Sunday, April 15, 2018

The Daily, Part 1 of 3, 4-14-18

* * * *
4/14/2018 Investment House Daily
* * * *

Investment House Daily Subscribers:

MARKET ALERTS:

Targets hit: None issued
Entry alerts: None issued
Trailing stops: None issued
Stop alerts: TJX

The market alert service is a premium level service where we issue intraday
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The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.

TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4

TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
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TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
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The REPORT SCHEDULE is as follows:

Market Summary Video, Plays and Play Videos, and Play Table with play
annotations will issue Wednesday, Weekend.

Monday a Market Summary video, new plays, play table annotations.

Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play table.

Access to all current videos will remain assessable each day using the play
links in the reports.

If any market circumstances arise where we see additional plays we want to
prepare for the next session, we will of course issue those plays regardless
of the day of the week.


MARKET SUMMARY

- Too much turmoil and geopolitics for many to buy into the weekend.
- Stocks start higher but fade off the higher highs.
- Indices cannot take out the 50 day MA's yet, but volume and breadth are
light.
- Syria strikes raise risk level, but Trump declares 'mission accomplished.'
- Earnings start with NFLX leading off Monday as indices are in position to
continue the rebound rally.
- Still plenty of leadership in position to move higher.

The week did not end great, but while the stock indices traded lower Friday,
the overall week was positive. Even Friday. No, not a rip higher, but a
second bounce from the February lows, one that produced better internals and
much better moves by some solid leader stocks. The bounce took RUTX past
the 50 day MA's, but the rest of the indices still had to deal with that
level, something we noted as this bounces' first test. Wanted them to move
through and then come back and test from above a la RUTX, but that was not
in the cards. With the move higher on the week and a weekend with still
many potential flashpoint issues, after a higher open the bids dried up and
stocks solid back, really struggling in the afternoon session.

SP500 -7.68, -0.29%
NASDAQ -33.60, -0.47%
DJ30 -122.91, -0.50%
SP400 -0.32%
RUTX -0.50%
SOX -0.77%

VOLUME: NYSE -4%, NASDAQ -13%. Volume, already low, tumbled Friday. NYSE
posted another below average session, NASDAQ faded as well. Volume was
quite light all week with one good upside session Tuesday when the market
kicked in its first good upside move in awhile with some good internals and
leadership.

ADVANCE/DECLINE: NYSE -1.3:1, NASDAQ -1.7:1.

These internals show no selling, just a drying up of the bids ahead of the
weekend. People were not dumping stocks ahead of the weekend, they just
stopped buying given all of the geopolitical issues in the world. Oh, and
it was Friday the 13th as well.

Again, it was not a great week of power. It was, however, the second bounce
off the test of the February lows by SP500 and DJ30. It showed the internal
strength and particularly leadership that the first bounce did not have. As
you are aware, we concluded based upon the internals and the improved action
in leaders that a tradable rally was beginning and thus we started buying
the good moves. It is interesting that Friday Byron Weems said he believed
that the market would test the February low and then move higher from there.
It would appear to us that the February lows have been tested and the market
is already moving upside despite the Friday sluggishness.

Accordingly, we picked up quite a few positions on the week, greatly
expanding our exposure to the market. Some really good names moving really
well. The key now, as noted late week is whether the indices can overcome
the first test, the 50 day MA's, and continue the rally into earnings.
Friday was a 'no,' but that was not the seminal test. This week more
earnings come out and the market is set up quite well to move higher and
continue the rebound.

What about the geopolitics, e.g. the late Friday strike on Syria by the US,
France and UK (Germany sat this one out)? If things spiral out of control
of course all bets are off. Thus far, however, the market is shaking them
off and moving higher, even if on low volume.

Remember, this does not mean we think new highs are going to result. They
can but the market will need a real boost and get a lot more volume to make
that happen. Earnings can provide that as they did in October 2017. Thing
is, the move higher has been steady and straight for a long time. Starting
in January and that four week surge to higher highs, the market moves are
much more volatile. That is something moves tend to show near their end
before a deeper correction is needed.

