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5/5/2018 Investment House Daily
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Investment House Daily Subscribers:
Targets hit: None issued
Entry alerts: BABA; CDXS
Trailing stops: None issued
Stop alerts: None issued
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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.
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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.
- Stock indices build on the Thursday reversal, posting very nice percentage
gains on virtually no volume. Another rally with no teeth?
- Some nice leaders post good moves. Others we are still waiting on.
- Jobs report stronger but misses, and some say that is good because of the
Fed. Really? Still on that?
- Buffett bought AAPL in Q1, lets it 'slip' on a CNBC interview, lemmings
rush to follow the 'teacher.' Yes, he taught them a lesson, but they are
not getting it.
- Indices did what they needed to do at support. Now can some volume
actually show up to make these patterns work instead of fizzle?
Those Thursday doji at key support levels for the index bases led to a nice
price advance Friday as the indices try to make good on holding support and
holding their bases. Solid percentage gains for the indices as they
launched higher off support, though volume came in very, very light for the
session. Oh great, here we go again: upside accompanied by no volume.
SP500 33.69, 1.28%
NASDAQ 121.47, 1.71%
DJ30 332.36, 1.39%
NASDAQ 100 1.89%
VOLUME: NYSE -10%; NASDAQ -13%. Ah yes, once again volume declines,
precipitously and below average as stocks rallied. Again volume is missing
on the upside.
ADVANCE/DECLINE: NYSE +3:1, NASDAQ +2.7:1. Very solid breadth as the
entire market rallied. Buying across the board, but not many buyers.
Remember, the indices are in a basing process with SP500, DJ30, SP400 in
triangles, NASDAQ in a 3+ month trading range but still holding a 2+ year
trendline, while SOX and RUTX are in ranges as well. All tested lows or
trendlines in their bases and Friday all started to bounce. You WANT to see
better volume on the upside to give even the bounces some credibility as
well as show continuing accumulation, something that has to occur in a base
or else when it comes time to breakout all it does is jump up, fizzle, and
Thus, the lack of volume keeps this in a bounce classification, and frankly
you have to see what happens Monday to see if there is something there other
than a Friday short squeeze. Yes, there are plenty of indications it is not
just a short squeeze, e.g. holding support, good patterns, decent earnings
(okay, good earnings), and it could make good on the volume later. Why?
Because if this is a real move there is not just one entry. If they are
still working we can move in with more positions Monday, and again when they
test the initial move off the support at the bottom of the patterns and
A bit of a test that holds is a good entry point for more positions as many
stocks gapped higher Friday. If the move was on solid volume in a stock in
a good pattern, you can still enter if the upside continues. Weaker volume,
not so interested.
What had stocks so ginned up they rallied on no volume? Buffett let 'slip'
Berkshire had acquired 75M AAPL shares in Q1. Of course everyone rushed in;
if Warren bought they should buy. So, Buffett once again, after he took his
position, let out that he had done so, knowing all of the lemmings would
rush to follow and drive up the value of his shares. Worked like a charm.
They will never learn that Buffett, the 'investor, teacher, icon' as CNBC's
special calls him, is simply playing by his book just as Trump plays by his
book. The willing dupes were there yet again, and the entire market was up
in part because of Buffett's 'belief in America.'
Seeing through the Mueller investigation? It probably did not hurt that the
judge overseeing the Mueller case against Mr. Manafort is considering
dismissing the charges altogether, questioning Mueller's areas of
investigation. "I don't see how this indictment has anything to do with
anything the special prosecutor is authorized to investigate," noted the
judge. Could it be the courts are going to stand up to the unending
nonsense on this matter when so many other clearly prosecutable actions have
taken place before any of the areas under investigation were claimed to have
occurred? The market perhaps took some heart in the possibility of the
courts curtailing this. Perhaps.
Jobs Report not so good and thus was quite good.
With the Fed on hiking trail there is still the idea that economic weakness
is goodness. Futures bounced on thoughts, uttered by the CNBC morning
blabbermouth (man I miss Mark Haynes), that Fed Chair Powell should consider
perhaps 3 rate hikes in 2018 were unnecessary. There you have it: no need
for as many rate hikes.
