Sunday, September 30, 2018

The Daily, Part 1 of 3, 9-29-18

* * * *
9/29/2018 Investment House Daily
* * * *

Investment House Daily Subscribers:

MARKET ALERTS:

Targets hit: None issued
Entry alerts: APC
Trailing stops: URI
Stop alerts: URI

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:
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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:
https://investmenthouse1.com/ihmedia/f/mo/mo.mp4

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

- Friday shows no relative change after the post-Powell changes.
- Tumultuous week outside the markets, some sharp move in financial
markets.
- Trade, economy, politics still issues, but the Fed significance
becomes more of a reality for most players.
- Market starts to show money shifts heading into Q4.
- No September drop so it is coming in October, right? Not
necessarily.
- Q4 potentially shaping up similar to 2017 with a big name focus to
start.

A tumultuous week outside of financial markets, some tumult in the financial
markets, and a possible change of focus in the stock market.

Trade remained an issue with more US companies complaining about the
potential for rising costs, no deal with Canada but deals with South Korea
and others, and of course, China whining like a toddler about how the US
just isn't playing fair. Hell, maybe China ISN'T ready to join the big
leagues of world finance -- but it certainly will have to trade fairly and
stop stealing the rest of the world's intellectual efforts. China likes to
brag about its intellectual power, but it has stolen most of its advances.
Kind of like the guy in college who would probably still make good grades if
he spent as much effort studying as he did figuring out ways to cheat.

Economics of course played their role. The US remans much stronger than the
rest of the world, but even the US data appears slowing in the forward
looking areas. For example, Chicago PMI put in its lowest reading since
April -- but at 60.4 it is HARDLY low. Trends, however, are always the real
story, and while the overall trend is up, the data is slowing a bit. Of
course any slowing is heralded as the end of the run -- instead of the more
obvious . . . a slow down after two 4+% GDP quarters. Even in the gains in
the 1980's there were slowdowns between quarters. Not major slowing, just
ebb and flow in a very strong run higher. History repeats, but so do
doomsayers.

The Fed was THE dominant factor for the week, specifically the chairman's
comments regarding 'excess asset valuations.' Always a slap for markets
because when the Fed starts talking overpriced assets it moves into areas
where its lack of understanding has manifested time and time and time again,
always with the same actions and same result: it overreacts, goes too tight
too long, the market rolls over, the economy after it.

With that, stocks hiccupped after the chairman's press comments. More than
that, there was a notable shift from small and midcap stocks. They broke
near support in a much more violent move than the large cap indices. They
recovered some ground the balance of the week but they did not retake
support.

Small and midcaps are economic harbingers, but it is also true that as a
recovery matures, money tends to shift away from them. They are early
growers -- something we saw with the RUTX the first to hit new highs on
several occasions -- but after their growth spurt they slow and money moves
to other areas. Hence the rise in the SP500 and DJ30 in terms of relative
strength in recent market history. The Fed chairman's comments may have
just acted as the trigger point for what funds were already contemplating.
With the Fed chair comments, why wait for the Christmas rush? So, they sold
now.

As of Friday, not much has changed. NASDAQ still trended higher in its
channel though no big moves at all. NASDAQ 100 is stronger than overall
NASDAQ, lending to the 'lose the small stuff' attitude that emerged late
Wednesday. SP500, DJ30 still trending higher. RUTX and SP400 are seriously
challenged. SOX is still, yes still, working on its base. That it is not
breaking down is a win. For now.

SP500 -0.02, -0.00%
NASDAQ 4.38, 0.05%
DJ30 18.38, 0.07%
SP400 0.34%
RUTX 0.36%
SOX 0.65%
NASDAQ 100 -0.03%

VOLUME: NYSE +27%, NASDAQ +14%. Volume spiked Friday, but it was month end
and quarter end. Highest NYSE trade since the S&P rebalance and before that
since late July. NASDAQ trade rallied back to recent elevated levels after
a Thursday dip to near average.

ADVANCE/DECLINE: NYSE +1.3:1, NASD +1.2:1. Still nondescript.


Quarter 4 starts now. Along with October.

Moving into Q4, October, earnings season, and the jobs report Friday.
September certainly was not a downside month; it just wasn't a surge upside.
Many are expecting a selloff in October. It could happen, It did not last
year after a solid move higher in September. No downside occurred until
mid-November and it was just a dip. Then a more than impressive run higher
into late January.

The point: just because September and October often result in downside does
not mean they have to result in downside.

What we think is happing right now and will become clearer as the market
moves through Q4 is similar to last year: an initial focus on large caps,
particularly known names. Last year in Q4 we said get used to the idea of
buying FAANG and playing them to the exclusion of most other areas. We made
huge gains doing that -- and playing other opportunities that emerged as
money again re-entered the market and bought just about everything. Recall:
many big names said the rally was done, done, and more done. Then it kept
moving higher and they were forced back into the market, driving stocks to
gains, amazing gains for us.

We think a similar play could very well present itself this year. Perhaps
not all of FAANG: thanks to FB, NFLX and GOOG, it has started lagging SP500.
NFLX is coming around very well, however, while AMZN and AAPL remained more
or less solid. Now throw in some other name brands such as NVDA, cloud and
gaming software, a few other tech and miscellaneous leaders along with the
industrials . . . and there are plenty of solid money makers in Q4.

The trick is whether the market decides to sell some in October to reset for
a run to year end. As noted, history, indeed recent history, shows that
does not have to be the case. With Fed chair Powell's comments this past
week, however, asset valuation scares rippled in the market. Several
players have said for awhile that a selloff is coming and that group of
believers may try to sell the market and cause an October dip.

Perhaps. Many leaders improved their positions and patterns despite a
sluggish market overall. Indeed, as you see, that even lends to the thesis
that the market move will again concentrate in fewer names toward year end.
It might not; maybe everything will rally. Okay, that works because as new
patterns set up and make moves, we will be there and ready to take advantage
of them.


CHARTS

NASDAQ: Up on the week, bouncing off a drop to the 50 day MA's. Was
rocking higher Wednesday then the foul Powell comments hit and it gave up
the move. Didn't stop the big techs; they moved higher Thursday and Friday,
though a most modest move. Still trending, getting help from the big techs
as NASDAQ 100 is outperforming NASDAQ overall.

RUTX: Major moves the past two weeks. After an initial drop from the late
August new high, RUTX consolidated at the 20 day EMA. After a week, it
dropped hard in once session to the 50 day MA and the June/July highs.
Tried a sharp bounce, failed. Then last Wednesday it broke the 50 day MA's
and the prior summer highs post-Powell. It attempted a Friday recovery but
is still below those two former support levels. A very, very key week for
RUTX to see if it can recover. It formed an ABCD consolidation on top of
the prior highs -- great pattern. It could not bounce, however, and now has
an ABCDEF pattern -- hmm. Never seen one of those work.

SP400: The midcaps bumped along the 20 day EMA and the August all-time high
heading into last week. As the week started, however, SP400 started sliding
lower, and then there was that Wednesday Powell plunk below the 50 day MA's.
Held, roughly, the summertime highs, bouncing Friday to the 50 day MA. As
with RUTX, there was a money shift. As with RUTX, this week is a very
important week for the midcaps.

SP500: Down on the week, gapping lower Monday and unable to recover by
Friday. Too much to deal with for any bids to feel really good and thus
buyers stayed home. Still trending up the 20 day EMA and still bumping
around the upper channel line. SP500 has found it difficult to break out
and hold a breakout over the upper channel line. Often that will wear out
an attempt to move over it and precipitate a test lower in the channel.
With the financials providing no help, this could be the potential 'dip'
ahead discussed in the market overview. There are some really good setups
in the industrial side, however, and if they move that will help SP500's
upside.

DJ30: Still holding the 10 day EMA in its test back from its new all-time
high posted the previous Friday. Low volume on the fade, even on the Powell
pause day. DJ30 remains well-poised to move higher with stocks such as CAT,
UTX, BA in excellent position. Indeed, BA started upside Friday off its
fade, perhaps signaling the others are to follow.

SOX: SOX continues toiling in its 6 month triangle, falling to the 200 day
SMA on the week. Landed there Wednesday, held, started upside Friday.
Another higher low inside the pattern at a key level. Perhaps, finally,
this one will yield a breakout after the chips have toiled for months
consolidating prior gains. With stocks such as AVGO turning the corner and
NVDA starting its next blast higher, it is possible. AND THAT would be huge
for the market in a Q4 yearend rally.


LEADERSHIP

FAANG: Thanks to FB and GOOG, and until recently NFLX, SP500 has
outperformed FAANG on a relative basis. AAPL and AMZN continue trending
higher over near support. NFLX has established a nice 3 month cup base and
is moving higher. GOOG could be setting up for a new move. FB cannot get
out of its own way with a new 50M user hack as well as selling the phone
numbers of users who provided FB with the number as part of a 2-step
authentication process. FB is quickly becoming hated. GOOG will face
antitrust actions from the Trump administration given its 98% market share
and its office in the White House during the prior administration. We are
now naming this SCAANN: SQ, CRM, AAPL, AMZN, NFLX, NVDA.

Energy: A much-improved sector. APC posted a gain on rising volume Friday
in a very nice pattern. XOM in an excellent rally test at the 10 day EMA.
CVX shows a similar pattern to APC. APA a cup with handle. CRZO still in a
nice pattern. HAL the same. ESV testing a solid rally, waiting on the 10
day EMA to catch up.

Software: CRM surged Monday and continued upside on the week to a new high.
ATVI moved to a new high while TTWO did the same. ADBE bounced well, MAST
is in a very nice 10 day EMA test. FEYE remains ready to break higher.
DATA, NOW somewhat blah. NEWR needs to show something right now. SZ
recovered and put in a nice test of the 50 day MA.

Chips: There is some promise here. NVDA gapped and surged Friday on
reports its AI platform is almost 'there.' AVGO in a solid 200 day SMA
test. AMD 20 day EMA testing. XLNX is solid, still looking to enter.
INTCE started upside on volume. AMAT, LRCX sport patterns similar to FB and
GOOG before they made their recent bounces from lows.

Financial: Pathetic. BAC continued lower, adding 5 downside sessions on
the week, picking up speed to the downside. JPM, C are both now testing to
the 200 day SMA in week-plus fades. V touched a nominal new high in modest
upside. GS gapped lower Friday after a prior week of selling.

Machinery/Manufacturing: CMI, CAT, DE still solid in tests. CMI , ETN look
great in tests and BA started upside big Friday. Great looking group.

Drugs: PFE in a lateral test at the 10 day EMA, still trending nicely
higher. MRK, BMY, LLY similarly situated. BIIB bounced upside on the week,
AMGN upside all week but Friday, CELG is interesting and Adami on Fast Money
likes it for what that is worth. INFI surging for us, up 10+% Friday. VCEL
is testing but looks really good at the 10 day EMA.