Also, the patterns developed in the indices suggest a rebound but more has
to be shown to make new highs. Specifically, SP500 and DJ30 set up double
bottoms at the 78% and 61% Fibonacci retracement, respectively, of the
September through January rally. Those are reliable upside bounce plays
with a maximum target at the prior highs. Beyond that, again, needs to have
something more to drive it.

Therefore, on this move we play the pattern move. Then if something more
shows up to drive stocks higher, we enjoy the ride as we are already in, and
we take the opportunities presented in other stocks that will show up. We
know that to be the case because if the move continues beyond a bounce there
will be new leaders and new opportunities to play the upside.


THE MARKET

Friday the lackluster economic data continued as the slow spot I discussed
over a month ago -- and that the Fed just acknowledged this past week --
continues. Michigan Sentiment was not bad but it posted the biggest loss in
18 months.

Then there are the geopolitical issues dominated by trade, and after Friday
evening, perhaps Syria/Russia. One bright spot Friday was Secretary Ross
stating at a conference in Lima, Peru that he anticipates a new deal on
NAFTA by the third week in May.

Thus far, the market, while buffeted day to day by the news, has overcome
the negatives and is rising off the February lows. It is not a massive
surge but it is showing the right credentials in internals (when it counts)
and leadership. Even IBD says the market is now in what it calls a
confirmed uptrend again. As noted, we are playing that move, using rational
expectations.

CHARTS

RUTX: The small caps get the pole position today because they led the move
starting with a Tuesday surge off a higher low. That higher low was a test
of the initial move from the 200 day SMA and selloff that started mid-March.
RUTX broke higher through the 50 day MA's and extended that move into
Thursday. Friday of course it was off, but it is testing from a position of
strength, i.e. from above. That bodes well for RUTX successfully testing
and resuming the move upside.

SP400: Moved through the 50 day MA's Thursday on the high but could not
hold it. Again Friday but could not hold it. Still an improved pattern,
showing a pennant the past 3 months. Looks ready to follow RUTX through
that first resistance.

NASDAQ: Moved up to the 50 day MA's on the week, but was rebuffed Friday.
Holding over the rising 10 day EMA and we anticipate NASDAQ to continue the
move next week given the good leadership. NASDAQ appears to have formed a
new, wider uptrending channel using the 200 day SMA on the lows. Rallied
off that level just over a week back, a quick test, then the move higher
last week.

SOX: Came off the channel lower trendline Monday and posted a great move
into the Friday open. That move SOX through the 50 day MA's, but it could
not hold the move. Still trending in its 5 month channel, coming off the
low the past week as noted.

DJ30: Off the February lows touched just 7 sessions back. February lows,
200 day SMA, 61% Fibonacci retracement -- very good support. Bounced up to
the 50 day EMA Friday, faded modestly, lower trade. Okay, a double bottom
at the February lows, and now something of a downward pointing wedge
forming. Wedges tend to resolve to opposite direction of the point, and in
this case that would be upside.

SP500: Also held the February lows, 200 day SMA, and its 78% Fibonacci
retracement. Bounced through the Friday open, testing the 50 day MA's from
below. Faded that move, but is in very good position to hold and continue
the move higher.


LEADERSHIP

FAANG: NFLX and the four dwarves. NFLX was up all week in a good move.
AAPL up but still lodged in the range. AMZN looks weak below the 50 day MA.
FB managed to bounce on ZBurg playing nice to Congress, but still has to
appear before the EU. GOOG is holding at the 200 day SMA; perhaps some day
it can put in a bounce. For now, money has left all of this group outside
NFLX.

Chips: Still a struggle but working on it. LRCX not bad with a move up on
the week. AVGO gapped upside on a big share buyback program, but still has
to show its pattern can hold up. INTC is back near its high, coming off the
50 day MA. MU is moving up off the 50 day MA. MXWL, AMAT not bad while
MLNX is putting in higher highs. There are leaders.

Drugs/Biotech: AMED, AMAG had good weeks though Friday was off. DVAX was
strong but fell to the 10 day EMA Friday. UNH still trying to set up, ARWR
looks great, INO setting up, MYL not bad. VRX looking good. Good group.

