Thursday, January 24, 2019

The Daily, Part 1 of 2, 1-24-19

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1/24/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: MC; MU; RMBS; SQ; UCTT
Trailing stops: None issued
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.


- SOX blasts higher on strong earnings, INTC afterhours throws on a wet blanket.
- SP500, DJ30 in a nice 1-2-3 test, NASDAQ and growth looks ready. Now is the same old question: can they make the move that is set up?
- Stocks do a credible job on the day despite all kinds of missteps and less than good news.
- Many stocks in good position. Many stocks need to make the move.

It was another sluggish session on the indices even though all ended higher but for DJ30 with its most modest loss. The gains were focused in growth with SOX, NASDAQ, SP400 and RUTX --REALLY focused in SOX.

SP500 3.63, 0.14%
NASDAQ 47.69, 0.68%
DJ30 -22.38, -0.09%
SP400 0.70%
RUTX 0.70%
SOX 5.73%
NASDAQ 100 0.66%



SOX exploded higher after results from XLNX overpowered the TXN so-so results. Airlines were higher as well thanks to LUV and AAL, but that is another story. Many chips jumped. The issue: INTC afterhours missed and gave weak guidance. It dropped 6% taking others with it, but most of those others have recovered, e.g. AMD, MU, NVDA later in the afterhours trade.

NASDAQ, SP400, RUTX all posted just over 2/3% gains -- very credible but not blowout.

DJ30 and SP500 both showed very tight doji just over the 50 day EMA, just as they did Wednesday. That is good action, setting up that 1-2-3 test of the break higher last week.

Indeed, SP400 and RUTX are in basically the same pattern over the same support.

Thus, the indices have set up just as you should anticipate on a test of a break over resistance with the old 1-2-3 pullback. Often that sets up the new break higher that continues the breakout move for the third leg. It is, yet again, the lick log.

Stocks did a pretty good job overcoming some issues such as the administration's self-inflicted wound by Wilbur Ross. On CNBC he let slip that the US and China were 'miles and miles' apart from a deal due to structural issues and verification issues. Then he said he could not understand why federal employees were struggling -- before adding that they could get loans because the government is the guarantor. But, the first line gave all the soundbites needed to ridicule the administration. Good job!

The ECB said 'significant' monetary policy would remain 'essential' because risk remained to the downside. Very non-rosy view.

Then there was the Davos crowd talking their book. The MS CEO says he is "extremely negative" if the shutdown continues. Yes, another globalist worried the US might continue to turn away from the globalist agenda, thus damaging their power and wealth positions. I am reminded of the first Bond movie with Daniel Craig where at the end M says 'so, you learned your lesson. You trust no one. Good.' You cannot believe one word these people utter. They have a different agenda from you and me. They all are only interested in talking their 'book,' their attempts to get their agenda in place whether business, government, charity -- anything. Nothing can be taken as truth from these people.

China: The government is now blocking Microsoft's Bing browser. Mysterious, without warning, just doing it. Why? Because China is communist.

China is desperate. It is attempting to avoid history's march against its form of government. The model simply cannot compete with even partially free enterprise systems. No innovation, no entrepreneurial spirit. The Chinese people have that, but the government does not reward you, and indeed owns you (or if you don't play along, crushes you), if you have those attributes.

China is flailing as it tries to find a solution to its economic limitations. Why do you think Xi was made leader for life? Because the system cannot produce innovation -- it has to steal it and the rest of the world is not mad enough to do something about it. China's economics are failing and the leaders were desperate enough to accede to the demands of a megalomaniac. Where are the comparisons of Xi to Hitler that we see made rather readily regarding other people today? Look what he is doing to religion and virtually nothing is reported on it. The hallmarks are all there. Very dangerous and if we can use economics to force changes away from another dangerous communist regime, so be it.



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More overall constructive action, but we have to see how the market weathers the INC earnings miss and weak guidance.

SP500, DJ30: A second tight doji over the 50 day MA and the bottom of the October/December trading range. The two have put in a 1-2-3 test of the break higher and now it is time to move back up if they are going to do so.

