Wednesday, February 27, 2019

The Daily, Part 1, 2-27-19

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2/27/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: NEWR; NOW; XLNX; SPY
Trailing stops: ISRG
Stop alerts: IMGN; LASR; ON

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- Indices mixed, growth leads, and the test then recovery is not bad action.
- Somewhat constructive test leaves indices and many stocks in decent position.
- Powell testimony over, earnings winding down, but a lot more economic data as the market looks for the next catalyst.

Growth moved back into the lead Wednesday, though there was not much leadership however you sliced it. The small caps scored +0.23% on the upside while SOX dropped 1.22% as semiconductors were boxed around a bit.

SP500 -1.52, -0.05%
NASDAQ 5.21, 0.07%
DJ30 -72.82, -0.28%
SP400 0.12%
RUTX 0.23%
SOX -1.22%
NASDAQ 100 -0.09%

VOLUME: NYSE -4%, NASDAQ +8%. NASDAQ trade remained above average as the index tests the 200 day SMA. NYSE trade faded a bit farther off average.


The indices again tested resistance and did not do that bad a job of it as they started low, sold more, then recovered the rest of the session into the close. We picked up some SPY puts to have at least some downside exposure -- then SP500 promptly recovered to a doji over the 10 day EMA.


Indeed, while mostly lower or at least mixed, the action was not bad; yea verily, it could be labeled constructive.

As noted, SP500 sold back, but it tapped the 10 day EMA on the low and rebounded to basically flat with a nice doji test. Pretty decent 2-day pullback after bumping the November/October range peaks.

DJ30 was similar, testing near the 10 day EMA on the low, recovering to a not so terrible 0.28% loss -- continued light trade as well shows no real sellers, just the buyers pulling bids for now. To recap, DJ30 tapped the top of the range at the Monday high (the November peak at 26,278) then faded that session. This is thus something of a 0.5-2-3 pullback to near support.

NASDAQ similarly tapped the 200 day SMA on the low, then rebounded to a gain just below the November middle peak at the top of the range. Nice test, shakeout, then rebound.

RUTX was the same, tapping the 10 day EMA on the low, recovering to that market-leading gain, but the most important aspect was the similar good action. Tapped the top of the range Monday then started to fade that session into Wednesday, but as noted, it recovered off the low to close positive, right at the 200 day SMA.

SP400 midcaps -- the first to clear the range and testing the same as the others, closing right at the top of the range after a 2.5 session pullback.

SOX: A bit wilder, gapping lower and testing near the 20 day EMA and the mid-February upper gap point. Chips were the anchor chain on the day, but they are not garbage -- some very good pullbacks underway.

Summary: Each index touched up near or to resistance and is backpedaling. The moves thus far, however, are rather orderly, and as noted, the Wednesday low open, lower early action through the first hour, then steady recovery to the close -- is quite constructive.


Semiconductors: Definitely lagging, but not tanking. SMTC, SIMO not bad; COHR in a great test. MU, AMD, AVGO are struggling a bit more. ON, LASR sold harder. INTC still solid, LRCX making a doji test of the 20 day EMA. Some good, some decent, some in trouble.

Energy: Some interesting moves. NBR gapped lower, sold, then shot up 7%. DVN still looking good, TELL started upside nicely. APA looks very solid. COP interesting and XOM just broke above the 200 day SMA on pretty solid rising volume.

Software: Some really good action. Bought NOW as it broke higher. NEWR started upside on solid volume. TEAM still solid, WDAY edging higher. PANW gapped past the September high on big earnings.

FAANG: Didn't do much. FB faded to a doji at the 20 day EMA and still looks good. AMZN in a lateral move -- still. AAPL edged higher but is very similar to AMZN. NFLX pausing after a creep higher. GOOG holding just below the 200 day SMA in a not bad pattern.

Manufacturing: UTX in a very nice 2 week test over the 200 day SMA. MMM in a short pullback as well.

Machinery: CAT jumped off the 20 day EMA and back over the 200 day SMA. DE in a good test of the 20 day EMA after that good upside surge off support. CMI testing the 10 day EMA in its continued move higher.