Thus, a jobs report that was not that strong was a reason to at least not
sell stocks. When the bell rang, after falling to the open stocks jumped
upside. Jobs miss, Fed should reduce hikes, Buffett buying AAPL (back in
Q1 -- think he is buying now that he let everyone else know?). On Friday
that was reason to buy.
The April jobs report, however, was a miss though the jobs mix continues
MUCH improved over the Obama years that were dominated by government,
restaurant and bar hiring, and retail hiring.
Jobs: 164K vs 190K exp vs 132K prior (from 103K)
Unemployment 3.9 vs 4.0 ex vs 4.1 March. Lowest since 12/2000
Wages: 0.15% vs 0.2% expected. 2.6% year/year. Not that great.
U6: 7.8% (lowest since 12/2001)
Participation: 62.8%. Not rising this month, unable to move past that 63%
Labor force: -236K and thus the 3.9% unemployment rate
Workweek: still at 34.5
Where the Jobs are:
Wholesale trade: -10K
Again, a decent job mix once more, but not an overall strong report. But
again, perhaps the Fed will go easy on the hikes? Hmm. Seemed to work for
Friday as one of the catalysts upside off the support.
New break higher off of support in the patterns or at the trendlines as the
case may be. No volume, good breadth, good initial move. Now we see if
they can hold the moves.
SOX: Biggest move so starting here. Also, they were the most oversold
after the 8 week selloff from the March high. Two weeks at the 200 day SMA
then a big bounce Friday. Tried this a week before and didn't even last a
session as the gap higher was sold. Not bad in terms of the bounce. The
overall pattern is still lacking as SOX formed a head and shoulders and
broke lower. As is often the case in these patterns, it has not broken
down. Lots of rebounding chips the past 1 to 3 sessions, but a lot are just
rebounds that turned higher from the teeth of selling. Thus, we see if
chips can show the right stuff.
NASDAQ: Bouncing off the trendline from early 2016 after the Thursday doji
at the level on good volume. Made it to the 50 day SMA, closing just over
that level. Volume backed off to below average. Perhaps the reversal was
enough. In any event, held the trendline as it did two weeks back, bouncing
again. This time NASDAQ needs to put some distance on the trendline, unlike
the last attempt in the first two weeks of April.
SP500: Triangle was getting to the point so to speak, where it would show
its break higher or break lower. Nice doji reversal Thursday, nice solid
upside break and rally Friday to the 50 day EMA. That puts it about halfway
to the upper trendline in the 3+ month triangle. Volume needs to come in
because on both Thursday and Friday it was nowhere as the move started. On
the breakout at 2700ish (closed at 2663) that is when it really needs to
show the volume.
DJ30: Same action as SP500, i.e. doji Thursday at the 200 day SMA followed
by a break higher Friday. DJ30 is still below the 50 day MA's at 24,500 and
the upper trendline in its triangle at 24,450. No volume here either, but
again, on the breakout that is where you want to see it.
RUTX: Surged back up through the 50 day MA's, helping that NYSE 3:1
breadth. Only index that did not come close to the 200 day SMA on the April
selling. Small caps showing relative strength is not a bad indication for
the economy and the market. Even as the economy moves through a slow patch.
If the small caps rally, that says well for the slow patch ending and the
economy to pick back up.
SP400: After the Thursday doji tapping right at the 200 day SMA on the low,
the midcaps rallied through the 50 day MA's as well. Already nearing the
upper trendline of the 3+ month triangle, and as with the other indices we
are watching to see the volume to see if it comes back in on the break
Retail: Some nice patterns. After pulling back some, HD, COST are starting
to rebound. TSCO tested and looks good. RH jumped to a higher recovery
high on good volume. BBY has a very interesting pattern. TJX is testing the
50 day MA's. Definitely some good-looking possibilities.
Software: Moving up again. FFIV was off a bit Friday but had a great week.
GLUU exploded higher for a third session. RHT broke to a higher high Friday
after testing the 10 day EMA on the week. CRM showed good volume finally as
it works up the 10 day EMA. MSFT trying to come up off the 50 day MA but
not much volume. DATA tested after the big upside breakaway gap Thursday on
its earnings. Still a good group.
