Wednesday, March 27, 2019

The Daily, Part 1, 3-27-19

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3/27/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: HUBS; TSLA
Trailing stops: None issued
Stop alerts: MTCH; WDC; WMT

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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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- Stocks sell off, as with Monday's gain, not any volume, and the indices and stocks recover decently.
- Serious recoveries off the lows equal to the losses off the highs Tuesday.
- Leaders remain the same: some surging, some in great tests, some testing farther.
- Some other groups show life, e.g. builders. Still, the list of leaders is a bit thinner.
- Interest rates fall across the curve, leaving rates lower but the curve the same.

Tuesday saw the market give up really good gains but still manage an upside close. Upside, but as noted, less than solid. Wednesday the sellers were taking the indices lower to substantial losses, then the sellers lost their dominance and stocks recovered off their lows. Similar to Tuesday in a mirror image sort of way, the downside saw impressive losses turn not so impressive as the indices recovered to hold support -- at least those that are at some support.

SP500 recovered 17 and closed down 13 (-30 at the low). NASDAQ recovered 61 points (closed off 48.14). DJ30 201 points (closed -32.14). SOX not so great: recovered 10 points off the low but closed -20. At least it held the 20 day EMA and the late February prior high.

SP500 -13.09, -0.46%
NASDAQ -48.14, -0.63%
DJ30 -32.14, -0.13%
SP400 -0.09%
RUTX -0.39%
SOX -1.45%
NASDAQ 100 -0.58%

VOLUME: NYSE +1%, NASDAQ +8%. Both remained below average. At least the sellers have not rushed in when the market sold off the high Tuesday and sold to the low near noon Wednesday. Outside of the Friday selling on the New York Fed's new theory about yield curve inversions, volume is light.

ADVANCE/DECLINE: NYSE -1.2:1, NASDAQ -1.4:1. The rebound kept things from getting ugly.

A quick scan of the leaders offered some insight as the strong continued their strength, those testing continued to test, perhaps a bit deeper, while some new strength emerged.

Transports finally showed some life with a gain in a down market. Not breaking out, but back to the 50 day EMA. Airlines recovered some even as LUV warned about the impact of the BA grounding. Not breakouts necessarily, but stronger Truckers have decent patterns, or at least they are not worse. Rails added modest gains but sport decent patterns.

Homebuilders gapped higher on the LEN, KBH earnings.

The rally horses continued to run. CMG, ULTA added more upside.

Others tested. AVGO looks good. NVDA looks really good to break higher. LRCX solid. AMZN looks great and AAPL is showing a nice tight doji at the 10 day EMA.

Still others tested deeper, e.g. GOOG (at the early March peak), AMD (down to the 20 day EMA). ADBE held over the 20 day EMA quite well.

The leaders pose an interesting question: if the sellers were really out for blood then they would be taking down the big leaders. Some are being sold yes, but it is not wanton selling.

New issues are coming and people want to be part of Lyft, etc., and thus some money is being raised from selling some of these other stocks. At this juncture, however, they have not torn them down.


Still a problem as bonds continue to rally, driving rates lower. Low rates is not bad, not bad at all. They plummeted during the Reagan years as the economy surged. High growth and low employment does not equate to higher interest rates in the real world, just in the Phillips Curve's own little make believe world. Thus, I am not that worried about low rates, just the RELATIVE level of rates between the various debt instruments.

The 3 month yield remains over the 10 year: 2.434% 3 month versus 2.381% 10 year.

The 2 year is still below 2 year: 2.21% versus 2.381% 10 year.

The 3 month/10 year spread remained 4BP.

The 2 year/10 year spread widened to 17BP from 15BP

Again, whether the 3 month/10 year means anything is an open question outside the NY Fed. The historically more important spread involving the 3 month is with the 30 year as strange as that seems, and that is currently 36BP. Close but no cigar, at least yet.


SP500: Decent job of holding the line, undercutting the 20 day EMA on the low, recovering to hold it at the close with still very tepid volume. It avoided selling off, but the buyers have not returned in enough numbers to get off this near support.

NASDAQ: Same action as SP500, undercutting the 20 day EMA and testing the early March prior high, recovering to hold over the 20 day EMA. Volume moved up but still below average. It is notable it was not surging as NASDAQ stocks recovered off the morning lows. Held, but not much more, and needs the chips and big names to reengage.

DJ30: Rather solid action with a third doji over the 50 day MA. Low volume, certainly has the look it is trying to build something of a right shoulder to a 6 month potential inverted head and shoulders. Many components still struggling, e.g. financial, WMT, but at least BA was up.

SOX: Faded the most, but it usually does gain more or lose more. As with SP500 and NASDAQ, the chips held at the 20 day EMA on the close. Not as much rebound, but held at the late February closing high as noted earlier.