Retail: Same stocks are solid: TJX, ULTA, ROST. WSM testing the 50 day MA
nicely. HD in an ABCD at the 20 day EMA. LULU new high. Yoga pants.
Whatever.

MISC: SQ new highs. PYPL broke the 50 day MA Friday. MTCH, GRUB not much
changed, bouncing up off support. DDD also up off support, looking for a
stronger upside break.


MARKET STATS

DJ30
Stats: +18.38 points (+0.07%) to close at 26458.31

Nasdaq
Stats: +4.38 points (+0.05%) to close at 8046.35
Volume: 2.34B (+13.59%)

Up Volume: 1.13B (0)
Down Volume: 1.16B (+269.22M)

A/D and Hi/Lo: Advancers led 1.17 to 1
Previous Session: Advancers led 1.01 to 1

New Highs: 85 (+22)
New Lows: 87 (+16)

S&P
Stats: -0.02 points (0.00%) to close at 2913.98 NYSE Volume: 953.397M
(+27.31%)

A/D and Hi/Lo: Advancers led 1.27 to 1
Previous Session: Advancers led 1.25 to 1

New Highs: 63 (+18)
New Lows: 134 (+19)

SENTIMENT

VIX: 12.12; -0.29
VXN: 16.58; -0.17
VXO: 11.30; -0.38

Put/Call Ratio (CBOE): 1.06; +0.12


Bulls and Bears:

Bulls continue bumping at 60.0, a historically high level that leads to
declines. Bears remain elevated, but not moving higher right now.

Bulls: 59.0 versus 57.7

Bears: 18.1 versus 18.3

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: 59.0 versus 57.7
57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5
versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0
versus 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

Bears: 18.1 versus 18.3
18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6
versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 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


OTHER MARKETS

Bonds: 3.061% versus 3.052%. Bonds rebounded sharply Wednesday and
Thursday but Friday reversed for a loss after a gap above the 10 day EMA.
Bounced, but what is still there?

Historical: the last sub-2% rate was in November 2016 (1.867%). 3.052%
versus 3.048% versus 3.048% versus 3.085% versus 3.066% versus 3.068% versus
3.076% versus 3.057% versus 2.99% versus 3.00% versus 2.972% versus 2.963%
versus 2.977% versus 2.937% versus 2.941% versus 2.879% versus 2.904% versus
2.897% versus 2.86% versus 2.857% versus 2.882% versus 2.882% versus 2.846%
versus 2.813% versus 2.828% versus 2.821% versus 2.819% versus 2.819% versus
2.864% versus 2.871% versus 2.879% versus 2.882% versus 2.873% versus 2.928%
versus 2.963% versus 2.977% versus 2.977% versus 2.945% versus 2.95% versus
2.986% versus 3.005% versus 2.962% versus 2.975% versus 2.958% versus 2.982%
versus 2.965%


EUR/USD: 1.16038 versus 1.16357. The dollar posted a strong 2-session move
that sent the pair down to the 50 day SMA.

Historical: 1.16357 versus 1.17501 versus 1.17658 versus 1.17476 versus
1.17486 versus 1.17772 vs 1.16833 versus 1.16692 versus 1.16858 versus
1.16226 versus 1.16900 versus 1.15863 versus 1.16016 versus 1.15946 versus
1.15534 versus 1.16243 versus 1.16341 versus 1.15832 versus 1.16029 versus
1.1664 versus 1.17035 versus 1.1691 versus 1.16802 versus 1.16216 versus
1.15390 versus 1.15709 versus 1.158 versus 1.1487 versus 1.1437 versus
1.13765 versus 1.13731 versus 1.13479 versus 1.14052 versus 1.1413 versus
1.1526 versus 1.16186 versus 1.16001 versus 1.15572 versus 1.15683 versus
1.15864 versus 1.1662 versus 1.1689 versus 1.17074 versus 1.16558 versus
1.17324 versus 1.17385 versus 1.16846 versus 1.16989 versus 1.17214 versus
1.1651 versus 1.16514 versus 1.16603 versus 1.1709 versus 1.1685 versus
1.16608 versus 1.1672 versus 1.17288 versus 1.17578 versus 1.17439 versus
1.1689


USD/JPY: 113.690 versus 113.410. Dollar continued a 3 week run from the
July to early September range.

Historical: Last below 109 four months back. 113.690 versus 112.734 versus
112.981 versus 112.811 versus 112.575 versus 112.448 versus 112.247 versus
112.369 versus 111.849 versus 112.06 versus 111.81 versus 111.491 versus
111.608 versus 111.192 versus 111.064 versus 110.680 versus 111.448 versus
111.468 versus 111.082 versus 110.962 versus 111.734 versus 111.19 versus
111.081 versus 111.249 versus 111.351 versus 110.766 versus 109.92 versus
110.49 versus 110.935 versus 110.818 versus 111.229 versus 110.737 versus
110.840 versus 111.07 versus 111.361 versus 111.344 versus 111.254 versus
111.621 versus 111.628 versus 111.744 versus 110.990 versus 110.995 versus
110.791 versus 110.871 versus 111.235 versus 111.084 versus 111.451 versus
112.732 versus 112.783 versus 112.896 versus 112.337 versus 112.631 versus
112.093 versus 110.911


Oil: 73.25, +1.13. Breaking higher and now knocking at the June high.


Gold: 1196.20, +8.80.

End part 1
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Sunday, September 23, 2018

The Daily, Part 1 of 3, 9-22-18

* * * *
9/22/2018 Investment House Daily
* * * *

Investment House Daily Subscribers:

MARKET ALERTS:

Targets hit: CLF; VRSN
Entry alerts: C; LITE
Trailing stops: ODFL; SFIX; TLRY
Stop alerts: LLL; WSM

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:
https://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:
https://investmenthouse1.com/ihmedia/f/mo/mo.mp4

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

TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
https://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

- DJ30 pads its new high. What next now that the last dog caught the
car?
- NASDAQ and growth continue their tests of support, looking for the
bids to return.
- More of the same rotation pattern or does it change this time?
- Set up for the same moves but there are some issues to face.
- New leaders trying to emerge and give upside support as NASDAQ and
big names face the lick log.

The theme for the week remained through Friday, that is the NYSE large caps
moving higher as money moved their way, the NASDAQ, small caps and midcaps
consolidating the past three weeks the August move to a new high. SOX
remains in its triangle, showing promise of a breakout to come, but not
still not making the move.

SP500 -1.08, -0.04%
NASDAQ -41.27, -0.51%
DJ30 86.52, 0.32%
SP400 -0.19%
RUTX -0.46%
SOX -0.33%

VOLUME: +235%, NASDAQ +57%. Explosion in volume on the SP500 and NASDAQ on
the S&P rebalance.

ADVANCE/DECLINE: NYSE flat. NASDAQ -1.2:1.


Indeed, DJ30 finally purchased a new high, moving past the January peak, the
last to join the indices (excluding the specialty SOX) at new highs since
the early year peak. That of course raises the question that now the last
dog has caught the car, what do they do next? Rotate back to the techs?
Certainly they are set up after 3 weeks of testing, the small caps are
pretty much in the same position.

In recent history this same rotation two-step has played out with moves
higher. The 'industrial side' rallies then money shifts back to the more
tech-ish/growth side and the roles are swapped, the rallies in both sides
maintained. Virtuous rotation as opposed to vicious rotation.

Thus the indices all stay in their uptrends, testing then rallying in a
sinusoid wave.

Ah but there are issues or potential threats.

First, though the sinusoidal rotation has been the pattern, NASDAQ relative
strength is weakening against the large cap NYSE indices over the past three
months. SP500 relative strength rose in late July as NASDAQ sold, faded to
midmonth August before rallying again. The past 3 weeks it has again
rallied back, this time near the late July peak as of Friday. It is at the
lick log, i.e. if it continues it will break trend of falling against
NASDAQ. If so, NASDAQ could continue to weaken against it, and the virtuous
rotation cycle may end, leaving NASDAQ in the cold.

Second, the rampant pessimism for this rally. Each day you hear a new
billionaire, brokerage, or major financial group speak of their concerns
regarding the move's longevity. This past week Mr. Schiller of the
Case/Schiller housing index said the market would make one more move higher
then roll over. Now I am not certain of Mr. Schiller's market acumen, but
he follows a list of brokerages (e.g. MS, GS) and billionaires (e.g.
Gundlach) calling a market top.

As noted before, sentiment is an inverse indicator, suggesting opposite
moves in the market than sentiment. Thus, if there was ebullience at new
highs -- and there was some on Friday on the financial stations who view the
Dow as THE market -- but at the same time the caveats abounded. 'A new high
yes, but . . .'

On the other hand, if all the big money feels the same way then it can lead
to a self-fulfilling prophecy. Certainly how this current test by the
growth sectors will tell a good part of that tale.

Third, this weekend it is learned the President is drafting an executive
order instructing law enforcement and antitrust agencies to begin investing
the business practices of 'social media companies.' This on top of the EU
threatening FB and others with regulation. One would assume that the EO
targets include FB, Twitter, perhaps GOOG. TWTR this weekend suspended
conservative actor James Wood's account for posting a satirical video that
TWTR claims could 'impact an election.' Wow, ANY comment about politics
could sway an election. Is that now the new-Nazi standard: political speech
outlawed? How Stalinist. Old Joe is smiling from his grave -- he finally
won. And now an executive order to make it 'fair?' During this episode I
keep wondering why not a conservative Twitter or FB? Patent issues I am
sure, but would it not be good for the companies to see this and do it
themselves? It is not a perfect solution, but it beats having the
government down your back. Or, here is a novel solution, just let people
speak freely with just pornography, graphic violence, and profanity being
the automatic filters? In my book, more speech is always better than less
speech because if we truly believe in the power of ideas, just ideas will
win out over unjust.

In any event, remember when the Clinton administration went after MSFT as a
monopoly and the EU followed suit? That threat of regulation helped peak
the stock and for a time the market.

Fourth, is trade and beyond trade. Thus far the market has managed to
rebound and indeed move to new highs in the face of the trade war/skirmish
with China. China has cancelled the planned resumption of trade talks with
the US, angered by sanctions against China for its buying Russian arms.
China warned of consequences and has summoned the US ambassador over the
sanctions. The trade 'skirmish' as Jamie Dimon called it this week is
branching out into other areas. You know the old saying, trade wars lead to
shooting wars . . . Looking to the north, at least they are saying the US
and Canada are very close to a trade deal.

