Wednesday, November 07, 2018

The Daily, Part 1 of 3, 11-7-18

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11/7/2018 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: FEYE; NBEV; OKTA; SQ
Trailing stops: None issued
Stop alerts: AMZN

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The REPORT SCHEDULE is as follows:

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.


- The election in the bank and stocks unleash upside on the certainty.
- More or less as expected and the market surges a sigh of relief.
- Indices breakout from inverted head and shoulders patterns, led by the large caps.
- Yes growth stocks get back into the game, but at the same time the same leaders prior to the election continue higher. All together? That would be nice.

The certainty of the election and the certainty of a certain amount of gridlock certainly brought the bids back in, and not just certain stocks. Certainly.

Beyond the societal implications, Wednesday gave the market the follow through session to the 10/30 reversal. 2+% gains, stronger, above average volume (NASDAQ showed this). Seven sessions from the reversal is a good time for a follow through. Speaking of sessions, AG Sessions resigned today at Trump's request. That helped the pot stocks. Everything was high, so to speak.

SP500 58.44, 2.12%
NASDAQ 194.79, 2.64%
DJ30 545.29, 2.13%
SP400 1.50%
RUTX 1.67%
SOX 1.19%
NASDAQ 100 3.07%

VOLUME: NYSE +9%, NASDAQ +17%. NYSE volume moved up to average -- no the kind of volume desired for a follow through session. NASDAQ trade jumped back above average. Not blowout volume but in the range of the prior two weeks that included selling volume as well as upside volume. All it takes is one index and it looks as if NASDAQ delivered on the volume.

ADVANCE/DECLINE: NYSE 3.1:1, NASDAQ 2.3:1. The market move definitely had a large cap bias, and that is no different from the general bias over the past two months after the small and midcaps topped and dropped.

More importantly, what about leadership? Are the patterns there? Before the election I talked about the inverted head and shoulders patterns forming in the indices and a lot of the tech stocks, particularly software, were setting these up. Those started breaking higher today along with the indices.

In addition to those leaders, the leaders when growth and large cap tech were absent (or more accurately, were refried beans), continued moving well. WMT, JNJ, KR, KO, MCD -- all are in good patterns, all broke higher, all are still moving higher. Add to that utilities such as AEP still moving higher and you have a rather broad -- and rather strange -- group of stocks moving higher. Kind of a 'just buy it all' session.

Now it is a question of staying power, of more leaders stepping up to support a confirmed rally. There are some strong stocks breaking higher, and if they continue we will add to those we bought today -- as we let the positions we bought ahead of this move continue to work, many of which are listed above.

To be sure, the afterhours shows were effusive in their 'buy, buy, buy' point of view. Cramer et al were all espousing the Crash Davis (Kevin Costner) instructions to rookie pitcher Ebby Calvin Laloosh in 'Bull Durham': don't think, just throw.

While there may be some giveback Thursday after such a rush higher, that likely would be a great opportunity to pick up some positions. Refining the Crash Davis instruction to Ebby Calvin (aka Nuke), if we get good entries on good patterns, we won't question the action, just take what the market gives us.


NASDAQ, SP500, DJ30 broke higher from inverted head and shoulders. NASDAQ and DJ30 moved on very solid volume. DJ30 was already over the 200 day SMA and is already taking on the prior high. SP500 gapped over the 200 day SMA. Nice. NASDAQ gapped higher and rallied through the 200 day SMA on the close, solid volume as noted. NASDAQ's and DJ30's moves were follow through sessions for the market: 2+% gains, strong, above average volume.

SP400, RUTX: Both broke higher from their own inverted head and shoulders patterns, though they are so down they have yet to reach even the 50 day MA. They also lagged in terms of percentage gains. Clearly they are still less favored than the large caps, but they are following along.

SOX gapped higher from the right shoulder of its potential inverted head and shoulders, but it did not clear the late October highs. INTC moved well but many chips struggled. XLNX gapped higher but then faded to a loss. QRVO, SWKS, SLAB still show muddled trade post-AAPL earnings and the XR phone issues. A rather undecided pattern with no follow through yet.

