Tuesday, November 13, 2018

The Daily, Part 1 of 3, 11-13-18

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11/13/2018 Investment House Daily
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Targets hit: VZ; WBA
Entry alerts: NVDA
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.


- Stocks try to rally early, fail to hold a move -- once again no cathartic selloff.
- Recent NYSE leaders taking a breather, techs still weak for the most part.
- Suddenly calls for a rally to year end. Will the algos provide one even with beaten down tech names?
- Still some good patterns, but still not enough to support a lasting move.

Stocks were almost chronically weak Tuesday, and frankly the setup heading into the session was not conducive to a Tuesday bottom. Futures up, then futures faded, then stocks rallied at the open only to turn over and sell off most of if not all of the move. Starting with upside let the pressure off. Whatever fear, worry, angst, or anxiety that formed Monday was let off the hook with the higher futures. The result was mushy, back and forth trade all session with a muddled close.

SP500 -4.04, -0.15%
DJ30 -100.69, -0.40%
SP400 0.01%
RUTX -0.26%
SOX 1.35%
NASDAQ 100 0.03%

VOLUME: NYSE +11%, NASDAQ +2%. Not bad with volume rising while SP500 holds steady at the early October low.


But apparently there is nothing to fear. Afterhours Cramer is calling for a time to buy on the big name techs. On other shows the line is 'if the market is going to rally to year end, the techs and semis have to be leaders.'

Okay, everyone is back to gearing up for a rally, calling for a bottom. Looking at the charts of AMZN, AAPL, NFLX, NVDA, GOOG I see various stages of crapola. FB is a possibility and it may be time to put it back on, but the rest hare trending lower. Now they could all get an algo-induced buy program and make the end of year run come alive, but the patterns are not showing accumulation that leads to breakouts. They can rally from here on pure yearend rallying, but once the algos stop, the move stops.

Indeed, FB, NVDA, NFLX and company are up late on this rah-rah rally to yearend talk. From a session that was a high to low to high to lower to time to buy. Nothing different in the trade from any of the recent action. From upside then downside, sharp downside, and more upside them downside emerges a great buying opportunity?

Hmm. But, as Hans Gruber said to his safe-cracker Theo who said it would take a miracle to get through the final electromagnetic lock on the Nakatomi Corporation safe, 'It's Christmas, a time for miracles.' -- 'Diehard' (1988).

Thus, while there is no reason to believe these stocks and their patterns show a reason to bounce, you cannot discount that if the algos decide to try and drive a end of year rally. Sounds crazy, but you take the market presented, and while it likely would not last past a yearend move, if stocks start breaking higher you start playing some more upside, and not just WMT, MCD, JNJ, VZ and the like that have made us money on the last move.


To view, click on the following links:


There are some charts that support a rally, just not many that are cited by the pundits.

DJ30 showed a hammer doji over the 200 day SMA Tuesday. It is definitely in the field to bounce, particularly with some of those names we have played a bit rested now. To us it is the best of the indices and of course it has led the moves of late. DJ20 transports are not showing the same pattern, but they are working on an inverted head and shoulders the past 5 weeks as are some other indices. They need to break higher to give any DJ30 move credence.

SP500 and SP400 show the same pattern as DJ20: a 5 week inverted head and shoulders, working on what looks to be the low of the right shoulder. Not bad, but with the continued failure to hold upside moves and now washout session, they are going to have to show strong moves higher. Thing is, they can do it and keep the follow through very much alive.

NASDAQ is similar, but its right should attempt has dipped below the recover lows as well as the early October first selloff low that would represent the left shoulder. Problematic is a good word to describe it.

SOX: See NASDAQ pattern, just a bit worse on this last part.

RUTX: See SOX. Same pattern for the small caps, and not necessarily a delight to the upside.


Recent leaders such as WMT, MCD, VZ, WBA, JNJ, DG, AXP are making the thus far orderly tests we said they would make. That is why we took some of the gain, and now we see if they can finish the job and set up new moves.

Techs: Most do not show good patterns as outlined above with some of the big names so many watch and desire to rally. Others are not bad and can make moves as noted before: VMW, VRSN, DATA, TWLO are well known names with good patterns, contrary to NOW, NFLX, AMZN and others noted. Possibles are FB, ADBE, CRM, kind of in between good and bad.

There are others not big names with good patterns: CIEN, GLUU, COST, CREE, WDAY, SBUX (with a bit more test), GOGO (telecom), ENPH (chips).

Even some non-techs: VLO (refining), VMC (materials).

There are potential new leaders out there -- 17 or so listed above. Good pattern for the most part, but not what you would call a wave of stocks ready to lead higher.

That takes you back to the 'yearend rally just because it is year end' theory for touting the old FAANG big names and others. Okay, it can happen. All it takes are algos given the 'buy the yearend' formula. Maybe these pundits can order a redirecting of the programs to buying. Again, hmm.


Stats: -100.69 points (-0.40%) to close at 25286.49

Stats: +0.01 points (0.00%) to close at 7200.87
Volume: 2.35B (+2.17%)

Up Volume: 1.33B (+933.75M)
Down Volume: 994.78M (-895.22M)

A/D and Hi/Lo: Decliners led 1.05 to 1
Previous Session: Decliners led 3.65 to 1

New Highs: 21 (-9)
New Lows: 175 (-1)

Stats: -4.04 points (-0.15%) to close at 2722.18
NYSE Volume: 948.909M (+11.13%)

Up Volume: 450.738M (+306.179M)
Down Volume: 487.908M (-214.654M)

A/D and Hi/Lo: Decliners led 1.07 to 1
Previous Session: Decliners led 2.76 to 1

New Highs: 28 (-31)
New Lows: 151 (+20)


VIX: 20.02; -0.43
VXN: 27.68; -0.43
VXO: 21.45; +0.45

Put/Call Ratio (CBOE): 0.98; -0.21

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: 3.147% versus 3.186%. Bonds in rally mode again.

Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.13124 versus 1.12348. After getting blasted Monday, the euro got most of it back.

Historical: 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: 113.900 versus 113.717

Historical: Last below 109 in June 2018: 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: 55.69, -4.24. A bomb lower after 6 weeks downside. Have not seen a selloff such as this since summer 2015. That was also from a high and was just the first leg. It sold again to end 2015 and begin 2016 in an 8 week selloff.

Gold: 1201.40, -2.10. A week downside, showing a doji at support at 1200.


Okay then, calls for a yearend bounce to start anytime, even in the -- and in some rally calls especially in the -- big FAANG and similar names. As noted Monday, we are in a Missouri 'show me' market. From crappy patterns will a yearend rally emerge?

Maybe if it does it won't be in those stocks but others that are in good patterns. Maybe it is in all of them. We will be ready with current plays such as VMW, DATA, FIVN, HLIT, LASR, ZS, CIEN, GLUU, VRSN. We can also look at TWLO, COST, FB, CREE, WDAY, ENPH as other stocks in really good patterns. If there is a break higher then these are well-positioned.

In the big picture, nothing has changed from Monday in terms of upside. Indeed, you can argue the odds are worse as the selloff Monday did not continue into Tuesday and it let the pressure off. More than that, stocks attempted to rally but managed to blow that move. As noted earlier, this is not the kind of action in itself that suddenly turns a wishy-washy market into a big buy.

As always, however, we play what the market presents. If the market breaks higher, we use our plays to move in.

Have a great evening!

End part 1
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