SP400: Doji with tail, holding the 50 day MA after reaching lower intraday. Not bad, could pull something out of the hat here at the 61% Fibonacci retracement of the mid-January to late February run. Could. Has to prove it.

RUTX: Not quite doing it. Sold off, recovered big (16 points to close -5.93), but still below the 50 day MA's with a hangman doji. Kind of bear flag-looking.


Stats: -32.14 points (-0.13%) to close at 25625.59

Stats: -48.15 points (-0.63%) to close at 7643.38
Volume: 2.24B (+7.69%)

Up Volume: 825.93M (-434.07M)
Down Volume: 1.39B (+606.96M)

A/D and Hi/Lo: Decliners led 1.38 to 1
Previous Session: Advancers led 2.05 to 1

New Highs: 70 (+4)
New Lows: 71 (+23)

Stats: -13.09 points (-0.46%) to close at 2805.37
NYSE Volume: 820.182M (+0.56%)

Up Volume: 260.853M (+115.476M)
Down Volume: 531.14M (+385.762M)

A/D and Hi/Lo: Decliners led 1.18 to 1
Previous Session: Advancers led 2.81 to 1

New Highs: 143 (-4)
New Lows: 33 (+10)


VIX: 15.15; +0.47
VXN: 18.74; +0.11
VXO: 16.76; +0.95

Put/Call Ratio (CBOE): 1.03; +0.15

Bulls and Bears:

Knew there would be a bounce in bullish sentiment. Interestingly, more of a relative decline in bears then the rise in bulls. Did its jobs on the crossover though that was quite some time back.

Bulls: 53.9 versus 52.4

Bears: 20.6 versus 21.4

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: 53.9 versus 52.4
52.4 versus 52.9 versus 52.4 versus 51.9 versus 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

Bears: 20.6 versus 21.4
21.4 versus 20.6 versus 20.4 versus 20.7 versus 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


Bonds: 2.381% versus 2.421%. All rates fell but fell more or less in sync, thus keeping the yield curve status quo.

3 month: 2.434% versus 2.47% versus 2.465%.
2 year: 2.21 versus 2.268% versus 2.26%.

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

2.421% versus 2.443% versus 2.437% versus 2.538% versus 2.524% versus 2.616% versus 2.601% versus 2.591% versus 2.628% versus 2.625% versus 2.60% versus 2.641% versus 2.632% versus 2.641% versus 2.693% versus 2.715% versus 2.724% versus 2.759% versus 2.717% versus 2.673% versus 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%

EUR/USD: 1.12452 versus 1.12754. Dollar gains more, though just modestly compared to the Tuesday euro dump.

Historical: 1.12754 versus 1.13145 versus 1.13009 versus 1.13713 versus 1.14314 versus 1.13526 versus 1.13359 versus 1.13248 versus 1.13070 versus 1.13271 versus 1.12895 versus 1.12592 versus 1.12344 versus 1.1191 versus 1.13123 versus 1.13050 versus 1.13344 versus 1.13650 versus 1.13725 versus 1.13790 versus 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

USD/JPY: 110.132 versus 110.537. Dollar rallied up to the 50 day MA's, tapped them, then faded Wednesday. Has the look the dollar is heading lower near term after failing twice at the 200 day SMA in March.

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

110.537 versus 110.113 versus 109.92 versus 110.72 versus 110.673 versus 111.374 versus 111.432 versus 111.470 versus 111.715 versus 111.314 versus 111.428 versus 111.165 versus 111.482 versus 111.624 versus 111.845 versus 111.856 versus 111.921 versus 111.433 versus 110.873 versus 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

Oil: 59.41, -0.53.

Gold: 1310.40, -4.60.


In response to the Friday selloff, this week has thus far shown a wash day Monday, a bounce Tuesday that could have been great but was not, and a selloff attempt that could have been bad but was mitigated. The result has left the indices at near support still.

Of course, they need to do more than just sit at support. For more upside, we wanted to see a fairly definitive move higher, and again, Tuesday looked as if it would fill the bill -- until it didn't. Perhaps the indices can simply consolidate and work the Friday selling out of the system and set up a new move.

Perhaps. Not hold the breath, but perhaps enough cash has been raised for the new issues. Again, that volume is not heavy, not showing lots of sellers swarming. Not saying the upside is now taking over the path of least resistance, the predominant bias, but if the volume remains this light, there certainly are not market sellers, just some profit takers freeing up some money for other areas such as IPO's, rotating to other groups.

We closed some positions that were not holding support. If other stocks testing cannot deliver a good move from this level we will have to look at closing them again versus suffering another downside leg. A bounce would be great, one for more than a few hours, as that would give a better assessment of buying strength. If a bounce takes the indices near the recent highs from last week and they fail, that is a clear signal.

Have a great evening!

End part 1
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