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11/14/2018 Investment House Daily
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Investment House Daily Subscribers:
Targets hit: None issued
Entry alerts: BAC; CREE; HLIT; VMW
Trailing stops: None issued
Stop alerts: M; ROST
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Market Summary Video, Plays and Play Videos, and Play Table with play annotations will issue Wednesday, Weekend.
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If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.
- Stocks look good pre-market, early on, then pull the old high to low.
- CPI bounces the market. Temporarily.
- DJ30 holds over the 200 day SMA, all other indices sliding toward the reversal session.
- Still a real lack of leadership to help hold a move higher.
- Administration holds off on auto tariffs. For now.
- German economy contracts
- Powell speaks, doesn't say anything really new.
Once again stocks show they cannot play with a lead. Futures moved steadily higher all morning, then received another boost upside when the CPI was released, showing a tenth lighter reading on the yearly core (2.2% vs 2.3% expected). Apparently that was good enough for buyers as they bought even more.
Stocks opened higher, moved up a bit more. Good stocks were moving well. Then they were not. The move peaked and stocks spent four hours heading from positive to negative. A bounce from 2:00ET to 3:10ET ran out of gas and sold back into the close; at least they avoided going out at session lows -- just barely for some.
SP500 -20.60, -0.76%
NASDAQ -64.48, -0.90%
DJ30 -205.99, -0.81%
NASDAQ 100 -0.89%
VOLUME: NYSE +5%, NASDAQ +8%. Higher volume on a high to low session. Clearly sellers used upside to again sell.
ADVANCE/DECLINE: NYSE -3:2, NASDAQ -2:1. Not overwhelmingly negative as it was quite a reversal session.
Early session some of the big names and some better-positioned growth stocks looked decent -- as decent as can be for stocks such as AMZN, NFLX, NVDA -- gapped higher, but the lowly 10 day EMA proved too much for them. They all fell off the high with AMZN closing at session lows, barking like a dog all the way down.
Problem is, even the recent leaders -- outside personal products -- continued to test back with retail even looking somewhat tattered after M jumped on its earnings only to reverse, taking some others such as ROST with it. VZ hung in while JNJ dipped to the 10 day EMA.
Some of the good patterns in growth were still decent, just didn't do anything. Hey, in this market that kind of action from those stocks is not bad: TWLO, DATA, VMW, HLIT, ZS, UBNT. Some possibilities there, but thus far the mostly remain just possibilities outside a few here and there.
It could be that the testing leaders such as WMT, JNJ, MCD are about ready to move upside. Surely that would help, but those are not the market and there are a lot of stocks in the overall market that are not working well.
That is, of course, reflected in the indices. Since the prior Wednesday follow through, the indices have been nothing but lower. Indeed, NASDAQ closed below the October 30 reversal closing level, RUTX and NASDAQ 100 as well. That does not kill the follow through but it does all but that.
DJ30 remains decent at least, holding near the 200 day SMA, still just over the early October low. It is the 'leader,' and it is struggling.
SP400 is slipping below the early October low, trying to hang onto its pattern, one similar to NASDAQ.
SOX has a bear flag going at the 10 day EMA. Chips continue their chronic weakness, not a great thing as the bulls are looking to them to help lead a rally toward year end.
Oh, the timing for such a rally is running out rather rapidly -- Thanksgiving is next week.
Moreover, the market continually blows upside moves. This since the follow through session. Not showing much power. Not showing any power as the leaders test as well.
Strangely, there are those still saying this is a bottom right now. From a lot of gloom just recently to the past two sessions a bottom. Oh, VIX is up from 16.50 to 22.50; surely a spike of fear.
It comes down to leadership. The growth areas have some setups but many are being hesitant. VMW jumped today and did a decent job of holding some upside as techs faded, but it did close off its high. CSCO announced some good results afterhours and is up around 2 points (5%) -- perhaps if enough announce good results eventually the selling turns to bids. Just has not done so yet.
As noted, the recent leaders should be near the end of their tests, and they certainly can provide some plays that make some upside money again, but they represent a small part of the market.
This evening Chairman Powell spoke, and while he notes the economy is strong, he says it could face headwinds in 2019. Powell gave a little indication the Fed was thinking as it goes along versus just hiking past neutral as he said before: 'We have to be thinking about how much further to raise rates, and the pace at which we will raise rates.' Okay, that sounds promising, but it does not repudiate the 'hike past neutral,' aka the 'hike until something breaks' plan of action.
