Thursday, November 15, 2018

The Daily, Part 1 of 3, 11-15-18

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11/15/2018 Investment House Daily
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Targets hit: None issued
Entry alerts: TWLO; XLNX
Trailing stops: None issued
Stop alerts: None issued

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- Stock indices sell, reverse, manage to hold the gains.
- After 4.5 days lower some life, but outside DJ30, SOX, looks like more of the same.
- SOX closed well, but NVDA, AMAT earnings afterhours are not upside conducive.
- JWN, WSM earnings eroding one of the market's leadership groups.
- China stocks trying to step up and rally. Software continues to look good.
- Friday in a weak overall market not a great buying time, but some outsiders look good.

After 4.5 days downside (including the Thursday early weakness), stocks finally bounced. Oh, and they held the bounce. That is a bit of a change of character though you can argue they were simply oversold after the drop straight down from the follow through session two Wednesday s back. Pretty good argument.

The bounce itself showed good price action with the indices posting roughly 1% and higher moves. Volume was lighter, however, once again showing the buy side weaker than the sell side.

SP500 28.62, 1.06%
NASDAQ 122.4, 1.72%
DJ30 208.77, 0.83%
SP400 1.16%
RUTX 1.44%
SOX 3.34%
NASDAQ 100 1.78%

VOLUME: NYSE -10%, NASDAQ -2%. Volume remained above average, but again on an upside session trade was lower than selling volume. Still not a surge of buyers. Perhaps bounce-worthy, but big picture still not as strong as the selling.

ADVANCE/DECLINE: NYSE 1.3:1, NASDAQ 2.1:1. Not even really decent though NASDAQ was better thanks to the chips looking better. Before the afterhours earnings at least.


To view, click on the following links:

The charts as a whole are less than impressive, just more of the same. BUT . . . there is something here. At least there was before NVDA's earnings: they took the blow torch out for those and the stock is off 18.5%. That could, just possibly, put the kibosh on what was a newly interesting SOX pattern. And NASDAQ.

So, those results likely take the market back to the 'just more of the same' action it has shown. Likely. If the market does not impute NVDA's results to other stocks then perhaps they can make something of this upside. Thus, with that possibility I will discuss the 'something' in the market action Thursday.

To start, I just want to say that after 4.5 downside days, a 1%ish or more bounce does look more intriguing. But, of course, there is more to it. Not any newfound leadership that was not there before today though some areas continue improvement, e.g. China stocks. Go figure.

No, it is the symmetry of some of the pullbacks.

DJ30: A much stronger recovery from late October into November (7-8 sessions) versus the initial bounce (3-4 sessions), including a follow through session. Now a 4.5 session test to the 200 day SMA with a nice doji with tail reversal on rising volume. DJ30 continues to sport the best action, and this setup gives the Dow a bona fide chance to rally back upside for a yearend rally. Stocks such as MCD, JNJ, VZ, WBA, KO -- already leaders -- are in great position to rally again. Even WMT, knocked back to the 50 day MA on its earnings, is still in good position to rebound from earnings that were not bad -- seen that before. INTC, AXP, MRK are also in very good position to break higher and thus push DJ30 upside off this follow through test to the 200 day SMA.

SOX: Filled the gap off the October low Monday, worked laterally, then jumped higher today with stocks such as INTC, XLNX, AVGO looking super. Nice higher low off the recovery, well-positioned to move. Of course, NVDA and AMAT (weak guidance) are trying to wreck that show, but keep an eye on XLNX, AVGO and INTC. They could go their own route upside.

The chart quality drops off after those two. The rest of the charts show some of the attributes, but frankly not as many, not as clear, just more of the same.

NASDAQ: Filled the gap off the October low Wednesday, bounced from there; at least that won't hold it back (as if you were worried about that). Decent gain but lower trade as these stocks moved higher. It has vestiges of DJ30 and SOX, but it is just not as well set up and it also does not have a ton of leadership.

SP500: Reached lower, filled the gap off the October low on that dip, then reversed to positive. Volume faded 10% so not as strong as the selling, but it was still above average -- not a complete dearth of buyers. Decent enough to bounce but tons of resistance starting with the 200 day SMA.

