- Jobs Report comes, goes, stocks rise, fade, but SOX breaks to a higher high. - Jobs headlines are okay while the underlying numbers are finally better. - Analysts calling for a pullback from the highs. Is that not just what happened or do they mean a correction? - Leaders have a pretty good Friday as they and the uptrends still don't have any real sellers. - This week sees the Fed rate decision, Dutch election, and debt ceiling all hit on Wednesday.
February jobs topped Friday's news. It was an okay report on the headlines, beating expectations along with an upward revision to January. The internals were significantly better with participation rising to 63.0% as those not in the workforce fell another 176K on top of January's 736K, combining for the biggest ever 2 month drop.
Non-farm payrolls: 235K versus 188K expected versus 239K January (from 227K) Unemployment: 4.7% versus 4.7% expected versus 4.8% January Hourly wages: 0.2% versus 0.1% prior (revised from 0.2%). +2.8% year/year Average hourly workweek: Steady at 34.4. Again. Participation: 63.0%
The mix of jobs improved as well: Construction 58K, roughly a 10 year high water mark Manufacturing 28K Mining 6K, a modest improvement Private Education 39K Professional and Business: 37K Healthcare 27K Leisure and Hospitality 26K Retail -26K
Futures were already higher ahead of the report, and when the news hit, they rallied a bit farther. The news, however, did not have a lot of staying power. Even before the market opened stocks slid off the pre-market highs, and when the opening bell sounded prices slid. Three down legs into early afternoon led to back half recovery, but it was a very anticlimactic session to a much anticipated report that could have been, but was not, the next upside catalyst.
VOLUME: NYSE -4.5%, NASDAQ +6%. Lower on NYSE as the indices traded more or less flat, up on NASDAQ as it broke higher, albeit modestly. Not bad price/volume action.
A/D: NYSE 2:1, NASDAQ 1.4:1. A bit of a recovery in the small and midcaps helped breadth recover to decent levels.
Thus the market was still in the test mode, more or less; SOX did break to a higher high, and it is hard to argue with a semiconductor index that wants to lead higher. Often the rest of the market follows.
Perhaps the market is still contemplating what is to come this week: FOMC rate decision, Dutch election with a populist anti-EU candidate leading, and the US debt hitting the ceiling, and all on Wednesday. Will they or won't they raise it? Republican President, republican Congress. Sure they will.
After the super positive, olive branch extending SOTU address and subsequent one-day gap and rally, the stock market has tested that move. That entire move. Lots of infighting subsequent to the address, lots of obstructionism, yet the Trump administration keeps coming out in decent shape. More companies announce jobs in the US, even foreign companies. CEO's that talk with the President come out pumped and excited. Polls show continued approval of the job being done.
At the same time there is a lot of negativity surrounding a market testing back from higher highs. I have made it clear; I am not a fan of the move because of the weak internals and the high bullish sentiment. Yet, leadership remains despite the dropout of some leader groups (e.g. oil stocks). Moreover, as soon as the market started to test, bullish advisor sentiment dropped precipitously -- it would appear advisors are as jumpy as a 10 year old in a Halloween fright house.
Thus, while we still view this rally as being on its last legs, that is just opinion. The market punched out some new highs, is putting in a very orderly test of those highs, and it still has leadership in great position and indeed making good moves. We bought into some of those moves on Friday after moving into other positions during the week. Some great moves are in progress from this new rebound of leaders -- even as the market tests. SIMO, CTRP, PLX, IMMU, VRSN, BLUE, SWKS, AVGO, SOHU, ATHM -- excellent moves even as the market tests, not suggesting that buyers are backing away from the market. Bids are still there, and you have to, as corny as it sounds, follow the leaders.
MARKET
CHARTS
SOX: The star of the session, SOX put in a rather unheralded break to a new high, gapping and rallying past the late February high. SOX put in a 3 week lateral move after a new high in February, and is now at a new high once more. SOX tends to lead the rest of the market.
NASDAQ: After a four day lateral move over the 20 day EMA, NASDAQ gapped upside, filled the gap, then rebounded to hold the move. All in all, not bad with a nice showing of above average volume and some life moving back into some chips while FANG still showed some upside.
SP500: After a 6 session test of the post-SOTU rally, SP500 completely filled the gap higher, holding the 20 day EMA. Friday a gap higher to a doji. Decent but nothing breakthrough, nothing showing a clear return to the upside. It delivered a bounce where it needed to but did not add any bling to it.
DJ30: Gapped modestly higher to a doji as well, also coming off a gap fill and 20 day EMA test. Started higher, but that is about all it did.