What are the headwinds? Slowing growth abroad, fading impact of US fiscal stimulus, the lagging effect of the previous 8 rate hikes. Hmm. Those are important but not the most front and center.
The consistent upside failures point to more downside. After four sessions lower from the follow through, there actually could be a bounce that sticks. Could be, and that would be used to set up some more downside. In the event there is no bounce, we will look at some more plays such as AMZN. Oh, and watch for that bottom they are calling for.
While CPI being minutely lower appeared to give the market hope that Mr. Powell in his next appearance would take a more relaxed position to rate hikes, not much else helped.
Trade: The Administration said it was going to hold off for now on new auto tariffs. That would appear to be a positive, but the market didn't make any great surge. Gee, kind of like Captain Obvious there.
Germany: GDP fell -0.2%, the first contraction reading in 3 years. Autos are hurting its economy. Perhaps Trump took pity upon them, but that does not appear to fit Trump's MO -- when he has an opponent in a weakened position he tends to take advantage of it.
Oil: OPEC reportedly ready to do 'whatever it takes,' and is considering a 1.4M bbl/day production cut. Oil was up a whopping 0.56 cents (1.01%).
Stats: -205.99 points (-0.81%) to close at 25080.50
Stats: -64.48 points (-0.90%) to close at 7136.39
Volume: 2.54B (+8.09%)
Up Volume: 1.13B (-200M)
Down Volume: 1.39B (+395.22M)
A/D and Hi/Lo: Decliners led 1.92 to 1
Previous Session: Decliners led 1.05 to 1
New Highs: 18 (-3)
New Lows: 206 (+31)
Stats: -20.60 points (-0.76%) to close at 2701.58
NYSE Volume: 998.62M (+5.24%)
Up Volume: 380.209M (-70.529M)
Down Volume: 595.16M (+107.252M)
A/D and Hi/Lo: Decliners led 1.5 to 1
Previous Session: Decliners led 1.07 to 1
New Highs: 23 (-5)
New Lows: 172 (+21)
VIX: 21.25; +1.23
VXN: 28.37; +0.69
VXO: 22.15; +0.70
Put/Call Ratio (CBOE): 1.22; +0.24
Bulls and Bears:
Bulls are on an impressive dive from the low sixties to the low forties. Straight down. Bears are up but held steady on the week. Bulls are willing to converge, bears are not there yet. Stocks selling after bulls in the sixties is normal. They have bounced from here before, but in 2015 and again in 2016 they fell to the mid-twenties, crossing over with bears.
This now gets at least interesting. Bulls tumbled 6.2 points, now well below 50. Perhaps that is the dam breaking and negative sentiment will ramp. It is noteworthy that the market rebounded in the aftermath. Bears mad a significant move, at least for the bears.
Bulls: 42.5 versus 44.3
Bears: 19.8 versus 19.8
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 42.5 versus 44.3
50.5 versus 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: 19.8 versus 19.8
19.8 versus 19.0 versus 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: 3.127% versus 3.147%. Trying to bounce off that double bottom.
Historical: the last sub-2% rate was in November 2016 (1.867%). 3.147% versus 3.186% versus 3.239% versus 3.228% versus 3.222% versus 3.201% versus 3.22% versus 3.146% versus 3.149% versus 3.119% versus 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: 1.13264 versus 1.13124. Euro bouncing the past two sessions after a lower low.
Historical: 1.13124 versus 1.12348 versus 1.13475 versus 1.1364 versus 1.14329 versus 1.14228 versus 1.14090 versus 1.13881 versus 1.14019 versus 1.13394 versus 1.13455 versus 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
USD/JPY: 113.576 versus 113.900
Historical: Last below 109 in June 2018: 113.900 versus 113.717 versus 113.723 versus 113.72 versus 113.641 versus 113.419 versus 113.244 versus 113.204 versus 112.81 versus 112.877 versus 112.876 versus 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: 56.25, +0.56. Oil actually bounced. Barely. And this is all it can do on OPEC talking -1.4M bbl/day production?
Gold: 1210.10, +8.70. Modest bounce after falling through the 50 day MA's Friday.
Have a great evening!
End part 1
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