Sunday, June 24, 2018

The Daily, Part 1 of 3, 6-23-18

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6/23/2018 Investment House Daily
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- SP500, DJ30 post modest oversold bounces as growth sells for a second
- Some new areas showing signs of life
- It the economy ready to roll over or are the new areas showing the
expansion will continue?
- Many in the past have doubted the economy's ability to continue gains and
were wrong.
- Important week for growth and indeed market direction in general.

Friday was a bit more of the same of the Thursday new market look. This
time SP500 and DJ30 actually closed positive while the leading growth stocks
and their primary indices (NASDAQ, RUTX) sold for a second session.

It was not a large cap NYSE surge nor was it a growth stock purge. Sure
volume was huge, but that was due to an annual Russell adjustment. Perhaps
it was the start of some new rotation, but the moves to end the week were
not enough in themselves to show a change in investor tastes. The moves
left several important stocks at near support after two downside sessions,
making this coming week an important one for the growth areas, but more
generally the direction the market takes from here.

SP500 5.12, 0.19%
NASDAQ -20.13, -0.26%
DJ30 119.19, 0.49%
NASDAQ -20.13, -0.26%
SP400 0.11%
RUTX -0.20%
SOX -0.72%
NASDAQ 100 -0.28%

VOLUME: NYSE +180%, NASDAQ +45%. Okay, cannot read much into this given
the yearly Russell indexes 'adjustment.'

ADVANCE/DECLINE: NYSE +2:1, NASDAQ +1.2:1. The breadth shows Friday was
more of a large cap event where the big names that led higher sold back for
a second session while some NYSE large caps moved up and some new areas
rebounded such as energy. Yes, there is some shifting in tastes ongoing.
Again, that makes this coming week important directionally, and more
specifically for particular groups, some up, some down, or perhaps more
money comes in and the market finally moves up together.

I think that may be the key. While many Thursday and Friday talked of the
market rolling over, of course they were myopically focused on just the
stocks that moved higher. I think Thursday perhaps threw a curve: while
growth stocks sold back from highs, other areas did not move higher, indeed
continued sliding. That meant market rolling over.

Friday while growth experienced another tough session, some stocks rallied
such as CLF (industrial minerals), oil and gas, materials -- building
blocks, the 'stuff' things are made of. Many are looking at CAT, DE and
assuming anything on the industrial side is still dead money. As noted,
that is not the case and perhaps some are missing what may be changing or at
least spreading out to more of the market.

This does not look like a move that is rolling over, but a branching out
into other areas, areas that support the notion that the US -- even if the
rest of the world does not join in for now (synchronized global
recovery?) -- is going to continue expanding.

Further expansion? You wouldn't know it listening to many experts,

So many are assuming the US economy has to fade along with the rest of the
world economies. Some big think tanks at major financial entities feel
recession is coming. Gasoline is too high, bubbles everywhere -- the fear
is a fear of growth, of success. Or just a belief the US cannot grow
without everyone else in the world. We have seen growth occur when no one
thought it could continue (1980's) and motor higher when the rest of the
world faded (1990's). No one believes it can happen, that growth can
continue beyond initial surges or that growth can continue even if the rest
of the world and their mostly failed economic models stumble after short
improvements in economic activity.

This is germane in today's context as well. People love to say things are
different this time. Said it in the 1970's, that the US could not ever grow
as it used to. Then we grew better than we ever did, or at least matched
the 1920's. They said at the time that the deficits were just too big and
would crush us. Well, once the plan was complete and we spent the USSR into
economic and thus military oblivion we enjoyed surpluses that, of course, we
squandered on more social programs and increased taxes until we choked off
the 20 year boom.

Today's context is trade, how if we don't let pathetic trade arrangements
remain in place how we will destroy the world economy similar to the
Smoot-Hawley tariffs of the thirties. Not even relevant. We are trying to
get RID of bad trade deals knowing that we can easily compete with foreign
entities on an equal field versus sending our business, jobs, and IP
overseas. Those who benefit from these arrangements spread the dogma about
the need for 'free trade,' knowing full well that does not exist in the
current agreements, yet they stymie any attempts to change those agreements.
The worry is not that the US is seeking to remove these trade arrangements
and thus protect our ability to compete, but that those benefitting from the
arrangements continue giving to their friendly congressmen so both can
remain in Congress. And in power. Any attempt to correct the problem is
panned, blocked, ridiculed as insanely playing with the fires of a trade
war. Hogwash.

