The Daily, Part 1 of 3, 2-24-18

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2/24/2018 Investment House Daily
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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

- Stock indices resume the upside rally after the pause.
- Solid breadth, pathetic volume as NASDAQ leads higher.
- Fed speakers try to tone down the hawkish rhetoric, but they will have to
acknowledge their Phillips Curve -- or make excuses not to a la Yellen.
- Money leaves the market just as the market consolidates and breaks higher.
- Still some decent patterns in some leaders, others forming up and moving
up.
- Okay, so a further rebound, but still have to watch for it to fade and be
ready either way.

If only it was not Friday. Stock futures were higher, a dip at the open was
bought, and the stock indices rallied the entire session, sprinting upside
in the afternoon. New recovery closing highs for all indices as stocks
broke higher from the four-day lateral consolidation. NASDAQ, NASDAQ 100,
and SOX were the clear leaders based upon their patterns and the move made.
The NYSE indices all put in new rally closing highs as noted, but not as
definitive given they are still inside the price ranges of the past week
given the back and forth intraday volatility.

Nonetheless, for a relief rally, this was a really good new move upside.
Volume was pitiful, but it is a relief rally. Breadth was excellent as
funds bought all segments. It looks as if the indices are going to extend
the relief move higher and try to make it a new uptrend move. That remains
to be seen. We gladly let positions continue higher and bought a couple
more (AMGN, IMMU). It was Friday, however, and Fridays can be quite
deceitful in relief moves. Regardless, the indices posted nice gains and
even if they give back some early week, the move was solid enough, for a
relief rally at least.

SP500 43.34, 1.60%
NASDAQ 127.30, 1.77%
DJ30 347.51, 1.39%
SP400 1.22%
RUTX 1.25%
SOX 2.19%
NASDAQ 100 1.99%

VOLUME: NYSE -13%, NASDAQ -2%. Well below average trade for NASDAQ and much
lower below average for NYSE. The consolidation was low volume, a good
thing, but you would like to see just a bit more volume upside. Oh well;
relief rally. And Friday.

ADVANCE/DECLINE: NYSE 4.4:1, NASDAQ 2.8:1. Quite solid breadth, always an
upside positive.


The Fed talks too much, but what is new?

Five Fed members spoke Friday, but their comments did not bother the
markets. On sum they said the economy could be past full employment, but
wage increases were just 'moderate.' Of course the Fed fixates on this
given its Phillips Curve worship, but history shows no correlation between
wages and inflation, something Treasury Secretary Mnuchin had the courage to
say this week. The Fed also sees market prices as high as economic growth
continues to improve. Sounds pretty rosy, even with the Fed's Phillips
Curve fixation.


Once again the market works against the latecomers.

It is important to follow the money, but it is also important to juxtapose
that with sentiment and how the latter works. BAC and Lipper reported stock
fund outflows of $-2.4B and $-4.6B for the week as the late comers pulled
their money from the market. They came in late, got rattled by the
volatility that hit almost immediately, then tucked tail and ran. AS SURE
AS THE SUN RISES, the market used the money withdrawals to consolidate the
rally (we talked about it all week), and once the figures were reported,
once they were gone, the market jumped with all indices logging gains well
over 1%. As the Frenchman in 'The Matrix' trilogy would say, cause and
effect, though he was discussing bodily functions versus money movement in
stock funds.


Relief rally back on, at least through Friday.

Good breaks upside as the relief move resumed after a 4-day pause for most
of the indices. Good consolidation, no breakdowns set the move up. Looking
out over the market, there were not a lot of strong new moves in individual
stocks. FAANG was up with AAPL and FB solid, but the group was not blowout.
Some big name techs really helped NASDAQ, e.g. CSCO, MSFT, INTC. Financials
were up but not crushing it. Drugs/biotech were again solid. Individual
strong moves here and there, but mostly it was a general move higher as the
breadth indicates.

Light volume but good breadth and solid percentage gains after a lateral
consolidation. Certainly good enough for a continued relief move. The move
should hold and continue next week to test higher recovery highs. Then
again, it was Friday and strange moves can occur on Fridays with low volume
in a bounce. Okay, we won't read too much into that and enjoy the ride with
our current positions, the newer ones added, and still look for some more
upside because - - the move may turn into a new upside leg to new highs
(stranger things have happened) or it advances some more and toward the
prior highs before it falters. Of course a continued relief move sucks new
money back into it, and then rolls over making chumps, again, out of all the
people just getting in. That is why you also keep the downside plays
updated and ready to go.


THE MARKET

CHARTS

NASDAQ: After gapping over the 50 day MA's two Thursdays back and a
four-session volatile but lateral consolidation, NASDAQ gapped higher and
rallied to a far and away new rally closing high. Volume was pathetic as it
remained as low as it was in the consolidation, but it is a relief rally, at
least for now, and volume is not that big of a deal. NASDAQ is now 20
points through the 78% Fibonacci retracement and is 10 points from entering
the second gap lower in the selling. Potential resistance there (7347) as
well as the gap fill at 7386.

