Monday, February 11, 2019

The Daily, Part 1, 2-11-19

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2/11/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: ISRG; MCHP
Trailing stops: None issued
Stop alerts: None issued

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- Late hour trade deal, still needing Trump approval, could prevent another government shutdown.
- Stock indices continue the same action, testing the third leg for another day.
- Still sitting below resistance, still room to move higher to the top of the range and key levels, still leadership setting up well for another move.
- Leadership continues to work, new areas trying to set up in support.
- Ready to play more upside, understanding the key resistance, not trying to force a breakout, just playing the setups.

As a presage to the entire report, tonight democrat and republican negotiators say they have a tentative budget deal to avoid a government shutdown. Stock futures rallied in the past hour to 271.20ish after closing at 270.62. That puts futures up about one-third percent on the large cap indices.

After a lengthy discussion again regarding the indices at an inflection point as they test the third leg off the December low, the indices did nothing to change their status. A little upside early on, a fade, a bit of a late recovery ended with a mixed session with what bids there were leaning more toward the small and midcaps.

SP500 1.92, 0.07%
NASDAQ 9.70, 0.13%
DJ30 -53.22, -0.21%
SP400 0.66%
RUTX 0.84%
SOX 0.50%
NASDAQ 100 -0.06%

VOLUME: NYSE -2%, NASDAQ -10%. Volume was at least helpful, showing lower, below average trade as the indices performed in a lower, below average manner. No dumping, no churning, not much buying.

ADVANCE/DECLINE: NYSE +1.9:1, NASDAQ -1.5:1. Small and midcaps in the lead pushed NYSE breadth to a decent showing.

Okay, so the laggards in the move, SP400 and RUTX, are the leaders on the session. Playing a bit of catch up to the larger cap indices as those leading indices take another breather. A 1-2-3 pullback by the large cap indices turned into a 1-2-3-4 as a higher open frittered away with tepid buying in most circles; the large caps overall were just not ready to move higher.

Does that mean the pullback has failed and selling is certainly assured? No; the action was still very tame -- light volume, narrow breadth, holding near support, and some leaders moving up regardless of the overall market action (ISRG, MCHP and other semiconductors). There is nothing in the action itself or the internals that suggest anything other than more of the same, i.e. a continuation of the test.

Each session is placed under a microscope, however, as it is stacked up against the endless and mostly useless statistics financial stations use as teasers to try to hold a less than enthusiastic audience. Best since ______, worst in ____ years, _____ weeks upside, in a correction/bear market, out of a correction/bear market -- those don't mean much. Indeed, they mostly mean nothing in the way they are used.

The important takeaway today is nothing changed. As noted earlier, the indices are still testing the third leg of the move from the December low. Leadership is doing the same. Resistance is still overhead from the pre-selloff peaks in the October/December trading range. SOX is through that range but it is different from the others: SOX has two ranges and it is now working on the second from March through September. Different range, same problems.

That leaves the stock indices sitting on an impressive 3-leg recovery off that December low, putting in a very good test and trying to hold the line and set up for leg four, the leg that would challenge the top of the range.

That is all great you say, but the meaning please . . . Okay, many proclaim the selling is long over, that stocks are on the way to higher highs in a continuation of the bull run. Others say a rollover is near at hand because of the resistance still ahead, resistance that represents a lot of overhead supply ready to sell as stocks make it back that far. Thus, inflection point that is yet unresolved.

Solid move in progress, nothing suggesting the move is ending given solid leadership continues to set up and break higher. The indices are not at that next resistance. Thus, a fourth leg can rise from the test of the third leg, a rally that takes the indices to that resistance and finally decides the inflection.

That means for now we continue playing solid upside positions as they set up and break higher. Breakouts are not rolling over, not getting reversed as happens at the resistance. The test can still fail -- stocks can test and just keep testing until it is no longer a test. Thus far, as noted, not many breakdowns, reversals and the like. Getting closer to resistance from where the selloff started of course increases the probabilities that can happen. Thus, you stay vigilant, take gain as we have done, make sure positions are holding their patterns/trends/near support, enter new positions on good moves from good patterns. And stay vigilant. Worth saying it again.

Leadership continues in semiconductors, software, some food/eateries. Pharma is trying to set up in some cases, e.g. MRK. Old economy stocks such as IP (bid double bottom with handle), transports (rails, some airlines, some truckers), steel (AKS, STLD, RS) are trying to establish patterns to move higher and help out upside. Some smaller biotechs are getting better as well.

Good leadership is key to the success of any move, and for the continuation of the current move. Thus far, they are holding up and setting up well, and as long as they keep breaking higher and holding the moves we play them. With a bit of vigilance of course, knowing that the indices are approaching a very important resistance point.


Stats: -53.22 points (-0.21%) to close at 25053.11

Stats: +9.71 points (+0.13%) to close at 7307.90
Volume: 1.9B (-9.52%)

Up Volume: 980.28M (-119.72M)
Down Volume: 854.74M (-124.17M)

A/D and Hi/Lo: Advancers led 1.52 to 1
Previous Session: Decliners led 1.04 to 1

New Highs: 64 (+17)
New Lows: 33 (-10)

Stats: +1.92 points (+0.07%) to close at 2709.80
NYSE Volume: 811.085M (-2.38%)

Up Volume: 484.41M (+113.843M)
Down Volume: 314.364M (-132.675M)

A/D and Hi/Lo: Advancers led 1.9 to 1
Previous Session: Decliners led 1.08 to 1

New Highs: 86 (+23)
New Lows: 11 (-8)


VIX: 15.97; +0.25
VXN: 20.07; +0.03
VXO: 16.52; +0.22

Put/Call Ratio (CBOE): 0.87; -0.17

Bulls and Bears:

Bulls continue to recover, bears hold steady, both after really large moves during the late 2018 selling.

Bulls: 48.6 versus 45.8

Bears: 20.6 versus 20.6

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: 48.6 versus 45.8
45.8 versus 45.4 versus 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: 20.6 versus 20.6
20.6 versus 21.3 versus 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: 2.672% versus 2.634%.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.634% versus 2.657% versus 2.695% versus 2.702% versus 2.725% versus 2.684% versus 2.64% versus 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: 1.12816 versus 1.13218. Euro really plunging, falling below the lows from late November to January at 1.130.

Historical: 1.13218 versus 1.13396 versus 1.13645 versus 1.1396 versus 1.14350 versus 1.14554 versus 1.14478 versus 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: 110.488 versus 109.754

Historical: Last below 109 in June 2018: 109.754 versus 109.793 versus 109.803 versus 109.777 versus 109.987 versus 109.53 versus 108.85 versus 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: 52.41, -0.31. Tested lower to the 50 day SMA, rebounding to hold support. Important test in progress.

Gold: 1311.90, -6.60. Still in the 2 week flag test of the late January breakout.

End part 1
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