SP400: After a 6 session fade to the 50 day MA's, SP400 midcaps gapped higher Friday but could only manage a doji. As with SP500, it delivered a bounce where it needed to but not anything more.
RUTX: The small caps fell into the lower third of the December to February range as of Thursday, posted a modest bounce with a doji. Nothing definitive, just held after a week of downside.
LEADERSHIP
As noted, there is a swath of leadership from many sectors even as some have broken lower such as oil stocks. Even some of those, however, after long selloffs, are going to try and bounce.
Biotech: Continues to produce some impressive moves. CORT is surging for us. IMMU is in a powerful move. PLX exploded higher. CELG was up on the week then tried to give it up Friday. BLUE put in solid moves up off the 20 day EMA test. SRPT looks ready to move. Some got away with upside gaps, e.g. TTPH.
China: Some great moves again Friday, e.g. CTRP, ATHM, SOHU. YY looks good. Still waiting for BIDU, BABA, YNDX to start upside again.
Chips: Definitely coming back to life as evidenced Friday. SIMO put in a great week for us as we caught it on the breakout. SWKS put in a new high. SLAB regained its feet after that early March gap lower, starting up off the 50 day MA on strong volume. AVGO surged Friday.
Financial: Not a spectacular week, but they held the line. BAC working in a flat lateral move over the 10 day EMA. C gapped higher Wednesday and edged higher to the early January highs. JPM put in a nice test of the 20 day EMA, looks ready to move. GS looks a bit wobbly as of Friday, trying to hold the 20 day EMA.
Oil: Bouncing some after big drops but have not reversed the move yet. CVX bounced but has a lot of resistance. HAL bounced modestly. SPN bombed lower. SWN will be ready to bounce after putting in a small double bottom.
Industrial machinery: Struggling. TEX broke lower. CAT remains in trouble. CMI is holding over the 20 day EMA.
Metals: After some selling, some possibilities. AKS is trying to hold the late January low, showing higher MACD on this second low. It is somewhat by itself, however, as STLD, SCHN, RS have work to do. AA is trying to break below the 50 day EMA and the late February low.
Miscellaneous: GRMN breaking higher after testing its earnings gap. VRSN broke out on the week.
MARKET STATS
DJ30 Stats: +44.79 points (+0.21%) to close at 20902.98
Nasdaq Stats: +22.92 points (+0.39%) to close at 5861.73 Volume: 1.977B (+5.81%)
Up Volume: 1.23B (+261.52M) Down Volume: 728.62M (-148.01M)
A/D and Hi/Lo: Advancers led 1.39 to 1 Previous Session: Decliners led 1.4 to 1
New Highs: 99 (+22) New Lows: 40 (-26)
S&P Stats: +7.73 points (+0.33%) to close at 2372.6 NYSE Volume: 838.7M (-4.51%)
A/D and Hi/Lo: Advancers led 2.03 to 1 Previous Session: Decliners led 2.32 to 1
Bulls and Bears: Bulls fell back below 60 in a big drop. Bears back over 17. A bit of a bluster? Certainly in line with other sentiment we are hearing.
Bulls: 57.7 versus 63.1
Bears: 17.3 versus 16.5
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: 57.7 versus 63.1 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: 17.3 versus 16.5 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): 2.58% versus 2.60%. Trying to put in a second bottom at the December low. Look oversold from this pattern. Now what does that suggest? The Fed NOT hiking rates? Would it really do that? Perhaps a bounce into the FOMC announcement Wednesday.
Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.06746 versus 1.05948, Euro surging back upside Thursday and Friday. Bouncing up off the higher low.
Historical: 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: 114.807 versus 115.259. After a break higher Wednesday and Thursday out of the handle, the dollar backed off.
Historical: 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: 48.49, -0.79. Bombed lower Wednesday to Friday, closing just below the 200 day SMA. This is where oil held in November, i.e. at the 200 day SMA.
Gold: 1201.40, -1.80. Nine sessions to the downside, showing a doji just below the 50 day SMA. Oversold near term.
MONDAY
Some important milestones this coming week converging Wednesday with the FOMC rate hike (100% according to the Fed Funds Futures), the Dutch election, and the US reaching the debt ceiling limit. Of course the Jobs Report supposedly sealed the hike and that could have been a catalyst, but it was not, at least not for the entire market; there were some good moves.
Friday I heard more than one market analyst talking about a pullback from the highs being likely before the market rallied again. I looked at the charts again just to make sure what I saw over the past 7 sessions. Yep, still a nice orderly pullback off of the highs. Still no signs of sellers.
