Thursday, March 28, 2019

The Daily, Part 1, 3-28-19

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3/28/2019 Investment House Daily
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Apologies for the timing. The flu stepped back into the picture this evening and had to work through that.

Investment House Daily Subscribers:


Targets hit: VZ
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Trailing stops: VZ
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.


- More of the same action, and that is not a bad thing.
- Indices fade, recover, no volume. BUT . . . leadership is set up so very well.
- Will the LYFT IPO help other stocks if it goes well? If it doesn't go well?
- Again with the leaders: the pundits say a test has to occur, the leadership patterns suggest perhaps not. BUT, have to make the moves form good patterns.

D j vu all over again. Kind of. Close. The the indices did not give up big gains or recover from sharp losses. Well, they did come back from a morning dump lower to midday, just not quite on the magnitude of the prior two sessions. Still, SP500 saw a 17 point recovery low to close. NASDAQ 49 points. DJ30 140 points. Okay, pretty serious moves, not chicken feed

The end result, however, was similar as well. The indices reached lower to support and then recovered once again, this time to gains all except SOX.

SP500 10.07, 0.36%
NASDAQ 25.79, 0.34%
DJ30 91.87, 0.36%
SP400 0.82%
RUTX 0.85%
SOX -0.19%
NASDAQ 100 0.17%

VOLUME: NYSE -8%, NASDAQ -15%. Very low trade, so again no heavy buying, just a drift higher. Same as on the downside days, just a drift lower as bids are pulled. Sellers are not present right now after that day they showed up the prior Friday when rattled by the New York Fed's yield curve comments.

ADVANCE/DECLINE: NYSE +2.2:1, NASDAQ +1.8:1. Ho-hum. The way it has been this week. Not a bad thing in a consolidation.

As you can see, NASDAQ 100 lagged overall NASDAQ and growth in general. Those big names were still under pressure, or at least were not finding bids. Still holding support, however, and as noted Wednesday, if they can ride out this period of consolidation of the prior gains while some money moves elsewhere (e.g. rails), they will be well-positioned for a new move higher off support.


To view, click on the following links:

As for the index charts, as noted, very similar action. That keeps them over near support working on their patterns that fall into two groups.

SP500 and NASDAQ continue to hold right at the top of the resistance range, showing a string of doji at near support, attempting to hold close and resume the break upside from last week that was rudely disrupted by the Friday yield curve inversion fear trade. Thus far they have refused to give in to that Friday selloff. Recall, NASDAQ trade on the Thursday surge just before the Friday selling was MUCH stronger than the selling volume that faded back to average. Makes it look as if these stocks are biding their time.

DJ30 continues flat after bouncing Tuesday off the Friday/Monday 50 day MA test. Working laterally in a tight range, perhaps working on a right shoulder to a 6 month inverted head and shoulders pattern. Of course, that shoulder likely won't be ready for 2 to 3 more weeks -- the first shoulder ran roughly 7 weeks. The action is slow and boring, but slow and boring at this juncture is good.

SP400 showed very similar action, working along the top of the 50 day MA the past four weeks as part of a 5 week lateral move after breaking through the top of the resistance range in late February then fading to this support. As with DJ30, it likely takes a few more weeks to resolve.

RUTX is also perhaps setting up the same pattern, just testing a bit lower than the prior two. Not to the support level at 1475 (hit 1495 on the Monday pullback low), but it came close and bounced. The pattern still looks as if the small caps are going to come back some more, and I would not be surprised if they did come back to that 1475ish level, the 38% Fibonacci retracement of the December to February move.

SOX showed a loose doji at the 20 day EMA, for a third session out of four closing at that level that matches the late February closing high. Chips obviously struggled more as a major chip, INTC, had issues again. AVGO, NVDA, however, look quite good.


More of the same for leaders. Some continued the advance, e.g. CRM, ZS. Many others continued good tests: AAPL, NVDA, AVGO, AMD, AMZN, MSFT -- outstanding tests, setting up for more upside.

Others testing a bit deeper: GOOG is down 4 of 4 days but held the same low as Wednesday and bounced, the up trendline from the start of the year. TEAM is at the lower channel line and could be gravy as they say. Ditto FIVN.

