Monday, January 14, 2019

The Daily, Part 1, 1-14-19

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1/14/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: CLX; FB
Trailing stops: FIVN
Stop alerts: None issued

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- A slow start to the week with no decision made at resistance.
- First back-to-back losses of 2019 the headlines read. Yes, but at this point still just a test of the last run.
- China exports/imports weak, shutdown continues, but earnings are likely the next market move key.

Stocks started the week lower, making it two straight losing sessions for SP500, DJ30 and NASDAQ. First back-to-back losses of the year as some websites note. Lions, tigers, and bears, oh my.

Down, still just below resistance as carefully explained last week and over the weekend. Definitely something to watch, but not any obvious start to a new rollover. Indeed, more than a few good patterns were up, and we bought into some FB upside, though we entered some downside on CLX as well. Up and down, yen and yang. The market has not made its decision yet, but some individual stocks were casting their votes. Many were satisfied to wait it out at the status quo.

SP500 -13.65, -0.53%
NASDAQ -65.56, -0.94%
DJ30 -86.11, -0.36%
SP400 -0.59%
RUTX -1.01%
SOX -1.55%
NASDAQ 100 -0.91%

VOLUME: NYSE +11%, NASDAQ -6%. SP500 encountered some higher volume selling at resistance (MS said this level was where you should start selling positions) while NASDAQ, down harder, sold on light, less enthusiastic trade. Even NYSE trade was still below average, still below the Thursday levels that were below average as well. Thus, not an out and out dumping of these stocks.


What were the votes?

Upside: banks/financials posted solid gains despite C missing on the top line. Marijuana related stocks, e.g. CGC.

Down: Biotechs retrenched after gains, big pharma sold harder (the democrats opening inquiries into pricing), software giving back some moves, chips giving up some of their recent gains.

Flat: most everything including FAANG, software leaders (they barely faded), machines/manufacturing, metals, transports -- again, pretty much everything.

Why no definitive move? The economic news was limited, but what was out involved the continuing China economic problems. Exports fell 4.4% year/year in December and imports dropped 7.6%. Both down from lower but positive reads in November.

The big issue is upcoming earnings. Upside guidance such as seen Monday from LULU is at least offset by warnings from key players such as AAPL, MU, FDX, etc. C missed on the top line in its report released Monday, but the stock managed a gain and indeed all financials were stronger. That many be an outrider group, however, as financials have missed out on all of the rallies outside of this last one that started late December.

Typically stocks head into earnings a bit pensive as to the early results, and this time that is accentuated by the warnings after all the worry the Fed was overreaching and slowing the economy. The warnings appear to jibe with that concern, and thus the markets are somewhat on hold awaiting the release of those first key reports. Banks are important, but NFLX on Thursday holds a lot of weight all by itself.

Thus, despite the indices bumping resistance to end last week and setting up potential downside patterns, the market more or less held their patterns ahead of the next catalyst, likely earnings, but there are always the China and Powell twins. The Brexit vote is this week as well, the government shutdown continues to another record as our leaders on both sides take time off at home or frolicking in Puerto Rico. I would like to go to the sunshine and warmth there as well, but unlike those in DC, most of us have business to attend to. Ah, the tale of two countries: the leaders and the rest of us.

As for market actions, today we split the difference, buying some FB on a good move upside, and picking up some CLX downside -- kind of like the market.



SP500, DJ30, NASDAQ: Dipped a bit but continued the lateral move from late last week just below resistance. Still low trade, still consolidating the second leg higher.

RUTX, SP400: Very similar though the small caps took a bigger hit similar to NASDAQ (growth was more impacted). Both faded from the 50 day MA but slightly. Same situation as the large caps: just below resistance, testing back just a bit, still waiting for the next serious move.

SOX: After the Thursday/Friday break higher above the 50 day MA, the chips fell back to the 50 day MA, showing a tight doji. Not a bad test of the rally through that point, and a bit of a test is not a bad thing. Watching SOX closely given it tends to act in leadership fashion, and if it breaks higher again, the rest of the market may just follow and put in that third leg upside.


Semiconductors: NVDA was up, LSCC tried to surge, but many were lower, particularly the AAPL-related chips as another AAPL supplier overseas said business was slower. Indeed, most chips were down though not all sharply, e.g. AMD, AMAT, XLNX.

FAANG: FB posted a solid enough move to get us into some positions while most FAANG rested. AMZN continued its test of its run, NFLX faded to test the 200 day SMA it just broke above, GOOG showing a third doji as it tested back on low trade. AAPL lows some ground but was not crushed on reports a supplier was saying business had slowed.