SOX: Gapped off the 2-day test of the Tuesday strong upside move. New
closing high for the rebound, just edging past the November peak
representing a potential top to a right should in a head and shoulders
pattern. SOX is trying to move on through and break up that possibility.
The 78% Fibonacci retracement is still just overhead (1351.87).

SP500: New closing high for the recovery rally though still below the
Wednesday and prior Friday intraday highs. Pathetic volume. I mean
pathetic. Again, however, a relief move so giddy up, right? Just past the
61% Fibonacci retracement (2743.51) and into the third gap zone from the
selling gaps (the first one on the way back up). Still tons of overhead
supply, but it is moving up in a continuation of the relief bounce so it is
what it is and we take advantage of it.

DJ30: Moved up through the 50 day SMA on the close and put in a new rally
closing high, but just by a token amount. Terrible volume as well, but . .
. DJ30 is still below the 61% Fibonacci retracement touched the prior
Friday, and that means it is still not even in the gap zone (there were only
two for DJ30). Unlike NASDAQ and even SP500, not a great move.

RUTX: RUTX did not clear the intraday highs of the lateral consolidation,
just made it to the 61% Fibonacci retracement of the selling, and did not
take out the December consolidation. That said, Friday was quite a move
upside in itself, and the gains in small caps really fueled that strong NYSE
breadth.

SP400: Similar to DJ30, the midcaps were somewhat underwhelming. Bounced,
put in a very nominal new closing high, did not come near taking out the
intraday highs on the week, barely entered the third gap zone from the
selling, and is at the bottom of the December consolidation. Uninspired?
Perhaps. Just following the other indices? Yes.


LEADERSHIP

FAANG: FB actually showed some strength, moving up through the 50 day MA's.
AAPL was solid as it cleared the 4-day consolidation with a gap on rising
trade; still didn't help the Dow that much. AMZN was up but boring. NFLX
similar, unable to put in a new high over the January high. GOOG was
better, continuing the move up through the 50 day MA's though volume was
quite low.

Metals: Did not participate Friday, but put in an excellent consolidation of
their last moves on the week: STLD, SCHN, RS. SID is so-so; may need to
focus on RS or STLD for a new entry in this area.

Big Techs: Solid moves in not bad patterns, e.g. CSCO, MSFT, INTC, AAPL.

Drugs/Biotech: AMGN posted a nice move off a rebound consolidation. GILD
is still in a nice pattern. Smaller issues not bad, e.g. IMMU, ARRY, VCEL,
IMGN, BLUE.

Financial: GS, MS solid enough but still just so-so patterns. JPM posted a
higher high though on no volume. Best of the group. BAC, C posted very
modest moves.

Chips: Breaking higher in many areas of the group. MU looks good, SWKS not
bad. LRCX is setting up for more upside. QRVO still looks good. INTC
sports a good break higher, and MLNX gapped upside with a breakaway move.
There is leadership potential, but it is not across the board.

Retail: Still showing decent patterns in many instances, e.g. DDS, LOW, TGT.
Some apparel such as LULU looks interesting.


MARKET STATS

DJ30
Stats: +347.51 points (+1.39%) to close at 25309.99

Nasdaq
Stats: +127.31 points (+1.77%) to close at 7337.39
Volume: 1.88B (-2.08%)

Up Volume: 1.5B (+676.15M)
Down Volume: 351.4M (-718.6M)

A/D and Hi/Lo: Advancers led 2.83 to 1
Previous Session: Decliners led 1.41 to 1

New Highs: 69 (+5)
New Lows: 61 (+7)

S&P
Stats: +43.34 points (+1.60%) to close at 2747.30
NYSE Volume: 724.7M (-12.94%)

A/D and Hi/Lo: Advancers led 4.43 to 1
Previous Session: Advancers led 1.1 to 1

New Highs: 45 (+13)
New Lows: 31 (-48)


SENTIMENT INDICATORS

VIX: 16.49; -2.23
VXN: 18.16; -2.75
VXO: 14.92; -2.85

Put/Call Ratio (CBOE): 1.01; -0.11. Shorts forced to cover as the market
broke higher again.


Bulls and Bears: A veritable plummet in bulls ongoing, breaking below 50
for the first time since the second half of 2016. Bears remain in
hibernation.

Bulls: 48.5 versus 51.9

Bears: 14.6 versus 14.4

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: 48.5 versus 51.9
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: 14.6 versus 14.4
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: 2.866% versus 2.934%. Bonds bounced Thursday and Friday from the
Wednesday dive lower post FOMC minutes. The move higher took them back to
the 10 day EMA, however, and that only tests the downtrend and does not
change it.