Software: Really improving. RHT a good move last week, FFIV awesome for
us. CRM trying to make a break. GLUU breaking higher in the gaming
software. NOW setting up, COUP looks nice.

Oil: DO working quite well. HAL continues higher. APC as well. A group
of leaders that held up working well. Others are attempting to catch up.
Like NBR.



MARKET STATS

DJ30
Stats: -122.91 points (-0.50%) to close at 24360.14

Nasdaq
Stats: -33.60 points (-0.47%) to close at 7106.65
Volume: 1.76B (-12.87%)

Up Volume: 491.17M (-928.83M)
Down Volume: 1.25B (+675.7M)

A/D and Hi/Lo: Decliners led 1.64 to 1
Previous Session: Advancers led 1.85 to 1

New Highs: 52 (-19)
New Lows: 30 (+8)

S&P
Stats: -7.69 points (-0.29%) to close at 2656.30
NYSE Volume: 717.253M (-3.71%)

A/D and Hi/Lo: Decliners led 1.3 to 1
Previous Session: Advancers led 1.19 to 1

New Highs: 43 (-10)
New Lows: 50 (+8)


SENTIMENT INDICATORS

VIX: 17.41; -1.08
VXN: 22.06; -0.84
VXO: 17.89; -1.40

Put/Call Ratio (CBOE): 0.98; -0.01


Bulls and Bears:

Bulls are falling rapidly after the peak at 66.7. that was a significant
high and bulls have dropped hard into the low 40's. As you would
anticipate, the market sold off but as the bulls sell off the market is
ready for a pre-earnings rally off the lows.


Bulls: 42.2 versus 47.6 versus

Bears: 18.6 versus 18.1

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: 42.2 versus 47.6
49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9
versus 54.4 versus 66.00 versus 64.7 versus 66.7 versus 64.4 versus 61.9
versus 64.1 versus 64.2 versus 62.3 versus 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

Bears: 18.6 versus 18.1
17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4
versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2
versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 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


OTHER MARKETS

Bonds: 2.825% versus 2.825%

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.825%
versus 2.781% versus 2.801% versus 2.805% versus 2.775% versus 2.812% versus
2.806% versus 2.781% versus 2.739% versus 2.714% versus 2.781% versus 2.775%
versus 2.854% versus 2.813% versus 2.814% versus 2.881% versus 2.90% versus
2.852% versus 2.826% versus 2.819% versus 2.844% versus 2.866% versus 2.896%
versus 2.872% versus 2.879% versus 2.863% versus 2.879% versus 2.868% versus
2.799% versus 2.875% versus 2.893% versus 2.864% versus 2.866% versus 2.934%
versus 2.952% versus 2.893% versus 2.873% versus 2.904% versus 2.913% versus
2.833% versus 2.857% versus 2.8577% versus 2.844% versus 2.813% versus
2.805% versus 2.707% versus 2.841% versus 2.792%


EUR/USD: 1.23313 versus 1.23299. Holding steady in its lateral move,
testing the 50 day EMA, still positive pattern overall.

Historical: 1.23299 versus 1.23720 versus 1.2359 versus 1.2311 versus
1.22812 versus 1.2247 versus 1.2285 versus 1.22698 versus 1.23073 versus
1.23234 versus 1.2406 versus 1.24494 versus 1.2351 versus 1.23301 versus
1.23467 versus 1.22478 versus 1.2342 versus 1.2287 versus 1.2304 versus
1.23782 versus 1.2392 versus 1.23412 versus 1.2305 versus 1.2305 versus
1.24017 versus 1.2411 versus 1.2344 versus 1.23187 versus 1.22822 versus
1.21894 versus 1.21893 versus 1.23257 versus 1.2296 versus 1.2324 versus
1.22820 versus 1.23431 versus 1.2411 versus 1.25083 versus 1.2450 versus
1.23528 versus 1.22887 versus 1.22524 versus 1.2273 versus 1.2377 versus
1.24573 versus 1.2502 versus 1.2404 versus 1.2402 versus 1.23832 versus
1.24308 versus 1.24159 versus 1.24340 versus 1.23083 versus 1.22567


USD/JPY: 107.362 versus 107.267. Trying to break higher out of a tight
weeklong lateral move.