Okay, so we are not playing for an imminent crash. We are looking for
winning sectors and stocks. We will see if growth comes back around --
would make sense if we are still in a growth mode -- though it might need
more of a test before it is ready after this impressive run. We look to see
if the 'hard' areas come back around. Friday saw some money moving into
these areas -- though you have to temper that with the annual 'adjustment'
in the Russell indices. Still, hard energy, oil and gas, drugs showed some
buying from decent patterns. Decent patterns show accumulation, some buying
shows money moving their way. We will see if money continues flowing their



NASDAQ: After gapping modestly higher Thursday (but not to a new high) and
reversing to close at the 10 day EMA, Friday NASDAQ gapped higher again but
gave it up to close just below the 10 day EMA. That keeps NASDAQ in the
all-time high range it broke into, but there was some selling of big names,
many of which are at near support. The key for NASDAQ is whether the big
names can hold on and resume their moves.

RUTX: Gapped and rallied to a new high Wednesday and that was peak euphoria
for the moment. Thursday a drop to test the 10 day EMA, Friday a doji at
the 10 day EMA. As noted Thursday, the recent leg higher matched the length
and gains of the first move in May where RUTX broke out. A test of the 10
day is normal, as is a 20 day EMA test, another 15 points.

SP500: The pattern remains a solid one as noted Thursday. A 20 day EMA
test the past 1.5 weeks after moving to a higher recovery high on this leg.
If the other areas such as large drug companies, oil companies start to
pitch in, then SP500 has more upside push even if areas such as financials
still stink. For now.

SP400: The midcaps are at the January high, working laterally in a 2 week
lateral move along the rapidly converging 10 and 20 day EMA. The prior high
did not send it lower, but instead the midcaps are consolidating laterally.
This is a growth index. If the US is to continue expansion the midcaps
should consolidate then break higher.

DJ30: Up Friday, but the Dow has issues the other indices do not, namely
its components and too few to help it out. That said, JNJ may be ready to
bounce as may MMM. Those will help, but the Dow also has financials and
machinery, and they are more than paperweights right now.

SOX: Last but very important. SOX peaked the last run in early June about
25 points below the March all-time high. It has since tested, stepping down
to the 50 day EMA last week. Tried a bounce early week, failed, ending up
at the 50 day EMA to close. Not a dog of a pattern, but it is struggling.
You can argue there is a potential ABCD here, but it is not a really pretty
one. It also has issues with some main components such as INTC really
struggling to hang on. This index is a negative for the upside right now.


FAANG: Some important tests, some others just consolidating. FB holding
its move very well. NFLX is doing the same. AMZN testing the 10 day EMA
with a bit heavier action. GOOG showing a good doji with tail at the 10 day
EMA. AAPL holding the 50 day EMA for the fourth session.

Oil/Energy: Some good breaks higher, some good setups. APC gapped and
rallied past its 5 week consolidation and a 15 month base. Many smaller
issues look quite good, e.g. PES, NE, NGL. Getting some money, but they
have shown this action before. Still, they look good, and retail did the
same thing before it went crazy.

Software: A leadership group under pressure from FFIV to DATA, NOW. VMW,
UIS still solid. They can still recover after a consolidation. NOW may be
interesting already with its doji with tail at the 50 day EMA. ATVI looks
as if it might set up again for us.

China: Still trying to hang on and set up again. YY is not bad at all and
could give us a new entry. ATHM is in one of its usual lateral tests.
HTHT, however, broke near support. BABA, BIDU are hanging on. NTES looks
good to make a break higher from an inverted head and shoulders.

Drugs/Biotech/Health: JNJ is getting a lot of volume in a potential
inverted head and shoulders. IMGN finally caught fire. PGNX looks good in
its pattern. ARRY making a good test. ALXN still moving higher. There is
money coming this way.

Retail: Still solid overall though some are testing. COST still moving up,
RH looks as if it can resume the breakaway gap move. DDS, WSM, ROST, TJX,
ZUMZ all testing a bit.

