Thursday, December 13, 2018

The Daily, Part 1 of 2, 12-13-18

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12/13/2018 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: NBEV
Entry alerts: ARWR
Trailing stops: None issued
Stop alerts: None issued

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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.


- Another higher start is given back, but at least they fade to just flat.
- Upside trending 'Dow-like' stocks perform the best while software remain in good patterns, NASDAQ 100 remains in an inverted head and shoulders.
- Bounce or no? Sentiment in the tank is a positive, but lack of leaders makes significant upside questionable.

Feel as if we are in a continuous loop day something like Bill Murry in 'Groundhog Day.' Each morning futures are higher, either on some positive trade news or economic news that favors the Fed perhaps hiking once more in 2018, then taking a vacation. Stocks open higher then fade most of the move by the close.

Okay, sure, that has just been the case this week as the indices tested the October/November lows and try to move up, but it certainly is the pattern on the bounce attempt. Not much of an attempt in terms of results, at least thus far.

Thursday was the same story as the prior sessions with an upside open and first half hour rally, then a fade into the afternoon session. Still holding the range of course, just no traction when stocks get news good enough to bounce them higher initially.

SP500 -0.53, -0.02%
NASDAQ -27.98, -0.39%
DJ30 70.11, 0.29%
SP400 -1.05%
RUTX -1.55%
SOX -0.36%
NASDAQ 100 0.06%

VOLUME: NYSE -8%, NASDAQ -11%. At least volume backed off as stocks fell from early gains, showing they were not getting dumped.

ADVANCE/DECLINE: NYSE -1.8:1, NASDAQ 2.9:1. Definitely more trouble on NASDAQ where a lot of small caps reside.

The upside action, what there was, favored the 'Dow-type' stocks, the ones that remain in uptrends even as they suffered the same drunken stumble the rest of the market is showing the past few sessions. MCD, PEP, PG, CLX, AEP -- not flashy, but performing nicely on a day when most stocks did well to hold their ground.

Speaking of holding ground, the software stocks were not bad, just could not make the next breaks higher despite starting strong. TEAM, VRSN, VMW, WDAY -- all look very good in their patterns, just looking for a catalyst to set them to the upside. But they have to make the moves; unless selling calls, they don't make money if they don't move.

Could be the market goes back into the defense mode and gives up on the growth areas holding the trading range and bouncing higher once more. The action is certainly the kind that grinds down the will to keep looking for areas, up and down, that can make you money.

Sentiment sinks

Just look at the recent numbers from the AAIA sentiment numbers. 48.9% of the small investors believe the market will be lower six months from now, shooting 18.4 points higher from last week. Highest level since 4/11/2013.

Bullishness fell 17 points to 20.9, the lowest since 5/25/16.

These are nearing extreme levels for this survey. Indeed, the last time bears reached the current level SP500 rallied 16% from that April reading to the end of that year.

Sentiment, however, is just an indicator, not the indicator. If it is negative enough, and if the economic conditions are good enough, and if there are leaders in position, then a lasting move can launch.

Right now economics are a concern, the worries exacerbated by the Fed on its hiking campaign and the now-general belief that the Fed always overdoes it. Earnings have been solid, but top line misses showed up two quarters back and some quality stocks are missing (e.g. COST missing both top and bottom line as reported tonight). Then you have RUTX falling to a new closing low Thursday -- these stocks are an economic canary, and they are mining new lows even as the large cap indices try to hold up (see how I worked in the mining theme -- canary, mining?). As for leadership, well we have reported how it is thinning versus spreading out, and it has a defensive flavor to it. Software looks good in its patterns, but as noted above, thus far no concerted move higher.


To view, click on the following links:

What about just an old-fashioned bounce, not one for new highs, but a rebound in the trading range? Yes, what about that? The indices are certainly set up over that support. NASDAQ 100, and to a lesser extent NASDAQ, show inverted head and shoulders patterns, a very strong pattern since 2009. But, gentle reader, times are a bit different now as the Fed is not on the excess liquidity side and is not there to stoke the market every time trouble emerges. The pattern is there, it simply has to prove it is one worthy of buying, and that comes with a strong break higher.

Obviously not there yet, obviously still looking around for a reason to rebound in the range. It is almost as if the market cannot decide if it wants to go entirely defensive and give up on growth, or if it wants to give growth one more rally in the range. That stocks such as PG, CLX, MCD, AEP are moving higher while most stand around suggests that the market may go defensive despite a good pattern in NASDAQ 100. Or, perhaps . . . they all go up together. Yea, been waiting on that but so far nada.


We still have downside plays ready to go. We have upside plays ready to go. We have positions that are working, others that need work but are in position to make money. Friday is not the best day to buy if there is upside, but with the market already up a bit off the bottom of the range, if it makes a good break and stocks are showing good breaks, picking up some upside would work.

If it breaks lower and is closing below the range, what often happens is that further selling occurs the following Monday and Tuesday. Ah, but Friday is expiration, and the following Mondays tend to be the opposite direction. Thus, a break lower is worth waiting for a test -- for most positions -- and then when it fails, moving in. That said, we always pick up a position or two in the event there is no test, i.e. they open the bomb bay doors and stocks drop like rocks.



Stats: +70.11 points (+0.29%) to close at 24597.38

Stats: -27.98 points (-0.39%) to close at 7070.33
Volume: 2.16B (-10.74%)

Up Volume: 678.31M (-1.062B)
Down Volume: 1.46B (+805.24M)

A/D and Hi/Lo: Decliners led 2.87 to 1
Previous Session: Advancers led 2.09 to 1

New Highs: 16 (-3)
New Lows: 352 (+157)

Stats: -0.53 points (-0.02%) to close at 2650.54
NYSE Volume: 908.145M (-7.60%)

Up Volume: 363.652M (-298.796M)
Down Volume: 527.107M (+218.504M)

A/D and Hi/Lo: Decliners led 1.79 to 1
Previous Session: Advancers led 1.89 to 1

New Highs: 25 (-10)
New Lows: 378 (+250)


VIX: 20.65; -0.81
VXN: 25.80; -0.50
VXO: 22.52; -1.04

Put/Call Ratio (CBOE): 1.16; +0.16

Bulls and Bears:

Minor fade on bulls after that surge the prior week from 38.3. Bears fell after finally breaking over 20; at least they held 20. They have converged more than anytime since 2016, but nothing that would suggest extreme. If anything, bears are still extremely low.

Bulls: 45.5 versus 46.7

Bears: 20.4 versus 21.5

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: 45.4 versus 46.7
46.7 versus 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: 20.4 versus 21.50
21.50 versus 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: 2.913% versus 2.908%. Bonds still fading after clearing the 200 day SMA, closing below the 200 day but not tanking, more like testing.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.908% versus 2.884% versus 2.863% versus 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%

EUR/USD: 1.13604 versus 1.1376

Historical: 1.1376 versus 1.13244 versus 1.13657 versus 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

USD/JPY: 113.634 versus 113.385. Continued higher after recovering the 50 day MA Tuesday.

Historical: Last below 109 in June 2018: 113.634 versus 113.385 versus 113.022 versus 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: 52.58, +1.43. Could be that oil tries a bounce here. Has to get through 54.00 to make it anything close to meaningful, close to showing some strength.

Gold: 1247.40, -2.60. Nice lateral handle forming just below the 200 day SMA, consolidating the nice break higher the prior week.

End part 1 of 2
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