Historical: 107.267 versus 106.882 versus 106.873 versus 107.09 versus
107.16 versus 106.939 versus 107.11 versus 106.816 versus 106.797 versus
105.901 versus 106.286 versus 106.81 versus 105.397 versus 105.473 versus
104.789 versus 104.829 versus 105.892 versus 106.478 versus 105.945 versus
105.946 versus 106.344 versus 105.846 versus 106.42 versus 106.335 versus
106.77 versus 106.41 versus 106.105 versus 105.752 versus 106.359 versus
105.734 versus 106.03 versus 106.695 versus 107.381 versus 106.96 versus
106.886 versus 106.85 versus 107.581 versus 107.435 versus 106.294 versus
106.153 versus 106.782 versus 107.77 versus 108.669 versus 108.669


Oil: 67.39, +0.32. Nice break higher off the 50 day MA to a higher high,
moving past the last January peak.


Gold: 1347.90, +6.00. Broke higher Wednesday but then fell, only to start
to rebound Friday. A 2.5 month base looks close to breaking out.


MONDAY

The big news Friday was the Syria 'coalition' strikes. Russia claims it
shot down 70-something of around 100 missiles and little damage done. The
Pentagon says it hit all targets. Both could be true the way they phrase
things.

The worry is that causes some further brouhaha, but it helped when Trump's
defense minister said the strikes were a 'one time thing.' Later Trump
stated it was 'mission accomplished.' Now I know that phrase has dubious
meaning what with the Bush II forays into nation building, but in this
situation I am pretty sure it can be taken to mean as a message to Russia
that we are not going to launch further strikes based upon the chemical
poisoning claims.

With the selloff ahead of earnings, the start of the move higher, the lower
volume on the downside sessions, and the ability to thus far shake off
geopolitics, we are still looking for the move upside to continue.

That means a move through the 50 day MA's for the indices as they follow
RUTX and its move into earnings. NFLX gets things going with its results
Monday after the close. LRCX is Tuesday after the close. Some important
names announcing early to try and get the market moving into the first
couple of weeks of the season. These initial earnings will be important for
the move, and we anticipate holding some of the positions on NFLX, LRCX and
of course see if they can carry the rest of the market, and our other
positions higher.

Therefore, though we have several new positions as of last week, there are
plenty of very good-looking stocks still in very good position to make moves
higher.

Have a great weekend!

End part 1 of 3
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Saturday, April 07, 2018

The Daily, Part 1 of 3, 4-7-18

* * * *
4/07/2018 Investment House Daily
* * * *

Investment House Daily Subscribers:

MARKET ALERTS:

Targets hit: None issued
Entry alerts: None issued
Trailing stops: None issued
Stop alerts: EPZM

The market alert service is a premium level service where we issue intraday
alerts relating to the general market conditions, when stocks hit action
points (buy, stop, target, etc.), and when we see other information
impacting the market or our stocks. To subscribe to the alert service you
can sign up at the following link:
http://www.investmenthouse.com/alertdaily.html

********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy,
Technical Summary, and the Next Session. Choose the segments you are
interested in without having to search a longer video. Click on the link to
the portion you wish to view.

TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/mo/mo.mp4

TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/ts/ts.mp4

TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************

The REPORT SCHEDULE is as follows:

Market Summary Video, Plays and Play Videos, and Play Table with play
annotations will issue Wednesday, Weekend.

Monday a Market Summary video, new plays, play table annotations.

Tuesday and Thursday reports will contain the market summary, chart links to
view the index charts, and updated play table.

Access to all current videos will remain assessable each day using the play
links in the reports.

If any market circumstances arise where we see additional plays we want to
prepare for the next session, we will of course issue those plays regardless
of the day of the week.


