Thursday, January 10, 2019

The Daily, Part 1 of 2, 1-10-19

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1/10/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: BILI; DOCU
Trailing stops: HLF
Stop alerts: None issued

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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.


- Day five of upside as stocks fight off early weakness, rally to session highs.
- Powell speaks again, sends stocks lower, but they recover and move higher.
- Indices moving closer to the next resistance, SOX actually punching through.

Another bullish session saw stocks fight off early weakness and some bad retail and transport news, continuing the second leg upside for a fifth session. Nice low to high action shows the buyers stepping in again, even with some not so great economic news. Is the Fed's metamorphosis from hawk to dove so Yellen-like that the market prefers the Fed aid to actual good economics? Help us all.

The rally is still alive and well, of course prompting more speculation as to whether the stock market is back in a bull market. As Melvin (Jack Nicholson) asked Simon (Greg Kinnear) in 'As Good as it Gets' when Simon asked where his new place was, 'does it matter?' Okay, sure it does in terms of the existing trend and how that always helps you as a backstop, but in this market right now that has not proved it can hold a move lower or a move higher, all that matters is we make sound plays and take gain when the move gets a bit aged. We have done that and are letting positions move higher. Oh okay, and we did buy some BILI and DOCU on really good breaks higher. So, yes, the market displayed nice bullish action, moving from low to high for some decent gains.

SP500 11.68, 0.45%
NASDAQ 28.99, 0.42%
DJ30 122.80, 0.51%
SP400 0.80%
RUTX 0.46%
SOX 0.97%
NASDAQ 100 0.31%

It did so in the face of less than great, and indeed bad, news.

What happened to holiday sales?

After starting with a strong Black Friday and accompanying weekend, stores such as Macy's say that the consumer dried up. M, LB, KSS reported sales less than expected, LB off 6%. M stock is the downside leader, selling off 18% in the premarket. TGT managed to report stronger sales (5.75%) and BBBY raised its full year guidance (even with lower same store sales).

Travel was weak over the season: AAL cuts its 2019 outlook.

Ford: Going to cut thousands of jobs in Europe in a major restructuring. Europe going strong as well. Not.

So guess what? The economy is not as strong. Gee, we have only harped on that during the past few months as the FOMC hiked rates. We noted a slowdown starting in the summer, talked about it, said it was a normal ebb in an expansion. But then the Fed kept hiking and Powell destroyed confidence with his 'hike past neutral regardless' October comments. That turned a normal slowdown into another threat of a Fed-induced recession. Now the Fed is all friendly and dovish, but likely, as usual, too late.

The Fed's Brinker spoke today saying that economic growth continues but at a slower pace. No kidding, brainiac. The question is the pace of slowing and whether that will outstrip the 'continuing growth' Brinker sees. It is not a snapshot of the economy, but trends. Again, a normal slowdown in an expansion was turned into a serious slowdown by the Fed action. The trend is not up -- retailers just showed that -- despite the Fed's belief and the Fed citing the jobs report as 'proof' the economy is expanding. Incredible yes, given jobs lag. That is like a football team down by four TD's with 5 minutes left scoring a TD and a diehard fan saying 'see, they are still in it.'

Trade: China says progress was made at the recent conference concerning forced transfers. Much rejoicing. Yeah.


The market not only fought off selling for decent gains, but it also moved a bit closer to resistance.

Stocks started lower but rallied nicely to 12:50ET. Then Powell had his second speaking engagement in a week. The first one the prior Friday helped secure a strong stock gain and rebound into the second leg of the current rally. Thursday his comments almost scuttled the move as stocks fell from session highs rather dramatically. For almost an hour they struggled, but then when Powell was finished he did not say anything to mitigate his previous Friday comments, stocks rebounded and closed out at or near session highs. Thus, Powell, despite his natural inclination to step on it, avoided that, for the most part.

As a result, the market continued its upside momentum.


To view, click on the following links:

Outside of one index, not any change in position or character, still edging closer to that next resistance where the market reveals its inner strength -- or lack thereof.

SP500 and DJ30 shook off a lower start and rebounded for low volume gains that moved closer to the 50 day MA and the bottom of the October through December range. Still room to edge higher, and they are doing just that.

NASDAQ gapped lower as well, recovered to a gain, basically matching the Wednesday high at the 50 day MA's and the bottom of the October/December trading range. The lick log.

RUTX: Same action as SP500, DJ30, gapping lower, reversing for a gain, still room to move higher to the coincident 50 day MA and bottom of the October/December range. See, not much change.

SP400: Same story, reversing a lower open for a gain, this one the best of the rest outside SOX. At the bottom of the prior trading range, bumping into the 50 day EMA.

