Tuesday, March 05, 2019

The Daily, Part 1 of 3, 3-5-19

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3/5/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: BRKS; FB; OSTK
Trailing stops: CRM; DOCUM; MU; TEAM
Stop alerts: NEPT

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The REPORT SCHEDULE is as follows:

Market Summary Video, Plays and Play Videos, and Play Table with play annotations will issue Wednesday, Weekend.

Monday a Market Summary video, new plays, play table annotations.

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

Access to all current videos will remain assessable each day using the play links in the reports.

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.


- Sellers subside after giving it a shot Monday, but the buyers are not totally ready.
- FB, GOOG are the new breakouts, following other large cap techs.
- What doesn't kill you makes you stronger: sellers failed Monday, indices still consolidating, upside patterns still setting up.

Another day in waiting for most stocks outside of FB and GOOG as the stock indices again trade just below the top of the October/December trading range. Going on three weeks now, the indices remain in a tight lateral range. Many stocks have set decent patterns, but the majority are waiting for some reason to make the break higher.

As they wait, the small and midcaps are backpedaling just a bit more than the large cap indices. Nothing that would take them into danger, just a continued lack of buyers -- with a smattering of sellers as seen Monday -- that has to resolve itself.

SP500 -3.16, -0.11%
NASDAQ -1.21, -0.02%
DJ30 -13.02, -0.05%
SP400 -0.43%
RUTX -0.45%
SOX -0.47%
NASDAQ 100 +0.08%

VOLUME: NYSE -12%, NASDAQ -16%. No sellers today, just a sleepy session.

ADVANCE/DECLINE: NYSE -1.1:1, NASDAQ -1.3:1. Sleepy here as well.


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It is resolving itself in terms of FB and GOOG. Those two stocks have found a rather solid bid and are breaking out of well-formed bases. Are they set to lead the large cap NASDAQ higher? They look to be about the only ones. Well, that is not 100% accurate -- MSFT rallied and is putting in a nice test, INTC rallied well, CSCO and ORCL have performed -- it is like a reunion of former growth stock leaders.

Much of the rest of the market is indecisive. Transports are getting a lot of press right now. Truckers struggling, airlines showing weakness (when SAVE indicates a rollover, the sector is in trouble). Rails are hanging in the best (KSU, NSC, CSX); they are preventing DJ20 from rolling over.

Some big manufacturing and machinery names are under some pressure as they try to hold their patterns: MMM, DE. Still, most are holding up well: CMI, CAT, UTX.

Those waiting for the financial stocks to move are still waiting, at least for the big banks. V and MA remain in solid, albeit low volume, uptrends.

Semiconductors are seeing some big names struggle just a bit, e.g. MU, LRCX. At the same time some others are very solid. INTC is resting after a good run. AVGO took a nice break to test. BRKS, AMBA, MCHP, MLNX, TXN and others remain solid.

Energy has some good patterns still, e.g. CVX, XOM, SLB, APA.

As you can see, there are still solid upside possibilities in this market. Software is currently under some price restructuring -- aka selling -- after leading most of the move higher. Even so, software stocks have not turned belly up and sold off.

Indeed, even as the software leadership stocks struggle, the market holds up. What doesn't kill you makes you stronger as they say. Or, in this market's case, what doesn't put you to sleep. Right now the market appears to be in a sideways slumber, but as seen Monday, there are some sellers taking a shot here and there. Yet, the market survives those shots. For now, that remains bullish. Stocks will, of course, have to follow the FB and GOOG lead, but the fact they are emerging from bases is a very solid indication that this lateral move is just a further consolidation.

Thus, as improbable as it may seem, the market continues to consolidate the 20%ish rally off the low, and the longer it does this and stocks such as FB and GOOG emerge to join INTC, XLNX, MSFT and others, the rally has good foundation. That increases the probabilities of a new break higher from a solid shelf of support built out of consolidating the gains.

Therefore, while we have closed several upside positions that included leaders starting to struggle and other recovery attempts that ran out of gas, we continue looking at new positions on areas that are setting up good patterns.

That does not mean we will neglect the downside. Some leaders that are struggling may provide some downside opportunity. There are upside gaps that could be filled by stocks that rallied well but need to come back and consolidate those gains.


Trade: One of the recent themes is whether the US and China can actually find common ground for a real trade deal. Larry Kudlow was very encouraging last week, but this week the big financial houses, the WSJ, and others are casting doubt on the ability to enter a deal that makes serious changes. The Vice Premiere today commented the negotiations were "difficult." It would appear the Vice Premiere and the Premiere may not be seeing eye to eye. Surprise.

While I would love it if Larry Kudlow was correct, I still feel the Chinese cannot agree to give away their main methodology of acquiring technology, i.e. through 'sharing' and outright theft. It needs to recognize its problems vis- -vis the rest of the world and adjust its methodology, but that would mean ceding more and more control to the private side. Sorry, communism and private power and wealth creation don't coexist.

Thus, while I hope, I also believe any deal could be just China buying more stuff and perhaps promising some actions that are not verifiable, but it will one way or another continue to steal to survive and advance. Or, Trump just walks away and ups the tariffs. Indeed, Bloomberg today said that China would probably just prefer to pay the tariffs than agree to a deal that would require it to cede power and control to the masses.

China still needs help. Its biggest housing seller lowered prices 10% across the board as inventories stack up. Perhaps there is hope: the Chinese markets have surged, but then again, perhaps they surged on hope for a trade deal as well.


Stats: -13.02 points (-0.05%) to close at 25806.63

Stats: -1.21 points (-0.02%) to close at 7576.36
Volume: 2.16B (-16.28%)

Up Volume: 1.02B (-70M)
Down Volume: 1.12B (-290M)

A/D and Hi/Lo: Decliners led 1.33 to 1
Previous Session: Decliners led 1.63 to 1

New Highs: 38 (-56)
New Lows: 35 (-1)

Stats: -3.16 points (-0.11%) to close at 2789.65
NYSE Volume: 861.741M (-12.00%)

Up Volume: 366.779M (-44.627M)
Down Volume: 482.903M (-74.141M)

A/D and Hi/Lo: Decliners led 1.1 to 1
Previous Session: Decliners led 1.26 to 1

New Highs: 81 (-39)
New Lows: 22 (+8)


VIX: 14.74; +0.11
VXN: 17.06; -0.30
VXO: 14.19; +0.50

Put/Call Ratio (CBOE): 0.89; -0.11

Bulls and Bears:

Bulls continue their recovery, bears continue their decline after they merged in late 2018.

Bulls: 52.4 versus 51.9

Bears: 20.4 versus 20.7

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: 52.4 versus 51.9
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 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: 20.4 versus 20.7
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 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: 2.715% versus 2.724%. Bonds bounced for a second session after gapping down to the 200 day SMA Friday. Filling the gap for now in something of a dead cat bounce.

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

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% 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

EUR/USD: 1.13050 versus 1.13344. The euro rolled over from the 50 day MA and is still selling.

Historical: 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 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

USD/JPY: 111.845 versus 111.856. Dollar in a 3-day lateral move after breaking up over the 200 day SMA.

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

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 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: 56.56, -0.03. Still in the tight lateral range over the 10 and 20 day EMA.

Gold: 1284.70, -2.80. Gold still struggling after gapping lower through the 50 day MA's.

End part 1
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