Some of the brick and mortar we decent post-Supreme Court ruling. ROST,
COST, DDS, ZUMZ. W was sold down to the 20 day EMA near 105 but recovered
almost 10 points to close just lower. Online furniture seller.


Stats: +119.19 points (+0.49%) to close at 24580.89

Stats: -20.13 points (-0.26%) to close at 7692.82
Volume: 3.382B (+45.16%)

Up Volume: 1.94B (+1.209B)
Down Volume: 1.93B (+360M)

A/D and Hi/Lo: Advancers led 1.16 to 1
Previous Session: Decliners led 2.59 to 1

New Highs: 126 (-31)
New Lows: 41 (-14)

Stats: +5.12 points (+0.19%) to close at 2754.88
NYSE Volume: 2.204B (+180.03%)

A/D and Hi/Lo: Advancers led 1.97 to 1
Previous Session: Decliners led 2.13 to 1

New Highs: 89 (+6)
New Lows: 36 (-46)


VIX: 13.77; -0.87
VXN: 18.38; -0.51
VXO: 12.85; -0.59

Put/Call Ratio (CBOE): 0.86; -0.17

Bulls and Bears:

Bulls fell back from the strong rally upside off of the even stronger
plunge. Bears are a bit lighter though still overall on the rebound from
lows not seen since early 1987.

Bulls: 52.0 versus 55.5

Bears: 17.6 versus 17.8

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: 52.0 versus 55.5
55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6
versus 48.0 versus 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: 17.6 versus 17.8
17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6
versus 20.8 versus 19.6 versus 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: 2.895% versus 2.899%. Bonds rallied back a bit on the week, keeping
the yield curve flatter.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.899%
versus 2.937% versus 2.889% versus 2.915% versus 2.922% versus 2.933% versus
2.977% versus 2.963% versus 2.952% versus 2.948% versus 2.928% versus 2.974%
versus 2.935% versus 2.944% versus 2.902% versus 2.86% versus 2.857% versus
2.79% versus 2.931% versus 2.992% versus 2.982% versus 3.063% versus 3.056%
versus 3.06% versus 3.123% versus 3.096% versus 3.069% versus 2.997% versus
2.97% versus 2.966% versus 3.006% versus 2.952% versus 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%

EUR/USD: 1.16572 versus 1.16072. Euro continued a Thursday bounce, trying
for a double bottom break back upside.

Historical: 1.16072 versus 1.15762 versus 1.1586 versus 1.15746 versus
1.2624 versus 1.16245 versus 1.15678 versus 1.17973 versus 1.17454 versus
1.17761 versus 1.17737 versus 1.17987 versus 1.1774 versus 1.1762 versus
1.1697 versus 1.166 versus 1.16993 versus 1.16643 versus 1.15446 versus
1.17148 versus 1.17096 versus 1.17022 versus 1.17826 versus 1.1786 versus
1.17714 versus 1.1802 versus 1.1811 versus 1.18272 versus 1.19358 versus
1.19411 versus 1.1913 versus 1.18533 versus 1.18672 versus 1.19150 versus
1.19619 versus 1.1983 versus 1.1978 versus 1.19896 versus 1.20741 versus
1.21291 versus 1.21788 versus 1.2163 versus 1.22232

USD/JPY: 109.980 versus 109.895. Tight doji over the 200 day SMA as the
dollar looks as if it is setting to break higher once more.

Historical: 109.895 versus 110.376 versus 110.03 versus 109.783 versus
110.668 versus 110.578 versus 110.247 versus 110.381 versus 110.314 versus
109.466 versus 109.705 versus 110.164 versus 109.878 versus 109.90 versus
109.53 versus 108.767 versus 108.699 versus 108.699 versus 109.385 versus
109.667 versus 109.502 versus 110.833 versus 110.95 versus 110.76 versus
110.935 versus 110.376 versus 110.246 versus 109.693 versus 109.384 versus
109.40 versus 109.746 versus 109.038 versus 109.022 versus 109.08 versus
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

Oil: 65.58, +3.04. Impressive 4.64% move back up through the 50 day MA's
as OPEC cut an increased production bill but not the 1M bbl as anticipated.

Gold: 1270.70, +0.20.

End part 1
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