Software: COUP continues to set up well as do TEAM, NOW, DATA. MSFT slipped a bit more but did not sell hard into the ABCD pattern. TTWO did turn down much harder from its 50 day EMA test.

Retail: LULU upped its guidance and gapped higher. HD, LOW continue to set up, ROST also in a lateral test. M, KSS, COST, JWN still languishing.

Drugs: LLY is testing decently, but MRK, PFE struggle. Big biotechs were off but not heavy, e.g. BIIB, CELG. BLUE not bad but the group is struggling a bit after some decent moves.

Transports: Sliding back a bit more in some instances. JBHT moved higher, SAIA moved lower. DAL was downgraded but it lost just 1.67%. AAL languishing, SAVE testing but in good position still. Rails inching higher.

Financial: Strong moves even with C missing on the top line. C surged to the 50 day MA's on volume. BAC broke over the 50 day MA's. MS broke above the 50 day MA. Some good work ongoing.

Metals: FCX still working laterally over the 50 day MA. CENX tried higher then faded to flat. HMY (gold) in a good 2 week consolidation.

Pot: CGC jumping sharply, CRON continuing a steady rise up the 10 day EMA, TLRY up 4+%.


Stats: -86.11 points (-0.36%) to close at 23909.84

Stats: -65.56 points (-0.94%) to close at 6905.92
Volume: 1.94B (-5.83%)

Up Volume: 599.56M (-550.44M)
Down Volume: 1.32B (+433.29M)

A/D and Hi/Lo: Decliners led 2.18 to 1
Previous Session: Advancers led 1.18 to 1

New Highs: 22 (-4)
New Lows: 21 (+8)

Stats: -13.65 points (-0.53%) to close at 2582.61
NYSE Volume: 888.08M (+11.10%)

Up Volume: 373.728M (-77.101M)
Down Volume: 497.756M (+179.091M)

A/D and Hi/Lo: Decliners led 1.7 to 1
Previous Session: Advancers led 1.31 to 1

New Highs: 14 (-2)
New Lows: 22 (+17)


VIX: 19.07; +0.88
VXN: 25.74; +0.96
VXO: 19.61; +0.16

Put/Call Ratio (CBOE): 1.04; -0.04

Bulls and Bears:

After a quick crossover, a quick trist, bulls rebounded, bears fell a bit, and there is some separation. Still, the deed is done; they crossed over, typically a very good indication sentiment was extreme to the negative and sets up a move higher. We are seeing a move and now the indices are near the next key levels of resistance.

Bulls: 34.8 versus 29.9

Bears: 29.4 versus 34.6

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: 34.8 versus 29.9
29.9 versus 39.3 versus 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: 29.4 versus 34.6
34.6 versus 21.4 versus 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: 2.706% versus 2.699%. TLT still at the 20 day EMA, testing the last bond rally through the start of 2019.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.699% versus 2.733% versus 2.712% versus 2.731% versus 2.694% versus 2.668% versus 2.552% versus 2.643% versus 2.686% versus 2.716% versus 2.774% versus 2.811% versus 2.736% versus 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%

EUR/USD: 1.14734 versus 1.14699. Doji at near support as the euro measures the 200 day SMA it tried to break last week but faded back.

Historical: 1.14699 versus 1.15075 versus 1.15532 versus 1.14547 versus 1.14834 versus 1.13980 versus 1.13957 versus 1.13343 versus 1.14450 versus 1.14425 versus 1.1432 versus 1.13588 versus 1.14015 versus 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049

USD/JPY: 108.340 versus 108.563

Historical: Last below 109 in June 2018: 108.563 versus 108.332 versus 107.959 versus 108.802 versus 108.705 versus 108.517 versus 107.173 versus 107.515 versus 109.687 versus 110.273 versus 110.845 versus 111.190 versus 110.337 versus 111.223 versus 111.21 versus 112.521 versus 112.477 versus 112.653 versus 113.382

Oil: 50.51, -1.08. After tapping up to the 50 day MA and 52.50 resistance from December, oil has slipped back 2 sessions. Just over the 10 day EMA and we will see if it can hold and make a break through next resistance.

Gold: 1291.30, +1.80. Working laterally over the 10 day EMA for the seventh session.


Basically the same setup left from Friday with the indices just below resistance, awaiting the next catalyst to break them higher or back down into more selling. Of course we are waiting for the signal and have plays ready either way. It would be great if the indices can break higher again and continue to new highs -- most people like that -- but we will take whatever the market direction gives.

Have a great evening!

End part 1
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