Thursday, January 31, 2019

The Daily, Part 1 of 2, 1-31-19

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1/31/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: CLX; DATA; FB
Entry alerts: ZS; TREX
Trailing stops: None issued
Stop alerts: MSFT; USCR

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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.


- Market a bit punchy after the DJ30 big Fed upside session. DJ30 pauses, the others play catch up.
- FB keeps the earnings story solid, or does it?
- Trade deal progress (??) has positives and not. Gee, what a surprise.
- End of the month sees volume spike. Will money enter to start a new month?
- Friday again and new money could continue the upside, but don't forget Monday.

FOMC done, earnings not so done, trade . . . not done.

The aftermath of the Wednesday FOMC announcement and press conference still left questions as to whether the Fed is done or just waiting in the shadows, ready to jump out and regulate markets when it sees the need. Kind of creepy -- purportedly free markets, but not too free lest they create imbalances. What kind of imbalances, too much wealth? Can't have that; those the central banks work for would not be pleased if all the world made money, grew wealth, and thus grew individual power and independence. No government wants that, the ultrawealthy don't want that, so they become the sad bedfellows they are, creating central banks to tamp down spontaneous outbreaks of wealth.

But, of course, I digress.

The market for now only cares if the Fed is standing in the way or has stepped aside, even if it is data-dependent and could stick a leg out of the shadows at any time and trip stocks.

Thus, stocks, while not surging in most cases, put in a credible session given the outsized gains Wednesday.

SP500 23.05, 0.86%
NASDAQ 98.66, 1.37%
DJ30 -15.19, -0.06%
SP400 0.45%
RUTX 0.84%
SOX 0.03%
NASDAQ 100 1.45%

VOLUME: NYSE +65%, NASDAQ +15%. Finally above average trade on NYSE though mostly like it was end of month trade. Still, it was upside prices on upside volume. NASDAQ put in a second session of above average volume on the upside, showing power for the move.

ADVANCE/DECLINE: NYSE 2.2:1, NASDAQ 1.8:1. Say 'large caps.' Say 'Facebook.'

FB soared on its earnings, GOOG and AMZN were strong as well. TEAM, ZS, CRM, COUP -- and we own these -- and other software stocks surged (HUBS, OKTA, NEWR). Oh, we also own FB and GOOG; at least we kept those when we sold the rest of our AMZN earlier in the week. Semiconductors remained solid enough. Some retail remained strong, e.g. FIVN, AMZN (until afterhours earnings). Still enough to keep the upside in decent shape, but still in need for more stocks to rally outside these groups.

But, again, I somewhat digressed.


Earnings, the first or the second of the triumvirate of issues this week, were really good in a subset of stocks, not so good for many. FB great, beating and rewarded. V, PYPL beat but were beaten instead of rewarded. Many missed with the top line again being a problem: UPS, MSFT, QCOM, DDP HSY (bottom line too) all missed top line while BLK and TSLA missed bottom line. There are others for sure, but they all pretty much fall in line with the so-so results.

That leaves earnings good enough in the high visibility names that everyone watches, but overall disappointing for most stocks as the sales revenue contracted in Q4.


Ah, trade. The US and China met today. Initial reports, indeed the first ones heard, talked of the need for Trump and Xi to meet one on one to personally hammer out the stickier areas, e.g. IP transfers (aka theft), wanton hacking to steal business trade and US military and other secrets. Not too promising, the old 'here we go again' scenario.

But . . . Reuters reported late day that the top Chinese trade negotiator stated he hoped to accelerate the 90 day deadline. Most took that to mean the talks went well enough that they were much closer to reaching a deal. Body language experts, or those claiming to know something of it, said the body language was 'positive.' What does that mean? They weren't throwing punches? That is like saying something would be pretty if it wasn't so ugly.

Perhaps he meant that he hoped it would not take 90 days because China's economy is so bad it may not last the full 90 days. China's PMI dropped again we learned Tuesday. Maybe it is just a case that China is as desperate as it should be. I don't know if you have seen the graphic, but in the last 10 years the Chinese domestic loans have shifted from being well in favor of 'private' (and just how private are any companies in China?) companies to massively skewed to government-owned entities. China is heading more and more into hard-core communist control structures, and in so doing it is destroying its economy. Frankly, I don't think those in charge get that. They are clamping down harder and harder as things get worse and worse. That may result in collapse; awful for the average Chinese citizen -- near term, but quite a positive for the rest of the world.


For the stock market, the catalysts/obstacles/questions about the triumvirate of Fed/earnings/trade did not stymie the advance. Indeed, NASDAQ rallied as the big names were flush with FB's earnings; after AAPL, FB's crush of earnings had hopes high for AMZN and GOOG and they both showed it on the session, up 2.9% and 2.5%, respectively. DJ30 was flat on the day, but goodness, it was up huge Wednesday. Not bad for the day after a rush higher.


To view, click on the following links:

As noted, DJ30 was flat, trying to move over the 200 day SMA again, failing to make any headway after that 400+ point AAPL/BA earnings boost. That is okay, it is midway into the October/December trading range, taking a pause at 25,000 (closed at 24,999.67), the next resistance it faced. Didn't reverse immediately after getting there, always a positive, or at least a lack of a negative.

