- Market rebounds Thursday and Friday as political intrigue dies down but resurfaces late week. - Fed's Bullard spouts off about too aggressive rate hikes, economic data very mixed, Comey melodrama continues. - Volume solid on recovery, but the indices and several leaders are not that convincing on the bounce. - Still some solid leaders and the indices have shown what looked to be downside breaks before only to recover.
Stocks bounced again, but outside of a few of the same leaders and some new ones, the moves simply were not convincing. Not convincing, that is, in the sense new highs are to come on this particular move.
Futures started higher, stocks rallied, and the move held into mid-afternoon, indeed putting in higher highs to that time. James Bullard of the Fed was talking, always a mistake, and, among other things, noted market expectations of rate hikes were "too aggressive," and he even ventured that more QE was a possibility. Well why not rally?
Then the daily dose of White House leaks arrived, this one from another anonymous source claiming to have seen notes taken from the meeting between Trump and the Russian representative where Trump called Comey, among others, a nut job, and said basically Trump was now free to do whatever. I have to say, I am not a Trump fan nor a Clinton fan, but I have a hard time believing either would have done the things attributed to them by the opposition. You just don't get to where they are being so blatantly stupid.
But, that didn't matter for Clinton in the election and it apparently does not matter for Trump now.
As for the market, perhaps this was what threw the monkey wrench in the moves higher. Fading chances of tax reform, healthcare reform, regulatory reform does remove the lion's share of the reason for rallying.
VOLUME: NYSE +3%, NASDAQ -10%. NASDAQ trade fell but remained above average, where NASDAQ has traded most of the past two months on the way up. That shows a lot of buying. There was a distribution session Wednesday on that selling, but the market can survive a single distribution day and continue.
NYSE trade edged higher and was still solidly above average. The last three sessions of the week were all above average after NYSE trade flipped back and forth but mostly on light trade before that. Interestingly, volume was stronger Thursday and Friday than the selling volume Wednesday. Thus, there was distribution Wednesday, but buying in the wake of that session. Again, one day typically does not kill a rally though on NYSE, the volume was not all that stellar on the way up, certainly not the NASDAQ level.
It was also expiration so some volume is attributable to that given there were violent moves ahead of expiration, necessitating further moves to adjust positions.
A/D: NYSE 3:1, NASDAQ 1.8:1. Not bad breadth on NYSE as the midcaps posted a decent move.
CHARTS
The Index action was on some good volume and in the case of NYSE indices, on solid enough breadth. Two days up in response to the distribution reversal selling Wednesday is not a bad response. The problem arises in the technical look. All of the indices rebounded, SP500 and DJ30 recovering the 50 day MA's. NASDAQ bounced from above the 50 day MA's. SP400 never broke back over them. SOX was never in trouble in terms of breaking support; it bounced off the 20 day EMA though it was not immune from the Wednesday distribution session.
The issue is where it leaves the indices heading into next week: A big break lower with distribution, coming off new highs for SOX, NASDAQ, and SP500, and no index recovering the losses. It has the look of a rebound in relief but not a false break lower and then reversal to propel back to new highs.
That said, this has happened before, i.e. technical hiccups that looked very damaging but then the buyers just outmuscled the sellers. Happened in November 2016 when NASDAQ moved to a new high then was rocked on high volume. Held, rebounded, recovered new highs. In late January 2017 there was that island reversal that did not reverse. A new high in March was sold hard, but again NASDAQ held the 50 day MA in an 8 week consolidation and broke to new highs in April.
Of course at some point the magic lamp fails to light. This is another opportunity for the buyers to show they still want to buy, that there is still confidence at some level in the ability of the government to pass some tax, healthcare, and regulatory reform in one shape or another.
LEADERSHIP
As a market participant, not only is it the index action, but what you need to focus on is the action in leadership stocks even more so than the action in the indices. Many leaders broke to higher highs just ahead of the Wednesday selling only to face serious reversals downside. AAPL, AMZN, NFLX, GOOG, AVGO, AMAT, MSFT, TSLA, RHT. All of these stocks hit higher highs but then reversed. Some are recovering decently but even so they still have not put that sharp downside session behind them.
Breakouts that reverse is a key element to watch in determining market health. How these 'name brand' leaders perform in the aftermath of that reversal will tell a lot. Moreover, it is not just those stocks. Many of the market leaders in chips and elsewhere suffered the same type of action, and how they recover is equally important.
Oil stocks: Still trying to become new leaders. BTE broke to a higher high on better volume, coming off the lows. JONE looks similar. GPOR is setting up. Others are acting that way but not as good yet, e.g. MRO, CVX.
China: Already leaders. SOHU and BITA surged to initial targets Friday. NTES held its ground and pattern on a volatile week. BABA sold and reversed. YNDX bounced off a quick 20 day EMA test.
Drugs: Trying to move off some good patterns but struggling to hold moves, Friday is a case in point. NVAX looks good. CGIX is setting up. PCRX is down but still looks good. AUPH is similar. SRPT started higher, had a hard time holding up Friday, still solid. The theme: still solid but still struggling to hold the move.
