Saturday, February 23, 2019

The Daily, Part 1 of 3, 2-23-19

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2/23/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: ROKU
Entry alerts: COHR; VSH
Trailing stops: MC; UCTT
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.

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Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play table.

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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.


- Stocks start stronger, fade after no trade deal, recover after President, China say trade deal likely.
- Indices moving up to test the top of the range, SP400 is through the range, others trying to follow.
- Plenty of different groups vying for investment dollars, using some decent patterns as lures.
- Chips start higher again, software setting up again.
- Indices are certainly at resistance, but this far showing no signs of rolling over. As more solid stock patterns appear, they only reinforce an attempt to break through resistance.

No trade deal announced, but the President and top Chinese negotiator in DC concurred there would likely be one. The President stated a deal was 'more likely than not,' while the top Chinese negotiator opined an agreement would occur. Trump further said he and Xi would meet a Mar-A-Lago in March, again stating that only they could hammer out the final details of a deal.

Stock futures were higher and stocks opened higher, rallying into midday. After that, a slump into mid-afternoon took the indices back to the early session lows; still positive but well off the highs.

Then the announcements regarding trade. The word leaked that no deal was firmed up and that helped the selling. The President held a press conference and as the news percolated out, the comments from Trump and the Chinese lead negotiator hit. That news helped turn a midmorning to midafternoon slump into a rally back upside in the last 1.5 hours. The indices closed at or near session highs with the indices putting more moves on the October/December resistance.

SP500 17.79, 0.64%
NASDAQ 67.83, 0.91%
DJ30 191.18, 0.70%
SP400 0.80%
RUTX 0.92%
SOX 1.08%
NASDAQ 100 0.79%

VOLUME: NYSE -7%, NASDAQ +14%. NYSE trade languished below average again while NASDAQ trade moved above average for the first time in three weeks as some key stocks started higher again.

ADVANCE/DECLINE: NYSE 2.7:1, NASDAQ 2.5:1. Small and midcaps helping push higher.

SP400 moved on through as the midcaps continue leading. The others are moving up through the that range as well. After slowing the move Tuesday to Thursday, the indices bounced nicely to end the week.

The 'old guard' was moving, i.e. many of the initial leaders in the entire recovery: software, tech, drugs, chips as well. Then there are others stepping up, e.g. some Chinese stocks such as BABA, JD, TME.

Some of the recent movers took a pause as the older leaders bounced -- energy was off on the session and machinery and manufacturing still look good, but still looking for a new solid upside break.

With the resurgence of the initial leaders -- sans FAANG for the most part -- there are plenty of stocks to support a move higher. Friday that is what they were doing. Very pleased to let the move upside continue, let some positions continue working higher, pick up a few more good movers, and bank a bit more gain.

That does not mean we are now convinced the indices will break through the range and move on to new highs. After all, SP500 is still below 2800 and DJ30 is still dancing at 26,000, the first rungs of the October/December range. Some serious resistance from the top of this range, and even then the old highs after that.

The run from the December low is now 9 weeks old and in some cases has topped the December high and even the November high where the selloff started. A long time with no significant test, moving into key resistance. At some point the indices are going to test this move either with an ordinary pullback to test resistance broken, a deeper test to perhaps the trading range lows, and in the extreme, back toward the December low.

Of course that means the upside probabilities are less and less, but the indices and stocks are not showing any signs of running out of steam at this point. Indeed, more stocks are joining in and the initial leaders, after a rest, are coming back around. Sure does not look and act as a rollover.

Thus, looks as if there is more upside for now, and we will continue to play that until breakouts and breaks upside start reversing in numbers.


SP400: You have to lead with the SP400 midcaps again as late week they broke higher through the 200 day SMA as well as the top of the October/December range. With that move they are making good on the inverted head and shoulders pattern from early November to early February. Not a massive new move upside, but as has been the case for four weeks now, a solid, steady move. Domestic implications are the economy is not as frail and fraught with potential recession as many fear.