Fifth, the FOMC is still out there tightening and the next round comes
Wednesday when it is expected to hike another 25BP, the purported
penultimate hike of the campaign. Think so? Think not. The Fed fears a
rising economy, and even if it shows signs of slowing at the next hike or
beyond, the Fed will overlook them and continue tightening after a slowdown
starts. It always does. It is a supertanker that cannot change its course
without a lot of planning and a lot of time. The problem is it sets itself
up to keep hiking because the way the economy works. It slows but shows
little sign of doing so, then all at once it hits the skids. Moreover, the
Fed is already jawboning, laying the groundwork for further hikes due to an
increasing 'divergence' between the US and the rest of the world. Hey,
divergences are good if they are in your favor. We struggled in the early
2000's and from through 2016 when we tried to not excel and lead the rest of
the world. In any event, the Fed is there, the Fed doesn't know when to
cease and desist.


All of these present issues to the market move and the market has to prove
it can overcome them. As noted, NASDAQ and particularly the NASDAQ large
cap names are at the point they need to bounce to keep the same pattern
working.


THE MARKET

CHARTS

DJ30 put in a pair of new highs to end the week, the last of the big indices
to take out the January all-time high. Now the dog has caught the car while
NASDAQ big names are at important support. Will the pattern of rotation
continue or will a break occur where the NYSE large caps dominate while
NASDAQ large caps and growth base?

DJ30: Solid 4-session move to 2 new highs to end the week. Friday DJ30
gapped to a doji. Good 4-session move, about the most it has put in on its
prior runs. It could come back to test after the new high, but overall in a
trend upside, sitting on a good breakout move to a new high.

NASDAQ: Fell back to the 50 day MA Monday. Started up off that level into
the Thursday close, showing very good price/volume action on that move, i.e.
strong volume on the up sessions, lower volume on the downside day. Friday
a gap higher looked promising, but it was sold as big names sold back.
Volume spiked, but it was S&P rebalance Friday so you have to toss volume
out the window for the day.

SP500: Gapped to a higher new high then reversed for a modest loss to end a
week that saw a hold of the 20 day EMA and rebound. SP500 gapped to a new
high Thursday, looking to put some mileage on the prior peak. It did that,
but still problematic as SP500 is over the upper trendline and trying to
extend the move. Important that it does.

SOX: Very important group for the market's overall success. SOX fought off
selling in mid-August and again for a day in mid-September as it gapped to
the 200 day SMA and lower pattern trendline then gapped right back up to the
50 day MA's. Started higher Thursday with a gap, paused Friday, but looking
better in its triangle as some more stocks, e.g. AVGO, are joining the
upside. Still in the middle of the triangle pattern though cheating into
the top half. It is at the point to make a break.

RUTX: On the week, not a bad test of a key area, a bounce, now it has to
show it can do more. Dropped to the 50% Fibonacci retracement and 50 day MA
Monday. Then a nice bounce Thursday. Friday a try higher that fizzled into
a loss giving back half or so of the Thursday move.

SP400: Bumping the highs but nothing more than that as SP400 midcaps remain
in a 3 week flat consolidation over the 20 day EMA.


LEADERSHIP

Machinery/Manufacturing: CAT surged on the week, flat Friday. CMI broke
resistance in a 2 month lateral move. DE broke the 200 day and is testing;
interesting setup. UTX a solid upside week. ETN, EMR continuing upside
trends. BA posted a nice second week of the rebound off the 200 day SMA
test.

Financial: Solid week upside after 3 weeks lower. Good new breaks higher
by the banks Wednesday and Thursday, rested Friday (JPM, BAC, C). V and MA
moved higher again end of the week. GS surged through the 50 day MA,
testing Friday.

Energy: Coming to life with some drillers breaking out, e.g. RIG, DO.
Others as well, e.g. XOM, MRO, NE. Others are following, setting up
patterns.

Drugs: PFE still trending up the 10 day EMA as is BMY, MRK. Smaller issues
moving, e.g. VCEL, INFI. JNJ moving very well, tripping the target.

FAANG: NFLX still looks quite good in its 3-month base. FB, GOOG bounced
Wednesday and Thursday but then faded rather hard Friday. Worries re
regulation? AAPL put in a decent week, moving laterally along the 20 day
EMA. AMZN tested the 50 day MA starting Monday with that drop, then slid
laterally all week. Friday it dumped back to near the 50 day, but perhaps
more to do with the rebalance.

Chips: NVDA looked promising early week then slid to the 50 day MA to end
the week on an MS comment about its new chips. At the lick log. AVGO broke
over the 200 da on the week. AMD still strong wth a weeklong lateral test
over the 10 day EMA. TXN rebounded on the week to the 50 day EMA, up four
straight sessions. INTC bounced on the week to the 20 day EMA. Okay, but
yawn. XLNX trying a break to a new rally high. Improved but still working
on it.

Software: Some ups and downs in the group. MSFT was an up, breaking higher
after a lateral consolidation. Not huge but an up. DATA setting up a nice
flag to continue higher. FFIV still strong though slowly moving up the 10
day EMA. ADBE tested on the week to the 50 day MA. Interesting. CRM
tested into Thursday, started to bounce.

Telecom: Some interesting setups. HLIT, SWIR.

Transports: Big week for AAL as it took off, rallied, gaining more altitude
Friday. DAL broke higher Friday. Airlines good. Rails okay, but NSC is
good, CSX, KSU had a bit of issues though not much.

MISC: TLRY pot stock struggled but after it gave us a huge gain. CGC, CRON
still pretty decent; got some gain on CRON as well. SQ trying to hold the
20 day EMA. WBA a solid week.


MARKET STATS

DJ30
Stats: +86.52 points (+0.32%) to close at 26743.50

Nasdaq
Stats: -41.27 points (-0.51%) to close at 7986.96
Volume: 3.598B (+57.1%)

Up Volume: 1.275B (-455.159M)
Down Volume: 2.235B (+1.722B)

A/D and Hi/Lo: Decliners led 1.22 to 1
Previous Session: Advancers led 2.69 to 1

New Highs: 103 (+13)
New Lows: 48 (-3)

S&P
Stats: -1.08 points (-0.04%) to close at 2929.67 NYSE Volume: 2.647B
(+234.60%)

Up Volume: 1.463B (-1.097B)
Down Volume: 1.149B (+426.671M)

A/D and Hi/Lo: Advancers led 1.02 to 1
Previous Session: Advancers led 2.06 to 1

New Highs: 103 (+13)
New Lows: 87 (-7)


SENTIMENT

VIX: 11.68; -0.12
VXN: 16.84; +0.64
VXO: 10.89; +0.22

Put/Call Ratio (CBOE): 0.98; +0.09

Bulls and Bears:

Bulls continue bumping at 60.0, a historically high level that leads to
declines. Bears remain elevated, but not moving higher right now.

Bulls: 59.0 versus 57.7

Bears: 18.1 versus 18.3

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: 59.0 versus 57.7
57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5
versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0
versus 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

Bears: 18.1 versus 18.3
18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6
versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 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


OTHER MARKETS

Bonds: 3.066% versus 3.068%. Bonds sold on the week, bouncing modestly late
but in a steady downtrend below the 10 day EMA.

Historical: the last sub-2% rate was in November 2016 (1.867%). 3.068%
versus 3.076% versus 3.057% versus 2.99% versus 3.00% versus 2.972% versus
2.963% versus 2.977% versus 2.937% versus 2.941% versus 2.879% versus 2.904%
versus 2.897% versus 2.86% versus 2.857% versus 2.882% versus 2.882% versus
2.846% versus 2.813% versus 2.828% versus 2.821% versus 2.819% versus 2.819%
versus 2.864% versus 2.871% versus 2.879% versus 2.882% versus 2.873% versus
2.928% versus 2.963% versus 2.977% versus 2.977% versus 2.945% versus 2.95%
versus 2.986% versus 3.005% versus 2.962% versus 2.975% versus 2.958% versus
2.982% versus 2.965%


EUR/USD: 1.17486 versus 1.17772. Broke higher Thursday, tested a bit
Friday.

Historical: 1.17772 vs 1.16833 versus 1.16692 versus 1.16858 versus 1.16226
versus 1.16900 versus 1.15863 versus 1.16016 versus 1.15946 versus 1.15534
versus 1.16243 versus 1.16341 versus 1.15832 versus 1.16029 versus 1.1664
versus 1.17035 versus 1.1691 versus 1.16802 versus 1.16216 versus 1.15390
versus 1.15709 versus 1.158 versus 1.1487 versus 1.1437 versus 1.13765
versus 1.13731 versus 1.13479 versus 1.14052 versus 1.1413 versus 1.1526
versus 1.16186 versus 1.16001 versus 1.15572 versus 1.15683 versus 1.15864
versus 1.1662 versus 1.1689 versus 1.17074 versus 1.16558 versus 1.17324
versus 1.17385 versus 1.16846 versus 1.16989 versus 1.17214 versus 1.1651
versus 1.16514 versus 1.16603 versus 1.1709 versus 1.1685 versus 1.16608
versus 1.1672 versus 1.17288 versus 1.17578 versus 1.17439 versus 1.1689


USD/JPY: 112.575 versus 112.448

Historical: Last below 109 four months back. 112.448 versus 112.247 versus
112.369 versus 111.849 versus 112.06 versus 111.81 versus 111.491 versus
111.608 versus 111.192 versus 111.064 versus 110.680 versus 111.448 versus
111.468 versus 111.082 versus 110.962 versus 111.734 versus 111.19 versus
111.081 versus 111.249 versus 111.351 versus 110.766 versus 109.92 versus
110.49 versus 110.935 versus 110.818 versus 111.229 versus 110.737 versus
110.840 versus 111.07 versus 111.361 versus 111.344 versus 111.254 versus
111.621 versus 111.628 versus 111.744 versus 110.990 versus 110.995 versus
110.791 versus 110.871 versus 111.235 versus 111.084 versus 111.451 versus
112.732 versus 112.783 versus 112.896 versus 112.337 versus 112.631 versus
112.093 versus 110.911


Oil: 70.78, +0.46. Trying to break past the recent 4 week highs.


Gold: 1201.30, -10.00. Rallied to the 50 day SMA to end the week then fell
sharply Friday.


MONDAY

FOMC week with a rate hike Wednesday and no doubt more trade issues. Some
possibly positive re Canada, but China is getting even more persnickety with
each US move to ratchet up the pressure. Then there is the administration's
animosity toward social media and talk of an executive order. Don't forget
AMZN has in the past drawn the President's ire.

That is all well and good, but all that information is distilled down into
the stock and index patterns. Again, new highs on DJ30 and SP500 as money
moved their way after 2.5 week consolidation, and now NASDAQ and the other
growth indices have put in consolidations to support. Does the same
rotation pattern continue? Perhaps they all move up together for a change?
Or does one side roll over to the benefit of others?

