Thursday, November 01, 2018

The Daily, Part 1 of 2, 11-1-18

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11/1/2018 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: DATA
Entry alerts: INTC
Trailing stops: None issued
Stop alerts: None issued

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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.


- Third day of upside is still solid as small and midcaps join in.
- Jobs, AAPL earnings Friday will give near term direction.
- Possible scenarios from here.

Stocks rallied for a third session in this bounce move, starting higher early on with futures moving upside but not as dynamic as the prior two sessions. Stocks opened higher but quickly peaked and started to sell in the first half hour.

Then, rescue time. The President announced he and Xi had an extended telephone conversation regarding trade and that the negotiations were 'moving along nicely.' No one believes that or at least should believe that, but as with Pavlov's dogs, investors are conditioned to buy on positive trade comments. Or are they? During the selling there were positive and negative stories on trade; stocks sold regardless.

With a different attitude right now, however, stocks found new bids and rallied well into the last hour before a modest late fade. Another solid percentage gain with the small and midcaps coming around on the session, good low to high action, volume was lower though still above average.

SP500 28.63, 1.06%
NASDAQ 128.16, 1.75%
DJ30 264.98, 1.06%
SP400 2.00%
RUTX 2.22%
SOX 4.64%
NASDAQ 100 1.47%

VOLUME: NYSE -20%, NASDAQ -7%. Lower but not a major drop off in trade. Cannot move higher each session.

ADVANCE/DECLINE: NYSE 3:1, NASDAQ 3.5:1. Definitely helps with the small and midcaps move.


To view, click on the following links:

NASDAQ rallied to the 20 day EMA on the close, still 85 points off the 200 day MA. Good volume all week long.

SP500 is also moving up toward the 200 day SMA, 25 points to the north, about the move Thursday. Same as with NASDAQ. Note the gap upside from Wednesday (same on NASDAQ); that could be filled if the market fails here and still set a bottom off that late October selloff low.

DJ30 moved over the 200 day SMA on lower though still above average volume. AAPL will not help DJ30 Friday, but some of the other leaders that took the last couple of days off as the beaten down stocks bounced would likely start back upside gain, giving DJ30 continuing relative strength.

SOX exploded higher, aided by NXPI's earnings. INTC rallied well as did most all chips. From trashed to a sharp rebound. SOX is still well off the 50 day EMA and the 200 day SMA. I move up to 1290ish and then a fade will set up some interesting buys.

SP400 surged toward the 20 day EMA and is filling the gap lower from late October. Important test here for the midcaps.

RUTX moved up to the 20 day EMA after failing at the 10 day EMA on the last bounce. Not bad but a lot to overcome and will need a lot more setting up.


Materials performed, a very good sign (e.g. TREX). Chips were very strong, coming back big; again they will need to test but they could be buys before too long. The recent more 'stoic' leaders are testing a bit but look great (WMT, MCD, JNJ). After this move higher and a test, many of those techs will be in a pretty good position to buy for a new rally.

Note NASDAQ 100 lagging. The big names were higher, but not that much higher as stocks such as AMZN approached its 200 day SMA from below. Some very big showdowns with resistance immediately ahead, particularly with AAPL afterhours sharply lower after it beat on most everything but missed on iPhone units (46.9M vs 47.5M expected). Moreover, AAPL is no longer going to give unit sales each quarter, saying it was not a good indicator of the company's performance. Not everyone feels the same way and indeed, when a company starts withholding unit information it means the sales are topping out and historically has indicated a pricing decline ahead. AAPL closed at 222.22 and is trading 207.80 afterhours, a bit off its low.

Yes, serious resistance tests are ahead as the thrashed and trashed NASDAQ names recover to support in a 3-day rebound. There are some interesting possibilities.

First, there can be the relief move to resistance followed by a new leg lower. That would be leg three if it occurs. That is the first choice, the current trend the market must show it can beat. The indices have made good bounces off of DJ30's ABCD consolidation and still look solid; more upside off that pattern is not a far reach. Again, after this bounce they have to prove it.