MARKET SUMMARY

- Another tit in the tit for tat trade blustering and some weak jobs end a
weak 3-day bounce.
- A lack of strong buyers along with a lack of strong sellers leave the
indices in the same place for a second week.
- There are some great leadership stocks, just not enough.
- Earnings are next on tap and expectations are for a great season that will
repair the market. That is the problem, the expectations.
- Stocks are lower heading into earnings season and that provides
opportunity even if an earnings bounce ultimately cannot hold.

The past week did little but establish there are not many buyers in the
market. Not many sellers either, somewhat surprising given all the
negatives you hear from the financial stations each day.

The lack of buyers shows up with the sessions the market did rally. When
the market managed to cobble together gains as it did on the Tuesday to
Thursday, the move showed low volume and narrow breadth. As soon as a
negative story hit, the bids were pulled and stocks slid back, e.g. Friday.
More proposed Trump tariffs scuttled the advance and stocks started lower
and closed lower.

SP500 -58.37, -2.19%
NASDAQ -161.44, -2.28%
DJ30 -572.46, -2.34%
SP400 -1.97%
RUTX -1.92%
SOX -3.06%
NASDAQ 100 -161.63

VOLUME: NYSE +17%, NASDAQ +10%. Ah, once again stronger volume on the
downside than upside, but -- it is also with the indices holding support
again. When a stock or index holds support on volume and coming off the lows
some, that is not terrible action. Okay, a bit of a positive spin there,
but one silver lining is not bad.

ADVANCE/DECLINE: NYSE -3.7:1; NASDAQ -3.6:1. Of course breadth is much
stronger on the downside than up. That is the MO of this market.

When the market sold, however, there was no groundswell of volume indicating
the sellers were pouring in to ravage the market. Monday stocks sold but
volume remained light. Friday they sold again but volume, while higher, was
still below average. The selling was just not that heavy; more as if the
modest bids that led to the low volume rise on the week were pulled and
stocks slid back. The sellers are there, the buyers are there, but both are
in rather small numbers right now.

The result is the indices basically maintained their positions after a week
of volatility. The week should have shown which side would win out as SP500
and DJ30 had tested the February lows while NASDAQ tested is 2016 trendline.
When the bounce came, however, there was no internal strength as noted, and
on the first seriously adverse story, it fell back.

The inability to bounce suggests the upside does not have the chops to
sustain a move. Given the thinner leadership that makes sense, but it does
not mean the move has to fail. The inability to hold a move when bouncing
off a key low is not good action, but the up and down movement over the
February lows the past two weeks actually allows a thin group of leaders to
expand by improving their patterns and thus developing the kind of
leadership and stamina needed to hold a move may eventually emerge.

It is rather clear where the battle lines are drawn. For DJ30 and SP500 it
is the February lows and the 200 day SMA. For NASDAQ it is the 2016
trendline and the 200 day SMA. SOX is working the channel line and the 200
day SMA. SP400, the trendline and the 200 day SMA. Ditto RUTX.

Those are the battle lines, but for now neither side has the army big enough
to overrun the other. A positive for the upside is that after a dramatic
thinning of leaders, they are on the return with some well-known names
coming back to the fore along with some new or perhaps semi-new sectors.
Another positive is that despite all of the negatives impacting the stock
market (tariff threats, slowing economic data (e.g. consumer spending, jobs
report), Fed in a semi-tightening mode) and every opportunity to break
stocks down, the sellers could only hold the indices at support.

Positives for the downside include the failed bounce attempts off key
support, the lack of broad market leadership, and no quick resolution to the
news stories negative to stocks, a main one being the tariff story and its
loose cannon status.

That leaves stocks heading into next week in the same position as this week:
at support, still looking to see if they can bounce. Earnings season gets
underway and after a series of negative stories failed to take stocks lower,
could this finally bring the bids back? The time at support has allowed
some more patterns to develop, and the longer it holds and more patterns set
up, the better the upside potential.

Sure not many feel positive about the market's situation with all the
selling, the headwinds, and the inability to hold a bounce. But if the
sellers cannot take it lower despite all of this, out of the negativity a
good earnings season can cause a very tradable bounce. Certainly stocks are
lower heading into the season, leaving upside room versus being targets
sitting on big moves.

