Monday, March 25, 2019

The Daily, Part 1 of 3, 3-25-19

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3/25/2019 Investment House Daily
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Targets hit: None issued
Entry alerts: AMZN; ULTA
Trailing stops: None issued
Stop alerts: COHR; INTC

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- Friday selling abates, but there is no rush back in.
- Yield curve steepens but still a matter of which pairing you look at.
- Some leaders in excellent position to rebound, some decent to do so, but leadership is not spreading out right now.
- Leaders have to make the break higher near term if this current move is to sustain. Otherwise a deeper test.

Monday did not answer all the questions about the Friday yield curve worry selling. Matter of fact, I am not sure it answered any questions other than 'will the indices dive lower Monday.' Mercifully they did not.

The market traded mixed with the small caps and to a much lesser extent the midcaps 'leading.' Of course, those indices were leading downside and Monday's action hardly recovered those losses. Or, more concisely, not even close.

SP500 -2.35, -0.08%
NASDAQ -5.13, -0.07%
DJ30 14.51, 0.06%
SP400 0.17%
RUTX 0.46%
SOX -1.26%
NASDAQ 100 -0.12%

VOLUME: NYSE -22%, NASDAQ -15%. Volume well, well below average. That works for a session that saw at best mixed results. The selling took a break Monday.

ADVANCE/DECLINE: NYSE 1.1:1 from -4.1:1 Friday. NASDAQ 1.1:1 from -4.9:1 Friday.

Yes, the small and midcaps led, but if that is leadership, well, don't expect much upside from them. RUTX showed a doji below the 50 day MA's, SP400 ditto.

Now for the other indices things look a bit better despite the downside.

SOX: Starting here as it lost the most but does not look the least. Surged Thursday, gave up most of it Friday, gapped lower Monday. But it doji-tapped the 20 day EMA on the low and rebounded some. Not a bad pattern, not a bad pattern at all, and several solid chips remain solid even if we did close INTC: AMD, AVGO, AMKR, AMAT, MCHP -- not going to kick them out of the watchlist for eating crackers in bed. Okay, that is all well and good, but a doji here can also be what we call a continuation doji, one that is just a pause that then continues in the most recent direction. As of Friday, that was down given the reversal of the Thursday upside move.

NASDAQ: Very similar to SOX -- but on the other side of resistance -- NASDAQ doji-tapped the 20 day EMA as well, showing a very nice doji after the higher volume Thursday move was sold back to just inside the range. NASDAQ still looks good enough to make its move higher. As with SOX, NASDAQ still has to do it, but at least it gave itself the shot.

SP500: Similar action here as well with a very tight doji at the 20 day EMA following the Friday a reversal, sitting right on the 20 day EMA near support. Just inside the prior range, this is the lick log for SP500 to hold the move higher and expand on it versus fading farther back into the range and having to work itself back into position to make a new move. That, of course, can mean further selling to find the next level of support.

DJ30: The Dow never made a breakout over the October/December resistance. Indeed, it never really got into that resistance range. A little stock by the ticker BA got in the way. Of course, JPM and others did not help either . . . Even so, DJ30 shows a tight doji at the 50 day MA where it bottomed and bounced in early March. The Dow likely is not ready to make a break higher through resistance on its own -- it has some components that continue to lag, but for now, even with the stocks that are struggling, it is holding up and consolidating. That is about as good as it gets for now, and with other indices looking better, that works.

RUTX: Led the upside Monday, but that is a distinction without much difference. After the Friday tail kicking RUTX did rebound, but it showed a doji just as the other indices, and just below the 50 day MA's. Recall the above discussion in SOX about a continuation doji. RUTX is in prime position to continue lower off the Monday doji. 1475ish to 1470ish is prime support, another 35 to 40 points lower.

SP400: Same action on SP400 with the doji just below the 50 day MA's and the very likely possibility this continues lower. A bit of a twist from RUTX is that the doji is holding the recent low at the 61% Fibonacci retracement of the January to late February run, and that is a good spot for a double bottom bounce.


Not a lot of change, but in many cases that was not bad as many stocks are setting up quite well. The indices are at a near term crossroads still and thus will need the help of these stocks to start back upside after the sharp dip.