New leadership is trying to show up in support, e.g. energy, some telecom,
financials are trying their hand. Of course it would help the entire market
if the NASDAQ large caps started higher as they trade on several exchanges.
Definitely time for them to rebound and put in their next upside leg after 3
weeks testing.

Thus, we look at more good setups but there are more sectors to choose from
as the week progresses as some new patterns are setting up. We will see if
they continue to do so and make the breaks higher.

Have a great weekend!

End part 1
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Sunday, September 16, 2018

The Daily, Part 1 of 3, 9-15-18

* * * *
9/15/2018 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

- Trump makes his 'usual' Friday trade comments, market reacts like
Pavlov's dogs.
- In the end it was just a day off Friday, similar to the day off
Wednesday, in a continuation of the uptrend.
- Various big names help drive the action on the week, but the small
and midcaps step up late week.
- SOX makes a bounce off support just as, of course, the final big
names throw in the towel on chips. A little bit of history repeating.
- Retail sales miss but still trending nicely higher.
- Industrial production revised nicely higher with mining producing
good jobs
- Still plenty of negative vibes on the market, but the leaders remain
as do the trends.

I said last weekend that it seemed every Friday the President would say
something negative about trade ahead of the weekend causing a market drop,
and perhaps we should play it. We should have.

Friday once again the President had something to say. Just before 12:00ET
President Trump said he still wanted to implement the $200B in tariffs
against China regardless of whether the two sides were talking or going to
talk again about trade.

The stock market, after starting higher, testing, then rallying to midday,
responded as usual, dumping 143 points on DJ30, 60 points on NASDAQ. After
an hour of this weakness, stocks then recovered in the afternoon session,
the large cap indices never made it back to their session highs,
particularly NASDAQ. The small and midcaps did while SOX posted a nice
recovery as well for its second 1+% gain.

SP500 0.80, 0.03%
NASDAQ -3.67, -0.05%
DJ30 8.68, +0.03%
SP400 0.36%
RUTX 0.43%
SOX 1.11%
NASDAQ 100 -0.21%

VOLUME: NYSE +1%, NASDAQ -11%. All things considered, this is not bad
price/volume action. The small caps, midcaps and large cap NYSE moved up,
albeit in the latter cases very little, on rising, once again above average
volume. NASDAQ sold back but on significantly lower trade than the prior 3
sessions of upside. Again, not bad price/volume action.

ADVANCE/DECLINE: NYSE 1.1:1, NASDAQ 1.1:1. Pretty much tells the story . .
. of boring trade.

The move left the large cap stock indices little changed, showing doji
similar to Wednesday's pause or continuation doji. These are likely the
same.

SP400 and RUTX, however, posted nice moves off rather tight lateral
consolidations. Good resumptions of their upside moves after testing and
resting.

SOX rallied for a second session over 1% after the Wednesday gap down to the
200 day SMA and doji with tail. It was a gap lower, a gap higher -- an
island reversal -- and as per that pattern, SOX is moving upside. It also
happened at a key level, the 200 day SMA and tapping the lower trendline in
its triangle pattern. There is some history there and it bounced chips.
Important group, finished the week decently, but was it just a flare for
help?


NEWS/ECONOMY

The trade commentary impacted market action the most, but there was other
news.

Bonds: The 10 year yield closed at 3.0% for the first time since August.
It should, but reluctance marks the move.

Manafort: Entered a plea deal with the Mueller team and agreed to help.
The usual Hollywood types were ecstatic with one saying 'check mate and f***
Trump.' Class as always. The plea deal, however, discusses the areas he
will provide aid, and they deal with key officials tied to the Clinton
campaign as well as Obama advisors. The intrigue, if not boredom, continues
to grow.

Retail Sales, August: Smallest rise in 6 months, but still a solid trend
higher in sales. Is it inflation, more buying, both? CPI for August backed
off from expectations and prior reading on the core both for the month and
year/year (0.1% vs 0.2%, 2.2% vs 2.4%) -- thus, there was some inflation
aspect to the sales number, but it played a lesser role than in the prior
months.

Overall: 0.2% vs 0.2% expected vs 0.2% July. Year/year 2.7% vs 2.8%.

Note that PPI rose 2.9% year/year, indicating that while both consumer and
producer prices are rising, producer prices are rising more and thus profits
are getting squeezed a bit. Morgan Stanley stated Wednesday that the US was
already in a bear market because profits were starting to decline. Well,
this data would seem to suggest MS is at least partially correct: if this
month's results continue then companies will see profits decline as costs
rise but selling prices do not.

Sales ex-autos: 0.3% versus 0.5% expected versus 0.9% July (from 0.6%).
NICE upside revision.


Industrial Production, August: 0.4% as expected vs 0.4% July (from 0.1%).
VERY NICE revision.

Mining: +0.7% vs 0.7% July. Year/year +14%! This sector is producing a LOT
of quality jobs.

Utilities: +1.2% -- a sweltering August significantly increased HVAC usage.

Manufacturing: +0.2% versus 0.3% expected, but year/year +3.1%


Capacity Utilization: 78.1 versus 78.3 expected vs 77.9 July (revised lower
from 78.1). This is not bad. We are producing more but not straining
capacity so no supply bottlenecks that leads to price increases.

THE MARKET

CHARTS

SOX: SOX failed to hold the 50 day MA mid-range in its triangle --
obviously. It gapped lower Wednesday as MU and others were downgraded by
big name brokerages. After all the selling in these names I posited this
looked as if the towel had been thrown in and it could bounce. Further,
looking at the pattern, it was a gap lower to a doji with tail that tapped
the lower triangle trendline on the low then rebounded to hold the 200 day
SMA on the close. Sure enough, SOX gapped upside Thursday, then added
another 1+% Friday, closing over the 50 day MA's. Not a breakout, not a new
resurgence, but it held the pattern and bounced right back. A bit more work
in the pattern and some of these other chip names that were mauled in the
selling can set up some bases to rally upside. Well what do you know?

RUTX: after 5 sessions of tight doji at the 20 day EMA testing the late
August move to a new high, the small caps posted a quite solid move upside
Friday. Not a blast off, but a notable bid moved their way.

SP400: Very similar to RUTX, i.e. after a weeklong lateral test of the late
August new high, the midcaps jumped higher, almost putting in a new all-time
high Friday. It is hard to argue with the action: breakout of its 7 month
base in mid-August, rallying to a series of new highs. A test of that move,
coming back to the 20 day EMA and holding the breakout, then breaking higher
again. Textbook.

NASDAQ: On the week NASDAQ held the 50 day MA test and started higher
Tuesday. Paused Wednesday, gapped upside Thursday. Paused again Friday.
Very solid volume Tuesday to Thursday as NASDAQ held and then broke higher
off that key level. Looks very good to continue moving upside in its trend
after this test and bounce.

SP500: Held the 20 day EMA on the week and bounced similar to NASDAQ,
moving higher Tuesday, then a pause, then up again Thursday. Friday was
flat, but SP500 is just below the late August all-time high.

DJ30: The same action as SP500, the move up off the weeklong 20 day EMA
test on Tuesday, a rest day, then a gap upside to a higher rally high.
Friday was not much but the Dow did edge higher.

LEADERSHIP

FAANG: AAPL was off Friday but testing the 10 day EMA on lower volume. A
good rally after a week of testing back to the 20 day EMA. AMZN also had
tested back to the 20 day EMA and started upside Tuesday with a big move.
It continued higher Wednesday and Thursday but then sold back Thursday after
the initial high. Had a harder time keeping on track upside. NFLX broke
higher Tuesday and Wednesday in a move over the 50 day SMA, testing Thursday
and Friday. We are looking to enter after this test. FB trying to set up a
bounce, forming a short double bottom at its lower low in the selloff. GOOG
bled higher on the week up to the 10 day EMA but sluggish. Looks like a bear
flag setup.

Chips: NVDA enjoyed a solid Friday on strong volume, though it did close
off its high. Wednesday it sold to the 50 day EMA on the low and reversed
sharply to a doji. That helped spring it higher and it still looks good.
AMD sold hard Thursday but was back upside Friday, maintaining its trend.
XLNX finished its 20 day EMA test on the week, gapped higher Thursday,
flattish Friday; still looking to enter. SMTC remains solid in a 2 week
pennant. SIMO broke down over the past 2 weeks. For those that crashed,
they bounced with SOX but the patterns are not necessarily comforting to the
upside. MU bounced, but looks like a bear flag. Ditto AMAT, INTC. AVGO is
interesting as is MLNX, but they need more work.

Software: Solid group on the week though testing a bit late week. DATA
moved higher, off a bit Friday. NOW solid on the week. VRSN new high again
Friday. MSFT new high into Friday. ADBE posted a big new upside break
Friday. VMW posted a huge surge Friday in a clean, new breakout.

Retail: Mostly testing on the week, e.g. ULTA, ROST, TJX, COST.

Financial: Credit services had a good week, e.g. V, MA. Banks more of the
same, i.e. going nowhere, even struggling the cases of BAC, C.

Energy: Getting some interesting setups, e.g. CRC, PTEN, UNT, APA. Some
service companies already making good moves, e.g. ESV. The big service
companies (SLB, HAL) rallied, but just moved up to their resistance in
downtrends. The group has been down awhile and it is setting up a bounce.

Transports: Airlines are still interesting and look set to move up, e.g.
AAL. Truckers still solid. ODFL testing after a great move while SAIA,
JBHT, WERN test and try to set up as well. Rails are mixed with NSC solid,
KSU not bad, CSX struggling right now.

Materials/Industrial metals: Not bad as CLF continues higher. LPX (lumber)
solid. CX (cement) and VMC trying to set up.

Manufacturing: Remains solid, e.g. EMR, ETN. UTX broke out Friday after a
weeklong move higher; we will try to pick it up on a test. We don't want to
buy right now because it rallied to get to the breakout and is near term
extended; let it test, hold then pick it up as it starts back upside. BA
tested the 200 day SMA on the week and reversed to rally back to the late
July high.


MARKET STATS

DJ30
Stats: +8.68 points (+0.03%) to close at 26154.67

Nasdaq
Stats: -3.67 points (-0.05%) to close at 8010.04
Volume: 2.06B (-11.21%)

Up Volume: 1.16B (-70M)
Down Volume: 877.36M (-182.64M)

A/D and Hi/Lo: Advancers led 1.13 to 1
Previous Session: Advancers led 1.09 to 1

New Highs: 147 (+4)
New Lows: 74 (+6)

S&P
Stats: +0.80 points (+0.03%) to close at 2904.98 NYSE Volume: 760.443M
(+0.73%)

A/D and Hi/Lo: Advancers led 1.06 to 1
Previous Session: Advancers led 1.31 to 1

New Highs: 108 (-27)
New Lows: 91 (+6)


SENTIMENT

VIX: 12.07; -0.30
VXN: 16.12; -0.33
VXO: 10.80; +0.14

Put/Call Ratio (CBOE): 0.83; -0.01

Bulls and Bears:

After a one week move to 60 the bulls faded but not significantly. This
move reflects two weeks ago, and the market was n a fade to test. With all
the negative commentary from the big brokerages and billionaires, even a
routine test of the trend support freaks some investors. Bears were up, but
still quite low historically.

