- Market pauses after a 6-day recovery, before Memorial Day weekend. - Economic data continues to erode, market doesn't mind. So far. - Corporate profits decline according to what is reported to the IRS. - Business investment continues a second month of nothing. - Leaders still in good shape.
Friday the market was quiet, and quite flat, as it digested six days of upside following that Wednesday one-day selloff. Often of late the Friday ahead of a 3-day weekend is contra-trend, and with the markets in an uptrend and the leading indices overcoming the Wednesday thumping, Friday was due for some weakness. If that was it, however, it certainly was not much.
VOLUME: NYSE -16%, NASDAQ -12%. Volume down ahead of the long weekend.
Advance/Decline: NYSE 1.1:1, NASDAQ -1.1:1. Definitely a large cap session, at least on NASDAQ.
It was an unexciting day on a day that nothing was going to excite the market. Trump was still overseas and had not had his handshake war with the new French President, had not knocked over the G-7's card table about the Paris climate accord, Merkel had not stated that Britain and the US could no longer be relied upon, had not told Abbas that he lied to Trump in DC, etc. All that fun transpired over the weekend.
The market only had the second iteration of Q1 GDP and Durable Goods Orders to chew on. Both were less than satisfactory and bonds still look ready to break higher as a result of the weaker economics. RBC even said its indicators are flashing an 'imminent yield breakdown' is threatened.
GDP Q1 2nd: 1.2% vs 0.8% expected vs 0.7% first read (2.1% Q4 final) Consumption: 0.6% vs 0.3% prior. This added 0.44% to bottom line GDP (+0.23% prior reading)
Corporate Profits: -1.9% vs +0.5% prior.
Whoa. How can profits be lower when companies just reported one of the best earnings and profits quarters in a very long time? Several reasons, two standing out.
First, the big corporations that have done so well since the handouts starting with the Obama stimulus and carried through the ACA, executive orders, etc. has continued thus far under Trump because his administration just got started and it has been unable to push through tax or healthcare reform. A lot of executive orders and regulations are getting rolled back and that helps, but it takes awhile.
Second, and more immediately germane to this last report: the profits reported to the IRS are actual, GAAP profits, not the non-GAAP fiction designed to jump stock prices that are reported to shareholders and the markets each quarter. So, you have corporate profits actually lower. Sorry to burst bubbles, but then again, the market does not care about that. Big moves on made up earnings in a market that is made up of years of Fed easy money.
Nonetheless, the market moved, perhaps not higher, but not lower. This even with more calls that the end of the equity rally is over. Indeed, on many of the more negative websites there are more and more stories with headlines including 'the last time this happened' warnings of a major, end of this stage of western society market and economic event.
Durables Orders, April: -0.7% vs -1.8% expected vs 2.3 prior (from 0.7%)
Ex-Tansports: -0.4% vs +0.4% expected vs 0.8% prior (from -0.2%)
Business Investment: 0.0% vs 0.5% prior. 2017 low as businesses, supposedly so flush with profits, are not investing.
THE MARKET
CHARTS
Nonetheless, the indices held their gains on the week and SOX even nicely extended its move to higher highs. The market continued its indifference to weakening economic data, a bond chart that looks ready to break higher, and at least through Friday, the issues in DC. Of course with Trump back in country and leakers, the press, etc. hell bent on fighting the administration every step of the way, that could all change.
That said, last week once again showed how the indices are quick to shake off disruptive market moves and continue the trends.
SP500: Added fractionally to its new high as it successfully recaptured the Wednesday losses and Thursday put a bit of distance on the old high.
NASDAQ: Also added a nominally higher new high as it too put distance on the prior high Thursday. Still trending up the 10 day EMA, having quickly recaptured it after that Wednesday upheaval.
SOX: Impressive session, starting lower, rallying positive and adding some padding to its break to a higher post-2000 high. Many chips continue to recover and set up to deliver more upside.
DJ30: Lost a bit of ground Friday, still just shy of its March all-time high, but set up to make a new high. Of course, it has not done so and MACD is lower as it tests that high. Not exactly an upside juggernaut but the other big cap indices are leading.
SP400/RUTX: Up on the week but only made it to mid-range before fading some to the weekend. SP400 is nicely over the 50 day MA's, in position to move if the bids come. RUTX shows the same action, pausing after breaking back up through the 50 day MA's.
