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2/14/2019 Investment House Daily
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Investment House Daily Subscribers:
Happy Valentine's Day
Targets hit: MU
Entry alerts: NVDA; TME
Trailing stops: None issued
Stop alerts: None issued
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- Trump flexibility has futures up, economic data drops them.
- Retail sales post a surprise and sharp decline.
- Retail store closing already jumping ahead of 2018
- Stocks recover but for a second session fail in the last half hour.
- Indices remain just below resistance.
- Expiration, 3-day weekend, Trade negotiations with Xi. Perhaps stocks go quietly into the weekend.
The stock market tried to deliver some chocolates and flowers for Valentine's Day, but the flowers were droopy and the chocolates melted. Reports that Trump is considering a 60 day extension to the March 1 China trade deadline offset Wednesday night's futures slump on questions whether the budget compromise was palatable. Dow futures were up over 100 points, and then the economic data hit.
PPI lower overall (-0.1% versus 01% expected) but core topped expectations (0.3% versus 0.2% expected, 0.0% prior). Not so bad.
Retail Sales December -1.2% versus 0.2% expected and 0.1% November.
Ex-auto -1.8% versus 0.1% expected and -0.1% prior.
Final demand -1.7%.
Retails sales have not seen that kind of month over month decline since 2001.
Online sales -3.9%. Gasoline -5.1%.
Store closings: It is also reported that retail store closings in 2019 are at 2187, +23% from 2018. Bankruptcy filings are already 1/3 of the 2018 level. Not great news combined with the retail sales from December 2018.
Markets were not pleased and the futures gains peeled back and kept fading right into the open. Fifteen minutes in, however, they bottomed and commenced the comeback. Nice move into midday, a flat range for 3+ hours, then, as on Wednesday, a stiff drop in the last half hour. That closed the indices mixed with growth showing a slight edge.
SP500 -7.30, -0.27%
NASDAQ 6.57, 0.09%
DJ30 -103.88, -0.41%
NASDAQ 100 0.09%
VOLUME: NYSE +16%, NASDAQ +1%. Volume moved above average on NYSE for the first time in over two weeks. A bit of churn at resistance, i.e. stocks being sold more even as buyers buy. NASDAQ trade was up but remained below average; no accumulation there.
ADVANCE/DECLINE: NYSE 1.2:1, NASDAQ flat
Slight edge, but everything was down. No index really threatened a higher move that is for certain. Still, after starting lower, e.g. NASDAQ, or starting flat and selling off quickly, e.g. SP500, the indices did recover decently. The close was again not great, but not a rollover. It does show a change in mood from the buying into the close, but at least the indices are riding through this -- so far -- without flaming out and falling.
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That leaves the indices little changed, working laterally either just over the 200 day SMA (SOX, DJ30) or just below it (SP500, NASDAQ, SP400). All are facing one form of resistance or another after a good Monday and Tuesday move with a bit more upside Wednesday. Perhaps a bit of a pause as the US and China hold their next round of negotiations Thursday and then Friday with Xi supposedly set to join Mnuchin and Lighthizer.
Perhaps, but they are all feeling that resistance, that overhead supply from the top of the range spanning October to just before the December selloff. That represents a band of people who bought just before the market dove lower. When the market gets back to there they often sell into the move higher, thus stymieing a further advance. Perhaps NASDAQ, DJ30, SP500 use this to form more of a right shoulder to their potential inverted head and shoulders bases. That is an underlying positive with all of this talk about the indices hitting resistance and stalling. Yes, they have stalled a bit, but they have not rolled over.
DJ30 put in a nice tight doji tapping at the 10 day EMA on the low, rebounding to cut the downside. Volume was up, but it was down then up so some buyers did return. It sits over the 200 day SMA and 25,000 with 26,000 to 26,300ish as the top of the October/December range. Still some room to move, but definitely feeling that overhead supply.
SP500 started back below the 200 day SMA, rallied back over to midday but could not hold with that late drop. Showing a doji as well, still dealing with the 200 day and then the range peaks starting at 2800 (closed at 2745).