Financial: V flat after a decent Tuesday move. Banks are still so-so, going nowhere, except BAC does look pretty good. The regionals continue to look good, but they need to make a good move.

Retail: WMT looks very interesting with a doji at the 20 day EMA. Nifty little ABCD pattern the past 3.5 weeks. BBY beat and gapped to the 200 day SMA. TJX posted some good numbers and rallied on big volume.

MISC: CMG in a nice tight lateral range.


Stats: -72.82 points (-0.28%) to close at 25985.16

Stats: +5.21 points (+0.07%) to close at 7554.51
Volume: 2.43B (+7.52%)

Up Volume: 1.05B (+52.14M)
Down Volume: 1.32B (+120M)

A/D and Hi/Lo: Advancers led 1.07 to 1
Previous Session: Decliners led 1.56 to 1

New Highs: 74 (+12)
New Lows: 34 (+14)

Stats: -1.52 points (-0.05%) to close at 2792.38
NYSE Volume: 829.162M (-4.02%)

Up Volume: 442.969M (+86.831M)
Down Volume: 374.869M (-118.461M)

A/D and Hi/Lo: Advancers led 1.1 to 1
Previous Session: Decliners led 1.42 to 1

New Highs: 94 (+15)
New Lows: 21 (+11)


VIX: 14.70; -0.47
VXN: 17.60; -0.51
VXO: 14.32; -0.02

Put/Call Ratio (CBOE): 0.93; +0.08

Bulls and Bears:

Getting a bit bullish with a move over 50 while bears dropped right back below 21 after the short break higher. Fear continues to subside.

Bulls up again, but bears moved up a bit as some discomfort with the long recovery rally.

Bulls: 51.9 versus 49.5

Bears: 20.7 versus 21.5

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: 51.9 versus 49.5
49.5 versus 48.6 versus 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: 20.7 versus 21.5
21.5 versus 20.6 versus 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: 2.673% versus 2.636%. Sharp drop to the 50 day EMA. Serious drop.

Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018.

2.636% versus 2.672% versus 2.654% versus 2.695% versus 2.641% versus 2.641% versus 2.664% versus 2.654% versus 2.706% versus 2.686% versus 2.672% versus 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

EUR/USD: 1.13790 versus 1.1391

Historical: 1.1391 versus 1.13598 versus 1.13332 versus 1.13363 versus 1.14490 versus 1.13544 versus 1.12922 versus 1.12955 versus 1.12616 versus 1.3323 versus 1.12816 versus 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: 110.873 versus 110.53

Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.

110.53 versus 110.979 versus 110.670 versus 110.664 versus 110.786 versus 110.848 versus 110.469 versus 110.462 versus 110.945 versus 110.523 versus 110.488 versus 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

Oil: 56.94, +1.44. Solid bounce form the 50 day EMA but that just gets oil back to last week's highs -- nearly. Still building upside toward a showdown with the 200 day SMA at 62.50.

Gold: 1321.20, -7.30. Gold dropped like -- gold -- to the 20 day EMA after a nice lateral move.


Powell is done, Lighthizer said there was still a long way to go on a trade deal. But, consumer confidence moved up to 131.4 (from 120.2) as seen Tuesday. On the other hand, Factory Orders December rose just 0.1% versus the 1.0% expected; at least that was better than the -0.5% in November.

Thursday Q4 GDP advanced (2.3% expected versus 3.4% Q3) and Chicago PMI. Friday Personal income and spending, ISM, Michigan Sentiment.

Perhaps the market will find something to catalyze a move: the indices are in a pretty decent pullback testing the move up to resistance. No sellers have emerged in any numbers thus far and then we see if there is a catalyst to bring the bids in and break the resistance.

While the probabilities still appear to favor a bigger test before a new move that can take them out, plenty of good patterns are there. VC is making a great test of its move. YETI can make another move. WMT nice, GOOG is still interesting, TJX starting upside, LRCX is in position to move. NOW making a good move. Plenty of stocks can move off this short test. Again, we have to see if the bids return.

Have a great evening!

End part 1
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