Monday, December 24, 2018

The Daily, Part 1 of 2, 12-24-18

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12/24/2018 Investment House Daily
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Investment House Daily Subscribers:

Merry Christmas to all!

Monday: Half session, closing at 1:00ET
Tuesday: Markets closed for Christmas
Wednesday to Friday: Markets open as usual.

No report Tuesday.


Targets hit: CRM
Entry alerts: LLY
Trailing stops: None issued
Stop alerts: AEP; PG

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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.


- Mnuchin tries to calm markets, fails.
- Talk with bank CEO's overshadows positive news from China.
- SP500 dives into bear market territory as market suffers worst Christmas Eve trade ever.
- VIX finally breaking out.

Worst Christmas Eve session in history. Sometimes you have to laugh in the misery. It helps to play the downside, and we took some gain on CRM as we let the other downside plays run, but you still have to have good humor. It reminds me of a 'Bob Newhart Show' episode where the guys all got together to watch William & Mary play some other team in football. It was tradition after the other team scored to take a hit of some kind of whiskey. The next day Bob nursed a massive hangover. Emily came home and asked him what on earth had happened. 'Worst defeat in William & Mary's history' was Bob's anguished reply.

At -653.17 on the Dow, you would hope that was the worst loss in Christmas Eve history. SP500 dipped into a bear market and also broke the up trendline from the March 2009 low. Serious stuff.

Futures were up overnight, but as the idea of Treasury Secretary Mnuchin calling the CEO's of the top six banks as well as getting a meeting with the Plunge Protection Team (PPT) set up for Monday sunk in, the markets lost their nerve. Any notion of upside, of the start of a Santa Claus rally, was sold hard, landing the indices at their lows on the close.

SP500 -65.62, -2.71%
NASDAQ -140.07, -2.21%
DJ30 -653.17, -2.91%
SP400 -2.74%
RUTX -1.95%
SOX -2.90%
NASDAQ 100 -2.43%

The thing is, the defensive sectors were crushed along with everything else. PG, AEP, CLX, CL were exploded. Drugs were terminal as JNJ, LLY, MRK sold hard. Just old fashioned ugly.

An interesting aspect of the Mnuchin story is that he supposedly made the call and set up the PPT meeting without Trump's knowledge. Likely thought he was doing what Trump would want, but as it did not work -- as markets panicked -- and if it does not turn things starting Wednesday, Mnuchin has just placed himself on the short list of Trump's next purges from the administration. Perhaps Mnuchin did it on purpose, in order to GET dismissed. Who knows? No point in speculating here -- CNBC and other financial stations engaged is wild speculation all session long.

The Mnuchin story overshadowed some better news from other areas. China is reducing tariffs on 700 items to increase imports by $30T. Wow. That is a lot, and it is progress. At the same time, however, the big issue is IP theft. Still, China moves a step at a time, and this is progress. Not that the market gave a flip Monday.

The move leaves the indices still plunging to lower lows, putting SP500 in an official bear market. No change in the downside for now, just selling with abandon. A bounce a half hour into trade was punished after a half hour of upside, giving back those gains and just getting slaughtered into the close.

More and more oversold, right? This morning David Tepper, who a week ago said the Fed made clear what it was going to do, said he was buying stock after the worst market week in years. Hopefully he bought late in the session.

The point is, however, some are seriously starting to average into positions even as the selling, sentiment, etc. makes a crescendo. Perhaps it will be oversold enough to start a Santa Claus rally Wednesday. Perhaps, but as of the Monday close it was clear no buyers in any numbers were making a known presence.

Indicators such as VIX, as discussed over the weekend, are 'getting there.' VIX screamed higher almost 20%, closing at 36.07, +5.96. I said that when it broke free it tends to really fly. It is indeed flying, closing just under the February closing high of 37.32. Another good push higher on a weak Wednesday open might finally just do the trick to turn the market for bear market/Santa Claus combination move. So, we have that one in the hopper for Wednesday. If there is a big selloff Wednesday at the open, we will be taking a lot more downside gain then look for rebounds in stocks such as TEAM, WDAY, AMZN (big doji Monday)

We took some nice gain on half our CRM position, bought some LLY puts, sold AEP and PG as they, after nice holds at key support, folded like cheap pup tents. At some point not too far away there will be a wicked rebound. Just not showing up yet, but again, with VIX surging higher, the last piece of the puzzle for a rebound is falling into place. So, be ready, take some more downside gain on a sharp selloff Wednesday, then get ready to play some of these names above back upside.

Have a very merry Christmas!



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Stats: -653.17 points (-2.91%) to close at 21792.20

Stats: -140.08 points (-2.21%) to close at 6192.92
Volume: 1.65B (-63.82%)

Up Volume: 308.28M (-346.33M)
Down Volume: 1.32B (-2.5B)

A/D and Hi/Lo: Decliners led 2.7 to 1
Previous Session: Decliners led 3.78 to 1

New Highs: 8 (0)
New Lows: 1107 (+6)

Stats: -65.52 points (-2.71%) to close at 2351.10
NYSE Volume: 655.135M (-79.80%)

Up Volume: 73.195M (-349.191M)
Down Volume: 572.097M (-2.224B)

A/D and Hi/Lo: Decliners led 3.74 to 1
Previous Session: Decliners led 3.47 to 1

New Highs: 2 (0)
New Lows: 1256 (+198)


VIX: 36.07; +5.96
VXN: 38.68; +4.81
VXO: 37.34; +5.23

Put/Call Ratio (CBOE): 1.32; -0.11

Bulls and Bears:

Falling and rebounding to where they were four weeks back. Starting to converge. This coming week's numbers should show a bull dive and bear jump, converging the two to levels not seen since 2016.

Bulls: 39.3 versus 45.5

Bears: 21.4 versus 20.4

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: 39.3 versus 45.4
45.4 versus 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: 21.4 versus 20.4
20.4 versus 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: 2.736% versus 2.788%

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.788% versus 2.803%. versus 2.762% versus 2.821% versus 2.855% versus 2.895% versus 2.913% versus 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: 1.14015 versus 1.13708

Historical: 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049 versus 1.13604 versus 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: 110.337 versus 111.223. Diving lower.

Historical: Last below 109 in June 2018: 111.223 versus 111.21 versus 112.521 versus 112.477 versus 112.653 versus 113.382 versus 113.634 versus 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.

Oil: 42.53, -3.06. Diving to the next support.

Gold: 1271.80, +13.70. Bouncing off the test of the 200 day SMA breakout.

End part 1 of 2
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