Oil: Remains looking solid in the patterns. MRO did make the break
Thursday, adding to it Friday. HAL in a nice doji test of the 10 day EMA in
a handle. SLB looks great in its handle. DO looks as if it might come back
around to a buy. PTEN had a decent week to the upside. SPN in a nice
China: BABA shot higher on tremendous volume on very good earnings. BIDU is
in a weeklong lateral gap test. HTHT jumped up off a 50 day MA test. Not
bad. WUBA looks good off its 10 day EMA test.
Semiconductors: Some started rallying earlier this week and continued
through Friday, e.g. SLAB, QRVO. Others are setting up interesting
patterns, e.g. AAOI, AMD. LRCX and MU are interesting as well. Others are
still struggling, e.g. MXWL, XLNX. Important group, good to see some
Drugs/Healthcare: SRPT exploded higher Friday out of a 2 month triangle.
IMMU in a nice test. VRX has tested and looks good to move higher. EXAS
looks good. Mixed but good sector.
Misc: FLIR surging off a test post breakout. PCTY gapping to a new high on
Stats: +332.36 points (+1.39%) to close at 24262.51
Stats: +121.47 points (+1.71%) to close at 7209.62
Volume: 2.02B (-12.87%)
Up Volume: 1.6B (+595.867M)
Down Volume: 393.13M (-866.107M)
A/D and Hi/Lo: Advancers led 2.71 to 1
Previous Session: Decliners led 1.79 to 1
New Highs: 93 (+32)
New Lows: 50 (-32)
Stats: +33.69 points (+1.28%) to close at 2663.42
NYSE Volume: 765.7M (-10.31%)
A/D and Hi/Lo: Advancers led 3 to 1
Previous Session: Decliners led 1.4 to 1
New Highs: 76 (+21)
New Lows: 65 (-56)
VIX: 14.77; -1.13
VXN: 18.41; -1.24
VXO: 15.26; -1.24
Put/Call Ratio (CBOE): 0.96; -0.06
Bulls and Bears:
Bulls bounced back 4.5 points after a precipitous decline. They are falling
hard, bouncing with quick sharp bounces, then falling again. Very similar to
the stock market action. Bears were lower but they are holding the bounce
higher into the 19's.
Bulls: 48.0 versus 43.6
Bears: 19.6 versus 19.8
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: 48.0 versus 43.6
43.6 versus 42.2 versus 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: 19.6 versus 19.8
19.8 versus 18.6 versus 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
Bonds: 2.952% versus 2.948%. Bonds moved up to test the 50 day MA on the
week and closed just below that level Friday. Double bottom? About to find
out in how they react at the 50 day MA's.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.948%
versus 2.968% versus 2.954% versus 2.959% versus 2.975% versus 3.0245%
versus 3.00% versus 2.962% versus 2.96% versus 2.914% versus 2.867% versus
2.83% versus 2.829 versus 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%
EUR/USD: 1.19619 versus 1.1983. Euro dropped hard on the week through the
200 day SMA, trying to set up a bounce to test that break lower.
Historical: 1.1983 versus 1.1978 versus 1.19896 versus 1.20741 versus
1.21291 versus 1.21788 versus 1.2163 versus 1.22232 versus 1.22094 versus
1.22876 versus 1.23464 versus 1.23748 versus 1.23712 versus 1.238532 versus
1.23313 versus 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
USD/JPY: 109.08 versus 109.175. Dollar rallied on the week, tested
Thursday and Friday to the 20 day EMA, showing a doji. Looks as if it is
testing to size up the 200 day SMA just overhead at 110.38.
Historical: 109.175 versus 109.628 versus 109.91 versus 109.354 versus
109.051 versus 109.28 versus 109.373 versus 108.894 versus 108.728 versus
107.645 versus 107.404 versus 107.409 versus 107.027 versus 107.010 versus
107.362 versus 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
Oil: 69.72, +1.29. Oil broke to a higher rally high Friday.
Gold: 1314.70, +2.00. Fell to the 200 day SMA on the week, managed an ever
so slight bounce to end the week.
End part 1
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