Wednesday, December 12, 2018

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

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12/12/2018 Investment House Daily
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Stop alerts: None issued

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- Stocks jump on trade, CPI but again struggle to hold the gains.
- China reported ready to allow more corporate access, rewrite 2025 plan.
- China feels the heat as other countries are PO'd at its theft.
- Calls for the Fed to stop hiking. Now.
- Indices spike then give back a chunk of gains despite the better news.

The pattern continues: good to good-ish news (CPI tamer, trade positives as China making concessions on US corporate access, tech sharing), stocks start nicely higher, then lost their mojo and give up chunks of the gain. NASDAQ gave up almost 100 points from high to close, DJ30 300 points, SP500 34. Another gain, another gain squandered, though it was not a total washout of the upside.

SP500 14.29, 0.54%
NASDAQ 66.48, 0.95%
DJ30 157.03, 0.64%
SP400 0.78%
RUTX 1.05%
SOX 1.47%
NASDAQ 100 0.89%




The news was both interesting and impressive. Markets reacted positively as noted, but they also coughed up big chunks of the gains.

China: At 8:45ET the WSJ announced that China will allow more US company access and will rework/rewrite its China 2025 plan. Earlier in the week Trump had said to expect important announcements, and this fits that billing. With China's economy slowing and the world growing more than weary of Chinese theft and hacking, you have to ask if Trump just won the trade war.

There is more to this. We know actual Chinese government operatives, its official hacking team, were fingered with the huge Marriot hack. The DOJ is ready to indict those agents. Canada arrested the Huawei executive who allegedly engaged in fraud regarding deals to circumvent the Iran sanctions. Canada is mad enough to do the US' bidding. Further, the EU now says that the forced IP transfers must be stopped or regulated.

The point: the world is mad at China's stealing and are standing up to say it must stop. China is a member of the WTO and was allowed in under the conditions it would act appropriately and stop manipulating its currency, dumping on markets, and hacking, stealing, and cheating. Instead, it maintains its 'emerging economy' status as it came up with its China 2025 domination plan where theft remains the central aspect. How communistically ironic: oh, we are a poor, simple emerging economy -- but . . . we plan on global domination by 2025. The world is now waking up and saying no mas.

CPI, Nov: 0.0 vs 0.0 vs 0.3 October. 2.2% yr/yr vs 2.5% prior

Core: 0.2 vs 0.2 exp vs 0.2 prior. 2.2% yr/yr vs 2.1% prior

Higher: food (0.2%), rents (0.3%), healthcare (0.4% vs 0.2 prior; +2% yr/yr)

Lower: gasoline (-4.2%)

UK: May survived a no confidence vote with lots of votes to spare. Not as much no confidence as thought.

Fed: Trump renewed his attacks, saying the Fed would be 'foolish' if it raises rates again.

Cramer at CNBC went as far to say the Fed should CUT rates in December as the quarter is ending weak. This from the man who has up to now said the Fed should hike in December. Today he said he was only saying that to give the Fed 'cover.' Okay then.



Once again a lot of movement back and forth, this time the indices managing to hang onto some gains.

SP500: Gapped off the bottom of the range, rallied through the 10 day EMA, then fell back to close within the Tuesday range. Big tombstone doji and we will see if it is a continuation signal. MACD remains solid on this as well as the other indices.

DJ30: Same story, upside gap, rally through the 10 day EMA and past the Tuesday high, then fading back inside the Tuesday range, showing a doji.

NASDAQ: Almost the same except NASDAQ moved through the 20 day EMA before coming off the highs and closing just below the 10 day EMA and the Tuesday high. Still decently off the bottom of the range but showing that same tombstone doji.

SOX: Same as NASDAQ, through the 20 day EMA, faded to close at the 10 day EMA. Still off the bottom of the range but this pattern is still more one only a mother could love.

SP400: Midcaps rallied to the Tuesday high, faded to the upper range from Tuesday. That gets SP400 back to the October closing lows; lot of work for just that much of gain.

RUTX: Rallied to test the October low then faded to a modest gain and a close still below the October and November lows.


As with the indices, lots of gaps higher followed by fades.

Transports: A disappointment as the one good rail, CSX, is struggling to move higher.

Retail/Apparel: A bit more upside though not putting together great patterns. More upside for ULTA, LULU, but still weak patterns. COST trying the 50 day MA, showing a doji. Struggling.

Personal products: Still up, still so-so recently. PG at the highs from November. CLX dropped the gain from Tuesday. CL gapped upside and tested the 200 day SMA.

Food: Decent patterns, but going nowhere. KDP flat. YUM just a modest gain. CMG in the handle; still. PEP gapped upside, faded to the 20 day EMA and a loss. KO gapped higher, reversed the move. MCD still flipping around at 183ish.

Software: Hanging on is about all. GLUU showed a modest gain and doji after the two strong moves. TEAM moved higher then faded for a more modest gain. VRSN, SPLK, CRM showed the same action.

Drugs: Smaller biotechs for the most part still look good. BCRX, ZGNX are waiting to move. ARWR started a move and we will look at it again. ILMN gapped upside but showed the fade from the high action; if it holds and continues upside we can move in. Big pharma big bore. PFE, LLY, MRK went nowhere.

FAANG: Not bad action. FB moved up to test the 50 day MA, faded modestly. AMZN gained 1.24% but after bumping the 200 day SMA faded much of the gain. AAPL still struggling. GOOG gapped upside and tested the 50 day MA, faded. Same story.

Chips: AVGO continued upside with another gap. Most other chips stink, e.g. AMD, AMAT, NVDA, LRCX.


Stats: +157.03 points (+0.64%) to close at 24527.27

Stats: +66.48 points (+0.95%) to close at 7098.31
Volume: 2.42B (+6.61%)

Up Volume: 1.74B (+590M)
Down Volume: 654.76M (-445.24M)

A/D and Hi/Lo: Advancers led 2.09 to 1
Previous Session: Decliners led 1.21 to 1

New Highs: 19 (-2)
New Lows: 195 (-92)

Stats: +14.29 points (+0.54%) to close at 2651.07
NYSE Volume: 982.812M (+10.95%)

Up Volume: 662.449M (+299.222M)
Down Volume: 308.603M (-193.766M)

A/D and Hi/Lo: Advancers led 1.89 to 1
Previous Session: Decliners led 1.23 to 1

New Highs: 35 (-2)
New Lows: 128 (-161)


VIX: 21.46; -0.30
VXN: 26.30; -0.47
VXO: 23.56; -0.82

Put/Call Ratio (CBOE): 1.00; +0.03

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: 2.908% versus 2.884%. Bonds testing the 200 day SMA after breaking upside through it.

Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.1376 versus 1.13244.

Historical: 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: 113.385 versus 113.385. Holding over the 50 day MA after a strong surg through it.

Historical: Last below 109 in June 2018: 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: 51.15, -0.50. Struggling to get through the 10 day EMA after 3 weeks of working laterally.

Gold: 1250.00, +2.80. Rallied to near the 200 day SMA and now in a 3-day lateral move below it. Not bad at all for a break higher.


Not quite back where the move started earlier in the week, but not far from the bottom of the range. On the positive side, that means there is still plenty of room upside. On the other side, stocks have yet to show they can hold any kind of upside move this time. Two rallies higher in the range thus far, this one suffering from some stage fright.

Still in good position to move, still not really making a good move. Some good names in position, and if they move we will be ready to play them for a move similar to the November twins. If not, we have those downside plays ready to go . . .

Have a great evening!

End part 1
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