Monday, November 19, 2018

The Daily, Part 1, 11-19-18

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11/19/2018 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: None issued
Trailing stops: None issued
Stop alerts: OKTA; SQ; V

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- Upside potential again fails as growth bombs, same leaders lead.
- NASDAQ looks headed to the prior lows as key groups such as software collapse.
- Must be a bear market -- the experts say so. But really?
- Thus far the money shift continues out of big growth to non-growth.

Again, the market simply cannot play with any kind of lead, even if it is just a rebound. After a push on Friday's expiration, stocks sold back the entirety of the Thursday bounce -- DJ30 both the Thursday and Friday bounce -- as the upside was sold again. Many are claiming this a bear market; whether it is or not the indices are showing a continuing correction, unable to hold any moves upside.

SP500 -45.54, -1.66%
NASDAQ -219.39, -3.03%
DJ30 -395.78, -1.56%
SP400 -1.42%
RUTX -2.03%
SOX 03.86%
NASDAQ 100 -3.26%

VOLUME: NYSE -14%, NASDAQ -3%. At least volume tapered as stocks sold off harder, but it was post-expiration. Trade was below average NASDAQ, average NYSE. Not huge selling pressure.


Is this a bear market as some proclaim? No one knows. Stocks, after a decade of Fed support and thus Fed-induced gains, rallied on the Trump stimulus. Now the Fed has pulled the plug and they are giving up some gains. In reality, it is just a fraction of the gains since 2016. But, for the first time in what is for many, many fund managers the ONLY time, stocks are not finding a bid on a pullback. Specifically, tech stocks and the FAANG are not finding a bid on a pullback.

Outside of those stocks there are bids and uptrends in the same stocks that have scored gains while we carefully tracked the daily ups and downs -- mostly downs -- of the tech and growth areas. JNJ, VZ, MKC, KO, LLY -- food, some drugs, personal products, utilities -- boring but moving up.

Thus, it is not a bear market. A bear market tears everything down. Money does not move into stocks bout OUT. Money is moving to non-growth areas as it flees growth. Sure growth is in a correction and moving toward a bear market, but it is not there. Look at the index charts: these are not bear markets. They are corrections in an uptrend. NASDAQ has not even broken its 2016 uptrend. Even the individual stocks being lit up to the downside and suffering 20%+ losses -- bear markets as the financial stations call them -- are not that out of line. Growth stocks can and will suffer 40% to 50% corrections and still continue. They just have not had that happen much in the Fed-aided rally. Many fund managers today have never seen a non-Fed rally and thus don't understand this fact about growth stock selling. Oh well, they are seeing it now.

Sure, perhaps they will be in bear markets, and certainly it is a time to not play growth -- proved today by its abysmal performance after some decent setups through last week -- but that occurs in any correction. Granted, bids have always returned after even steeper corrections during this 10 year Fed-aided and induced run, but this selling isn't even as tough as the late 2015/early 2016 selloff. It is not pretty, and it is brutal for many of those big names, but whether it continues into a massive bear market is another question.

Now, I am not saying there will be no bear market; it can happen if the downside slowly consumes even the uptrending stocks. In a full bear market even those will be consumed. For now, however, they are receiving bids, receiving some of the money pulled out of the growth areas. Even happened Monday -- you know, VZ, JNJ, LLY, KO, etc.



Even with the lighter volume the losses were sharp on NASDAQ and NASDAQ 100. Heck they were sharp on all indices, but NASDAQ and NASDAQ 100 took sharp dips toward the October lows. Hmm. Wonder what happened to that bottom that had formed last week. From daily bottom watching, to a selloff, back to a bottom, then a hammering of growth Monday.

NASDAQ: Gapped lower, sold through last week's low, put in a lower closing low for this selling 'event.' Likely tries for the October low. Oh, then maybe they will find the 'bottom.'

DJ30: Sold back to close just below the 200 day SMA on continued above average volume. Okay, back to trying for the bottom. What kept the Dow down were stocks such as BA (-4.47%), AAPL (-4%), MSFT (3.4%) -- I guess that is how growth.

SOX: The life shown Thursday is getting snuffed out. Gapped modestly lower, sold to a point over last week's closing low. Lower high on the bounce, harder to make the case that chips could lead farther upside from here.

SP500: Fell away from the 20 day EMA test. Closed below last week's closing low. Lower trade not bad, but it was a slim silver lining. For now it is working back and forth at 2700ish support.

RUTX: Dropped to close below the prior week's low. Still in the range from last week, but definitely on the heavy side, i.e. looking as if it wants to test the prior low even with lower volume.