Historical: the last sub-2% rate was in November 2016 (1.867%). 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% versus 2.713% versus 2.72%
versus 2.72% versus 2.66% versus 2.66% versus 2.639% versus 2.617% versus
2.656% versus 2.661% versus 2.618% versus 2.587% versus 2.535% versus 2.55%
versus 2.559% versus 2.551% versus 2.482% versus 2.456% versus 2.463% versus
2.464% versus 2.405% versus 2.434% versus 2.412% versus 2.474% versus 2.485%
versus 2.484% versus 2.501% versus 2.459% versus 2.398% versus 2.351%


EUR/USD: 1.22960 versus 1.2324. Fell to the 50 day EMA midweek and held
there, still in the uptrend and in opposition to bounce back up against the
dollar.

Historical: 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 versus 1.22169 versus 1.2241 versus 1.2198 versus
1.22698 versus 1.22060 versus 1.20608 versus 1.19507 versus 1.19322 versus
1.19662 versus 1.20313 versus 1.20756 versus 1.20177 versus 1.20573 versus
1.2001 versus 1.1936 versus 1.1936 versus 1.18998 versus 1.18593 versus
1.18628 versus 1.18658 versus 1.18792 versus 1.18408 versus 1.17703 versus
1.1752 versus 1.17798 versus 1.18392 versus 1.17430


USD/JPY: 106.886 versus 106.85. After rallying to the 20 day EMA to
through Tuesday, the dollar faded into Friday. Tested the 20 day EMA on the
bounce, faded, but we will see if the dollar puts in a higher low and tries
to rally and take out the 20 day.

Historical: 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 versus
108.797 versus 108.88 versus 109.33 versus 109.58 versus 108.651 versus
110.001 versus 109.46 versus 109.50 versus 108.77 versus 108.84 versus
108.601 versus 109.411 versus 109.033 versus 110.159 versus 110.159 versus
110.70


Oil: 63.55, +0.78. Oil moved higher Thursday and Friday after a pause at
the 50 day EMA on its recovery move. Not bad action after testing the
November/December consolidation.


Gold: 1330.30, -2.40. Fell to the 50 day MA on the week, unable to rally
off that level, but overall still in a good upside move. Inflation worries
fell a bit on a perceived more hawkish Fed, but the trend is still higher.


MONDAY

A new break higher, but it was Friday and sometimes a light volume Friday
move is countered or at least tested a bit on Monday. A bit of testing is
not bad. Friday is not our favorite time to buy. The old adage, buy on
Monday, sell on Friday has truth to it. Thus you can see a late week move
tested early week, providing better entry points.

Given Friday was upside by 1.22% and more on the indices, a bit of a dip to
test is welcome in playing the rest of current rally, whether it is just up
to the prior highs or turns into something more. Thus a bit of a pullback
on Monday even into Tuesday is opportunity, as long as the pullback does not
slam back on screaming volume.

Now, while volume has not been a key ingredient on a relief move, if the
move is going to take on 'new bull rally' status it will need to ultimately
show strong volume on breakout moves. For now low volume can be overlooked.
In new high territory it must show real volume. Why? Because this is not
Yellen's Fed anymore and the general idea among smart people is that the Fed
under Powell is not going to be such an easy money, always back the
financial markets kind of Fed.

But, before that point, the market can deliver more upside that we can take
advantage of. A bit of a test early week helps set the table for playing
the move back up when it resumes. If there is no test, well okay then, we
can pick up well-positions stocks, but I personally don't want to chase say
an SP500 gap upside.

Have a great weekend!



SUPPORT AND RESISTANCE

NASDAQ: Closed at 7337.39

Resistance:
7400 is some price resistance from both sides of the mid-January all-time
high
7506 is the January 2018 all-time high


Support:
7300 from a modest mid-January consolidation
7240, the upper gap point from early February 2018
The 50 day EMA at 7114
6918 - 6980 are price points from November/December 2017
6914 is the late November all-time high
6796 is the early November 2017
6641 is the October high
6630 is the February 2018 selloff intraday low
The 200 day SMA at 6607
6477 is the September intraday high
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
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 2747.30

Resistance:
2744 is the 61% Fibonacci retracement of the selloff
2751 from early January 2018
2762 is the upper gap point from early February
2808 from the mid-January consolidation. Some support, not that strong.
2850 from a January 2018 gap point
2873 is the January all-time high

Support:
The 50 day EMA at 2711
2694 is the mid-December peak
2597 is the November 2017 high
2584 is the upper channel line from the March 2009 uptrend channel
The 200 day SMA at 2553
2532 is the February 2018 intraday selloff low
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
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 May 2017 low


Dow: Closed at 25,309.99

Resistance:
The 61% Fibonacci retracement at 25391
The lower gap point from February at 25,521
26,000 from mid-January consolidation
26,439 is a gap point from the January high
January 2018 all-time high 26,617

Support:
The 50 day EMA at 24,993
24,835 is the mid-December consolidation range
23,608 is the early November high
23,602 is the early November 2017 high
23,360 is the intraday low form the February selloff
The 200 day SMA at 22,974
22,420 is the September high
22,179 is the August 2017 all-time high
22,086 is the mid-August lower high
21,681is the July prior all-time high
21,638 is the July 2017 closing high
21,529 is the June 2017 high

End part 1 of 3
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