NASDAQ: Gapped and rallied on better volume, bouncing off the 50 day EMA. Not bad action, not great action, most of the move due to semiconductors rallying big.

SP400, RUTX: After two days lower a nice bounce off the 50 day EMA test, the 50 day MA tapped on the Wednesday low. Good action, but just a start.

SOX: Big gap and surge upside, lead by XLNX, LRCX and their earnings. Goodness, what moves. SOX is rapidly approaching the October, November, December interim recovery highs. INTC will cause issues, but strength in AMD, MU and the like will help smooth out the Friday action.


FAANG: Modest gains as best with GOOG failing to rally. Fell hard Tuesday after the prior week rally and need to make an upside move to bolster this third leg.

Software: Some quality moves continue, e.g. COUP. Others are set up to move, e.g. SPLK, NTNX, DATA, NOW, EA.

Financial: Modest gains, still working in the lateral consolidation of the surge higher. As with software, setting up, waiting on that next move. C, GS look good.

Semiconductors: Some very strong moves, e.g. XLNX, LRCX, RMBS, MU, UCTT. NVDA trying to make a new breakout. Solid, but INTC missed afterhours.

Pot: CRON strong, CGC looks ready to break higher.

Drugs: Big pharma hammered, e.g. MRK, PFE. Even LLY fell to the 50 day MA. Some biotechs still look solid, e.g. ARRY, AMRN.

Energy: HAL, SLB trying to move.


Stats: -22.38 points (-0.09%) to close at 24553.24

Stats: +47.69 points (+0.68%) to close at 7073.46
Volume: 2.42B (+6.14%)

Up Volume: 1.55B (+470M)
Down Volume: 851.13M (-288.87M)

A/D and Hi/Lo: Advancers led 1.64 to 1
Previous Session: Decliners led 1.02 to 1

New Highs: 29 (+7)
New Lows: 32 (-16)

Stats: +3.63 points (+0.14%) to close at 2642.33
NYSE Volume: 786.925M (+2.08%)

Up Volume: 503.556M (+144.286M)
Down Volume: 274.868M (-125.898M)

A/D and Hi/Lo: Advancers led 2.08 to 1
Previous Session: Decliners led 1.04 to 1

New Highs: 31 (+9)
New Lows: 22 (+3)


VIX: 18.89; -0.63
VXN: 23.49; -1.01
VXO: 19.38; -0.76

Put/Call Ratio (CBOE): 0.98; -0.18

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: 2.734% versus 2.741%. Bonds looked as if they would move higher and TLT gapped upside, clearing the lateral test of the 50 day MA.

Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.13134 versus 1.13830. Euro dives lower below the 50 day EMA on a dovish ECB.

Historical: 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: 109.757 versus 109.58. Dollar trying to break higher but not leaving the 20 day MA yet.

Historical: Last below 109 in June 2018: 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: 53.13, +0.51. Trying to get up off 52.50 support.

Gold: 1279.80, -.420. Third doji at the 20 day EMA. Rally or fade time.


Futures dipped on the INTC earnings, but futures recovered into the afterhours session, bouncing back up near the close around 7:00ET.

Okay, here is the setup. SP500, DJ30 putting in 1-2-3 tests of the breaks higher over resistance the prior week. SOX blasted higher but has the challenge of INTC's earnings versus all the other good results in the sector. NASDAQ started upside, moved mostly by chips, but there are sectors in good position, e.g. software, FAANG, internet, biotech -- in position, time to make the new break higher. SP400, RUTX very similar to the large cap NYSE, set up with a nice test, starting to move higher.

The testing is in, the indices hit support, some started bouncing. This even in the face of less than great news and after sellers have had every opportunity to sell. Thus, it is time for the indices to break higher and hold a break higher.

Like the setups, picked up several positions today in chips as well as in SQ and on MC. If the indices break higher once more, then there are others we have an interest in picking up. NVDA is past our original buy point, but now the pattern is very well setup -- if it decides to make a move we likely move in with it. GOOG, FB, EA, CGC look good if you are not in and they make a surge. NTNX looks tasty, NBEV not bad, ENPH, SIMO, SLB -- all are good IF they can make the break higher.

Have a great evening!

End part 1 of 2
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