 50 day EMA at 5259 The 50 day SMA at 5263 5271.36 is the August 2016 intraday prior all-time high 5287.61 is the September 2016 high 5309 is the late October lower high 5310 is the 2016 up trendline 5340 is the September all-time closing high.
Support: 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 The 200 day SMA at 5021 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 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
S&P 500: Closed at 2191.95
Resistance: The 10 day EMA at 2193 2194 is the August 2016 all-time high The 2016 trendline at 2205 The November 2016 all-time high at 2213.25
Support: 2175 is the June 2016 high The 50 day EMA at 2163 The 50 day SMA at 2156 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 The 200 day SMA at 2109 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 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 19,170.42
Resistance:
Support: The 10 day EMA at 19,061 18,669 is the August 2016 all-time high 18,595 is the July 2016 peak The 50 day EMA at 18,593 The 50 day SMA at 18,462 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 The 200 day SMA at 18,028 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. 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
December 2 - Friday Nonfarm Payrolls, November (8:30): 178K actual versus 180K expected, 142K prior (revised from 161K) Nonfarm Private Payr, November (8:30): 156K actual versus 170K expected, 135K prior (revised from 142K) Hourly Earnings, November (8:30): -0.1% actual versus 0.2% expected, 0.4% prior (no revisions) Unemployment Rate, November (8:30): 4.6% actual versus 4.9% expected, 4.9% prior (no revisions) Average Workweek, November (8:30): 34.4 actual versus 34.4 expected, 34.4 prior (no revisions)
December 5 - Monday ISM Services, November (10:00): 55.6 expected, 54.8 prior
December 6 - Tuesday Productivity-Rev., Q3 (8:30): 3.3% expected, 3.1% prior Unit Labor Costs - R, Q3 (8:30): 0.2% expected, 0.3% prior Trade Balance, October (8:30): -$41.8B expected, -$36.4B prior Factory Orders, October (10:00): 2.5% expected, 0.3% prior
December 7 - Wednesday MBA Mortgage Index, 12/03 (7:00): -9.4% prior JOLTS - Job Openings, October (10:00): 5.486M prior Crude Inventories, 12/03 (10:30): -0.884M prior Consumer Credit, October (15:00): $18.7B expected, $19.3B prior
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