Now once again the indices have pulled right back off a higher high. Did it in late January with a gap higher out of a 6 week lateral consolidation, but they also immediately held the line and rallied sharply in February. New high 8 sessions back on the post-SOTU rally, now a steady fade to fill the gap and hold near support. Perhaps a pullback is coming, but with the index action and the leadership action, once again there appears to be no sellers of any number willing to take on the uptrend.
That can all change with the right news (wrong news for the bulls), but what will that news be? The Dutch nationalists winning and wanting out of the EU as did the UK? The market seemed to get used to the UK leaving and frankly I don't think it would be surprised if the Dutch want out as well.
A Fed rate hike? That is supposed to be good news, right? Strong economy if the Fed hikes, right? After 2 hikes in 15 months can the economy stand another quarter point? If it cannot, and if the market cannot, then perhaps the Fed grossly 'misoverestimated' the economy's strength. If that is the case, well then stocks will ultimately react negatively to a hike.
The debt ceiling might be the silent rally killer. Treasury's Mnuchin is asking to raise the debt limit to keep spending. The ironic news item is the Deficit is down $90B since January.
So, reason to keep an eye out for what the politics are (and the Fed is political by the way) as we watch how the indices bounce and behave AND how leadership works. As of the end of the week it was working pretty well. Of course we still took advantage of APC selling off to make some downside money.
As for plays this week, we picked up some nice upside when things were not so great the past week. Heck they are not all that great now according to many pundits with this 'market top'. I guess we will just have to look at those great upside setups and pass them up because the market might top off of this pullback. Uh, hell no. As noted last week, the trend, despite all misgivings, is still holding, and our worries or the worries of others don't really change that trend and certainly have not changed the leaders setting up and breaking upside. Until the leaders are breaking down and the trends break, you look for stocks setting up for the upside and play them as them make their moves.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5861.73
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 5697 The 50 day SMA at 5677 The 2016 trendline at 5630 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 5297 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 2372.60
Resistance:
Support: The 2016 trendline at 2329 2301 is the late January 2017 high The 50 day EMA at 2313 The 50 day SMA at 2310 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 2195 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 20,902.98
Resistance:
Support: The 50 day EMA at 20,317 The 50 day SMA at 20,265 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 The 200 day SMA at 18,900 19750 is the lows of the December/January range 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 10 - Friday Nonfarm Payrolls, February (8:30): 235K actual versus 188K expected, 238K prior (revised from 227K) Nonfarm Private Payrolls, February (8:30): 227K actual versus 185K expected, 221K prior (revised from 237K) Unemployment Rate, February (8:30): 4.7% actual versus 4.7% expected, 4.8% prior Avg. Hourly Earnings, February (8:30): 0.2% actual versus 0.2% expected, 0.2% prior (revised from 0.1%) Average Workweek, February (8:30): 34.4 actual versus 34.4 expected, 34.4 prior (no revisions) Treasury Budget, February (14:00): -$192.0B actual versus -$192.6B prior
March 14 - Tuesday PPI, February (8:30): 0.1% expected, 0.6% prior Core PPI, February (8:30): 0.2% expected, 0.4% prior
March 15 - Wednesday MBA Mortgage Applica, 03/11 (7:00) MBA Mortgage Index, 03/11 (7:00): 3.3% prior CPI, February (8:30): 0.1% expected, 0.6% prior Core CPI, February (8:30): 0.2% expected, 0.3% prior Retail Sales, February (8:30): 0.1% expected, 0.4% prior Retail Sales ex-auto, February (8:30): 0.1% expected, 0.8% prior Empire Manufacturing, March (8:30): 14.5 expected, 18.7 prior Business Inventories, January (10:00): 0.3% expected, 0.4% prior NAHB Housing Market , March (10:00): 65 expected, 65 prior Crude Inventories, 03/11 (10:30): +8.2M prior FOMC Rate Decision, March (14:00): 0.875% expected, 0.625% prior Net Long-Term TIC Flows, March (16:00): -$12.9B prior
March 16 - Thursday Housing Starts, February (8:30): 1260K expected, 1246K prior Building Permits, February (8:30): 1251K expected, 1285K prior Initial Claims, 03/11 (8:30): 242K expected, 243K prior Continuing Claims, 03/04 (8:30): 2058K prior Philadelphia Fed, March (8:30): 25.0 expected, 43.3 prior JOLTS - Job Openings, January (10:00): 5.501M prior Natural Gas Inventor, 03/11 (10:30): -68 bcf prior
March 17 - Friday Industrial Production, February (9:15): 0.2% expected, -0.3% prior Capacity Utilization, February (9:15): 75.4% expected, 75.3% prior Leading Indicators, February (10:00): 0.5% expected, 0.6% prior Michigan Sentiment, March (10:00): 96.8 expected, 96.3 prior