Transports are better though not surging. UNP and NSC in rails are solid. ODFL in trucking is solid.

China stocks: HTHT is very solid in a test, HUYA has set back up after that dump lower last Friday. JD is very interesting. Many of the 'traditional' China stocks are not good, e.g. BIDU, SOHU, SINA.

Financials: V in a great lateral test, MA moving up but not breaking higher again just yet. WFC struggled again, and afterhours 'jumped' $1.10 from the close on word its CEO quit. JPM, BAC up a bit but nothing great.

Manufacturing/Machinery: UTX still good, upside on the day, no volume. DE, TEX just so-so moving laterally. CMI, CAT, also so-so, but holding decent lateral moves.

Energy is decent, but it gives so many head fakes. SPN, DVN, FSLR very interesting as is APA.


Bonds rallied again as yields dropped again.

The 3 month yield still over the 10 year: 2.437% versus 2.381% 10 year (10 year flat).

The 2 year is still below 10 year: 2.226% versus 2.381% 10 year, but the spread narrowed.

The 3 month/10 year spread expanded 2 BP to 6BP.

The 2 year/10 year spread narrowed from 17BP to 16BP


Stats: +91.87 points (+0.36%) to close at 25717.46

Stats: +25.79 points (+0.34%) to close at 7669.17
Volume: 1.91B (-14.73%)

Up Volume: 1.25B (+424.07M)
Down Volume: 642.45M (-747.55M)

A/D and Hi/Lo: Advancers led 1.81 to 1
Previous Session: Decliners led 1.38 to 1

New Highs: 65 (-5)
New Lows: 52 (-19)

Stats: +10.07 points (+0.36%) to close at 2815.44
NYSE Volume: 753.131M (-8.18%)

Up Volume: 492.659M (+231.806M)
Down Volume: 240.034M (-291.105M)

A/D and Hi/Lo: Advancers led 2.15 to 1
Previous Session: Decliners led 1.18 to 1

New Highs: 130 (-13)
New Lows: 31 (-2)


VIX: 14.43; -0.72
VXN: 17.99; -0.75
VXO: 15.67; -1.09

Put/Call Ratio (CBOE): 0.87; -0.16

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 2.381%.

3 month: 2.437% versus 2.434% versus 2.47%
2 year: 2.226% versus 2.21 versus 2.268%

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

2.281% versus 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: 1.12310 versus 1.12452. Euro continues to sell toward the early March low.

Historical: 1.12452 versus 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: 110.816 versus 110.132. Dollar makes a solid bounce.

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

110.132 versus 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: 59.30, -0.10. Nice hold at the 20 day EMA on the low, continuing the lateral move.

Gold: 1295.30, -15.10. Knifing lower through the 50 day MA. Gold losing its luster quickly.


LYFT goes public Friday at $72. The first big IPO in a string of big IPO's. The market has tread water ahead of the opening day. I would posit, given the solid patterns of the indices, at least solid in holding up when no one wanted to buy. If the LYFT IPO goes well, perhaps everyone breaths a sigh of relief and buys. OR, think of this: if it does NOT go well, perhaps investors think 'why are we in these?' and buy the old standbys?

I like that the indices have held the line in the rotation, pre-IPO binge. I don't think DJ30, SP400, RUTX are ready to move higher near term in a significant way: they are working on 6 month bases and likely have a few more weeks work ahead. SP500 and NASDAQ can pave the way, they are set up to do that, but nothing has excited buyers the past week. Perhaps the IPO success or failure does.

The 'up this way, up that way' choice is born of the indices holding support on light trade in decent patterns. Of leaders doing the same. The market looks as if it is setting up to move up, but it is also STILL at that inflection point at the resistance range. Good looks only get you so far. Have to make the move.

Not sure it happens Friday, but there are some good-looking patterns out there. NVDA, AMZN, AVGO, AMD, MSFT -- plenty look very good. We would love to get into them if they can show the moves. That is what it is all about right now: will the leaders show the moves and drive the indices higher? If they do we are ready to get more in these.

Have a great evening!

End part 1
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