Wednesday, January 23, 2019

The Daily, Part 1, 1-23-19

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1/23/2019 Investment House Daily
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Stop alerts: None issued

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- Stocks start stronger, struggle to hold on.
- Another test of the resistance just broken, modest rebound, overall constructive action.
- Earnings mostly positive, some clinkers such as TXN afterhours.
- Stocks could have sold off, did not, now need to show they can continue the third leg.

Tuesday was a pretty sharp thump lower post-expiration and breakout to a potential third leg of upside. Wednesday the action mellowed. Futures started higher purportedly on solid earnings from IBM, CMCSA, PG, UTX, giving the appearance of a rebound following that Tuesday post-breakout slump.

There was a rebound. It just did not last long. From the opening bell stocks struggled and indeed rolled over, selling off into 12:00ET. Another 50 day MA test was apparently needed. They got it. After that midday bump at the 50 day MA, bids returned. Not a roaring surge to the upside, but a steady build back to the close. Never made it back to the early session highs, and only the large cap indices closed in positive territory.

SP500 5.80, 0.22%
NASDAQ 5.41, 0.08%
Dj30 171.14, 0.70%
SP400 -0.16%
RUTX -0.22%
SOX -0.62%
NASDAQ 100 0.18%

VOLUME: NYSE -20%, NASDAQ -5%. Trade fell off again on selling, a good indication it is more a lack of bids than a lot of dumping stocks. Still a positive at this juncture.

ADVANCE/DECLINE: NYSE flat, NASDAQ flat. No dumping, no heavy buying, just consolidation.

Down again, but the action overall was upside constructive.

Specifically, the indices put in a second day testing the break higher over resistance. Tapped support on the low, recovered to the close showing doji on the candlestick charts. Pretty normal testing action. In other words, not a rollover , but a second test of the resistance broken last week, that resistance holding as support for a second session. Very orderly 1-2 test of the break higher. Not bad.

Not a done deal upside, but the patterns look good and it put the indices in much better position to continue the break higher on the attempted third leg.

SP500, DJ30, NASDAQ: All sported very similar action Wednesday, testing to the 50 day MA's on the low, rebounding to close with modest gains. All remain over the 50 day and over the bottom of the October/November trading range. Setting up well for a renewed move in the third leg break higher.

SP400, RUTX: These two are showing nice doji over the 50 day MA and the bottom of the October/December trading range. Very orderly, controlled fade to test that surge and break above that resistance.

SOX: After a sharp session Tuesday, SOX was more under control Wednesday, again testing the 50 day SMA, undercutting it, but holding it on the close. In its own way a pretty constructive session, but it is where it needs to hold and rebound to continue the break higher.


FAANG: No great leadership here as these stocks engaged in their own floundering around. FB never rebounded, falling to the 20 day EMA and staying there. NFLX lost some more ground but the post-earnings decline has slowed. AMZN tapped the 50 day MA again and rebounded off the low to a doji, while GOOG showed the same action but just a better doji. AAPL even looked better with a doji with tail. Okay, they are positioning to continue upside after a tough Tuesday. Held where they had to, now need to bounce.

Software: Same as the indices, testing support again, rebounding, e.g. CRM, ADBE. COUP and SPLK held gains while testing again. NTNX is setting up very well. TTWO in gaming software dove lower, and other such stocks suffered a bit, e.g. EA. DATA, NOW are not bad, continuing to test.

Financial: Another session of testing after a good move, setting up the next break higher. C is in a nice weeklong flat flag after a solid break higher. BAC testing the 200 day SMA after breaking through. GS in a short test of its big move as well.

Semiconductors: Working on it with many stocks testing a second session and a session a bit more sedate. RMBS, AMAT, AMD, UCTT. INTC testing the 50 day MA after rising to test the 200 day MA. TXN missed on the bottom line and gave weak guidance afterhours and is sharply lower. XLNX is sharply higher after its results as is LRCX.

Pot: CRON, CGC still testing, still in very good position.

Machinery: Suddenly not so great as TEX breaks lower from the 50 day MA. CMI testing hard back to the 200 day SMA. CAT in a 2-day test of its own to the 50 day EMA.

Drugs: Downgrades of MRK, PFE had little to no effect on those stocks. LLY broke nicely higher, taking on last week's high. Biotechs held steady but are consolidating nicely and could make some moves, e.g. ARRY, AMRN.

Energy: HAL, SLB still in good tests of their trend break attempts.


Stats: +171.14 points (+0.70%) to close at 24575.62

Stats: +5.41 points (+0.08%) to close at 7025.77
Volume: 2.28B (-4.6%)

Up Volume: 1.08B (+566.5M)
Down Volume: 1.14B (-720M)

A/D and Hi/Lo: Decliners led 1.02 to 1
Previous Session: Decliners led 3.15 to 1

New Highs: 22 (-4)
New Lows: 48 (+10)

Stats: +5.80 points (+0.22%) to close at 2638.70
NYSE Volume: 770.917M (-20.47%)

Up Volume: 359.269M (+210.754M)
Down Volume: 400.766M (-416.362M)

A/D and Hi/Lo: Decliners led 1.04 to 1
Previous Session: Decliners led 3.37 to 1

New Highs: 22 (+7)
New Lows: 19 (-9)


VIX: 19.52; -1.28
VXN: 24.50; -0.52
VXO: 20.14; -1.05

Put/Call Ratio (CBOE): 1.16; +0.23

Bulls and Bears:

Bulls continued a bounce back in the forties with bears dropping back near 20. Then the market sold back this week. Still, the crossover occurred and that is a bullish indication. The market has made a move up, is testing, and then the question is if it can continue from there.

Bulls: 45.4 versus 42.1 versus 34.8

Bears: 21.3 versus 25.2 versus 29.4

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: 45.4 versus 42.1
34.8 versus 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: 21.3 versus 25.2
29.4 versus 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: 2.741% versus 2.75%

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.75% versus 2.788% versus 2.752% versus 2.727% versus 2.718% versus 2.706% versus 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%

EUR/USD: 1.13830 versus 1.13652

Historical: 1.13652 versus 1.13636 versus 1.13919 versus 1.13993 versus 1.14802 versus 1.14734 versus 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: 109.582 versus 109.651.

Historical: Last below 109 in June 2018: 109.651 versus 109.773 versus 109.133 versus 108.912 versus 108.551 versus 108.340 versus 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: 52.62, -0.39. Still testing, showing a doji at the 52.50 support.

Gold: 1284.00, +0.60. Still testing the break higher, holding the 20 day EMA as part of a 3 week consolidation.


Shutdown continues with the snippiness growing on each side. Neither side wants to give the other a 'win,' thus the democratic leaders declined Trump's offer to meet. A GOP bill to authorize pay for federal workers was voted down last week with no coverage in most media. I guess Pelosi already had her response letter to Trump penned and didn't want to have to do a rewrite. Reminds me of the old classic barbs traded by Churchill and his political adversaries -- no that any of these rise to the level of Churchill.

Earnings are overall good though there are misses. XLNX solid afterhours, TXN not with its bottom line miss.

World economy remains wobbly as Canada reported a 0.9% drop in retail sales versus the -0.6% expected. The data is not very positive anywhere outside the US.

Trade, well anything can happen there.

As far as US markets, they did a good job of mitigating the Tuesday weakness, testing support, recovering decently off the lows. That leaves the indices and many leaders at least in position to bounce. Won't say great or good, but in position. The question is whether they do it. Wednesday was constructive -- the could have sold off but did not. Now they show if they can resume the upside on leg three.

Have a great evening!

End part 1
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