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12/2/2017 Investment House Daily
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Targets hit: None issued
Entry alerts: DEPO; SM; PTLA
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Stop alerts: QRVO
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Market Summary Video, Plays and Play Videos, and Play Table with play
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If any market circumstances arise where we see additional plays we want to
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of the day of the week.
- An avoidable firestorm: ABC misreporting aids a huge selloff.
- Stocks recover as the dip is bought, but close negative.
- Senate tax sausage making hard for the market to watch, ABC broke the
back -- for Friday.
- Afterhours ABC changes the crux of its story, Senate passes tax reform
- Rotation produces some new potential leaders.
- FAANG, other NASDAQ large caps at an important juncture. A September-like
recovery or not?
- Perhaps a 'normal' market week ahead with 'just' the jobs report?
Anything But Correct. Altogether Biased Coverage. American Broadcasting
Charlatans. ABC and its reporter Brian Ross should be held liable for
covering any losses any investor or trader suffered Friday. During the
session Mr. Ross reported that 'candidate Trump' ordered Michael Flynn to
contact Russia. On the heels of Flynn being charged and pleading guilty in
a deal that was dependent upon 'others being prosecuted,' that news appeared
to jeopardize Trump and his administration.
Stocks dove lower with DJ30 -350 points on the low, NASDAQ off a whopping
136 points (2%), RUTX -3%. That sent DJ30 to the 10 day EMA, NASDAQ below
the 20 day EMA, and RUTX all the way to the 50 day EMA.
Then the market seemed to sense something was not right. Bids returned,
massive recoveries ensued, and while all of the indices still closed
negative on the day, the losses were pikers compared to the bloodletting
that peaked at 11:30ET.
SP500 -5.36, -0.20%
NASDAQ -26.38, -0.38%
DJ30 -40.76, -0.17%
NASDAQ 100 -0.43%
VOLUME: NYSE -33%, NASDAQ -6.5%. Lower trade yes, but still impressive
trade on a rebound. Volume jumped on the ABC report but was strong as well
as stocks bottomed and reversed the 40 minutes after hitting bottom. Again,
there was buying once the kneejerk, algo-driven headline reaction was
ADVANCE/DECLINE: NYSE 1.1:1, NASDAQ -1.5:1. Again NASDAQ lags the NYSE
Late Friday, hours after the financial markets closed for the weekend, ABC
put Brian Ross live on the air. To give further damning detail to his prior
report? NO! To RETRACT the single most important aspect of the report, the
one piece of information that differed from what we all knew for more than a
year: it was not candidate Trump or anyone in his administration, but the
newly elected administration that sought contact with Russia. Specifically,
Ross changed his earlier report to say "candidate Trump asked him [Flynn]
during the campaign to FIND WAYS to repair relations with Russia and other
hot spots, and then after the election, the President-elect asked him, told
him to CONTACT Russia on issues, including working together to fight ISIS."
Oh, just a small oversight there. Therefore, when the balance of the
reporting Friday is reckoned and measured, nothing new was added to what was
known 12 months ago, i.e. that the newly elected administration, as is the
case for all new administrations, started reaching out and making contacts
with key members of other governments so they could hit the ground running
on inauguration day. How shocking. How against the interest of Americans.
Just as Presidents Obama, Bush, Clinton, Bush, etc. acted against the
interest of Americans when they, as Presidents-elect, reached out to foreign
governments to get the relations started in advance of taking office. We
were all grateful they did and felt it was part of getting ready for the
most important job in the world.
Goodness, we have learned in the intervening months that Russia,
post-election, was buying Facebook ads to try and sew seeds of discord in
the US to make the Trump administration LESS effective. It saw in Trump a
Ronald Reagan figure that would not put up with BS, and Russia is,
shockingly I know, trying to get ahead of the curve, actually using what it
learned from the history of the USSR dealing with a personality such as
Trump's. It would appear that Russia has been successful in that endeavor
given how readily US citizens are to attack one another.
Back to the markets. They dove on a combination of stories regarding the
administration that appeared worse than they were. On top of that, they
were already rattled by what appeared to be a sure thing tax reform bill in
the Senate get scuttled when more utterly BS Senate rules got in the way of
common sense. In reality, it was a ploy by the Corkscrew/Korkers sub-party
of newly found anti-deficit religious zealots -- reformed -- to keep tax
reform from passing.
