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11/20/2018 Investment House Daily
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MARKET ALERTS:
Targets hit: JNJ; VZ
Entry alerts: None issued
Trailing stops: None issued
Stop alerts: VMW; WBA; WMT
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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.
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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.
MARKET SUMMARY
- New gap lower sends indices to October lows and beyond.
- Beaten down sectors rebound off the gap lower, recent leaders suffer some profit taking as money moves.
- Many reasons you can point to for finally seeing a yearend rally.
- More damage done, some rebounds, some setups, but still just a bounce for now . . . if it comes.
If a test of the October lows was needed, the test is here. DJ30, SP500, RUTX are at the closing lows. NASDAQ and NASDAQ 100 gapped below the October lows. SOX gapped to near the closing lows then rebounded to positive. SP400 hung in better than all, at least on this leg of selling, as it is still easily above the October lows. Go figure.
SP500 -48.84, -1.82%
NASDAQ 11j9.66, -1.70%
DJ30 -551.80, -2.21%
SP400 -1.69%
RUTX -1.84%
SOX 0.15%
VOLUME: NYSE +10%, NASDAQ +12%. Of course volume jumped on a selloff. There was a reversal in some areas, however, and NASDAQ held the 2016 trendline. Higher volume in those situations is not bad at all.
ADVANCE/DECLINE: NYSE -5.5:1, NASDAQ -3.2:1. Pretty salty downside breadth.
NEW LOWS: NYSE 572, NASDAQ 395. Getting close to bounce-worthy.
So the indices are there, the selling complete, right? I am sure there are those saying that after this session:
*Stocks that reported good quarters were crushed for the heck of it, e.g. KSS (-9.23%). They were shooting even the good news.
*Stocks are way oversold. True, but oversold stocks can become even more oversold in bears.
*At the worst of it, NYSE downside volume to upside was roughly 9:1. Not bad, 10+:1 is better.
*Gloom was pretty high with talk of 'death crosses' on NFLX, NVDA, GOOG. Of course FB death crossed in early September; not a lot of talk about that.
*Some stocks, including big names, opened sharply lower but rebounded positive, e.g. NVDA, GOOG.
*The indices are testing those October lows along with some key names (e.g. GOOG).
*Some stocks didn't even sell, or at least remained in their patterns (e.g. INTC).
Those are some pretty good points and can certainly lead to market bounces. It may be that the market is ready to rally in a more traditional yearend bounce after this move to near the prior lows. The trade around Thanksgiving can be quirky. This would qualify as quirky from the look of it.
The points above can lead to a bounce, but VIX remained sluggish at best, moving to 23.81 on the high. Nowhere near the October highs. So, you can get a bounce, a year end run, but as one commentator put it, there was selling but no real bleeding on the day.
Not to say they were not gloomy pre-market. Kind of resigned to the selling, gloomy, things were just going to sell no matter what. But as soon as TXN turned positive along with a couple of other stocks in the first five minutes of trade, a reversal was coming. So much for gloom and doom.
CHARTS
To view, click on the following links:
http://investmenthouse1.com/ihmedia/f/charts/sp500.jpg
http://investmenthouse1.com/ihmedia/f/charts/NASDAQ.jpg
http://investmenthouse1.com/ihmedia/f/charts/DJ30.jpg
http://investmenthouse1.com/ihmedia/f/charts/RUTX.jpg
http://investmenthouse1.com/ihmedia/f/charts/SP400.jpg
http://investmenthouse1.com/ihmedia/f/charts/SOX.jpg
There are definitely reasons for the indices to bounce. Time to look at the charts.
DJ30: Gapped lower to close near the session low and at the late October closing low. MACD is higher at this test of the prior low. Volume high as it tested that low. Okay, there is some foundation to watch for a bounce. Tuesday was not a bounce, but it can turn into one.
SP500: Same as DJ30. Gapped lower to the October closing low and held. Rising, above average volume. As with DJ30, testing the prior lows on better MACD. As noted earlier, if investors wanted a test of the prior low, they have it, and now it shows if it can bounce.
NASDAQ: Gapped below the October low to the trendline from early 2016. Showed a doji at that trendline. MACD a bit higher here as well. Okay, tested the prior low, broke it, testing the longer term trendline. The ingredients are here for a bounce as well.
SOX: Actually looked better than most, gapping lower to near the October closing low then reversing to positive. NVDA reversed, AMAT, AMD, TXN as well. AMAT even looks decent.
RUTX: Gapped lower, sold to close near the October closing lows. No bounce, but it is finally testing that prior low.
SP400: Gapped lower below the recent lows but also well above the October lows. Kind of in no-man's land at this point.