Bulls: 57.7 versus 60.1

Bears: 18.3 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: 57.7 versus 60.1
60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9
versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 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

Bears: 18.3 versus 18.1
18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5
versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 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


OTHER MARKETS

Bonds: 3.00% versus 2.972%. After bounce off the prior selling, touching
the 10 day EMA on the Thursday high, bonds gapped sharply lower Friday,
closing in on the early August low. They should sell and rates should rise.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.972%
versus 2.963% versus 2.977% versus 2.937% versus 2.941% versus 2.879% versus
2.904% versus 2.897% versus 2.86% versus 2.857% versus 2.882% versus 2.882%
versus 2.846% versus 2.813% versus 2.828% versus 2.821% versus 2.819% versus
2.819% versus 2.864% versus 2.871% versus 2.879% versus 2.882% versus 2.873%
versus 2.928% versus 2.963% versus 2.977% versus 2.977% versus 2.945% versus
2.95% versus 2.986% versus 3.005% versus 2.962% versus 2.975% versus 2.958%
versus 2.982% versus 2.965%


EUR/USD: 1.16226 versus 1.16900. Euro broke higher Thursday, matched the
late August high, and then was pounded Friday. The ECB talk Thursday
apparently ran its course.

Historical: 1.16900 versus 1.15863 versus 1.16016 versus 1.15946 versus
1.15534 versus 1.16243 versus 1.16341 versus 1.15832 versus 1.16029 versus
1.1664 versus 1.17035 versus 1.1691 versus 1.16802 versus 1.16216 versus
1.15390 versus 1.15709 versus 1.158 versus 1.1487 versus 1.1437 versus
1.13765 versus 1.13731 versus 1.13479 versus 1.14052 versus 1.1413 versus
1.1526 versus 1.16186 versus 1.16001 versus 1.15572 versus 1.15683 versus
1.15864 versus 1.1662 versus 1.1689 versus 1.17074 versus 1.16558 versus
1.17324 versus 1.17385 versus 1.16846 versus 1.16989 versus 1.17214 versus
1.1651 versus 1.16514 versus 1.16603 versus 1.1709 versus 1.1685 versus
1.16608 versus 1.1672 versus 1.17288 versus 1.17578 versus 1.17439 versus
1.1689


USD/JPY: 112.06 versus 111.81. Strong week for the dollar, clearing interim
highs on the base formed off the mid-July high.

Historical: Last below 109 four months back. 111.81 versus 111.491 versus
111.608 versus 111.192 versus 111.064 versus 110.680 versus 111.448 versus
111.468 versus 111.082 versus 110.962 versus 111.734 versus 111.19 versus
111.081 versus 111.249 versus 111.351 versus 110.766 versus 109.92 versus
110.49 versus 110.935 versus 110.818 versus 111.229 versus 110.737 versus
110.840 versus 111.07 versus 111.361 versus 111.344 versus 111.254 versus
111.621 versus 111.628 versus 111.744 versus 110.990 versus 110.995 versus
110.791 versus 110.871 versus 111.235 versus 111.084 versus 111.451 versus
112.732 versus 112.783 versus 112.896 versus 112.337 versus 112.631 versus
112.093 versus 110.911


Oil: 68.99, +0.40. Gapped higher over the 50 day MA, fell back to test it
to end the week.


Gold: 1201.10, -7.10. Moved up to tap the 50 day MA on the Thursday high,
then faded back off that test.


MONDAY

Plenty more data, some more current, e.g. the Empire PMI Monday and the
Philly Fed Thursday. Housing starts, Existing home sales, Leading
indicators also on the week. Of course, the FOMC is the following week and
expected to hike rates at that meeting.

The indices continue to trend higher and in the face of quite a load of very
negative views regarding the current market and the economy's future. As
noted during the week, big firms, economists, billionaires were saying
another financial crisis will occur in 2019 or 2020, a recession in 2019, a
bear market either is here now or in the near future -- the trending market
that continues trending higher with leadership gets no respect. Ah, one of
the Rodney Dangerfield 'no respect' rallies. As Charles Payne noted Friday,
he likes all the negativity given the contrary indications and that the
market rallies in the face of adversity (I hate to call it this, but so many
people know what it means -- 'climbing the wall of worry.' Yuck).

We still see leadership setting up, we still see the indices test support,
hold, bounce. In that environment I am going to continue to play the solid
upside setups.

What worries me? The Fed. I commented on this Thursday, and if you have
not you need to read that commentary. The Fed is speaking the 'Fed
language' about the perils of a strong economy, particularly vis-a-vis the
rest of the world. The 2000 Fed created disaster out of prosperity and we
are still paying the price. The current Fed is using different words but
talking the same theories. As the late, great Crocodile Hunter would say,
danger, danger, danger.

For now we continue to play the good setups because for now it is just
negative talk and Fed posturing. If it changes and the market's character
changes, we will change as well, but for now it has not.

Have a great weekend!

End part 1
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Saturday, September 08, 2018

The Daily, Part 1 of 3, 9-8-18

* * * *
9/8/2018 Investment House Daily
* * * *

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Stop alerts: LSCC

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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

- Strong wages rattle a market fearing a Fed overreach yet again.
- Pullback, but nothing major as stocks put in a better test Friday as
a for now modest pullback continues.
- Fed operates by theory versus facts and history, and thus the
market's concern.
- Even with reform, we are still paying a lot of people not to work.
- Just when the market was recovering Friday, Trump talks of another
$267B in China tariffs
- Still good trends in the indices, good stocks tested and in good
position, not quite a market top.

Futures were lower Friday even before the jobs report, and when a solid
enough report was released, futures . . . fell farther with DJ30 tickling
-100 and NASDAQ -60+ points.

Or perhaps it was Elon Musk slurping whiskey, smoking weed, and playing with
a samurai sword on a Joe Rogan podcast that kept investor moods lower
Friday. Thursday night Musk enjoyed himself and got visibly stoned, no
doubt to the delight of the true believers. Apparently, however, the true
believers don't own the stock because TSLA was bombed, down 28+ points at
the low. Earlier in the week and then pre-market I speculated that we might
actually make some money on the TSLA downside play even after the 'going
private' tweet appeared to put the kibosh on the play. The beauty of that
was it took so much value out of the put options we just left it on. A long
strange trip it has been, from 'funding secured' to 'funding not secured' to
whiskey swilling and pot smoking absurdity. We sold our options at a stock
price near 255 this morning, just a few points off the low and a 60% gain.
Thanks Elon!

Stocks opened lower but immediately managed a rebound into midday. Not bad.
Then it all fell apart with a selloff into early afternoon. Not major
losses at all, and very much in keeping with the pullback by the techs off
the recent runs higher. Indeed, we were somewhat relieved the market did
not try to rally given it was Friday and we did not really want to open a
lot of new positions heading into the weekend.

SP500 -6.37, -0.22%
NASDAQ -20.19, -0.25%
DJ30 -79.33, -0.31%
SP400 -0.21%
RUTX -0.08%
SOX -0.41%
NASDAQ 100 -0.31%

VOLUME: NYSE -8%, NASDAQ -8%. Volume faded on both NYSE and NASDAQ,
holding just above average on NYSE, well above average on NASDAQ. Some
distribution on NASDAQ Wednesday to Friday, but holding over the 50 day is
not bad after the selling.

ADVANCE/DECLINE: NYSE -2.1:1, NASD -1.2:1. It would appear the NASDAQ had
done most of its selling.

That didn't keep all stocks, and quality stocks, from moving higher. AAPL,
AMZN continued nice tests. Other leaders started upside off short tests on
the week, e.g. DATA, GRUB, NOW, ROKU -- some solid names that have moved
well and recently tested.

The index charts continued the test. Lots of press about the indices
finishing a week lower, I suppose part of the 'market selloff' story we
discussed Wednesday and Thursday. Yes, quite the selloff indeed (that is
totally facetious).

DJ30 'sold off' to the 20 day EMA, testing it on the Friday intraday low
before closing with a doji. Looks to have 'sold off' into a good lateral
test that is setting up for a run at that January high.

SP500 is showing a doji at the 20 day EMA as well. Very orderly fade to
support. Not violently volatile as seen in the past.

NASDAQ tested lower toward the 50 day MA as expected, showing a hammer doji
and coming off the low. Maybe it wants to finish the 50 day MA test, but
even so, that is not much of a drop. Some big names that rallied it were
selling so NASDAQ sold. Now those names and NASDAQ are in good position to
continue higher here from the middle of the range.

SP400 also shows a doji at the 20 day EMA, also a nice test in progress, not
aggressive, but an orderly 6-day test despite all the selloff speculation.

RUTX also shows, surprise, a tight doji at the 20 day EMA after that sharp
Thursday drop to that level. Thursday was harsh, but Friday was nice: held
the June and July highs on the low, held the 20 day EMA on the low, held the
38% Fibonacci retracement on the low. A doji at the 38% retracement is a
good upside signal.

SOX dropped hard Thursday as well, but lo and behold, it shows a hammer doji
at the 50 day SMA Friday. Could it be that SOX holds here, makes the 50 day
MA test we were looking for, and then tries a breakout form its triangle?
Certainly did not look as if it could pull that off on the Thursday drop,
but it is holding at the 50 day MA and showing a doji.


In sum, a lot of talk about a selloff but not a lot of selloff. Sure AMZN
and AAPL finally sold back after some great upside moves, but that is to be
expected.

What was more concerning was the lack of serious upside by the 'industrial
side' stocks after the big techs started to sell. There is some movement in
them, but as noted Thursday, it was not a dollar for dollar move to that
group once the techs started to take profits.

With some important techs moving up Friday and others such as AMZN set up at
near support to rally again, however, that may not be too serious a concern.
Still, you want to see those other stocks get money as well as they were
very good performers heading into the two week test following those moves.
Even so, if the techs that faded on the week start back up the coming week,
you go with that.


NEWS/ECONOMY

Back to Jobs

But surely 201K jobs versus 187K expected and 147K in July (from 157K) was a
good thing, particularly with wages higher (0.4% vs 0.2% exp and 0.3% July),
good enough to rally stocks on good news in an expansion. Sure, it is a
good thing unless you live in the upside down contrarian Phillips Curve cage
that the Princeton school economists dominating the Federal Reserve call
home.

