Tuesday, October 30, 2018

The Daily, Part 1, 10-30-18

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10/30/2018 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: DATA; FOSL; JNJ; MCD; WBA
Trailing stops: None issued
Stop alerts: 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.


- After a crazy Monday, stocks bounce, but leadership is narrow.
- The good patterns from the same sectors lead: retail, food, drugs
- Indices show upside, but nothing yet suggests more than a bounce in a continuing move lower.
- Moved into some of the leaders, looking at a few more, but buying deeper and deeper into an unproven bounce amps the risk.

'Twas the night before Halloween, and all through the market -- a rally. Not huge, not blowout, and not 'all through the market.' Well-positioned stocks, however, moved higher. FAANG stocks were not well-positioned, and their moves lagged. Spooky. Other big techs lagged, e.g. MSFT, CSCO, though INTC showed excellent action.

The real move was in the same stocks that have led thus far: food, retail, select drugs, telecom. VZ added 3% to our position. WMT added 2.6%. KO 2.5%, MCD 3%, FOSL 8.2%, WBA 2.5%, JNJ 2.3%. DATA, one of those well-positioned tech stocks and a play we put on the report Monday, showed very good volume as it posted a 5% break higher off the 200 day SMA. The good setups yielded the good moves, as they should. We already are in VZ, WMT, JNJ, and we added FOSL, DATA, MCD, WBA, and more JNJ.

Does that mean it looks as if the second relief move is on? Could be. Certainly well-positioned stocks are moving . . . well, and as noted all along, those are the ones to focus on. It is rather good to see those are the best movers while FAANG and the like struggled on what was called a 'big' up session for the market.

SP500 41.38, 1.57%
NASDAQ 111.36, 1.58%
DJ30 431.72, 1.77%
SP400 1.73%
RUTX 1.99%
SOX 4.16%
NASDAQ 100 1.43%

VOLUME: NYSE +9%, NASDAQ -1%. Solid volume surge on NYSE as the stocks with good patterns, ones on NYSE, broke higher. That is good action. Finally some solid upside volume and on patterns that are solid. That gives some credence to the bounce working and these stocks able to provide some profits for us on this bounce.


To view, click on the following links:


There was not a ton of change in the index charts. Of course not. Massive movement Monday makes Tuesday look like a piker. Compared to the prior Wednesday's drop, Monday was a hiccup.

But, really good stocks moved on really good volume. Any move that is going ot last a bit, big or small, is made of leadership. Those leaders tend to move the best not just on day one, but on most of the days. They tend to have more staying power. For those reasons we liked the move and it looks to be the start of the next leg -- at least for those stocks.

DJ30 worked very well because stocks such as WMT and MCD worked very well. Stronger volume than Monday on a solid move back through the 78% Fibonacci retracement.

SP500 showed excellent volume, the best since 10/11, the day it hit bottom for the first rebound of this selloff. That is a nice positive.

NASDAQ gapped lower, reversed upside on good but flat volume. That pushed NASDAQ back over the 78% Fibonacci retracement. Decent, but NASDAQ is not where the best action is at the moment.

SOX showed excellent action thanks to INTC. It has held the same support for a week and surged upside. Good start.

SP400 shows the same action as SOX, holding the same level for a week, bouncing upside Tuesday. Promising but the midcaps have to prove they are wanted versus the larger caps that worked Tuesday.

RUTX is showing the same action as SP400, SOX, and as with SP400, has to show it has some kind of power. Has to show they are wanted and that just does not appear to be the case now. Perhaps in January with a January effect.


Same story: some software (e.g. DATA). Food (MCD, HSY, MKC, KO). Retail (WMT, FOSL, DG; ULTA had a bad day). Telecom (VZ, TMUS up afterhours). Drugs were mixed though JNJ was solid.