We will see. If upside patterns continue to develop in good stocks, then
they have the opportunity to show us they can make the moves. If earnings
disappoint it could get ugly -- blaming tariff talk could be a line we hear
a lot regarding guidance. That is okay, however. If stocks make the breaks
higher from good patterns on volume, then that is the signal. If they don't
and then break down, we play the break lower at that point because . . . the
pattern will be resolved.


THE MARKET

CHARTS

DJ30: A second week bouncing around the February lows, indeed undercutting
the February low intraday Monday. All the while DJ30 danced at the 61%
Fibonacci retracement of the September to January rally, as well as the 200
day SMA. Two weeks at these levels, perhaps getting a bit too long. Did
try to bounce starting Tuesday and through Thursday, but had no volume or
breadth. Now with the Friday drop DJ30 starts over to try again, but no
doubt it like gives it a shot. Note how it came off the low after tapping
the 61% dead on. Double bottoms at this level have a good history, if all
remains equal, of rallying nicely.

SP500: Very similar to DJ30, also spending a second week near the February
lows, undercutting the closing low Monday through Wednesday on the intraday
lows. It held at the February closing low and the 200 day SMA, and tapped
the 78% Fibonacci retracement on the Monday intraday low before rebounding,
just as it did on that big intraday drop in early February. Thus, basically
the same as DJ30, just at a lower Fibonacci retracement, also a good level
to double bottom and rebound.

NASDAQ: NASDAQ tested down to the early February closing low starting
Monday, and that put in the low for the week though it was tested Tuesday
and Wednesday. On the closes, NASDAQ held very near the trendline from
early 2016. It also held over the still rising 200 day SMA on the lows.
Not a double bottom as explained last week given the higher March high, but
it is in a channel outlined by the highs and lows this year. Perhaps it
will adjust into a new, larger channel than the prior tight one that was of
course aided by the FOMC's spoon feeding the market.

SOX: Very similar to NASDAQ, working in a wider channel but this channel has
held together the past 6 months. Over the rising 200 day SMA, testing the
same as early February. Can put a higher low and continue higher. If it is
going to do it, time to do it.

SP400: Two weeks over the 200 day SMA, holding that level just as in early
February. SP400 looks very sluggish here but it is still trending higher.

RUTX: Sold to the 200 day SMA with the Monday flop, rallied Tuesday to
Thursday, then Friday rolled back over. Okay, RUTX is very similar to
SP400, i.e. sluggish but can put in a higher low at the rising 200 day SMA.
Small caps are economically sensitive and they are struggling, not near
leading the market.


LEADERSHIP

There are stocks improving their looks and some actual breaks higher on the
week, breaks on good volume. One notable aspect is that in many situations
there are a small number of stocks in a sector that are showing good action.
That shows just how undecided the market is when only stocks here and there
are forming up more bullish patterns. The slight increase in leadership
stocks is in part due to that two weeks of holding support and working up
and down, buying time to form up. In order to sustain a move higher, the
market will need more leadership to step up, however, and right now they are
not lining up.

FAANG: Pretty much toothless at this juncture, at least for the upside.
NFLX still has some starch in it, holding at the late January high/50 day
MA, but it has to make the new move. AMZN bounced up to the 50 day MA after
gapping below it late March. Recovered, now looks weak. AAPL is still
slogging through the trading range. FB remains in purgatory. GOOG is
trying to hold the 200 day SMA. Trying. It looks very much as if this
group's leadership mojo is gone.

Chips: Hard to find anything that is really positive. INTC is still
working at the 50 day MA, attempting to shake off a downgrade. MU was
downgraded as well and extended its pullback. KLIC is not bad but far from
'buy me' position. ON fell off a higher high in early March but is now
approaching its lower channel line and could bounce. LRCX is bunching up
over the 200 day SMA and near the 78% Fibonacci retracement. NPTN is
working on a pattern. None of these are in great position right now, and
many chips that were decent are sinking, e.g. XLNX.

Energy: A few are trying to set up. DO, MRO, HAL -- a few.