SP500 continued its advance, rising to the key 2700 level, now also pretty much in the middle of the October/December trading range. The 200 day SMA is near 2750, the top of the range at 2800. Those are the levels you look for SP500 to shoot at before it needs to rest on this move.

NASDAQ rode FAANG higher, also continuing the move off the 50 day MA, cracking into the upper half of its October/December range. The top of the range is 7485 to 7575 with the 200 day SMA at 7453 thrown in there as well. Logical resistance, though AMZN is not going to help NASDAQ at all in the morning as afterhours it gave up the 48 point move on the session and is down another 45 to 50 points from the Wednesday close. And still falling for now.

SOX reached at the prior Friday rally high then faded to basically flat. Some resistance at 1280, and the 200 day SMA and October upper gap point is just below 1300 (closed at 1272). Feeling some pressure from those levels.

SP400 and RUTX were both very SP500-like. RUTX was better, extending its move up to the 78% Fibonacci retracement of the December selloff. SP400 midcaps took more of a back seat Thursday as it approaches the midpoint of its October/December range. They let the big names have their day. Would not be surprised to see something come back their way as AMZN sells Friday.


Ah, Friday. January is in the books. Big recovery, one of the best in a few decades, but of course on the heels of one of the worst Decembers in more decades. Newton's laws at work: reaction, equal and opposite reaction, something is left behind (in the market, usually the retail investor).

Now the January Jobs Report. Yes, it will be released on schedule. ADP was much stronger than expected. Will the shut down have an impact? IF IT DOES, it is more empirical evidence the federal government and its '800,000' employees is too damn big, just as New York rents are too damn high. Why on earth should the federal government shutting down for 3 to 4 weeks be a cause for jobs to fall? They should surge in celebration. Oh, Cramer has Senator Warren on; my TV just went blank as a result because I have it programmed to cloud up whenever an idiot speaks. Socialists and communists as well. Can't watch CSPAN or so-called news stations anymore. Of course, I am kidding. Don't send the thought police or try to have my Twitter account (which I don't have) revoked.

Jobs are so anticlimactic after this week. Perhaps they can play around the edges, but the big news is the Fed, earnings are important but becoming a known quantity, and trade is still the same question mark. Jobs? We will see what they are, but I don't think they have much impact.

That leaves DJ30 at the 200 day SMA and having to deal with AMZN's earnings retracement. SP500, NASDAQ and the others still have room to move higher to next resistance. Would not be surprised, after the large caps led recently on some big earnings (AAPL, FB) to see some interest return to the small and midcaps.

That kind of back and forth, that kind of rotation as it were, is good for the market overall. It keeps money in the market and attracts more.

Ah, more money. It is the start of a month and in an uptrend, on the biggest January in decades, likely more money is pushed into the market Friday. Thus, it could be we get the third upside Friday in a row.

Do you buy it? Remember the last two starts of the last two weeks: they ended the prior week with a Friday surge followed by an opening week purge. Thus, we are inclined to bank some more gain if it is there as we did today on CLX (downside right before it reversed), DATA, FB. New buys? Tough call. Not too enamored with the idea; the leaders, e.g. software, surged Thursday. The others that did not move, well if the break higher Friday, I am not sure just how trustworthy that may be. Thus, it will have to be quite tasty to buy into, but we will see -- we are always open to very good patterns making very good moves.

Have a great evening!


Stats: -15.19 points (-0.06%) to close at 24999.67

Stats: +98.66 points (+1.37%) to close at 7281.74
Volume: 2.93B (+14.45%)

Up Volume: 1.81B (-140M)
Down Volume: 1.1B (+504.45M)

A/D and Hi/Lo: Advancers led 1.79 to 1
Previous Session: Advancers led 2.3 to 1

New Highs: 75 (+44)
New Lows: 27 (-1)

Stats: +23.05 points (+0.86%) to close at 2704.10
NYSE Volume: 1.384B (+64.77%)

Up Volume: 882.905M (+209.204M)
Down Volume: 492.572M (+329.759M)

A/D and Hi/Lo: Advancers led 2.16 to 1
Previous Session: Advancers led 3.85 to 1

New Highs: 132 (+62)
New Lows: 7 (-7)


VIX: 16.57; -1.09
VXN: 20.24; -0.94
VXO: 17.10; -1.37

Put/Call Ratio (CBOE): 0.84; -0.05

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: 2.64% versus 2.679%. Bonds gap upside off the 4 week test.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.679% versus 2.710.5 versus 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: 1.14478 versus 1.14924. Euro flopped right back, giving up the Wednesday surge against the dollar. Another 200 day SMA failure?

Historical: 1.14924 versus 1.14351 versus 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: 108.85 versus 108.96. Dollar showing a doji after the Wednesday selloff.

Historical: Last below 109 in June 2018: 108.96 versus 109.364 versus 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: 53.79, -0.44. Rallied to a higher recovery high but then stalled.

Gold: 1325.20, +9.70. Gapped to a second straight doji with another good gain as well.

End part 1 of 2
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