Monday, December 10, 2018

The Daily, Part 1, 12-10-18

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12/10/2018 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: CENT; CME; HLF; WSM
Trailing stops: JNJ; UA
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.


- Weekend news is not great, futures fall, stocks fall, undercut prior lows but then once again rebound.
- AAPL tries to sink the market again after China grants QCOM an injunction against selling iPhones in China. Then AAPL recovers.
- Test below the range, recovery, now can they bounce up in the range?

Over the weekend news regarding China vowing a response to the US holding a state-owned company CFO, riots in France, Brexit vote delays (and perhaps the PM heading out) had US futures down sharply.

Monday morning futures were lower, but as the morning wore on they turned positive -- only to flip back negative. The session proceeded the same way: down after the bell to midmorning followed by a recovery into the afternoon session and close. Another session of flips and flops, this time with a mere 620ish points of DJ30 movement high to low. Ho-hum, another day of intraday volatility leaving the indices mixed but with a bias toward large cap growth -- not hurt by AAPL flipping from negative on news of Chinese courts granting QCOM an injunction to enjoin sales of iPhones in China to positive as pundits on CNBC said it was time to buy the maker of extremely expensive phones. Voila, upside in the afternoon.

SP500 4.64, 0.18%
NASDAQ 51.27, 0.74%
DJ30 34.31, 0.14%
SP400 -0.64%
RUTX -0.34%
SOX 1.41%
NASDAQ 100 1.05%

VOLUME: NYSE -3%, NASDAQ -5%. Volume declined on the reach lower and rebound, showing similarly weak volume to the Thursday move that was also a reach lower and rebound. No stampede back into stocks, but then again, playing a bounce not for new highs.


NEW LOWS: NYSE 561, NASDAQ 517. Impressive number for NASDAQ.


What happened on the indices? They dove to lower lows in the morning selling, undercutting the prior October/November lows. SP500, DJ30, SP400 and RUTX all punched out lower lows since the selling began. All reversed with the first three holding above the prior lows while RUTX, already with a Friday close below those lows, unable to recover them, much less get back to positive on the day.

NASDAQ: So with that, I start with NASDAQ. It undercut the October low mid-November as it fell to test the 2016 trendline. It held. It bounced to the top of the range. It fell back the past four sessions to that trendline. Monday it tapped it and bounced positive. MACD remains elevated off the November price low. NASDAQ continues holding the range and the trendline. It can of course still rebound in its range and put in another November-esque rip higher. That is what happens in corrections, bear markets, and the like.

SOX: The chips suffered a bad Friday. Many that had the bad week last week were not really better though they were up a bit Monday. All the same, with INTC bouncing 2%, AMD posting a low volume 2.7% bounce, and other big chip names bouncing in relief from the harsh selling, SOX held up well. AVGO actually looks solid, trying to make good on that triangle pattern forming the past 7 months. Perhaps it can make a breakout and provide some leadership.

SP500: Big reach to a lower low, holding near the March/April lows, rebounding to close inside the October to present range. MACD remains higher, putting in higher lows. Nice reach lower and recovery that, in the usual situation, would lead to a rebound in the range. Thus, we watch for that rebound.

DJ30: The Dow put in the same action as SP500, punching a new selloff low then reversing to positive to close inside the 3 month range. On the low, DJ30 touched near the same 2016 trendline NASDAQ is testing, i.e. the one formed off the early 2016 lows and the late 2016 low. That keeps DJ30 inside a larger yearlong trading range that formed off the January high. MACD continues with higher lows as well. Excellent position for a rebound inside the range.

SP400: Cut to a lower low then reversed to show a doji but closed at a new closing low for the selling. Struggling though it is still in the trading range.

RUTX: Sold to a lower low, rebounded, but still managed a negative close and a lower close just outside its trading range. Small caps continue to lag, showing issues in the economy, but they likely still follow if the other indices bounce, though in a more muted move.


Perhaps the sharp reach lower will work as a shakeout and allow some stocks in relatively decent position to rebound.

Transports: Mention of these stocks occurred many times today on the financial stations and websites, all very negative. No doubt DJ20 got the monkey-hammer treatment the past week from a breakout over the 200 day SMA to trading below the October low Monday. Thus, they are beaten down, oversold, and routinely despised. Therefore look for the ones in the best patterns to lead a rebound. That looks to be CSX, testing the 200 day SMA and its up trendline from February. Very interesting.

Retail/Apparel: Some gasps of life upside after a crushing Friday, but nothing notable. WSM continued lower and we picked up some downside positions. LULU, ULTA recovered off lows but are still buried.

Utilities: Up modestly, also partaking in an up and down session. After all the moves, however, they are holding the trend, holding near support and adding gains, e.g. AEP, AQN.