SOX: The one index that managed to break on through to the other side -- of the 50 day MA that is. SOX moved through that level. Perhaps it sets up a big double bottom with that lower December low that was mirrored with higher MACD at the low. Chips put in their time long before the other indices; actually looks interesting short term. Longer term there is still that yearlong top.


Some continued improvement, e.g. chips, others that looked better did not fare well, e.g. retail with the many holiday misses in sales.

Chips: AVGO continued to recover. LRCX added some more to the break through the 50 day MA. INTC bounced off the 50 day. AAPL-related continued to recover some, e.g. SWKS; QRVO not bad but similar to LRCX et al: up but approaching the old resistance.

Retail: Meltdowns in M, LB, KSS, but note that KSS, LB did make comebacks. Most did, even JWN that was hammered. BBBY upped its 2019 guidance and surged 16+% as it gapped over the 50 day MA. ROST tested the 200 day SMA and bounced, likely just taking a breather. LULU, ULTA, HD tested but nothing bad, perhaps just setting up for the next leg higher.

Software: Flattish, resing after really good moves, e.g. TEAM, NOW, SPLK. TTWO looks good, COUP is still setting up.

FAANG: Really quiet but not bad. Like GOOG's test to the 50 day MA; could be setting up well for an entry. AMZN was flat as was FB; AMZN had to recover to be flat. NFLX rallied more for us and was up 5 clicks afterhours.

Drugs: Not all was well. PFE broke down from the 50 day on huge trade. MRK threatening to do the same. LLY still like a fresh lily. AMGN still moving up, as is BIIB. Biotechs definitely the stronger in the group.

Transports: AAL warned but after gaping lower it rebounded decently. DAL gapped lower and reversed positive on volume. Trucking is trying to push up; ODFL is bumping the 50 day MA in a double bottom.

Financial: Quiet again on the day, a third session of R&R.

Machinery: sold off but recovered, e.g. CAT, TEX, CMI.

Metals: FCX is pausing after a break through the 50 day MA. CENX showing similar action. They are the best of the group of industrial metals in terms of pattern.


Stats: +122.80 points (+0.51%) to close at 24001.92

Stats: +28.99 points (+0.42%) to close at 6986.07
Volume: 2.19B (-9.88%)

Up Volume: 1.31B (-280M)
Down Volume: 851.08M (+32.41M)

A/D and Hi/Lo: Advancers led 1.19 to 1
Previous Session: Advancers led 1.91 to 1

New Highs: 18 (-17)
New Lows: 14 (+6)

Stats: +11.68 points (+0.45%) to close at 2596.64
NYSE Volume: 893.784M (-4.82%)

Up Volume: 501.946M (-183.042M)
Down Volume: 380.906M (+143.985M)

A/D and Hi/Lo: Advancers led 1.57 to 1
Previous Session: Advancers led 2.09 to 1

New Highs: 11 (-1)
New Lows: 7 (-3)


VIX: 19.50; -0.48
VXN: 25.91; -0.51
VXO: 21.14; -0.26

Put/Call Ratio (CBOE): 1.13; +0.20

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: 2.733% versus 2.712%. TLT dropped hard to the 20 day EMA, continuing the test of that break higher just over a week back that coincided with what was a new rollover pre-Powell.

Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.15075 versus 1.15532. After surging to the 200 day SMA, the euro faded back.

Historical: 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: 108.332 versus 107.959. Modest bounce from the dollar after selling off hard Wednesday.

Historical: Last below 109 in June 2018: 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: 52.59, +0.23. Oil continued higher up toward the 50 day MA, getting close now at next resistance here at 52.50.

Gold: 1287.40, -4.60. Faded some, finding some resistance at 1300.


Powell managed to maintain the market's good humor upside and the indices continued climbing toward next resistance. Nothing new there -- the indices have been in a steady climb toward that next resistance, now five days in the making. That is the next test, moment of truth, etc.

We have banked gain on the move and of course Friday will be watching to see if there is a Friday strong move or some equivocation. Either way we would likely take some more gain on January options and other Nice performers such as NFLX and company. NFLX is up to 330 afterhours, just below the 200 day SMA; looks like a good place to take some more gain if it cannot punch through and hold the move.

Thursday we could not lay off picking up some BILI and DOCU, both making good moves. Sure the indices are near resistance, but if the move continues, these are a couple primed to move well.

Thus far no sellers have ventured in front of this move. Friday may not be the day for them, and if they do show, Friday moves can be deceiving, especially in good moves one way or the other. For now, a good move upside making us money, letting positions work.

Have a great evening!

End part 1 of 2
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