That was a powerful 1-2-3 punch to the market psyche, and the already
rattled indices fell all over themselves. But, as noted, the sense was the
reporting was not correct. Also, a few senators, including Johnson (got
some pass-through amendments he wanted), Collins (got whatever she wanted;
still cannot figure out what that was), gave thumbs up to the tax bill.
Stocks then recovered and pared the losses as noted.
On the heels of the Abysmal Background Checking network's
retraction-but-not-called-retraction of its story, the Senate passed its
bill late, late night. Not sure what the heck is in it -- heard they were
handwriting parts of it on scraps of paper -- but it is passed and now the
House and Senate go to the next level of war, reconciliation. It is
apparently beneficial enough for CNBC to print a story titled "This tax plan
will spark an investment boom that will benefit everyone." Of course it was
penned by Larry Kudlow . . .
So, after Mr. Toad's wild ride induced as a result of some very
self-centered and goal-seeking reports and actions, the market got what it
anticipated: the senate passing a tax reform package. It may not have
anticipated the ABC retraction, but it also didn't anticipate the ABC
fabricated or at the very least poorly, poorly fact-checked story. Usually
when you rush to judgment you end up being the more harshly judged.
Now we see how the markets react to everything being pretty status quo
before all of the running in place that occurred in the very short span of
Friday. You also watch to see if the big NASDAQ stocks pull a September,
and after a sharp down session as on Wednesday, they get purchased yet again
along with other stocks. They based during the summer, broke out of new
bases and rallied, tested, and started back up when all of this started
hitting. Again, will they resume the breakout moves after this pretty big
Wednesday speed bump?
Don't forget about the semiconductors either. Tough week with a sharp drop,
but as noted in last weekend's report, they were extended with a long run up
the 10 day EMA and no inkling of a 50 day EMA test since last touched in
late August. Well, they have not put in that touch, falling to it on
Wednesday, holding it Thursday, undercutting it Friday, then recovering with
a big doji with tail right on top of the 50 day. Quite the shakeout move.
SOX: Let's start with SOX. A leader upside turned leader downside. 22%
above its 200 day SMA on the high heading into last week. That was
corrected as of Friday all the way back to 11% at the low. Halved the
extension. Now, if the uptrend is to hold what should happen is a new
bounce and new rotation up the 10 and 20 day EMA. Stocks and indices will
breakout, rally up the 10/20 day EMA 4 to 5 rotations or bounces, then
correct back to the 50 day MA where they reset the move and do it again.
SOX broke out of a 4 month base in mid-September and rallied up the 10 day
EMA afterward, putting in the full 5 bounces. It ran out of gas and fell,
but it has hit the 50 day, showing a big doji with tail. Again, if the move
is going to continue with some strength, it should hold and start a new move
NASDAQ: A lot of headlines on the week because the mega caps and FAANG were
down. The chart, however, shows a 20 day EMA test with an intraday
undercut, just as it did in late October and mid-November on the first and
second tests of that level after the mid-September breakout from its late
July to mid-September base. As with SOX, it has another bounce or two ahead
of it if the status quo remains, and as of the Anything goes Broadcast
Crapola story retraction and curmudgeon-defying senate passage of a tax
reform bill (and there is truly some tax reform in that bill), the status
DJ30: Yes the Dow was off 350 points Friday, but it was up 330+ points
Thursday. Moreover, it recovered 310 of the lost points intraday. Huge
surge higher on the week, even more extended (11%) over the 200 day SMA. It
CAN get to 15% extension before it starts to struggle, but that is rarer.
As you can see, it was primed for a pullback Friday with the ease in which
it gave up the Thursday gains. Again, however, it did recover.
RUTX: What a new breakout move Tuesday that coasted a bit higher into
Thursday. Then the Friday jolt sent the small caps all the way back to the
50 day EMA intraday. With the last-minute tax bill blockade attempts that
paired 'I have always been a deficit hawk since Trump was elected' Corkster
with his buddy Schumer when they aided the prior administration more than
doubling the debt, it is no wonder the tax sensitive small caps seized up
and plummeted. They too recovered vast amounts of lost ground to close, and
leave themselves in still good position to continue onward toward the 127%
Fibonacci extension at 1558 (closed at 1537) after bouncing off the 38%
Fibonacci retracement mid-November.
SP400: Massive Friday drop as well, tapping the 20 day EMA from a new
all-time high Thursday. Then the same massive recovery to hold its
breakout. Breakout, shakeout, all in 24 hours. Impressive breakout indeed,
and a test of the move is not at all abnormal.