In that world they talk of a thing called 'wage-led inflation' whereby
supposedly when workers make more money they bid up prices because they have
more money to spend on them (more money chasing the same number of goods).
In a controlled, socialist/communist economy, yes that could be the case.

What the PCurve has always failed to account for is that in a free
enterprise system where government does not attempt to control where
investments are made, industry will invest more money to create more supply,
dampening any inclination for prices to rise. Sure there might be near term
rises while businesses gear up more production, but they WILL gear up to
produce more because they make more money selling an extra unit than the
marginal price increase they may get due to a temporary shortage. In other
words, if it costs you $15 to make a product you sell for $75, you would
rather sell another product and make the $60 profit versus sell the same
product for a marginally higher price at $85. Two sales with a profit of
$120 beats one sale at a profit of $70.

That is how economics really works, backed up by plenty of history -- pretty
much the entire history of economics. The tragedy is the Fed has its own
control agenda -- that is what is was created for, not the 'economic
stability' it says is the reason for its existence -- and thus it ignores
facts in favor of continuing the dogma that favors it remaining in control.

Thus, in its world, the Fed sees the wage component rise to 2.9% year/year,
the highest since June 2009, and the market panics. Why? Because the Fed
always panics and ends up going too far and too hard, wrecking the market
followed by the economy. It chased inflation that never showed up in 1929,
fearing the economy was too hot. It fixed the problem: it helped cause the
crashes that led to the Great Depression. Greenspan oft talked of the
'runaway consumer' in the late 1990's and hiked rates and drained the money
supply, ostensibly to prevent the consumer from spending us into inflation.
He avoided that fictitious problem for sure: the stock market lurched into a
rollover and the economy lurched into a recession from which we never really
recovered as we lost so many quality US jobs to overseas markets never to
return.

The problem is the Fed gets it in its collective mind things are too hot.
It hikes and hikes rates to bring things under control (as if they needed
that) but nothing changes. It is like a puppy that doesn't follow the
owner's rules and the owner keeps telling it 'no' but the puppy doesn't
listen. So the owner starts saying 'no' louder and tapping the puppy with a
rolled up newspaper. The puppy is not bothered and it keeps on doing the
same thing. Then the owner gets hacked off, takes the newspaper, and knocks
the cr*p out of the puppy. The dog runs off and hides under the bed, crying
and whimpering, and not coming out. The Fed ratchets up its inflation
'fight' the same way and ultimately gets so aggressive it goes too far. The
market breaks, then the economy breaks.

THAT IS WHY stocks sold more after the release of the jobs data. Good news
is bad news because the Fed is on a hiking campaign and it is going to see
its hiking having no discernible effect (of course that is like beating the
dog when the cat poops on the rug -- no cause and effect). So it keeps on
doing the only thing it knows to do, expecting a result that its actions
won't bring about. It goes too far, market crashes.

Thus, stocks were selling Friday in a near term reaction to the data and how
the Fed would perceive it. Indeed, Rosengren reiterated that the Fed should
continue gradual rate increases and Kaplan latter pretty much echoed that
notion. They will continue as long as they don't see any reaction. The
tragedy is, of course, they WON'T see a reaction to their actions until it
is too late. Trying to prevent a fire when a flood is the problem at hand.

It was not the top, it was not 'the' moment the market checks out. It was a
near term reaction to what it feels the Fed will ultimately accomplish yet
again. Tops, however, are a process, and the market is trending with
leadership, not in a signature rollover yet. So, Friday was a near term
reaction, and frankly, it helped set up some good stocks in good positions,
e.g. AMZN, SQ, AMZN. Indeed, some stocks moved higher already, e.g. DATA,
GRUB, NOW, ROKU.

The other parts of the report.

Workweek: Still at 34.5. Not increasing despite all the claims of worker
shortages. Usually the workweek jumps when there is no one to work. This
is one of those 'how can that be?' if the anecdotal evidence we are given is
true.

Participation: 62.7% versus 62.9%. Now hold on. With all of those jobs,
with the shortage of labor, why is participation among working aged citizens
falling? I will tell you why.

Despite the rollback of the absurd expansion of definitions for what
constitutes looking for work (e.g. bed rest, reading the want ads, attending
a parent/teacher conference) and the reduction in people receiving food
stamps, we still make it too tempting not to work.

Numerous studies in the second term of the Obama administration tried to
answer why people were not working. Other than the obvious of reduced hours
thanks to the Affordable Care Act's hours worked cap, they found that a
person with a couple of kids who took advantage of all the government
programs (aka handouts) had as much disposable income as a person with the
same number of kids working a job paying roughly $75,000/year.

We continually hear this fiction about how everyone really wants a job
versus taking a handout. Apparently not. Over the past 50+ years (Great
Society boondoggles) we have created a mindset where it is okay not to work
but to instead take the benefits so you could pursue your bliss. Recall the
'Jane' commercials in the prior administration? She got free healthcare,
free this, free that so Jane could take the time to find out what she really
wanted to do in her life. Sadly, we are finding out, surprise, that what
Jane wants to do is not work, goof off, but collect those benefits. Thus
when anyone questions why we are spending hundreds of billions on these
programs that pay people not to work, an angry, screaming mob that has no
qualms going to your house to harass you or even commit physical violence
against you demands the status quo remain. It would appear 'Jane' can be
quite an ogre when she cannot pursue her bliss on someone else's dollar.

Thus, we have over 95M working aged people out of an entire population of
around 320M who are not working and are living off the those that are
working. At some point those working will ask 'why the heck am I doing this
to pay for them?' and the sham crashes down. That is what Tocqueville wrote
and it is happening now.

Where the jobs are: Still decent but manufacturing flipped negative.

Healthcare 33K
Construction 23K
Transportation 20K
Leisure 17K
Manufacturing -3K
Autos -4900
Retail -5900


More tariffs anyone?

Stocks were okay, however, recovering from the open to surge upside by the
time Europe close. Looked promising as the bids yet again returned. Alas,
but they did not hold. They bombed lower by midday and then struggled to
hold those levels to the close.

Cause? One could argue that AAPL's comments the $200B in tariffs would hurt
the economy if implemented were not well-received. Indeed, the market
dipped when they hit the wire.

Then the President decided to rattle everyone ahead of the weekend
announcing that another $267B were 'ready to go on short notice' with
respect to China. Open bomb bay doors.

Larry Kudlow gave a less than rosy update on the trade negotiations saying
they were working on them but it was quite simple. For China it is IP
theft. Obviously wrong but China won't admit to it. For Canada it was one
word: milk. Canada will not let the US sell its milk in the great white
north tariff free.

All in all no progress on the week, one where the US and Canada renewed
their efforts to get Canada into the deal US/Mexico deal.

In short, there was no reason for bids to return after the initial effort
stalled midday.


THE MARKET

LEADERSHIP

Software: Leading off because it was stronger Friday. CRM, DATA, NOW
started higher. MSFT showing doji at the 50 day MA after a week of declines
off a higher high. COUP gapped upside Wednesday, tested modestly waiting
for the 10 day EMA to catch up. A still strong group.

Drugs: The big names stated back upside. PFE, LLY, BMY, MRK. Big biotechs
not bad, e.g. AMGN. CELG is interesting with a 50 day MA test. Some
smaller bios are not bad, e.g. IMMU.

FAANG: FB sold off farther and faster. NFLX sold hard Wednesday, still
below the 50 day EMA. GOOG sold as did FB. AAPL faded to just below the 20
day EMA, showing a hammer doji. Testing the move but could drop farther
toward the 20 day EMA. AMZN is already at the 20 day, tapping it Thursday,
opening there Friday. Good setup.

Financial: Not bad but not going anywhere. Working on patterns. Still.
BAC continuing to work laterally over the 50 day EMA. JPM holding at the 50
day EMA as well with several doji. C broke down Thursday and Friday,
closing below the 50 day MA. GS finished an 8-session fade to the 50 day
SMA. V hanging on at the 20 day EMA after an ugly flop to that level
Wednesday.

Materials/Metals: Not surging upside, but could something arise here? LPX
is in a handle to a 3+ month double bottom with handle base. VMC is trying
to bottom at long term support. Overall, however, still not much strength.
Some industrial minerals moving (e.g. CLF), but metals look bad.

Manufacturing/Machinery: Manufacturing was good through Wednesday then
struggled a bit, e.g. EMR. Others not bad as ETN tested a good move.
Machinery trying to set up: CMI, CAT. DE starting higher on volume. BA all
over the place but forming a triangle. We will see.

Retail: Still overall strong with some testing, some still rallying. COST
added another 2% to a strong move. JWN still rising. ULTA surged 3+% on
top of a week of gains. FIVE gapped sharply higher on earnings just as it
did in June on those earnings. TJX paused after a good move, WSM in a two
week gap consolidation. Others not so good: M, DDS, GES.

Semiconductors: It was a week of haves and have nots, but by the end it was
mostly have nots. NVDA tested its new high, but actually looks quite good
at the 20 day EMA. AMD made a good short test, SMTC as well. LSCC rolled
over. CY rolled over. INTC continued a week of selling. LRCX, MU cracked
hard, TXN sold to the 200 day SMA.

Transports: A classic example of a group that has some good members but
also some dogs. ODFL strong. KSU strong. NSC started upside off the 20
day EMA after a week of consolidation. CSX is hanging on at the 20 day EMA.
Airlines had a hard week, AAL, DAL. LUV looks good.


MARKET STATS

DJ30
Stats: -79.33 points (-0.31%) to close at 25916.54

Nasdaq
Stats: -20.18 points (-0.25%) to close at 7902.54
Volume: 2.16B (-7.82%)

Up Volume: 961.31M (+911.62M)
Down Volume: 1.17B (+1.122B)

A/D and Hi/Lo: Decliners led 1.24 to 1
Previous Session: Decliners led 1.88 to 1

New Highs: 108 (+5)
New Lows: 84 (+2)

S&P
Stats: -6.37 points (-0.22%) to close at 2871.68 NYSE Volume: 705.407M
(-8.41%)

A/D and Hi/Lo: Decliners led 2.07 to 1
Previous Session: Decliners led 1.45 to 1

New Highs: 81 (-18)
New Lows: 134 (+25)


SENTIMENT

VIX: 14.88; +0.23. VIX rose the entire week, moving up to the 200 day SMA
where it stalled mid-August. As the market faded you would expect it to
rise and it did. Still in the longer term range, no significant indications
here yet.
VXN: 19.76; +0.59
VXO: 13.66; +0.78

Put/Call Ratio (CBOE): 1.17; +0.12

Bulls and Bears:

Bulls now back at 60, a number that suggests excessive bullishness and thus
likely selling. The market is already pulling back but -- modestly thus
far. This indication has a bit of a delayed effect: everyone is bullish and
feeling good and it takes a bit for the market to peak. Once everyone who
wants to put money in upside is in, then you get the decline.