RUTX: Cleared the 200 day SMA Friday as well as the November peak. Now just the October recovery peak remains in its range. RUTX has already recovered 100% of the December and November selloffs but is a long way from the 2018 peak. As with midcaps, the success and relative strength from small caps of late shows confidence in the US economy.

DJ30: Over the 26K level on the week, but hardly impressively so. The Dow rallied well two Fridays back then slid laterally this week just below resistance from the Oct/Dec range. Thus far not trying to break through the top of the range, but if stocks such as CAT, MMM continue higher and AAPL breaks higher once more, the Dow will have some potential to break through. As of yet, a low volume bumping at the top of the range.

SP500: Over the 200 day SMA on the week but still below the peaks of the trading range. 2800 was tested but remained unbroken. As noted last week, everyone and his brother is watching the 2800 - 2830 level as resistance.

NASDAQ: NASDAQ moved through the 200 day SMA as well with a more definitive Friday move, showing a solid price gain and a shot of very solid above average volume. Cleared the December peak on the move but is still below November and October at the top of the range. It is working and some big name techs that are not FAANG are working, e.g. MSFT, INTC, ORCL, CSCO.

SOX: Steady week, continuing to trend higher over the 10 day EMA. Several groups of chips started back upside Friday. Not a bad move at all.


Software: Setting up well as noted previously. TEAM, NOW, NEWR, WDAY are all leaders that tested, held gains, and look strong once more.

FAANG: Still a laggard group. FB, GOOG, AMZN, AAPL all in lateral moves. NFLX is not bad at all.

Energy: Back and forth on the week but finished the week still holding good patterns. DVN, TELL, PTEN, CVX, COP -- many have promising patterns.

Machinery: CAT in a nice test of the move over the 200 day SMA. CMI worked mostly laterally on the week but still trended up the 10 day EMA. DE recovered very well off a 50 day MA drop on earnings.

Manufacturing: MMM, UTX still setting up quite nicely.

Home-related: HD is in a great flat flag test. LOW has enjoyed a super 2 weeks. DHI moved to a higher recovery high Friday. TOL working. TREX faded on the week but still a solid pattern.

Financials: V broke nicely higher Friday. Regional banks decent, e.g. STT, TCBI. C was upgraded but that didn't do anything for it or any of the other bank stocks for that matter.

Chips: Came back to life on the week. RMBS, SIMO, SMTC, INTC. Still like how NVDA is setting up.

Metals: Industrial metals still look decent, e.g. CLF, MUX. Steel making some good moves, e.g. SID.


Stats: +181.18 points (+0.70%) to close at 26031.81

Stats: +67.84 points (+0.91%) to close at 7527.54
Volume: 2.42B (+14.15%)

Up Volume: 1.67B (+829.88M)
Down Volume: 718.14M (-531.86M)

A/D and Hi/Lo: Advancers led 2.45 to 1
Previous Session: Decliners led 1.39 to 1

New Highs: 126 (+51)
New Lows: 20 (+3)

Stats: +17.79 points (+0.64%) to close at 2792.67
NYSE Volume: 796.076M (-6.56%)

Up Volume: 516.496M (+246.563M)
Down Volume: 252.163M (-320.713M)

A/D and Hi/Lo: Advancers led 2.66 to 1
Previous Session: Decliners led 1.57 to 1

New Highs: 162 (+72)
New Lows: 9 (+1)


VIX: 13.51; -0.95
VXN: 16.95; -1.24
VXO: 13.87; -0.99

Put/Call Ratio (CBOE): 0.79; -0.14

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: 2.654% versus 2.695%. TLT is working up and down in a four week range from 120.50 to 122.50.

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

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 versus

EUR/USD: 1.13332 versus 1.13363. Euro rebounded to the 20 day EMA on the week, stalled there for now.

Historical: 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: 110.670 versus 110.664

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

110.664 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: 57.26, +0.30. Oil moved up well the past two weeks from a 50 day SMA test. Moved past the late January recovery high and to the mid-November consolidation price -- where it failed.

Gold: 1332.80, +5.00. Gold broke to a higher high Tuesday then gave it up. Held at the 10 day and rebounded from there. Still looks in position to continue higher.

End part 1
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