SP500: New high Thursday, tested almost to the 20 day EMA Friday, recovered
to almost flat by the close. Broke out on a new leg higher 8 sessions back,
very strong Tuesday to Thursday move, and as with SP400, a test would not be
out of the question.
Friday some of the recent leaders in retail, manufacturing, transportation
tested their moves. They recovered off the lows, but were due for a bit of
a test after at least 3 good sessions upside. May get some entries out of
them this week.
Retail: Some testing after good moves though COST, M added gains. JWN,
ROST, TGT put in modest tests while WMT continues its 2 week lateral flag.
HD strong all week. They paused some but for most they held their gains
Transports: Most paused. Rails saw KSU, NSC test, but CSX continued its
break higher. Some interesting tests in trucking, e.g. JBHT after a good
break higher. WERN barely tested, same with ODFL. Airlines tested, barely
as well: LUV, SAVE. The DJ20 new high along with the DJ30 new high still
has Dow Theory working even as many with fear of flying forget about that
confirmation indication simply because they have a fear of flying.
Drugs/Biotechs/Healthcare: Trying to come around again. PFE broke higher
early week, MYL at the end of the week. Generics bounced on AMZN showing
interest. Healthcare plans also moved with UNH surging early week. LH is
testing the huge Wednesday move and may give us the entry after a bit more
testing. VSTM looks good even though it gave up its gap higher Friday.
PTLA gave us the entry. IMGN and some other smaller names are interesting.
Manufacturing/Machinery: MMM gave us the target Thursday, took Friday off.
HON surged on the week, also took Friday off. CAT showed a solid new break
higher Thursday, did not give it back.
Oil: Some good moves continued and started. SM popped Friday and we moved
in. SN continued its Thursday move, indeed accelerating the surge for us.
CVX, XOM and other big names paused some Friday after their strong Wednesday
moves. PTEN, SWN may be setting up for new moves or breaks higher,
Financial; Strong Tuesday and Wednesday moves, then took Thursday and Friday
as personal days. Great recovery moves and we will see if we can get any
new entries off this. TCBI testing nicely as is STT. BAC looks great still
and C could now give the entry.
Semiconductors: With SOX SMH showing a possible shakeout at the 50 day MA,
some stocks should be setting up after a rough week. LRCX and AMAT are
still well below the 50 day EMA and at the 78% and 61% Fibonacci
retracement, respectively. More work to be done to form a pattern there.
AVGO held up well, reaching lower but recovering to the 20 day EMA to close
yet again. QRVO reached down toward the 200 day SMA but did manage a
recovery; work to do now to get set back up. INTC looks good. CAVM as
well. Many, however, have a lot of work to do to rebuild patterns.
FAANG: Have to look at these of course. Still in the hanging on stage
after the Wednesday drop, similar to September. FB holding the 50 day MA
with a pair of doji. AMZN holding the 10 day EMA in a test. AAPL trying to
hang on at the 20 day EMA. NFLX broke the 50 day Wednesday and sank more
from there. GOOG all the way to tap the 50 day EMA on the Friday low,
modest rebound. Okay, at least it is in great position to bounce.
Software: Took on water Wednesday and Thursday, but some recovered. MSFT
was never in jeopardy. SYNT still working well. VMW announced earnings and
jumped off the 50 day MA. BLKB took a trip to the 50 day MA on the Friday
low; will see if it can make something of the fast test. FFIV paused Friday
but gave us the target Thursday. CRM fell Wednesday, but it might pull off
a hold and new setup.