Semiconductors: Struggled but still showing leadership qualities. AVGO up and down but holding its move and trying to form up for a new move. LSCC in excellent position to break higher. NVDA gapped back upside to challenge the Tuesday new high. XLNX is at a new high, ignoring the selling. ON, NPTN decent enough. SIMO sold off but then surged off the 50 day MA Friday. Not all are as nice. SLAB, PLAB hit hard times. PXLW is too volatile. Still showing some buying; will know more this week.
FAANG: Mixed. AAPL, AMZN not bad. FB trying to make a break off the 50 day MA. NFLX, GOOG rebounded from selling but show patterns similar to the indices.
NOTE: The drugs and medical stocks do not look bad at all. Oil stocks are attempting to set up. Chemical stocks are not bad. China continues solid as do many chips. What the market MIGHT be showing is some rotation OUT of the initial leaders that pushed NASDAQ to those consecutive, day after day highs. Thus we need to be open to the possibility of these stocks fading as simply a part of the market still moving upside, just with some other leaders while these pull back and take a breather.
MARKET STATS
DJ30 Stats: +141.82 points (+0.69%) to close at 20804.84
Nasdaq Stats: +28.57 points (+0.47%) to close at 6083.7 Volume: 1.91B (-10.33%)
Up Volume: 1.35B (-30M) Down Volume: 517.08M (-201.72M)
A/D and Hi/Lo: Advancers led 1.75 to 1 Previous Session: Advancers led 1.36 to 1
New Highs: 102 (+51) New Lows: 58 (-50)
S&P Stats: +16.01 points (+0.68%) to close at 2381.73 NYSE Volume: 1.08B (+2.86%)
A/D and Hi/Lo: Advancers led 2.95 to 1 Previous Session: Advancers led 1.04 to 1
Put/Call Ratio (CBOE): 0.99; -0.14. The week saw the ratio jump back over 1.0 Wednesday and Thursday. This is an inverse indicator, i.e. when there are more puts traded than calls it starts indicating selling is over. It has to have a series of such closes to mean anything, e.g. 8 to 10.
Bulls and Bears: Bulls faded slightly but not much. Of course the Wednesday market drop is not factored into these numbers. It will next week, but that does not change the fact of the string of 60+ closes from early 2017. That level typically results in selling at some point.
Bulls: 58.1 versus 58.7
Bears: 17.1 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: 58.1 versus 58.7 58.7 versus 58.5 versus 54.7 versus 51.9 versus 56.3 versus 55.8 versus 49.5 versus 56.7 versus 53.4 versus 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
Bears: 17.1 versus 17.3 17.3 versus 17.9 versus 17.9 versus 18.3 versus 17.5 versus 18.3 versus 18.1 versus 17.3 versus 13.75 versus 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
OTHER MARKETS
Bonds (10 year): 2.233% versus 2.229%. Bonds surged on the week, particularly Wednesday. Makes sense given the uncertainty. Overall, bonds are still suggesting issues, e.g. the economy here in the US is just not that good despite some super huge companies reporting super huge earnings. Most people do not work for those companies.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.229% versus 2.223% versus 2.32% versus 2.34% versus 2.34% versus 2.393% versus 2.401% versus 2.394% versus 2.381% versus 2.354% versus 2.322% versus 2.289% versus 2.322% versus 2.30% versus 2.31% versus 2.33% versus 2.275% versus 2.236% versus 2.234% versus 2.21% versus 2.15% versus 2.248% versus 2.232% versus 2.264% versus 2.30% versus 2.36% versus 2.37% versus 2.34% versus 2.33% versus 2.34% versus 2.33% versus 2.35% versus 2.40% versus 2.41% versus 2.382% versus 2.418% versus 2.376% versus 2.40% versus 2.41% versus 2.40% versus 2.43% versus 2.463% versus 2.50% versus 2.529% versus 2.502% versus 2.602
EUR/USD: 1.12077 versus 1.10985. After a one-day pause Thursday, the euro rallied to a new recovery high, up 4 of 5 sessions on the week and extending the breakout after that mid-month test.
Historical: 1.10985 versus 1.11557 versus 1.10862 versus 1.09833 versus 1.09328 versus 1.08655 versus 1.08671 versus 1.08843 versus 1.09286 versus 1.09994 versus 1.09086 versus 1.08923 versus 1.09284 versus 1.090984 versus 1.08987 versus 1.08691 versus 1.09093 versus 1.09358 versus 1.08449 versus 1.07255 versus 1.07255 versus 1.07188 versus 1.0717 versus 1.07304 versus 1.06431 versus 1.06138 versus 1.0671 versus 1.06068 versus 1.05984 versus 1.05906 versus 1.0645 versus 1.06760 versus 1.06804 versus 1.06702 versus 1.06584 versus 1.06855 versus 1.07546 versus 1.0815 versus 1.08640 versus 1.07894 versus 1.07670 versus 1.07920 versus 1.08117 versus 1.0748 versus 1.07395 versus 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
USD/JPY: 111.271 versus 111.584. Dollar trying to hold at the 200 day SMA after bombing lower Monday and Tuesday.