SP400: Not bad, holding in the recent range. Will see if it can continue the lateral move.


Dow-type leaders: JNJ, VZ, KO, MRK, LLY up, MCD off a bit but solid. WBA sued by Florida for opioid sales and didn't phase it. AXP off but still solid. These look just fine.

Chips: So much for the potential here. XLNX still decent enough as is INTC. ENPH still in a good pattern and MLNX, ON, MCHP, PLAB made it through fine. AAPL-related chips such as QRVO, SWKS, AVGO were lower, but I guess because they were so weak they were not slaughtered.

China: Surprisingly, not bad. QIWI very nice low volume test. BABA faded on light trade. SINA, JD sold harder. NTES holding up. Not bad, again surprisingly so.

Food: KO, PEP, KR higher. MKC, CMG, MCD not bad. POST, up big Friday, lost it all Monday.

Telecom: Not so impressive outside of VZ.

Software: Overall clobbered though VMW and SYMC put in decent tests, VRSN not bad. DATA, NOW, FFIV, TTWO bombed.

Drugs: LLY, PFE, MRK, JNJ, HZNP. All decently upside.


Stats: -395.78 points (-1.56%) to close at 25017.44

Stats: -219.40 points (-3.03%) to close at 7028.48
Volume: 2.38B (-3.25%)

Up Volume: 436.04M (-773.96M)
Down Volume: 1.91B (+730M)

A/D and Hi/Lo: Decliners led 2.93 to 1
Previous Session: Advancers led 1.03 to 1

New Highs: 19 (-14)
New Lows: 193 (+48)

Stats: -45.54 points (-1.66%) to close at 2690.73
NYSE Volume: 906.082M (-13.63%)

Up Volume: 286.05M (-296.772M)
Down Volume: 588.514M (+139.138M)

A/D and Hi/Lo: Decliners led 2.78 to 1
Previous Session: Advancers led 1.11 to 1

New Highs: 47 (+7)
New Lows: 241 (+59)


VIX: 20.10; +1.96
VXN: 27.44; +3.06
VXO: 21.88; +1.94

Put/Call Ratio (CBOE): 0.97; +0.03

Bulls and Bears:

Bulls held relatively steady after a serious dive from the low sixties to low forties. Bears actually shrank. Just not a lot of convergence between the two right now to show really bottoming action, BUT bulls have dropped off significantly, and that is some upside impetus.

Bulls: 42.9 versus 42.5

Bears: 19.0 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: 42.9 versus 42.5
42.5 versus 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: 19.0 versus 19.8
19.8 versus 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: 3.056% versus 3.065%

Historical: the last sub-2% rate was in November 2016 (1.867%). 3.065% versus 3.116% versus 3.127% versus 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: 1.14484 versus 1.14172. Euro made it to the 50 day EMA, where it stalled early November.

Historical: 1.14172 versus 1.13308 versus 1.13264 versus 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: 112.617 versus 112.831. Still trying to hold after a week test.

Historical: Last below 109 in June 2018: 112.831 versus 113.585 versus 113.576. Was at 110 three weeks back.

Oil: 57.20, +0.52. Modest bounce continues. Modest.

Gold: 1225.30, +2.30. Another slight push higher after a week of gains.


Post-expiration stocks dropped. Big name growth took the biggest beating, large cap NYSE not bad. Some of the growth stocks in software, FAANG, SCAANN took a pounding. As cousin Eddie put it in 'Vegas Vacation' after Clark lost a pile of money at the blackjack table, I haven't seen a beating like that since someone put a banana in my pants and turned a monkey loose. It has been a while.

One positive: with the repeated failure of bounce attempts perhaps that will stop the 'this is the bottom' prognostications, the watched pot never boils lack of a market bottom syndrome. Today one of the big names, BAC or MS or some similar entity said a bear market is here. GS said 2019 would be an economic slow crawl. The pessimism is ramping up. Getting there.

But not quite. VIX is still quite low. Hell, it is low. Looks as if it is ready to bounce off the 50 day EMA in a pennant pattern formed off the early October low. At least that ultimately leads to a bottom. Remember, all the pieces never came together for a bottom that leads to a new high kind of move. Again, perhaps a further selloff here gets everything lined up and just skips an interim bounce that would have failed anyway.

In any event, the bias still remains down, index moves higher as well as any growth move upside is still a definite Missouri 'show me,' and the boring NYSE large cap names are the best upside money. We are only sorry we did not let NVDA keep running and that the Thursday move did not result in some more upside for a few days to better play a new downside move.

Have a great evening!

End part 1
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