Stats: -40.76 points (-0.17%) to close at 24231.59
Stats: -26.39 points (-0.38%) to close at 6847.59
Volume: 2.29B (-6.53%)
Up Volume: 965.05M (-514.95M)
Down Volume: 1.29B (+360.44M)
A/D and Hi/Lo: Decliners led 1.54 to 1
Previous Session: Advancers led 1.13 to 1
New Highs: 103 (-179)
New Lows: 43 (+9)
Stats: -5.36 points (-0.20%) to close at 2642.22
NYSE Volume: 1B (-33.33%)
A/D and Hi/Lo: Advancers led 1.06 to 1
Previous Session: Advancers led 1.38 to 1
New Highs: 151 (-147)
New Lows: 31 (-6)
VIX: 11.43; +0.15
VXN: 16.57; +0.64
VXO: 10.86; +0.50
Put/Call Ratio (CBOE): 0.78; -0.07
Bulls and Bears: Bulls dipped two weeks back then recovered this past week
though still off the recent peaks. It will be interesting to see how the
DJ30 versus NASDAQ/SOX will play out this past week. Bears dipped but still
hold a more elevated level, though still way off the highs. Still very high
Bulls: 62.3 versus 61.5
Bears: 15.1 versus 15.4
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: 62.3 versus 61.5
61.5 versus 63.5 versus 64.4 versus 63.5 versus 62.3 versus 60.6 versus 60.4
versus 57.5 versus 54.3 versus 50.5 versus 47.1 versus 49.5 versus 49.5
versus 48.1 versus 50.5 versus 57.5 versus 60.0 versus 60.2 versus 57.8
versus 50.0 versus 52.5 versus 54.9 versus 51.5 versus 50.00 versus 55.8
versus 50.00 versus 51.9 versus 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
Bears: 15.1 versus 15.4
15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1
versus 17.0 versus 17.1 versus 19.0 versus 20.2 versus 19.1 versus 19.1
versus 18.3 versus 18.1 versus 17.0 versus 16.2 versus 16.5 versus 16.7
versus 18.6 versus 18.8 versus 18.6 versus 18.3 versus 19.2 versus 18.3
versus 17.1 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
Bonds: 2.363% versus 2.412%. Given the Friday uncertainty, bonds surged as
a safe haven play. Still below the late November highs, but a big bounce
off the 50 day EMA.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.363
versus 2.412% versus 2.385% versus 2.326% versus 2.329% versus 2.321% versus
2.34% versus 2.354% versus 2.367% versus 2.345% versus 2.37% versus 2.336%
versus 2.375% versus 2.407% versus 2.402% versus 2.34% versus 2.326% versus
2.316% versus 2.32% versus 2.332% versus 2.349% versus 2.358% versus 2.378%
versus 2.37% versus 2.419% versus 2.456% versus 2.435% versus 2.421% versus
2.366% versus 2.383% versus 2.318% versus 2.341% versus 2.30% versus 2.302%
versus 2.275% versus 2.321% versus 2.345% versus 2.345% versus 2.361% versus
2.348% versus 2.327% versus 2.326% versus 2.341% versus 2.339% versus 2.312%
versus 2.307% versus 2.236% versus 2.222% versus 2.253% versus 2.276% versus
2.273% versus 2.246% versus 2.234% versus 2.201% versus 2.186% versus 2.19%
versus 2.167% versus 2.134% versus 2.042%
EUR/USD: 1.18983 versus 1.18976. Working laterally over the 10 day EMA,
testing the mid-November break higher off the 50 day EMA.
Historical: 1.18976 versus 1.18529 versus 1.18489 versus 1.1899 versus
1.19329 versus 1.18148 versus 1.17402 versus 1.1791 versus 1.1787 versus
1.1786 versus 1.1799 versus 1.16443 versus 1.16646 versus 1.16439 versus
1.15871 versus 1.15954 versus 1.1609 versus 1.16092 versus 1.16575 versus
1.15480 versus 1.1644 versus 1.16091 versus 1.16330 versus 1.18163 versus
1.17570 versus 1.1759 versus 1.17798 versus 1.18476 versus 1.17995 versus
1.1771 versus 1.17932 versus 1.1823 versus 1.1834 versus 1.18662 versus
1.1813 versus 1.17460 versus 1.17352 versus 1.17100 versus 1.1754 versus
1.17676 versus 1.17315 versus 1.1812 versus 1.17817 versus 1.1746 versus
1.17852 versus 1.18540 versus 1.19476 versus 1.19420 versus 1.19420 versus
1.19954 versus 1.19436 versus 1.1918 versus 1.1874 versus 1.19706 versus
1.19551 versus 1.20379 versus 1.2025 versus 1.19258 versus 1.19143 versus
1.18621 versus 1.19131 versus 1.18938 versus 1.19731 versus 1.19678 versus
1.19212 versus 1.18 versus 1.17516 versus 1.1813 versus 1.17595 versus
1.17107 versus 1.17812 versus 1.17445 versus 1.17751 versus 1.18216 versus
USD/JPY: 112.190 versus 112.55. Gave back some ground in the turmoil, but
bounced off an intraday 200 day SMA test, holding much of the week's bounce
off that support.
