Tuesday, January 29, 2019

The Daily, Part 1, 1-29-19

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1/29/2019 Investment House Daily
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Targets hit: BILI; AMZN; WDAY
Entry alerts: ADBE; MSFT; USCR
Trailing stops: BLUE
Stop alerts: AMZN; EA

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- NASDAQ, big tech nervous ahead of AAPL earnings, midcaps, small caps and DJ30 appear not to care that much.
- Some indices are in the upper half of the 'third leg' range, others are at the bottom, but all are holding as they wait.
- Waiting on? FAANG earnings, Fed, trade talks. No, not jobs.
- Lots of top line misses, some leader groups starting to struggle, but other groups are trying to step up.
- AAPL results beat lowered expectations, stock rises into the 50 day MA afterhours.
- Market may take a pass on AAPL, but still has Powell Wednesday, the start of trade talks, and Thursday more FAANG.

After another start of the week drop, Tuesday attempted to make amends. With the Fed starting its 2-day meeting, trade talks set to begin Wednesday (and China carping about conceding structural changes), and AAPL starting off FAANG earnings after the close, early bids did not hold up that well.

Futures showed gains and stocks jumped higher the first half hour of trade. After that initial burst was out of the system, however, the bids stalled. Stocks plunged into midmorning. From there a recovery to midday, but the large cap indices never made it back to session highs with NASDAQ and SOX the biggest laggards. SP400 and RUTX did indeed put in higher highs mid-afternoon, fading back some into the close but definitely looking the stronger of the indices.

SP500 -3.85, -0.15%
NASDAQ -57.39, -0.81%
DJ30 51.74, 0.21%
SP400 flat
RUTX -0.14%
SOX -1.45%
NASDAQ 100 -0.96%

VOLUME: NYSE -6%, NASDAQ -15%. NASDAQ sported some hefty declines, but volume was not blowout. That means no dumping, just a lot of nervous feet ahead of the start of FAANG earnings, the Fed, and trade.



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It was not any kind of rollover for the indices. Some obviously performed better (SP400, DJ30, RUTX) than others, but none broke back through the resistance they moved above 1.5 to 2 weeks back.

RUTX and SP400 tested just modestly, holding near the top of their range formed on the initial break higher through the 50 day MA resistance.

DJ30 is in the middle of its range post-break through resistance.

SP500 is showing another doji over the 50 day MA and in a rather orderly move laterally.

NASDAQ fell to the 50 day EMA and sitting on that support in the bottom half of its 'leg 3' break higher.

SOX faded to the Tuesday low, this time not bouncing, closing nearer the 10 day EMA. Its breakout is still holding but it is dealing with NVDA dropping as well as struggles for AMD as that stock falls back through support. AMD, however, is up afterhours near 21 (closed at 19.25).

No break lower, but also no new move higher. More lateral attempts to consolidate the break over resistance. Definitely no continued move higher on a third leg. At best -- and that is the best case scenario discussed Monday -- the indices are working in a lateral consolidation, trying to hold on while they consolidate enough and get some triggers to get buyers interested in the upside again.

The most obvious trigger is earnings. Tuesday saw a wide range of stocks miss. Those that did not miss warned of a weaker 2019.

VZ, HOG, XRX, WHR, PII all missed on the top line with HOG missing bottom line as well. That nemesis is returning again after showing up in Q3 results. That is the most obvious indication of slowing economics when a broad range of companies miss on expected sales. MMM and PFE both beat, but they also both lowered 2019 expectations. Even if they win they are not that convincing.

AAPL: Perhaps AAPL's afterhours results will provide a catalyst. It beat expectations but remember, these expectations were lowered on AAPL's own warning. Thus the $94.3B versus $93.97B expected is not that great of a beat. Services up 19% to $10.9B with margins stated at 62.8%. Initially up 4 clicks, then 6. During the call it moved up almost 11 clicks but backed off to less than 9. Some pretty decent siren songs given the anticipation after the warning. It was obviously not a wow quarter as AAPL just barely edged lowered revenue expectations, but it is being painted much better than when the warning was issued. Still, the afterhours move puts AAPL just below the 50 day MA's on a Wednesday gap higher. Gapping into resistance.