LEADERSHIP
Semiconductors: Still leading, having posted a nice comeback. AVGO to a higher high late week. QRVO rallied sharply, off a bit Friday. MU broke to a higher closing high. DIOD jumped higher on stronger volume. NVDA broke to a higher high on strong volume. SIMO posted a great break higher on the week. CY looks good and MXL and PXLW look good to go higher again.
China: Still solid though some took a powder. SOHU in a nice test, setting for a new move. BABA continues up the 10 day EMA. SINA is strong. QIWI made us another higher high. CTRP looks ready to break higher again. BIDU looks ready to make a new break higher.
Casual eateries were off Friday but good on the week: SONC, WEN, DRI, YUM
Manufacturing enjoyed a good week: ZBRA, HON still showing good uptrends
Transports: Very solid across the board. Airlines DAL, UAL. Rails rallied, making us quite upset about selling KSU prematurely.
Internet: GOOG still very solid. BCOR ditto. GRUB posted a great move upside Friday.
Miscellaneous: Great moves continued in several of our plays across sectors. MNST, STMP, SQ, COL.
Medical/Healthcare: IMGN looks good to move again. CO rallied nicely. Some of these look to be forming up better.
MARKET STATS
DJ30 Stats: -2.67 points (-0.01%) to close at 21080.28
Nasdaq Stats: +4.94 points (+0.08%) to close at 6210.19 Volume: 1.57B (-11.8%)
Up Volume: 868.45M (-271.55M) Down Volume: 652.1M (+41.73M)
A/D and Hi/Lo: Decliners led 1.13 to 1 Previous Session: Advancers led 1.16 to 1
New Highs: 135 (-86) New Lows: 65 (+1)
S&P Stats: +0.75 points (+0.03%) to close at 2415.82 NYSE Volume: 682.8M (-15.63%)
A/D and Hi/Lo: Advancers led 1.11 to 1 Previous Session: Advancers led 1.1 to 1
Bulls and Bears: Bulls faded HARD. Bears jumped HARD. Lots of pessimism quickly injected itself into the market. Lots of fund managers and market mavens are negative and it is spreading around. That is good.
Bulls: 51.9 versus 58.1
Bears: 18.3 versus 17.1
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: 51.9 versus 58.1 58.1 versus 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: 18.3 versus 17.1 18.3 versus 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): 2.26% versus 2.255%. Bonds still look ready to break higher once more.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.255% versus 2.252% versus 2.287% versus 2.254% versus 2.233% versus 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: 1.11810 versus 1.12148
Historical: 1.12148 versus 1.12240 versus 1.11868 versus 1.12390 versus 1.11916 versus 1.23077 versus 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: 111.217 versus 111.828
Historical: 111.828 versus 111.678 versus 111.835 versus 111.076 versus 111.534 versus 111.271 versus 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: 49.80, +0.90. Oil imploded Thursday after hitting 52. That stalled it a bit below the range highs (53-55). Friday a recovery of the 200 day SMA, but still problematic. Can oil recovery the same as equity markets?
Gold: 1268.10, +11.70. Solid break higher after the weeklong consolidation of the move that recovered the 200 day SMA. Gold still looks ready to move higher.
TUESDAY
Market closed Monday for Memorial Day. That means plenty of time for the Asian and European markets to work through the weekend stories from the G-7, etc. Then we see if the US markets pick up where the left off, including the US stock indices. SOX, NASDAQ, and SP500 at higher highs. Will they continue higher and pull the others with them?
Lots of negatives still swirl in the headlines and just because the indices hit new highs does not mean they will necessarily hold or extend them. True, but thus far the indices have met adversity with steady buying. Did it again last week.
Thus this weekend we have more upside plays to take advantage of good setups and more upside if the market can deliver. Semiconductors are leading again, internet is still moving higher, Chinese stocks, FAANG, and others are working as well.
Have a great Memorial Day!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6210.19
Resistance:
Support: 6170 is the recent all-time high The 50 day EMA at 6003 5996 is the recent May 2017 low The 50 day SMA at 5983 5937 is the all-time high from April 5915 is the tops of the March to April 2017 range 5910 is the lower gap point from mid-April The 2016 trendline at 5882 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 5568 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 2415.82
Resistance: The 2016 trendline at 2437
Support: 2406 is the all-time high from May 2017 2401 is the March 2017 all-time high The 50 day EMA at 2374 The 50 day SMA at 2372 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 2262 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 21,080.28
Resistance: 21,169 is the March 2017 all-time high
Support: The 50 day EMA at 20,787 The 50 day SMA at 20,786 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 19,633 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
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