Second, this move with the ABCD bounces continues, taking the indices next resistance at the 200 day (DJ30 is already there) and indeed beyond to the peak of the initial relief move. It may or may not give a follow through session (strong price move, strong volume); that really does not matter for this move.

The key to this one is the move up to the first relief move bounce high. From there a fade that acts as a shakeout as many figure the recovery is over. Then a bottom at the initial selloff low from mid-ish October. That sets up a . . . inverted head and shoulders pattern. That is a pattern we would certainly want to play.

Third, a move a bit higher, perhaps to the 200 day SMA or similar resistance, a move that fails. It then sells to fill the gap from Wednesday, acting as a shakeout here as well. Then you see a new move higher that has follow through attributes (2% price move, strong volume, some good breakouts).

Fourth, a bit more upside -- or not after AAPL's earnings -- and then a rollover. After all, VIX never made any kind of serious spike, never gave a real cathartic cleansing of sellers. Hope is a powerful selloff painkiller, but it does not cleanse the market. It actually does the opposite.

If door number four is chosen, then we play the downside. The current bounce is roughly equal to the first in size, and with the indices outside of DJ30 approaching the 200 day SMA, you start watching for the stall and fall near that level.

At the same time, however, even if door 4 is chosen, if the gaps from Wednesday are filled, you still have to watch for bottoming action at that recent low. Cannot rule it out and you have to watch on each such test.

Those are the variations that are presented at this juncture. The action thus far is good, but if you look at patterns such as AMZN and some other big names, they are in relief moves to this point. You don't want to get caught up in the hopeful excitement but keep the big picture in mind and remain dispassionate.

Semiconductors are making strong moves, but they have come from the sewer on these moves. You don't chase them as the move out of the sewer, but wait for a test of the surge. That typically will coincide with the market overall testing and set up better entries. We did pick up INTC today but it already broke through some resistance, tested, and started back upside.

We have bought some positions and indeed took some gain on DATA today. The next really good upside buy point, if it comes, will be on tests of the current move per the above scenarios. That accomplishes so much: taking the fluff out of this move, proving up some breaks through resistance, and setting up a new break higher that can provide the follow through session.

Friday is jobs Friday. The market is up 3 sessions with strong moves, AAPL is off 15 points afterhours, basically at the intraday low from 10/29, AAPL's low point on this selling. SPY closed at 273.34 and was down to 271.65 on the low but is recovering some.

That is totally not great for the rebound and makes what's behind curtain number 4 more realistic. Okay, maybe it just has to fill the upside gap from Wednesday and then provide the new break higher and that also incorporates the follow through move. After a further test lower, there could very well be some good bases shaped up, ready to move.

Have a great evening!


Stats: +264.98 points (+1.06%) to close at 25380.74

Stats: +128.16 points (+1.75%) to close at 7434.06
Volume: 2.71B (-6.87%)

Up Volume: 2.26B (+260M)
Down Volume: 436.27M (-446.34M)

A/D and Hi/Lo: Advancers led 3.48 to 1
Previous Session: Advancers led 1.59 to 1

New Highs: 39 (-6)
New Lows: 78 (-58)

Stats: +28.63 points (+1.06%) to close at 2740.37
NYSE Volume: 1.031B (-19.61%)

Up Volume: 736.426M (-47.275M)
Down Volume: 289.988M (-201.645M)

A/D and Hi/Lo: Advancers led 3.02 to 1
Previous Session: Advancers led 1.5 to 1

New Highs: 28 (+3)
New Lows: 74 (-68)


VIX: 19.34; -1.89
VXN: 26.12; -3.00
VXO: 21.25; -2.32

Put/Call Ratio (CBOE): 0.85; -0.27. First time below 1.0 in something like 13 sessions.

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: 3.146% versus 3.149%

Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.14019 versus 1.13394. Trying to bounce off the recent selloff.

Historical: 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 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: 112.81 versus 112.877.

Historical: Last below 109 in June 2018: 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: 63.69, -1.62.

Gold: 1238.60, +23.60. Big surge off the 50 day MA test.

Have a great evening!

End part 1 of 2
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