Historical: 111.584 versus 111.167 versus 112.414 versus 113.074 versus 113.749 versus 113.349 versus 113.759 versus 114.263 versus 113.771 versus 113.217 versus 112.683 versus 112.495 versus 112.782 versus 112.779 versus 111.793 versus 111.524 versus 111.197 versus 111. 177 versus 111.234 versus 109.704 versus 110.022 versus 109.00 versus 109.357 versus 108.974 versus 108.525 versus 109.150 versus 109.170 versus 108.926 versus 109.691 versus 110.704 versus 111.096 versus 110.85 versus 110.794 versus 110.705 versus 111.386 versus 111.255 versus 111.114 versus 110.581 versus 111.335 versus 111.242 versus 111.295 versus 111.502 versus 112.289
Oil: 50.67, +1.01. Oil was up all week, its second week of gains. Moved through the 200 day SMA Thursday after a pause below that level. Friday a strong break higher again. Oil continues its rally higher in its range.
Gold: 1253.60, +0.80. Gold broke through the 200 day SMA Wednesday during that turmoil. Paused Thursday, sold Friday, reversed to hold the 200 day. Rallied, paused, resumed.
MONDAY
The market certainly took on water Wednesday and did not redeem itself through Friday. The indices are still trying to swim back upstream. Many leaders such as NFLX, GOOG mirror that action, up but not strong. Many other leaders, however, sport very good recoveries or did not fall victim to the selling in the first place.
So, there are still leaders that look good and sectors that look very good. Still, the fact that many leaders reversed hard off of new highs, and some indices as well, raises a caution flag to see how the market responds this week. In the past it has shrugged off these kind of half-weeks and continued. Now with the insane, hyperventilating political news environment, it is especially something to watch. Indeed, the latest story today is that Comey is now changing his mind about whether there was attempted political influence. Of course Comey lost whatever credibility he had during the election by stepping in when he should have just done his job quietly. Either he is truly a 'nut job' or he is just getting the same treatment everyone in DC is getting these days.
The end result? It is up to the market to show if it will shake off these issues and again overcome a market jolt. We have upside positions working well. We have upside plays that look good if they can show the move. We have more upside this weekend. We also have downside plays ready to go and more this weekend. PWR turned in a great downside gain for us; we closed it Thursday as it showed a bit of life after a 2+ week drop through the 200 day SMA as we held May options.
As usual, you follow the leaders' lead, playing a bit cautiously right now given the market jerky moves, but still recognizing good patterns and potentially emerging leaders. Oil stocks look pretty darn solid in many cases despite surging US production and more rigs churning; heck, there are two rigs in my area and one well just completed. Nonetheless, these stocks are setting up and moving higher. We picked up some BTE Friday and like JONE if it can hold the move.
Okay, those are specifics. Overall the market has to prove it can hold and move higher gain, but it does have groups trying to emerge even as it struggles. Perhaps that is simply some rotation from the big names that have led the move to this point, perhaps it is more insidious for the upside than that. It is a positive there are new groups trying to improve and others still working well, and we will see how the market shakes out this week.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6083.70
Resistance: The 10 day EMA at 6088 6170 is the recent all-time high
Support: 5996 is the recent May 2017 low 5937 is the all-time high from April The 50 day EMA at 5965 The 50 day SMA at 5954 5915 is the tops of the March to April 2017 range 5910 is the lower gap point from mid-April The 2016 trendline at 5864 5800 from the February consolidation lows 5661 is the late January upper gap point 5601 is the January lower gap point The 200 day SMA at 5544 The November prior all-time high at 5404 5340 is the September and October 2016 twin peaks 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
S&P 500: Closed at 2381.73
Resistance: The 2016 trendline at 2419 2401 is the March 2017 all-time high 2406 is the all-time high from May 2017
Support: The 50 day SMA at 2369 The 50 day EMA at 2367 2352 is the recent May 2017 low 2348 is the April 2017 lower gap point 2329 is the March and April twin lows 2322 is the March 2017 low 2319 is the 78% Fibonacci retracement 2301 is the late January 2017 high 2298 is the late January 2017 high 2282 - 2280 from January 2017 2277.53 is the December 2016 high The 200 day SMA at 2257 The November 2016 all-time high at 2213.25 2194 is the August 2016 prior all-time high 2175 is the June 2016 high
Dow: Closed at 20,804.84
Resistance: 21,169 is the March 2017 all-time high
Support: The 50 day SMA at 20,775 The 50 day EMA at 20,738 20,553 is the lows of the week of May 15 20,547 is the lower gap point from late April 2017 20,412 is the March 2017 low 20,400 is the mid-April 2017 low. 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 19,732 is the January 2017 low The 200 day SMA at 19,571 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
Market Data 
Markets 