Historical: 112.55 versus 112.102 versus 111.583 versus 111.244 versus
111.523 versus 111.247 versus 112.349 versus 112.615 versus 112.124 versus
112.91 versus 112.879 versus 113.430 versus 113.615 versus 113.526 versus
113.379 versus 113.99 versus 113.723 versus 113.758 versus 114.064 versus
114.010 versus 114.010 versus 113.845 versus 113.640 versus 113.175 versus
113.675 versus 114.071 versus 113.607 versus 113.913 versus 113.31 versus
113.530 versus 112.561 versus 113.031 versus 112.21 versus 112.20 versus
111.852 versus 112.25 versus 112.413 versus 112.41 versus 112.700 versus
112.653 versus 112.818 versus 112.79 versus 112.667 versus 112.716 versus
112.442 versus 112.86 versus 112.289 versus 111.649 versus 1.12125 versus
111.995 versus 112.454 versus 111.559 versus 111.435 versus 110.846 versus
110.01 versus 110.62 versus 110.216 versus 109.434 versus 107.847 versus
Oil: 58.36, +0.96. Solid bounce Friday after a Monday to Thursday pullback
to the 10 day EMA. OPEC and Russia extended the production cuts through
then end of 2018.
Gold: 1282.30, +5.60. Still having a hard time getting off the 200 day
Hey, a jobs report is due out this coming week. Back to normal perhaps in
terms of the market and the news flow? What a hectic Friday, but we here
were happy, at least for now, we stayed the course Friday. NASDAQ and FAANG
still have to show if this was a 'September thing' type of move Wednesday,
but they recovered well enough Friday. Regret? Perhaps should have bought
in with a few positions on that Friday morning selloff.
That said, the market is being called too high by most quarters, and the
bulls/bears supports those calls. Thing is, the market can become more and
more extended before it breaks. Last week certainly shows volatility, at
least in some leadership areas, but others surged. Moreover, this market
has shown that certain groups get sold quickly and then recovery quickly.
That is one of the key areas we are watching to start the week, e.g. FAANG
and others in software, chips. Chips suffered a lot of damage, however; may
take them time to come back around and set up.
There is money moving into new areas and some are testing; will see what
they produce in terms of entries. Some leaders were hit as noted, but some
are already very interesting for new positions. Always worth a look.
At the same time there are downside plays, and given the sentiment and some
of the volatility you have to look at some of those plays. This past week
we had some, but the opening moves were extremely quick; always best to play
the test that fails. So, we look at some of those just in case.
Big picture: stocks are extended, but it is a time of year runs are often
made. Some of the big names broke out of bases, rallied and tested -- then
Wednesday to Friday tested them more. IF there is a mindset to rally to
yearend those tests may make them intriguing to those wanting to play a
yearend move. We will see. The indices are all in uptrends, there were 50
day EMA tests by SOX and even RUTX intraday. If the trends are to continue,
you would anticipate bounces off the 50 day with the resumption of the moves
up the 10/20 day EMA to follow. Again, it all depends upon if the bids
remain and want to carry stocks higher to yearend.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6847.59
6914 is the late November all-time high
6796 is the early November 2017
The 20 day EMA at 6802
The 50 day EMA at 6685
6641 is the October high
6477 is the September intraday high
The 2016 trendline at 6463
6461 is the July 2017 prior all-time high
6450 is the early September high
6341.70 is the all-time high from early June.
6300 is the mid-June interim high
The 200 day SMA at 6271
6205 is the late May all-time high
5996 is the recent May 2017 low
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
5800 from the February consolidation lows
S&P 500: Closed at 2642.22
The 20 day EMA at 2601
2597 is the November 2017 all-time high
The 50 day EMA at 2569
2544 is the upper channel line from the March 2009 uptrend channel
2491 is the August all-time high
2480 the late August and early August highs
2453.46 is the June prior all-time closing high
The 200 day SMA at 2454
2409 is the July 2017 closing low
2406 is the all-time high from May 2017
2401 is the March 2017 all-time high
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
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 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 24,231.59
23,602 is the early November 2017 high
The 20 day EMA at 23,642
The 50 day EMA at 23,221
22,420 is the September high
22,179 is the August 2017 all-time high
22,086 is the mid-August lower high
The 200 day SMA at 21,759
21,681is the July prior all-time high
21,638 is the July 2017 closing high
21,529 is the June 2017 high
21,169 is the March 2017 all-time high
End part 1 of 3
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