Bulls: 60.1 versus 59.6

Bears: 18.1 versus 18.3

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: 60.1 versus 59.6
59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3
versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 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

Bears: 18.1 versus 18.3
18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5
versus 18.6 versus 18.4 versus 17.6 versus 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


OTHER MARKETS

Bonds: 2.941% versus 2.879%. Gapped lower from the 200 day SMA Tuesday.
Tried to bounce through Thursday, then gapped to a lower low on this selling
Friday. Okay, this is as it should be: stronger data equals weaker bonds,
higher yields.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.879%
versus 2.904% versus 2.897% versus 2.86% versus 2.857% versus 2.882% versus
2.882% versus 2.846% versus 2.813% versus 2.828% versus 2.821% versus 2.819%
versus 2.819% versus 2.864% versus 2.871% versus 2.879% versus 2.882% versus
2.873% versus 2.928% versus 2.963% versus 2.977% versus 2.977% versus 2.945%
versus 2.95% versus 2.986% versus 3.005% versus 2.962% versus 2.975% versus
2.958% versus 2.982% versus 2.965%


EUR/USD: 1.15534 versus 1.16243. After a week holding the 50 day MA in a
test, Friday the euro broke that support.

Historical: 1.16243 versus 1.16341 versus 1.15832 versus 1.16029 versus
1.1664 versus 1.17035 versus 1.1691 versus 1.16802 versus 1.16216 versus
1.15390 versus 1.15709 versus 1.158 versus 1.1487 versus 1.1437 versus
1.13765 versus 1.13731 versus 1.13479 versus 1.14052 versus 1.1413 versus
1.1526 versus 1.16186 versus 1.16001 versus 1.15572 versus 1.15683 versus
1.15864 versus 1.1662 versus 1.1689 versus 1.17074 versus 1.16558 versus
1.17324 versus 1.17385 versus 1.16846 versus 1.16989 versus 1.17214 versus
1.1651 versus 1.16514 versus 1.16603 versus 1.1709 versus 1.1685 versus
1.16608 versus 1.1672 versus 1.17288 versus 1.17578 versus 1.17439 versus
1.1689


USD/JPY: 111.064 versus 110.680. Sold hard Thursday on Trump musing about
Japan tariffs, then rebounded Friday. Still, still in the 8 week lateral
range at the 50 day MA.

Historical: 110.680 versus 111.448 versus 111.468 versus 111.082 versus
110.962 versus 111.734 versus 111.19 versus 111.081 versus 111.249 versus
111.351 versus 110.766 versus 109.92 versus 110.49 versus 110.935 versus
110.818 versus 111.229 versus 110.737 versus 110.840 versus 111.07 versus
111.361 versus 111.344 versus 111.254 versus 111.621 versus 111.628 versus
111.744 versus 110.990 versus 110.995 versus 110.791 versus 110.871 versus
111.235 versus 111.084 versus 111.451 versus 112.732 versus 112.783 versus
112.896 versus 112.337 versus 112.631 versus 112.093 versus 110.911 versus
110.973 versus 110.474 versus 110.666 versus 110.40 versus 110.854 versus
110.687 versus 110.523 versus 110.223 versus 110.097 versus 109.678 versus
109.980 versus 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


Oil: 67.75, -0.02. Sold on the week, holding near 67 on the lows,
rebounding off the lows Thursday and Friday. Still very range bound.


Gold: 1200.47, -3.83. Two weeks working laterally at the 20 day EMA after a
bounce from the lows. Still trending lower below the 50 day MA's.


MONDAY

Another data dump the coming week. Consumer credit, Small business
sentiment, PPI, CPI, Fed Beige Book, retail sales, Production. Interesting
for certain, but nothing really definitive. CPI is watched because of the
FOMC and its rate hiking. Retail sales are watched as a barometer of the
consumer, though inflation as we know can disguise the results as they are
based on prices, not quantity. If inflation pushes up prices, retail sales
can 'rise' without any real increase in sales.

Oh well, another screwed up 'measure' of economic activity. Everything gets
perverted at some point. The law is so twisted that procedure trumps the
facts. We all know about 'legal-eze' and how simple contracts are so
convoluted not even the lawyers really know the true result. Now, with
economic indicators, they are taken to such an extreme they do not reflect
the real world and their utility is thus highly questionable. Look at the
football rules: they are now so subjective who knows what will happen. What
is a catch? What is 'making a football play?' What is the point of instant
replay when hyper-technical rules say it is okay to use it in some instances
but not others, when the ones not allowed are the very plays that are often
game-determinative. Again, oh well.

After that digression into the recesses of my mind, what about next week?

Lots of talk about market tops and perhaps this is the market topping. That
is a process as discussed before, with rallies, declines, rallies, declines.

Right now, however, the indices are trending higher, rotation continues as
one area rallies, another tests, and then they reverse more or less,
changing positions. Wednesday to Friday saw the drugs and some
manufacturing start back up after tests. At the same time the tech leaders
were testing, but now they are set up fairly well for a bounce and indeed
Friday some, particularly in software, already started back upside.

Thus, we are going to continue looking upside at those stocks holding trends
or in good patterns that are ready to move. That includes AMZN already
simply because it is testing the 20 day EMA and could hold and resume the
move as it is that strong. Software is very interesting, drugs -- a lot of
stocks that moved well on the last move that are showing good activity even
with just a short test.

Have a great weekend!

End part 1
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Sunday, September 02, 2018

The Daily, Part 1 of 3, 9-1-18

* * * *
9/1/2018 Investment House Daily
* * * *

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MARKET ALERTS:

Targets hit: None issued
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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

- Stocks rally to new highs midweek, test modestly into Friday.
- Canada/US fail to reach trade agreement but will go at it again starting
Wednesday.
- NASDAQ near the upper channel line, SOX as well.
- NASDAQ leaders may test soon, but others in NASDAQ and in more industrial
areas are close if not already there on tests.

The week saw new highs or higher highs through Wednesday on all the indices
followed by a modest test to end the week and the month. That leaves the
indices set up quite well for a new upside move to start the new month.

SP500 0.39, 0.01%
NASDAQ 21.18, 0.26%
DJ30 -22.10, -0.09%
SP400 0.26%
RUTX 0.48%
SOX 0.58%
NASDAQ 100 0.16%

VOLUME: NYSE +35%, NASDAQ -6%. NYSE trade surged above average for the
first time since 7/31. NASDAQ trade fell to just below average.

ADVANCE/DECLINE: NYSE +1.2:1, NASDAQ +1.6:1

Oh yes, the new month. September. The month most associated with losses.
Well, in 2017 SP500 rallied 48 points (1.9%), NASDAQ 1%. Didn't tear the
cover off the ball thanks to a late month dip, but hardly living up to
September's unsavory reputation.

Of course, whenever the market rallies for as long as this one has and is
punching out new highs, the worry is about market tops. Not without reason.
The economy is strong with 4.2% Q2 GDP and the Atlanta Fed calling for 4.6%
this quarter. Yet, the recent data has softened. I believe it is just a
soft spot in the expansion, but of course the doom websites and authors are
saying we are at a 2000 and 2007 type of top.

Some headlines today from those sites:
'The decoupling has never been greater'
'Once the bubbles pop, we're all broke'

Typical daily headlines. What most people do not know and what is bandied
about by the global elite -- and even discussed by some great true
economists such as Milton Friedman -- is the ultimate fix, the ultimate
reset button, if it becomes necessary.

The worry is not the current and pending aggregate debt on the books of the
world's countries, but the layer upon layer of tied derivative debt in the
form of derivatives, credit default swaps (insurance on insurance), etc.
Trillions upon trillions of dollars of debt and insurance tied to one
another. If it breaks, the tidal wave of cascading debt could throw
civilization into chaos.

Thus, the kill switch, the reset button, is a global cancellation of debt.
All debt. One time, get out of jail, start over from zero balance.
Everybody; it would not be acceptable to the proletariat (that is you and
me, anyone not in the power broker elite) if only the elites were allowed to
reset. They might try, they might say if they are not saved no one will
survive, but they did that in the financial crisis and it won't happen again
because now the poor slobs are onto it.

Anyway, I hate to sound as if there is no need to worry because the ultimate
bailout is there. To the contrary, it would be frightening, ugly, and
involve a lot of suffering before it was done, but even free market greats
are for it if necessary. Why? Because Friedman and others realize that the
problems are caused not by the free market but by the interference into the
markets that are the genesis of this kind of layered insurance, etc. to
protect positions. Government involvement always exacerbates a problem by
factors of tens.

More to the point for the current day, however, is the FOMC and its interest
rate policy. Thus far it is not showing any desire to slow its rate hiking.
Bullard voiced some concern, stating the Fed should stay put the rest of the
year, but the minutes and Powell himself said the economy is strong and that
hikes will continue as planned. The Fed has paid some lip service to the
yield curve, but you hear comments from the administration (Mnuchin) stating
the yield curve is not an economic indicator but a market indicator. Well,
a yield curve inversion invariably precedes a market turnover, and the
market turnover typically predicts an economic slowdown to come.

Thus, FOMC overplaying its hand remains a worry for the market's future.
For now, the market is not pricing it in. Indeed, some are saying the
recent highs show the market is pricing in the cessation of the FOMC's rate
hiking.

Well, I am simply not smart enough to say that is the case. What I can say
is the market shows good leadership with some prior leaders coming back
after some damage in late July, joining other sectors that started to rise
when they started to fall. That kind of rotation is market healthy.

With the moves to new highs the past week, many of our plays were hitting
our close to target levels. We banked some solid gain on AAPL, AMZN, SQ, V,
VRSN, GRUB, ROKU, etc., etc. After the current test of the move to higher
highs we will see if some of these same stocks as well as others present new
upside entries for the next move upside.


NEWS/ECONOMY

Trade dominated headlines again, Friday whether Canada would join the
US/Mexico deal. 'Off the record' comments from the President were released
and Canada was reportedly outraged regarding the President's lack of respect
for the Canadians. Could be that has to do with its PM and his prior
comments about the President.

Whatever. The end result was no deal Friday. Canadian sources reported no
deal and that the talks were over. That news killed an attempted move
higher by US stocks following a softer open. Then the US reported that the
talks had concluded for the day without a deal but would resume on
Wednesday. Okay, not so harsh. Stocks did manage a very respectable
recovery in the last two hours.