Stats: +431.72 points (+1.77%) to close at 24874.64

Stats: +111.36 points (+1.58%) to close at 7161.65
Volume: 2.624B (-0.77%)

Up Volume: 1.91B (+1.029B)
Down Volume: 745.19M (-1.015B)

A/D and Hi/Lo: Advancers led 2.09 to 1
Previous Session: Decliners led 1.45 to 1

New Highs: 19 (-4)
New Lows: 225 (-123)

Stats: +41.38 points (+1.57%) to close at 2682.63
NYSE Volume: 1.169B (+8.74%)

Up Volume: 914.615M (+481.168M)
Down Volume: 250.245M (-388.069M)

A/D and Hi/Lo: Advancers led 2.33 to 1
Previous Session: Decliners led 1.35 to 1

New Highs: 28 (+10)
New Lows: 336 (-65)


VIX: 23.35; -1.35. Never spiked so this suggests just a relief bounce.
VXN: 30.73; -1.02
VXO: 25.47; -1.81

Put/Call Ratio (CBOE): 1.18; -0.09. Eleven straight over 1.0 and 14 of 15. Extreme enough for a bounce.

Bulls and Bears:

Bulls continued to fall though at a slower pace. Bears almost 'jumped' for them. Stubbornly low are those bears. It is best to see the bulls and bears converge, the former down, the latter up. They are, but in very slight moves.

Bulls: 50.5 versus 51.9

Bears: 19.0 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: 50.5 versus 51.9
51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 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

Bears: 19.0 versus 18.3
18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 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


Bonds: 3.119% versus 3.089%

Historical: the last sub-2% rate was in November 2016 (1.867%). 3.089% versus 3.079% versus 3.126% versus 3.111% versus 3.1692% versus 3.20% versus 3.196% versus 3.1779% versus 3.209% versus 3.165% versus 3.158% versus 3.167% versus 3.146% versus 3.169 versus 3.206% versus 3.233% versus 3.189% versus 3.183% versus 3.061% versus 3.087% versus 3.061% versus 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%

EUR/USD: 1.13455 versus 1.13760. Dollar strengthens and pushed euro to a lower closing low on this fade from late October.

Historical: 1.13760 versus 1.14042 versus 1.13757 versus 1.3972 versus 1.14682 versus 1.14626 versus 1.1538 versus 1.14556 versus 1.14961 versus 1.1578 versus 1.15906 versus 1.15592 versus 1.15901 versus 1.15324 versus 1.4966 versus 1.4916 versus 1.1598 versus 1.15164 versus 1.14762 versus 1.15517 versus 1.15774 versus 1.16038 versus 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

USD/JPY: 113.074 versus 112.58. Dollar extends the Monday break higher form support.

Historical: Last below 109 in June 2018: 112.58 versus 111.89 versus 112.391 versus 112.091 versus 112.427 versus 112.680 versus 112.527 versus 112.385 versus 112.553 versus 112.558 versus 111.848 versus 112.222 versus 112.076 versus 112.158 versus 113.01 versus 113.12 versus 113.706 versus 113.894 versus 114.383 versus 113.642 versus 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

Oil: 66.18, -0.86. Breaking lower from the weak bounce to test the 200 day SMA.

Gold: 1225.30, -2.30. Testing the 20 day EMA in its 2+ week lateral consolidation.


Okay, the indices were close to the bounce point per a 'symmetry' view as discussed Monday. Tuesday a solid upside break by the stocks that were set up the best. We picked up positions on several. Unfortunately we did not have them all on, e.g. KO, but we snagged some very good stocks making very good moves.

Now, this is a bounce so you cannot expect too much upside. Thus, continuing buying as the move progresses increases the risk. Sure it can always just continue higher, but that is something it has to prove, and that means a follow through session. By the time that happens you often get a pause then the follow through. If the follow through does not emerge, that pause turns into another selloff and a third leg lower.

Some still look great and possibly worth a buy, e.g. INTC now rallying off initially selling on earnings. We have made money on these before and INTC may pop the 200 day SMA this time. This is a more aggressive tech play. QCOM is very interesting here (earnings 11/7 after), CIEN is intriguing (11/29 before), and VRSN as well (1/24 after). These are more aggressive, not your food or retail. These are still not showing the moves yet outside INTC, so consider that in determining whether you enter. More risk, but they can move rapidly upside -- then downside if the market again spits the bit, and if this is just a bounce as anticipated . . . if you do, just be nimble.

Have a great evening!

End part 1
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