Saturday, December 01, 2018

The Daily, Part 1 of 3, 12-1-18

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12/1/2018 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: DATA
Entry alerts: ON
Trailing stops: None issued
Stop alerts: BAC; KR

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The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.




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.


- Stocks get more upside help from the Fed, trade possibilities.
- Instead of another pause into the weekend, the news fuels more upside and pushes indices to next resistance.
- Some really solid moves on the week leave less positions to consider for next week. A pause Monday and Tuesday would cure that . . .
- Still waiting on Trump/Xi meeting resolution, but based upon the likely outcome it likely won't add much more as the market has priced in expectations for some minor deal.
- Would not be surprised to see the indices pause to start the week given a lot of good news is build into the past week's move.

Friday the market did not give us the perfect setup; as noted Thursday, it often does not. That does not mean it was a bad session. Hardly. The indices rallied nicely.

What we wanted, however, was another pause following Thursday's sluggish session, a pause to better setup a new move higher in the coming week to continue the move with a new breakout.

Stocks did start lower pre-market and by the open improved but were still mixed and near the flat line. The problem was the Fed was active again. Wednesday Powell confirmed the Fed-speak of the Fed vice chair Clarinda, i.e. that the FFR was just below neutral. Friday the New York Fed reiterated the FFR was not far from neutral and indeed the FFR was to remain 'low.' Okay, the top three on the Fed all agreeing rates were near neutral, meaning quite limited upside in terms of more rate hikes. Ultra-ultra Fed dove Kashkari also threw in that the Fed should not hike rates when job creation is strong and inflation tame. What more could you want?

How about the administration suggesting a US/China trade deal Saturday was a done deal. Mr. Lighthizer, a White House advisor who has been very negative about the possibility of a deal, stated he would be 'surprised' if the Trump/Xi dinner was not a success. Okay, so even the negative folks were pushing for a deal.

The market, of course, liked it. Stocks opened, rallied, tested into midday, then sprinted higher to the close. Volume surged, but it was month end and stocks had posted quite a rebound. Thus there was some position shuffling to take place before the new month.

SP500 22.41, 0.82%
NASDAQ 57.46, 0.79%
DJ30 199.62, 0.79%
SP400 0.64%
RUTX 0.52%
SOX 1.49%
NASDAQ 100 0.82%

VOLUME: NYSE +90%, NASDAQ +26%. NASDAQ back to just over average, NYSE surging to the highest since expiration in September. Beginning of the month, a rally that the big money did not expect, and now a lot of money getting put to work suddenly.

ADVANCE/DECLINE: NYSE +1.2:1, NASDAQ +1.2:1. Puny breadth, more a large cap session. Nothing new there.

There was more news that proved perhaps helpful.

China's PMI came in at a 29 month low. It just keeps getting better and better for China as the Shanghai index tests the early 2016 lows after an 11 month selloff.

The move pushed the indices higher, pushing the indices into resistance.

DJ30 at the 50 day SMA. SP500 rallied to the 200 day SMA. NASDAQ moved closer to the 50 day EMA up at 7400 (70 points higher). SOX is at the 50 day EMA. SP400 pushed closer to the 50 day SMA, RUTX held more or less steady just over the 20 day EMA.

Big name 'Dow-type' stocks enjoyed solid moves, e.g. big drugs, VZ, PEP, CAT, AXP, HD. Other big names as well, e.g. INTC, and a bevvy of software stocks such as DATA hitting our target.

Again, there was no pause as the move took a one-day breather and renewed the upside. That leaves the large cap indices moving into next week at resistance. Oh well, the market moved on good news. The yearend rally is showing good strength. Good stocks are moving quite well. The setup for the continuing rally remains solid as many are now waking up and realizing the market got what it wanted from the Fed, and most were not looking at the good patterns as we were and picked up some great positions right at the start of the move. Now they are buying and driving our positions higher. That works, though we would have preferred to get the lateral move and set up new buys. With the continued move upside that leaves fewer entries as the week starts, but that may change if we get a little pause Monday and Tuesday.



DJ30: Upside 4 of 5 sessions, moving off the Thursday doji up to just below the 50 day SMA. Solid double bottom bounce but now at some resistance. Lots of good news built into the move (Fed, trade) and a 1250 point move on the week. It would appear DJ30 needs to rest a bit, but with a yearend rally the moves are not necessarily standard.

SP500: Also rallied off the Thursday doji, moving higher to close just below the 200 day SMA, a significant resistance point. Four of five sessions upside here as well. Basically the same pattern as DJ30 in application, i.e. the double bottom rally up to a resistance point.

NASDAQ: Continued higher Friday off a Thursday pause, moving closer toward the 50 day EMA. The big upside days were Monday and Wednesday while Thursday and Friday were more a coast upside. A bit of slower trade here leaves NASDAQ with some more room to rally though both 50 day MA's and the 200 day SMA overhead for the next 175 or so points.

SOX: Very similar to NASDAQ in terms of approaching the 50 day MA's though a bit closer after the Friday rally. Chips are improved with many having put in longer bases and SOX' pattern is better itself. Still, it is more in a position of having to prove it can make the break over the 50 day MA and rally to that early October gap lower at 1300 (closed at 1240ish).