Not sure AAPL's results will do it though the conference call tells all, or at least more. Still AMZN and FB to come, still the FOMC and trade as well. The market is not selling through support in anticipation of these events, but it also is definitely not moving higher into the news, thus demonstrating there is not a lot of confidence for positive outcomes. That of course, leaves the market vulnerable to breaching support if the news does not satisfy investor expectations that have thus far at least kept the indices working laterally over that support.

Thus, the indices head into Wednesday and the FOMC decision and Powell press conference with some decent enough AAPL results (more of a bounce in a sigh of relief given fears it would be worse than AAPL warned) but also facing AMZN and FB results and potential trade bombs.

Technically, they are also hanging in at support, not negative enough to sell off, not confident enough to rally.

That said, there are still good looking groups emerging such as financial, semiconductors, metals. Truckers, industrial manufacturing, some machinery, some retail have possibilities.

On the other hand, leadership is still rather thin. There are possibilities in many groups, but those have to turn into good patterns.

Some leadership groups are in a fight. Software, a longer lived market leader, is starting to struggle. FAANG is at the moment of truth with earnings at hand, and some big tech names are just really in a struggle (INTC, MSFT, NVDA).

In sum, that leaves the indices hoping for a catalyst from earnings, the Fed, and trade. Frankly, the Fed is a prerequisite to a move higher, perhaps a catalyst as well. In other words, the market has to have the Fed maintain its rediscovered love of rising markets and convey that in the Powell press conference. The fact that gold broke higher again this week with a strong Friday through Tuesday move (clearing the prior January high) speaks to the markets anticipating a continued market-compliant Fed Wednesday.

After the Fed, then earnings and trade come in to act as upside drivers -- or not. The indices are hanging over support looking for a reason to move upside or a reason to give up and break back down through potential support for a move toward the December low.

We closed some upside positions, taking some nice gain on some, taking lumps on others, and picked up a couple of downside positions, all in a positioning ahead of the results to come -- earnings, FOMC, and trade. AAPL, because of its weight, has S&P futures up as well, moving over the intraday session high. Step one is passing the test as investors breath a 'whew,' now waiting for Mr. Powell.


Stats: +51.74 points (+0.21%) to close at 24579.96

Stats: -57.39 points (-0.81%) to close at 7028.29
Volume: 2.09B (-14.69%)

Up Volume: 646.52M (-326.46M)
Down Volume: 1.43B (+20M)

A/D and Hi/Lo: Decliners led 1.23 to 1
Previous Session: Decliners led 1.79 to 1

New Highs: 34 (-6)
New Lows: 26 (-9)

Stats: -3.85 points (-0.15%) to close at 2640.00
NYSE Volume: 767.565M (-6.19%)

Up Volume: 454.569M (+133.637M)
Down Volume: 297.483M (-185.211M)

A/D and Hi/Lo: Advancers led 1.28 to 1
Previous Session: Decliners led 1.21 to 1

New Highs: 52 (+12)
New Lows: 17 (-5)


VIX: 19.13; +0.26
VXN: 23.86; +0.43
VXO: 20.10; +0.36

Put/Call Ratio (CBOE): 0.89; -0.10

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: 2.710% versus 2.738%. Bonds break higher off support, anticipating a still dovish Fed.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.738% versus 2.748% versus 2.734% versus 2.741% versus 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: 1.14351 versus 1.14285

Historical: 1.14285 versus 1.1407 versus 1.13134 versus 1.13830 versus 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: 109.364 versus 109.180

Historical: Last below 109 in June 2018: 109.180 versus 109.545 versus 109.757 versus 109.58 versus 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: 53.31, +1.32. Bouncing off the 52.50 level, still working in a rather tight lateral range over the 50 day MA.

Gold: 1308.90, +5.80. Continuing the Friday break higher, adding to the move over the prior January high.

Have a great evening!

End part 1
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