China trade: China continues to make personal attacks on Trump, the sure
sign it has no substantive reasons it should maintain the fiction it is an
emerging economy and thus entitled to emerging economy preferential
treatment. China an emerging economy? That is the same as Heddy Lamar --
That's Hedley -- in 'Blazing Saddles' attempting to pass himself off as a
student to receive a discount to the movies.

In any event, China said that Trump's tweets are "from some alternative
universe." What universe is that? Where the world's number 2 GDP country
considers itself an emerging economy? Is this how China justifies stealing
other countries' IP? I have to laugh. China is so proud of how smart it is,
yet much of the tech it has is tech it stole either through espionage in
terms of government tech (weapons, etc.) or from its 'partnerships' in terms
of company IP. So smart, so advanced, but it feels it must get ahead by
stealing from others. Where is the pride in that? Where is the face saving
in that? There is none. China is full of BS, it knows it, and thus the
personal attacks because it has no argument to counter the question why do
you consider yourself still an emerging economy in need of assistance? I
would LOVE to ask them that question and then press them on it.


THE MARKET

CHARTS

NASDAQ: Just over two weeks upside off the 50 day MA with a series of new
highs from the prior Friday to the intraday high Thursday. Friday NASDAQ
was still up thanks to AAPL, AMZN, MSFT and company. Slowing the move
higher as it does its imitation of a pause after a solid surge higher
starting with the Monday gap higher. Near the upper channel line (8180,
closed at 8110) and that appears to be exerting some influence, slowing the
move and starting something of a consolidation.

RUTX: One of the best performers Friday, not slowing but accelerating to a
new high after a sluggish Tuesday to Thursday. Always love to see the small
caps as upside trendsetters.

SP400 and SP500 are very similar, breaking to new highs on the week then
testing back Thursday and Friday. Holding the breakouts, nice modest tests
to near the 10 day EMA, setting up the next move higher.

DJ30: Similar to SP500 though DJ30 has not hit a new high on the move
though it is hitting higher rally highs. Still remains just over 100 points
off the January all-time high.

SOX: SOX ran into the upper trendline of its 6 month triangle on the Monday
high then spent the rest of the week bumping at it. Didn't drop away, just
hanging in below the TL. Best action would be a drop to near the 50 day MA,
a higher low, then a surge back upside for the breakout.


LEADERSHIP

FAANG: AAPL, AMZN carried the load on the week, each continuing upside even
into Friday. FB was up but not ripping higher. NFLX is trying to break
through the 50 day SMA in something of a cup with handle. GOOG looked great
and started the move higher after a test, but then Friday dropped hard
through the 20 day EMA.

Software: Solid on the week, most taking a breather late week. FFIV
continued its rally into Wednesday then tested modestly. VRSN, ADBE ditto.
VMW looks as if it is ready to break higher. RHT may be through its issues
after that June gap lower. NOW off a bit to end the week after a strong
surge into Wednesday. DATA solid, moving back to the late July high. MSFT
a new high on the week.

Semiconductors: NVDA posted a strong week of recovery; a test back this
week gives a potential entry point. XLNX tested late week after an
excellent move higher. AMD in a nice test of its surge. LSCC moved well
Friday after a good early week surge. Still waiting for AAOI, SIMO to move.
One we were watching, SMTC did so, surging almost 10 points Thursday-Friday.

Drugs/Healthcare: A quiet week after those good runs to end July and into
mid-August. MRK in a 2 week test. PFE a 2 week test to the 20 day EMA.
BMY also in a lateral test. LLY in a flat lateral move as well. SRPT
started upside Wednesday could not continue it to Friday but looks quite
good.

Financial: Still in the test after an upside move Monday. JPM, BAC, C all
testing after that move. V put in a new high on the week, ending with a
pair of doji. GS up Monday, off Tuesday to Friday, giving up the move A
step forward, a step backward.

Industrials: A few moved well, e.g. HON into midweek then a modest test to
Friday. EMR held up well, added some Friday. ETN rallied, tested well into
Friday. These look good. CMI so-so, holding the 50 day EMA. CAT still
working on its pattern.

Retail: Overall solid with some good moves, some others not so great. TJX
posting a nice run higher through Friday with a new high. COST surged
Friday out of a consolidation. ROST holding up well and TGT holding its gap
and consolidation. WSM tested back to the upper gap point and started
higher Friday. WMT still looks good in its pullback to test its earnings
gap.

Transports: AAL moved higher early week then slid laterally in a tight
range; still looks good. CSX in rails tested back to the 20 day EMA on the
week. ODFL (trucking) surged Wednesday, flopped to the 50 day MA Friday,
then recovered decently.

Misc: SQ put in an outstanding week, may need a breather after 2+ weeks
upside. PYPL broke higher as well, tested at the end of the week. DIS
still going nowhere. ROKU surged early week, gapped lower Wednesday on an
AMZN threat, holding near the 10 day EMA.


MARKET STATS

DJ30
Stats: -22.10 points (-0.09%) to close at 25964.82

Nasdaq
Stats: +21.17 points (+0.26%) to close at 8109.54
Volume: 1.9B (-5.47%)

Up Volume: 1.21B (+438.09M)
Down Volume: 662.27M (-547.73M)

A/D and Hi/Lo: Advancers led 1.61 to 1
Previous Session: Decliners led 1.36 to 1

New Highs: 142 (+7)
New Lows: 29 (-15)

S&P
Stats: +0.39 points (+0.01%) to close at 2901.52
NYSE Volume: 830.912M (+35.44%)

A/D and Hi/Lo: Advancers led 1.16 to 1
Previous Session: Decliners led 1.8 to 1

New Highs: 94 (-20)
New Lows: 46 (-16)


SENTIMENT

VIX: 12.86; -0.67. Still range bound and that is fine. The only thing
really to fear is if VIX rises as the market rises, not the case now.
VXN: 16.04; +0.02
VXO: 11.16; -0.52

Put/Call Ratio (CBOE): 1.03; +0.21

Bulls and Bears:

Bulls rallied again, effectively at the 60 level associated with pullbacks.
Bears are elevated but still quite low. At this level of bulls it is time
to start watching how the leaders perform. Thus far they are fine.

Bulls: 59.6 versus 57.7

Bears: 18.3 versus 18.3

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: 59.6 versus 57.7
57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4
versus 47.1 versus 47.6 versus 52.0 versus 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

Bears: 18.3 versus 18.3
18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6
versus 18.4 versus 17.6 versus 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


OTHER MARKETS

Bonds: 2.86% versus 2.857%. Gapped below the 200 day SMA Tuesday as bonds
sold, yields rose. Friday gapped over the 200 day SMA but then gave it up
and lost ground. Back to the 50 day SMA where it held after the gap lower.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.857%
versus 2.882% versus 2.882% versus 2.846% versus 2.813% versus 2.828% versus
2.821% versus 2.819% versus 2.819% versus 2.864% versus 2.871% versus 2.879%
versus 2.882% versus 2.873% versus 2.928% versus 2.963% versus 2.977% versus
2.977% versus 2.945% versus 2.95% versus 2.986% versus 3.005% versus 2.962%
versus 2.975% versus 2.958% versus 2.982% versus 2.965%


EUR/USD: 1.16029 versus 1.1664. Dollar rallied back Thursday and Friday,
driving the pair down to the 50 day MA after a 3 week run higher.

Historical: 1.1664 versus 1.17035 versus 1.1691 versus 1.16802 versus
1.16216 versus 1.15390 versus 1.15709 versus 1.158 versus 1.1487 versus
1.1437 versus 1.13765 versus 1.13731 versus 1.13479 versus 1.14052 versus
1.1413 versus 1.1526 versus 1.16186 versus 1.16001 versus 1.15572 versus
1.15683 versus 1.15864 versus 1.1662 versus 1.1689 versus 1.17074 versus
1.16558 versus 1.17324 versus 1.17385 versus 1.16846 versus 1.16989 versus
1.17214 versus 1.1651 versus 1.16514 versus 1.16603 versus 1.1709 versus
1.1685 versus 1.16608 versus 1.1672 versus 1.17288 versus 1.17578 versus
1.17439 versus 1.1689


USD/JPY: 111.082 versus 110.962. Still in the range around the 50 day MA.
Tried to break higher Wednesday then sold off Thursday. Friday sold below
the 50 day MA then reversed for a modest gain. Still range bound.

Historical: 110.962 versus 111.734 versus 111.19 versus 111.081 versus
111.249 versus 111.351 versus 110.766 versus 109.92 versus 110.49 versus
110.935 versus 110.818 versus 111.229 versus 110.737 versus 110.840 versus
111.07 versus 111.361 versus 111.344 versus 111.254 versus 111.621 versus
111.628 versus 111.744 versus 110.990 versus 110.995 versus 110.791 versus
110.871 versus 111.235 versus 111.084 versus 111.451 versus 112.732 versus
112.783 versus 112.896 versus 112.337 versus 112.631 versus 112.093 versus
110.911 versus 110.973 versus 110.474 versus 110.666 versus 110.40 versus
110.854 versus 110.687 versus 110.523 versus 110.223 versus 110.097 versus
109.678 versus 109.980 versus 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


Oil: 69.80, -0.45. Rallied through the 50 day SMA Wednesday and Thursday,
faded modestly Friday. Good break higher, now how it holds the 50 day MA is
key.


Gold: 1206.70, +1.70. After rallying through the 20 day EMA the prior
Friday, XGLD spent the week testing in a tight flag. Not a bad set up to
break higher, but why would it break higher if the Fed has things under
control? That said, gold has trended lower now for 5 months.


MONDAY

Tons of data coming out this week starting with the ISM and construction
Tuesday, ADP, Productivity revision, factory orders Thursday, and the Jobs
Report Friday.

More trade issues as the US and Canada resume on Wednesday. China will
surely have some more commentary about Trump given it has no favorable facts
to support its trade positions. Larry Kudlow said Friday that China had no
interest in talking; thus the personal attack campaign is at least
explained.

As for the market, stocks and the indices rallied to higher highs then faded
Thursday and Friday. The trends are still in place, buyers came in to push
stocks to higher highs, then they returned after a test to push them higher.
A good test in progress, a bit more would not be bad.

After the test we look to play upside as stocks rebound. Some are already
testing such as AMD, WSM, VRSN, ADBE, NANO, DOCU. We will let them develop
and as they break higher we can move in to catch the next run.

Trade remains an issue if just for short periods. NASDAQ is near the upper
trendline and that may stall some of the moves from big names such as AAPL,
AMZN. If so, however, a test then sets those stocks for some new entries as
well.

Yes, keep in mind the bulls indicator, that it is September, and the Fed is
on a hiking mission, but at this juncture you look at the action of solid
patterns and take the cues from there.

Have a great weekend and Labor Day!

End part 1
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