SP400, RUTX: Patterns very similar to NASDAQ and it makes sense as they are growth indices. They have that inverted head and shoulders look still, filled the October gap off the low. Okay, they can bounce but there is no reason to call a bounce, same as NASDAQ and SP500.


Dow-type leaders: The stocks mentioned earlier, e.g. JNJ, MCD, VZ, KO, WBA have rested and look good to go again. That coincides with DJ30 showing a doji with tail at the 200 day SMA. AXP, INTC, MRK, WMT are in position to step up and help out.

Industrial/Machinery: With the MMM earnings we thought the group might be looking better. Not really. CAT, EMR, TEX, UTX -- more of the same, i.e. off the lows but not showing much else.

Steel: Someone said it was better, and in some cases such as SID, perhaps. Overall, however, I suppose better means just not as bad.

China: Yes, China. We put SOHU and HTHT on the report awhile back, but we were premature. Now, perhaps, China is here -- as Wang's father told Jack Burton (Kurt Russell) in 'Big Trouble in Little China.' SOHU looks good. SINA is not bad. NTES gapped upside Thursday. QIWI gapped upside Wednesday. BABA is over the 50 day EMA on volume. JD is looking good but earnings are just ahead. Hmm, maybe China IS here.

Food: MCD looks great in its pullback. MKC ditto. CMG is great -- wish we were not already in it; looks as if we buy more when it bounces from here. KO in a nice rest. KR needs to bounce off the doji at the 20 day EMA.

Telecom: VZ slowed this week, moving laterally after its run; solid. HLIT is showing great volume as it tries to breakaway.

Chips: AVGO, XLNX, INTC, ENPH still look good. We will see if they can survive AMAT and NVDA bombing lower afterhours on their results.

Software: FEYE still solid in its pullback. DATA started to break higher Thursday. SYMC broke over the 200 day SMA on decent volume Thursday. VRSN looks ready to break higher. TWLO broke higher and we moved into the position. There ARE stocks here that could lead a tech move.


Stats: +208.77 points (+0.83%) to close at 25289.27

Stats: +122.64 points (+1.72%) to close at 7259.03
Volume: 2.51B (-1.18%)

Up Volume: 1.85B (+720M)
Down Volume: 632.46M (-757.54M)

A/D and Hi/Lo: Advancers led 2.07 to 1
Previous Session: Decliners led 1.92 to 1

New Highs: 20 (+2)
New Lows: 200 (-6)

Stats: +28.62 points (+1.06%) to close at 2730.20
NYSE Volume: 893.016M (-10.57%)

Up Volume: 568.584M (+188.375M)
Down Volume: 305.431M (-289.729M)

A/D and Hi/Lo: Advancers led 1.33 to 1
Previous Session: Decliners led 1.5 to 1

New Highs: 21 (-2)
New Lows: 241 (+69)


VIX: 19.98; -1.27
VXN: 26.05; -2.32
VXO: 21.51; -0.64

Put/Call Ratio (CBOE): 0.85; -0.37

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: 3.116% versus 3.127%. Bonds gapped higher, faded, still on the recent upswing off the early November lows.

Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.13308 versus 1.13264. Doji at the 10 day EMA as the euro bounced modestly the past 3 sessions.

Historical: 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: 113.585 versus 113.576. Doji with tail tapping the 50 day MA. Good test, ready to move higher.

Historical: Last below 109 in June 2018: 113.576 versus 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: 56.68, +0.43. An ever so modest bounce for a second session. Not much there.

Gold: 1215.00, +4.90. Up 2 sessions to the 50 day SMA.


I hate it when stocks set up to move higher on a Friday. Even more so in an overall weak market. In these conditions a weekend bounce can run into the harsh fist of reality Monday.

They may run into that fist Friday given the results from NVDA, AMAT, JWN, WSM. All of them disappointed and the latter are in a sector that has helped provide what little leadership the market has 'enjoyed' to this point.

With that, there are still stocks we like even on Friday. AXP, VRSN, ZS, CIEN, FIVN, GLUU are good and on the report, CMG if not in. More such as SOHU, SYMC look solid to move in. If they show the moves, we will move in some.

Have a great evening!

End part 1
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