FAANG: FB, after sinking to the 50 day EMA, actually looks ready to move higher. AMZN tested the 10 day EMA on the open and started upside; we entered a position. AAPL announced its TV service and sold to test the 10 day EMA; a typical sell on the news day and still in good position to bounce. NFLX, AAPL's competition, managed a rebound from Friday. GOOG struggled, gapping to a doji near the 10 day EMA and just over the recent pullback lows.

Semiconductors: INTC struggled gapping below the up trendline from January, but many others performed well. AVGO looks very good with a doji test of the 10 day EMA after its break over resistance. AMD, NVDA showing the same action. ASML not bad, AMKR still solid. It is not a slam dunk; AMAT is okay as is RMBS, but not surging. It is time to see the moves yet again.

Software: A leadership group that has lost energy the past 6 weeks looked weak Friday, hung on for life Monday, and now they show if they have consolidated enough to have anything in the tank. HUBS gapped lower, tapped at the 50 day MA, recovered to positive. FIVN sold to test the 50 day MA, rebounded quite decently. TEAM hanging on at the 20 day EMA with a doji. Nice action in the game stocks, e.g. ATVI, EA.

Machinery/Manufacturing: CMI trying to hold the 20 day EMA with a modest rise. UTX holding in its lateral move of the past 5 weeks. CAT trying to hang on as is TEX. It is a struggle for them.

Financial: Perhaps they have sold enough. Certainly V and MA look ready to go upside again. Banks are weak, e.g. C, JPM, BAC, etc.


Stats: +14.51 points (+0.06%) to close at 25516.83

Stats: -5.13 points (-0.07%) to close at 7637.54
Volume: 2.13B (-14.8%)

Up Volume: 995.02M (+603.21M)
Down Volume: 1.08B (-1.02B)

A/D and Hi/Lo: Advancers led 1.1 to 1
Previous Session: Decliners led 4.93 to 1

New Highs: 57 (-10)
New Lows: 95 (+6)

Stats: -2.35 points (-0.08%) to close at 2798.36
NYSE Volume: 809.994M (-22.62%)

Up Volume: 1.58B (+1.436B)
Down Volume: 1.67B (+770.685M)

A/D and Hi/Lo: Advancers led 1.08 to 1
Previous Session: Decliners led 4.13 to 1

New Highs: 72 (-77)
New Lows: 62 (+8)


VIX: 16.33; -0.15
VXN: 19.44; -0.39
VXO: 17.81; +0.55

Put/Call Ratio (CBOE): 0.86; -0.03

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: 2.443% versus 2.437%. After the big gap higher Friday, bonds rallied again, but gave up much of the gain. The yield curve steepened a bit, particularly the 2 year/10 year. Yes bonds are overall lower, but the yield curve turned steeper across all metrics. Still, it depends on what curve you focus upon: 2 yr/10 yr steeper, 3 month/30 year not so much.

3 month: 2.465% versus 2.459%
2 year: 2.26% versus 2.319%

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

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: 1.13145 versus 1.13009.

Historical: 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: 110.113 versus 109.92.

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

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: 58.82, -0.22. Oil making a test of the 10 day EMA with a doji. Looks pretty good to make a new run at the 200 day SMA. The question is whether it will be able to take out the 200 day SMA.

Gold: 1322.69, +10.39. Gold surges off the 50 day MA, not wholly convinced inflation is contained.


Leading stocks have faded from last week's highs in rather abrupt drops, showing some good to decent action Monday. NVDA, AMD, AMZN, V, some software -- they are in good position. GOOG, NFLX, FB are working on it. Indeed, for this move to hold on this fade and the indices to continue higher near term. These stocks need to make a stand and deliver the upside move if that is to happen.

Many are currently saying the move is done, that SP500 is failing at 2800 again and a deeper test is starting. Looking at the small and midcaps, that could very well be the situation. Definitely the move ran headlong into resistance last week and was smacked. If it cannot show new buying it loses bids and a deeper test comes. With the indices bumping resistance in some cases (DJ30, SOX) and cracking through it but then struggling in others (SP400, SP500, NASDAQ), that scenario is definitely on the table just as it was in late February when we discussed the possible market options: breaks through and continues after a test, fails and fades back into the range with support at the bottom, or down to the December low for a test.

The resolution lays with the leaders making these tests, some more solid than others. How they resolve these tells the story of the next move as, of course each market move is made of leaders -- sometimes they are upside, sometimes they are downside.

Afterhours Samsung warned on its Q1 earnings. Nonetheless, seeing stocks higher afterhours versus lower.

Have a great evening!

End part 1
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