Personal products: PG, CLX still testing near support, still holding for now. Makeup still struggling, e.g. EL, REV.

Food: Some reaches lower, some recoveries. CMG still working on the handle. YUM a nice doji with tail testing the 50 day MA. KDP in a nice ABCD pattern at the 50 day MA. KO holding at the 20 day, PEP a doji with tail at the 50 day EMA. MCD reached lower and reversed nicely to positive. SBUX sold lower, recovered to a tight doji at the bottom of its more recent range. Hanging in as a group with some looking pretty good.

Software: Moved higher but not much strength. TEAM put in some upside but low volume. VMW was not bad at all; if it continues it is a buy. VRSN held up quite well in its good pattern. GLUU jumped upside off the 50 day. SPLK is setting up quite well. CRM tried to sell off but hung on.

Drugs: Smaller biotechs look quite good: BCRX, CRMD, ZGNX. Big pharma tested lower but then rebounded nicely, e.g. LLY, PFE, MRK -- may be some plays here. Oh, JNJ shook us out of two positions we did not want to get turned over in, then it rebounded. Okay, perhaps there is some buying opportunity here.

FAANG: FB looks interesting. AAPL may bounce, but its pattern needs help. AMZN was up but could not clear the 10 day EMA. GOOG up but no pattern change. NFLX, NVDA ditto.

Chips: As noted, AVGO has a nice pattern while INTC bounced some. Not much else is helping the sector out. AMAT, AMD, NVDA moved higher, but they did not suddenly become buys.

Financial: Utterly despised, and if they showed any kind of good pattern at all the very fact they are so hated would make them an interesting rebound play.


Stats: +34.31 points (+0.14%) to close at 24423.26

Stats: +51.27 points (+0.74%) to close at 7020.52
Volume: 2.37B (-5.2%)

Up Volume: 1.24B (+813.4M)
Down Volume: 1.09B (-940M)

A/D and Hi/Lo: Decliners led 1.47 to 1
Previous Session: Decliners led 2.63 to 1

New Highs: 15 (-2)
New Lows: 517 (+247)

Stats: +4.64 points (+0.18%) to close at 2637.72
NYSE Volume: 1.005B (-2.51%)

Up Volume: 260.165M (+64.095M)
Down Volume: 734.329M (-87.229M)

A/D and Hi/Lo: Decliners led 2.08 to 1
Previous Session: Decliners led 2.19 to 1

New Highs: 12 (-27)
New Lows: 561 (+302)


VIX: 22.64; -0.59
VXN: 27.20; -0.83
VXO: 24.50; -2.63

Put/Call Ratio (CBOE): 1.07; -0.10

Bulls and Bears:

Seriously? Bulls surge over 8 points past the mid-forties. The trend, however, is lower. Bears continued higher, taking out the prior 2018 high. That is a positive longer term. Bears have been absent for over 2 years.

Bulls: 46.7 versus 38.3

Bears: 21.5 versus 20.6

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: 46.7 versus 38.3
38.3 versus 39.6 versus 42.9 versus 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: 21.50 versus 20.6
20.6 versus 19.8 versus 19.0 versus 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


Bonds: 2.863% versus 2.854%. Holding over the 200 day SMA.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.854% versus 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058% versus 3.059% versus 3.048% versus 3.065% versus 3.074% versus 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%

EUR/USD: 1.13657 versus 1.1404. Euro broke back below the 50 day MA's.

Historical: 1.1404 versus 1.1376 versus 1.13970 versus 1.13360 versus 1.13199 versus 1.13934 versus 1.13682 versus 1.12973 versus 1.13325 versus 1.13380 versus 1.13829 versus 1.13818 versus 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

USD/JPY: 113.022 versus 112.66. Dollar jumped back up over the 50 day MA.

Historical: Last below 109 in June 2018: 112.66 versus 112.71 versus 112.813 versus 113.581 versus 113.474 versus 113.402 versus 113.559 versus 113.781 versus 113.510 versus 112.972 versus 113.007 versus 113.077 versus 112.617 versus 112.831 versus 113.585 versus 113.576. Was at 110 three weeks back.

Oil: 51.00, -1.61.

Gold: 1249.40, -3.20. Approached the 200 day SMA on the open, faded to a loss.


Another big reach lower, another sharp recovery to hold the range. So, we will see if that delivers a break upside in the range. Showing the attributes of a bounce (new lows then reversals, rising MACD, leaders holding support), just has to make the move.

The indices continue showing stickiness at those lows and we will continue looking at upside plays in the range as well as downside in the event the indices cannot make those moves or if the indices bounce up the range then roll back over. In the latter scenario we play the bounce in the range, take what gain we can, then play the drop back to the bottom of the range and see what happens at that point.

Have a great evening!

End part 1
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