NASDAQ gapped lower then recovered to test the 200 day SMA again. Did not take it out, but showed relative strength. Almost no difference from the SP500 action though recall the top of the October/December range for NASDAQ is closer than on SP500, so NASDAQ is feeling the overhead supply.
SOX added some upside, rebounding from a lower open to scratch out a slightly higher recovery high, but then it faded. Still managed a higher closing high. Much rejoicing. Yea. SOX remains a leader, remains in the middle of its summertime base, the base that broke down instead of breaking out. As with the other indices, its success in recovering has landed it at next resistance.
SP400 lost a bit of ground though it was at a higher recovery high midday. Good recovery from a gap lower, just could not hold all of it. Still below the 200 day SMA and at that start of the tops of the October/December range.
RUTX posted a gain, edging past Wednesday on the close though it too gave up a higher intraday high. Well below the 200 day SMA, but also at the lowest peak in the October/December range.
Semiconductors: The most consistent upside group Thursday. AVGO, SMTC, CY, INTC, RMBS all added gains, albeit modest. Others were flat, holding gains, e.g. ON. MU moved up to its target and we banked some nice gain. AMD still looks to be in a very nice upside setup.
Food: KO earnings disappointed and it was crushed. CMG was still up though PEP lost some ground in sympathy.
Industrial: Took hits after good gains, e.g. MMM. Others not bad: UTX, CMI, TEX, CAT -- held in very well.
Software: Held in as you would expect. COUP, NOW, VMW higher, TEAM, CRM, ADBE down just modestly.
Retail: About all I can say here is that WMT looks good, LULU put in a nice quick test.
Stats: -103.88 points (-0.41%) to close at 25439.39
Stats: +6.58 points (+0.09%) to close at 7426.95
Volume: 2.11B (+0.48%)
Up Volume: 1.31B (+60M)
Down Volume: 746.85M (-51.95M)
A/D and Hi/Lo: Advancers led 1.02 to 1
Previous Session: Advancers led 1.42 to 1
New Highs: 74 (0)
New Lows: 28 (+7)
Stats: -7.30 points (-0.27%) to close at 2745.73
NYSE Volume: 947.309M (+16.40%)
Up Volume: 496.915M (-9.427M)
Down Volume: 439.271M (+141.977M)
A/D and Hi/Lo: Advancers led 1.16 to 1
Previous Session: Advancers led 1.84 to 1
New Highs: 71 (-16)
New Lows: 8 (+3)
VIX: 16.22; +0.57
VXN: 19.02; +0.02
VXO: 16.31; +0.40
Put/Call Ratio (CBOE): 0.92; -0.09
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: 2.654% versus 2.706%. Bonds caught a bid off the 20 day EMA test on the weaker economic data, but they still closed off the intraday high.
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018.
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 versus
EUR/USD: 1.12955 versus 1.12616. Euro trying to hold 1.125.
Historical: 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: 110.462 versus 110.945. Dollar dropped right back, giving up the Wednesday gain.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
110.945 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: 54.41, +0.51.
Gold: 1313.90, -1.20.
Three-day weekend (Monday is President's Day), expiration Friday, Xi purportedly meeting with Mnuchin and Lighthizer in Beijing. The budget bill is going to be voted on and passed without reading it and Trump is going to go forward with the wall, taking money here and there to build it one piece at a time. Everyone can say they 'stood up' to the other side. The populace will be more or less appeased as the status quo, no matter how messed up, continues.
Stocks have taken a 2-day pause after a solid 2-day move higher. The indices are feeling resistance and the move has slowed as anticipated. The question is whether there is one more move, a surge or just an amble, upside to test the tops of the range.
NVDA beat earnings and is up 8 clicks afterhours, off from up 13, but it is not moving SPY much. Okay, it is not moving SPY at all; NVDA is moving NVDA.
Good move up to resistance, 3-day weekend, good positions working, not too excited about adding new ones with the day off and the indices at resistance. Of course, there are always really sweet patterns that make their moves without care of the market, and we will watch for those.
Have a great Valentine's Day!
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