LEADERSHIP
Dow-type leaders: The recent true leaders were up early but started to wobble as money that fled the techs and growth. JNJ, VZ, KO, MRK, MCD all lost ground. Did not break trend but were definitely sold as money moved back into growth after it started lower. IF MONEY IS LEAVING THESE, i.e. if it continues after Tuesday, then the other areas can indeed continue their rebound.
Chips: Surprisingly good action and again showing potential. INTC showed excellent strength. ON, MCHP, PLAB continued good patterns, AVGO sold but is in a decent larger pattern. Others related to AAPL stink, e.g. SWKS, QRVO.
China: Still hanging in. QIWI looks excellent, up on the day on rising trade. BABA needs work but we will watch it. SOHU holding nicely. NTES ditto. JD, SINA not so much so. These are really interesting.
Food: Hit with the selling here as well. KO, POP, MCD -- some of the recent bigger leaders. POST, MKC, CMG still not bad.
Telecom: VZ sold off after gapping higher. We saw the gap, the waffle, and sold some more for 75% profit.
Software: Clobbered then recovered. CRM gapped to a lower low, finished flat. DATA down to the 200 day SMA, moved to positive. NOW, ADBE and others. This group is very important. Monday it collapsed, Tuesday it collapsed farther, then it rebounded. Okay, rubber match. DATA, VRSN, VMW still not bad.
Drugs: Off some as some profits were booked on JNJ, MRK, LLY. HZNP was hit fairly hard though volume backed off.
Retail: TGT, COST, ROST, TJX, WMT destroyed after TGT's earnings. KSS reported an excellent quarter but was plundered and pillaged for a 9.23% loss.
MARKET STATS
DJ30
Stats: -551.80 points (-2.21%) to close at 24465.64
Nasdaq
Stats: -119.65 points (-1.70%) to close at 6908.82
Volume: 2.67B (+12.18%)
Up Volume: 776.52M (+340.48M)
Down Volume: 1.87B (-40M)
A/D and Hi/Lo: Decliners led 3.16 to 1
Previous Session: Decliners led 2.93 to 1
New Highs: 13 (-6)
New Lows: 395 (+202)
S&P
Stats: -48.84 points (-1.82%) to close at 2641.89
NYSE Volume: 993.452M (+9.64%)
Up Volume: 106.929M (-179.122M)
Down Volume: 877.539M (+289.025M)
A/D and Hi/Lo: Decliners led 5.43 to 1
Previous Session: Decliners led 2.78 to 1
New Highs: 32 (-15)
New Lows: 572 (+331)
SENTIMENT
VIX: 22.48; +2.38. Weak. Still well below the October highs. Pattern is an upside pattern. Okay, so it can break higher, but that also means more selling.
VXN: 28.77; +1.33
VXO: 24.02; +2.14
Put/Call Ratio (CBOE): 0.92; -0.05
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
OTHER MARKETS
Bonds: 3.074% versus 3.056%. Bonds sold back a bit at the 50 day EMA.
Historical: the last sub-2% rate was in November 2016 (1.867%). 3.056% versus 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: 1.13700 versus 1.14484. Euro turned down after rallying up to the 50 day MA.
Historical: 1.14484 versus 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: 112.883 versus 112.617. Trying to hang on at the 50 day EMA.
Historical: Last below 109 in June 2018: 112.617 versus 112.831 versus 113.585 versus 113.576. Was at 110 three weeks back.
Oil: 53.43, -3.77. Oil getting utterly bombed. Dollar surging and that lower price. World economies struggling, and that really lowers price.
Gold: 1221.10, -4.10.
WEDNESDAY
The continued selloff with the sharp gap lower, the jump in new lows, the 9:1 downside trade, the rebound in several names, money moving out of the recent leaders on some profit taking, you start getting the elements for a bounce in place. VIX is still low, low, so it is likely not a bottom leading to new highs. If of course it IS a bottom. Many tries, many sad excuses for bounces.
Perhaps this time enough upside positives have stacked up to deliver the traditional yearend rally. The downtrodden growth names were getting some money after the gap lower as the recent solid leaders were sold. That shows money movement pretty clearly and the other technical indicators and sentiment indicators support that.
Thus, there can be a bounce in a lot of stocks that have damaged patterns. Some do not, some held up reasonably well, some better than reasonably well.
With VIX still low it looks like just a bounce, and as noted last night, when the turn did come it would at least be a tradeable bounce. Thus, we will look at some upside from decent setups. There are still some of those out there even after the selling.
It will be a case of seeing which ones move. There is still a lot of work to be done, but some patterns could set better over the next several sessions. Putting some back on that held up well, new ones that held up well. Then we see which ones make the moves and get into those.
DATA: Putting it back on, adjusting the entry.
VRSN: Putting back on as well, adjusting the entry.
AMAT
MCHP
Have a great evening!
End part 1
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