SP400: Similar to SOX in its pattern of the past three months, moving up near the 50 day MA's where it failed in early November. Put in a higher low the third week in November, bounced off that, but at this point is still a follower not a leader.

RUTX: Off the double bottom, moving through the 20 day EMA, but not much more than that. Kind of a SOX pattern, just not at the 50 day MA's yet. Follower.


Drugs: Strong week for big names and some smaller issues look better. LLY, ABT, PFE very solid. Biotech is also moving, with some large caps (BIIB, AMGN, ILMN) working well. Smaller are getting a bit better but need work.

Software: Some nice moves for sure, e.g. DATA, VMW, CRM, TEAM. The latter two had earnings and we did not want to get in on that. DATA hit our target Friday already.

Food: Still chomping. PEP, KO surged Friday. MCD faded Friday but a solid week overall. CMG struggled Friday but recovered well enough. MKC continues to recover off the test the prior week. Still eating, still a group seen as protection for a slowing economy.

Transports: Airlines surged on the week as SAVE reported good results and all went higher. Rails are actually setting up some, e.g. KSU, NSC. Trucks are trying to set up bottoms but are not there just yet.

Retail: Very mixed, most struggling. COST, ROST, BBY, WSM. AMZN bounced on the week to the 200 day SMA.

Chips: Some good moves, some. ON broke higher late week. XLNX continued to a higher high. LRCX showed good upside action. AMD, AMAT set up very well.

Telecom: If you mean VZ, then yes it is doing fine.

SCAANN: SQ languishing in a non-move. CRM gapped on earnings Wednesday. AMZN at the 200 day SMA after a week of upside. AAPL testing 2 days, in good position to bounce. NFLX up to the 20 day EMA and showing a doji after a bounce on the week. NVDA bounced to the 10 day EMA. None look awesome though AAPL is due to continue its move higher after this short test -- wish the rest of the market would have done this.

Metals: Basically crappy but FCX is one to watch.

China: Good end to the week in anticipation of a US/China deal. BABA jumped nicely as did QIWI. SOHU still looks good, still looking for SOHU to make good.


Stats: +199.62 points (+0.79%) to close at 25538.46

Stats: +57.45 points (+0.79%) to close at 7330.54
Volume: 2.54B (+26.37%)

Up Volume: 1.49B (+549.63M)
Down Volume: 1.02B (-20M)

A/D and Hi/Lo: Advancers led 1.24 to 1
Previous Session: Decliners led 1.23 to 1

New Highs: 51 (+14)
New Lows: 119 (+25)

Stats: +22.41 points (+0.82%) to close at 2760.17
NYSE Volume: 1.509B (+89.21%)

Up Volume: 870.304M (+532.626M)
Down Volume: 624.773M (+172.887M)

A/D and Hi/Lo: Advancers led 1.18 to 1
Previous Session: Decliners led 1.13 to 1

New Highs: 57 (+19)
New Lows: 259 (+91)


VIX: 18.07; -0.72
VXN: 24.02; -0.31
VXO: 20.75; -0.60

Put/Call Ratio (CBOE): 0.76; -0.13

Bulls and Bears:

A second week below 40 as bulls slide a bit more in what is a precipitous drop. Maybe not into the low thirties, but the magnitude and angle of decline was enough to contribute to the bounce. Bears move over 20 for the first time since early 2018. Significant as well.

Bulls: 38.3 versus 39.6

Bears: 20.6 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: 38.3 versus 39.6
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: 20.6 versus 19.8
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: 2.993% versus 3.032%. Wow, back below 3% for the first time in over 2 months.

Historical: the last sub-2% rate was in November 2016 (1.867%). 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% versus 3.00% versus 2.972% versus 2.963% versus 2.977% versus 2.937%

EUR/USD: 1.13199 versus 1.13934. After rallying Wednesday, an ugly turn back down.

Historical: 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: 113.474 versus 113.402. Holding the bounce from the 50 day MA test.

Historical: Last below 109 in June 2018: 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: 50.93, -0.52. Moving laterally for a week just over 50. Trying to hold there but thus far showing no other signs of bouncing back up to break the trend.

Gold: 1220.20, -3.90.


Still waiting on the outcome of the Trump/Xi dinner after the G-20 conclusion and whether we will be 'surprised' by no deal or a deal as we are told will occur. Frankly, the deal would likely be a cessation of hostilities to a certain extent, though that does not really help the US, just gives China a chance to save some face and perhaps then the sides come up with a real deal that addresses the real issues.

If it is a sweeping deal the market could surge on the news, but after 5 days up, how much more and what kind of test afterward? If it is not a sweeping deal, that is likely already built into the move into the Friday close. Thus, it would not add much more nor would it detract.

We will have to see, but for now the indices have moved up to next resistance on a week of upside. We wanted a pause Friday into Monday, but didn't happen. Now we see if that occurs to start the week then takes back upside.

In any event, outside a letdown from Xi/Trump we anticipate the market to continue the yearend move either without a rest or taking that rest. Thus, we will continue looking at upside plays.

Have a great weekend!

End part 1
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