Tech: NTNX still solid. STX not bad with a 2 week move over the 50 day MA.
AKAM (internet) still good at the 50 day MA. PANW testing a good move.
CREE remains in a nice pattern.

Retail: Off Friday in many cases, but still solid. M testing a 2-day move
as is DDS. TJX tested a 3-day move. BKE, ZUMZ are working well.

Drugs/Healthcare: DVAX nice cup. HIIQ is looking good again.

Construction: FLR is interesting. DHI, PHM in residential construction
have intriguing patterns.

Misc: Z, HLF, TRIP. These still look good but have to show a move that
sticks.


MARKET STATS

DJ30
Stats: -572.46 points (-2.34%) to close at 23932.76

Nasdaq
Stats: -161.44 points (-2.28%) to close at 6915.11
Volume: 2.36B (+10.28%)

Up Volume: 702.08M (-717.92M)
Down Volume: 1.63B (+936.82M)

A/D and Hi/Lo: Decliners led 3.58 to 1
Previous Session: Advancers led 1.69 to 1

New Highs: 40 (-17)
New Lows: 56 (+30)

S&P
Stats: -58.37 points (-2.19%) to close at 2604.47
NYSE Volume: 879.4M (+16.69%)

A/D and Hi/Lo: Decliners led 3.69 to 1
Previous Session: Advancers led 2.72 to 1

New Highs: 31 (-20)
New Lows: 55 (+30)


SENTIMENT INDICATORS

VIX: 21.49; +2.55
VXN: 27.43; +2.40
VXO: 22.93; +2.95

Put/Call Ratio (CBOE): 1.03; +0.18


Bulls and Bears: Bulls dove, bounced, then dove once more. Getting a bit
out of the stratosphere, a good thing to happen, but not that low yet.
Bears are up, but still relatively weak compared to bulls.

Bulls: 49.5 versus 55.5

Bears: 17.5 versus 16.8

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: 49.5 versus 55.5
55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4
versus 66.00 versus 64.7 versus 66.7 versus 64.4 versus 61.9 versus 64.1
versus 64.2 versus 62.3 versus 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

Bears: 17.5 versus 16.8
16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5
versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1
versus 15.2 versus 15.1 versus 15.1 versus 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


OTHER MARKETS

Bonds: 2.775% versus 2.812%. Of course the trade worries and jobs report
bounced bonds again. After a week pulling back to test the 50 day MA after
breaking over it, a bounce upside Friday in an attempt to continue the new
rally off the February low.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.812%
versus 2.806% versus 2.781% versus 2.739% versus 2.714% versus 2.781% versus
2.775% versus 2.854% versus 2.813% versus 2.814% versus 2.881% versus 2.90%
versus 2.852% versus 2.826% versus 2.819% versus 2.844% versus 2.866% versus
2.896% versus 2.872% versus 2.879% versus 2.863% versus 2.879% versus 2.868%
versus 2.799% versus 2.875% versus 2.893% versus 2.864% versus 2.866% versus
2.934% versus 2.952% versus 2.893% versus 2.873% versus 2.904% versus 2.913%
versus 2.833% versus 2.857% versus 2.8577% versus 2.844% versus 2.813%
versus 2.805% versus 2.707% versus 2.841% versus 2.792%


EUR/USD: 1.22812 versus 1.2247. Euro continues in its 3 month lateral
range around the 50 day MA.

Historical: 1.2247 versus 1.2285 versus 1.22698 versus 1.23073 versus
1.23234 versus 1.2406 versus 1.24494 versus 1.2351 versus 1.23301 versus
1.23467 versus 1.22478 versus 1.2342 versus 1.2287 versus 1.2304 versus
1.23782 versus 1.2392 versus 1.23412 versus 1.2305 versus 1.2305 versus
1.24017 versus 1.2411 versus 1.2344 versus 1.23187 versus 1.22822 versus
1.21894 versus 1.21893 versus 1.23257 versus 1.2296 versus 1.2324 versus
1.22820 versus 1.23431 versus 1.2411 versus 1.25083 versus 1.2450 versus
1.23528 versus 1.22887 versus 1.22524 versus 1.2273 versus 1.2377 versus
1.24573 versus 1.2502 versus 1.2404 versus 1.2402 versus 1.23832 versus
1.24308 versus 1.24159 versus 1.24340 versus 1.23083 versus 1.22567


USD/JPY: 106.939 versus 107.11. Dollar bounced starting late March with
the tariff talk, and last week it broke over the 50 day MA's, testing the
move Friday.