NASDAQ 100 gapped over the 200 day SMA and rallied. That bounces NASDAQ 100 up from the sort of inverted head and shoulders pattern.


SCAANN: SQ gapped and rallied on volume ahead of earnings, sold some on good results, but down rather modestly (closed at 82.69, trading at 80 afterhours and off the lows); likely see the recent treatment, i.e. a bit down on results then rallies. CRM gapped up off the 200 day SMA with a strong move. AMZN rallied through the 200 day SMA and held it. Don't like the pattern, but volume was strong. AAPL gapped and rallied 3% but on very low volume. Not convincing. NFLX rallied on decent trade, but nothing spectacular here. NVDA continued working laterally at the 10 day EMA. Certainly no drive higher.

FB doji'ed just below the 20 day EMA, going nowhere. GOOG gapped upside and rallied on above average volume; not bad, but not as clear as other NASDAQ big names.

Software: Some good patterns. TTWO did not rally much but afterhours reported good results and was up to 132; faded, however, to 129 (closed at 126ish). FEYE surged on strong volume. CRM looks good as noted. VMW gapped and rallied to the 50 day SMA. DATA gapped big on earnings results, clearing the September highs. NOW rallied well off the 200 day SMA. ADBE looks interesting with this break higher. VRSN testing nicely after its upside gap on earnings last Friday.

Retail: A mixed bag. WMT added a solid gain and TGT gapped nicely upside. DG a higher high. AMZN surged as noted. ULTA, WSM paused, RH rallied through the 50 day SMA. LOW made an interesting break higher off the 200 day SMA. FOSL looked really bad.

Financial: V, MA gapped nicely higher off support. Interesting. GS up. C, BAC up but problematic patterns. JPM shows the inverted head and shoulders and broke higher.

Food: MCD, KR, MKC, KO, PEP higher again, still rallying.


Stats: +545.29 points (+2.13%) to close at 26180.30

Stats: +194.79 points (+2.64%) to close at 7570.75
Volume: 2.68B (+17.03%)

Up Volume: 1.86B (+510M)
Down Volume: 772.04M (-111.46M)

A/D and Hi/Lo: Advancers led 2.32 to 1
Previous Session: Advancers led 1.59 to 1

New Highs: 63 (+18)
New Lows: 78 (-5)

Stats: +58.44 points (+2.12%) to close at 2813.89
NYSE Volume: 883.576M (+8.74%)

Up Volume: 667.944M (+150.487M)
Down Volume: 207.026M (-73.048M)

A/D and Hi/Lo: Advancers led 3.11 to 1
Previous Session: Advancers led 1.66 to 1

New Highs: 80 (+29)
New Lows: 51 (-14)


VIX: 16.36; -3.55
VXN: 22.39; -3.78
VXO: 16.72; -4.08

Put/Call Ratio (CBOE): 0.96; -0.16

Bulls and 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: 44.3 versus 50.5

Bears: 19.8 versus 19.0

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: 44.3 versus 50.5
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 19.0
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: 3.228% versus 3.222%. Gapped higher but faded to flat, still near the lows but trying a double bottom with improving MACD.

Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.14329 versus 1.14228. Rallied to the 50 day EMA reversed to a loss. Euro bounced, made it to the 50 day EMA. Now it shows if it has any strength.

Historical: 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 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: 113.641 versus 113.419. Dollar tries a breakout form the 6 week double bottom w/handle pattern.

Historical: Last below 109 in June 2018: 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: 61,57, -0.64.

Gold: 1228.70, +2.40. Still working laterally over the 20 day EMA and 50 day EMA.


Good breaks higher by the indices and many growth stocks out of 5-week inverted head and shoulders patterns as some pent up election anxiety was released on the split the baby kind of results.

If the moves continue, there are some we want to enter. It could be that after such a sharp release of anxiety with buying results in a bit of a give back, a bit of a pause, after the move. If that occurs we can use that as an entry. If the moves continue, however, we are not going to balk at moving into some of these stocks that started a pretty solid break upside.

Then we see if the moves can continue and if this is the start of the rally to year end. It certainly has the earmarks with the follow through session and some very decent patterns capable of delivering a move to yearend, a very tradeable move at that.

Have a great evening!

End part 1
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