Historical: 107.11 versus 106.816 versus 106.797 versus 105.901 versus
106.286 versus 106.81 versus 105.397 versus 105.473 versus 104.789 versus
104.829 versus 105.892 versus 106.478 versus 105.945 versus 105.946 versus
106.344 versus 105.846 versus 106.42 versus 106.335 versus 106.77 versus
106.41 versus 106.105 versus 105.752 versus 106.359 versus 105.734 versus
106.03 versus 106.695 versus 107.381 versus 106.96 versus 106.886 versus
106.85 versus 107.581 versus 107.435 versus 106.294 versus 106.153 versus
106.782 versus 107.77 versus 108.669 versus 108.669


Oil: 62.06, -1.48. After bumping the January high two weeks back, oil has
faded and now is fighting to hold the 50 day MA.


Gold: 1336.10, +7.60. Gold tested again on the week, now a 2 week test to
the 50 day MA, attempting to put in a higher low and take on resistance at
1360-65.


MONDAY

Jobs are out of the way and were less than impressive. As I noted last
week, two weeks back, a month back, the US economy has hit a slow spot. It
is likely just a slow spot, but you have to keep watch on the small and
midcaps as they are lagging the rest of the market, and if the tax cuts are
going to kick in and help the economy you would anticipate they would bottom
and start to move back up.

Nearer term there are a couple of competing forces.

Earnings are here and I have heard many, many commentators talk about how
earnings are going to right the market's ship because there is expected 16%
to 19% growth. Okay, great, but those are the expectations. Earnings tend
to work best when expectations are not too grand then companies blow by them
as did FAANG in October 2017. Expectations, the same as gravity as Mountain
Rescue climber Hal noted in the movie 'Cliffhanger,' can be a b**ch. It
sets the bar high and it is a lot easier to disappoint.

On the other hand, stocks deflated valued ahead of earnings and that gives a
nice on ramp to higher prices if earnings are solid and the general
conditions are upbeat. Ah, if general conditions are upbeat. If this
market volatility after a long run upside is forecasting economic issues
then earnings, though they might provide a very tradable rebound from the
recent dip, would not rescue the market. The market looks ahead and
earnings are the past.

The second competing force is leadership. The market can bounce on earnings
given the pullback heading into the season. If the move is going to sustain
then it must have leadership. There is still not enough leadership. The
two weeks bouncing up and down at support has improved some patterns, but
frankly we don't see enough good patterns in sectors that provide leadership
for true moves higher. You need growth to help lead, whether that is growth
in tech, small caps/midcaps, or even the large caps selling to the rest of
the world (e.g. CAT). There are definitely growth stocks in leadership
positions with good patterns. There are just not a ton of them and we are
not seeing a lot developing in the wings. That is a major debilitating
factor for any move higher on earnings.

Thus, this setup ahead of earnings is one that can easily lead to an
earnings bounce. After that, however, unless more and more stocks set up a
bit better and make good upside breaks, any rebound is likely limited in its
height and duration. Certain things have to happen for a market to sustain
a break higher, and leadership is a critical element. Perhaps there are
some groups out there we have discounted too much that will suddenly pull it
all together and lead. That would be awesome and of course we would spot
them quickly. We will watch for those, but if they are forming up right now
they are doing so with very good camouflage.

Therefore, we are going to look at upside for that earnings move higher,
using in many cases stocks we already have on the report. Why? Because they
are the better patterns and this market is short on upside patterns. Energy
needs to show up, software would help, security software is trying to set up
and some are moving, homebuilders are interesting -- but work needs to be
done. Upside plays into earnings season? Yes. Downside plays on deck if
the 2 weeks of bouncing at support fails? Yes as well.

Have a great weekend!

End part 1
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