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4/30/2019 Investment House Daily
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Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: None issued
Entry alerts: AAPL; ACAD; AAPL; AVGO; ETSY
Trailing stops: AAPL; DRI; NBR
Stop alerts: COHR; DO
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
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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.
MARKET SUMMARY
- Even with GOOG dropping 100, the indices hold their position ahead of AAPL
- Data does not really help the outlook as Chicago PMI misses, China PMI misses.
- Pending home sales solid, confidence still high.
- Administration causes issues with a 'it will happen or not' view of the trade deal.
- Up to AAPL to drive the large cap indices higher.
Despite GOOG's impressive $99, 7.7% plunge to just below the 50 day MA, the stock market held up well enough. A mixed close, still bumping old highs (SP500, NASDAQ are the two trying to get past those highs), but holding up in the face of adversity.
That might pay off: afterhours tonight AAPL beat the street on most metrics and included a serious buyback and a 5% increase to its dividend. The combination was plenty to satisfy and even excite investors, and the stock is up 10+ points after losing 4 points on the session. That leaves AAPL over the recent highs and dragging SPY up with it afterhours. Hello? GOOG? Want to take a lesson from AAPL on buybacks and actually answering questions in a conference call? Might help avert $100 price plunges as traders and investors tend to dump a stock when they feel the company is playing hide the ball.
Even with AAPL's apparent aplomb at media relations, it is highly entertaining listening to analysts comment on AAPL's results. Billions upon billions of profits and amassed fortune and the best this high tech firm, the inventor of the smartphone, can come up with are buybacks. I would say AAPL is the same as MSFT now, just making refinements to its cash cow product. Thing is, MSFT has actually put out some really nice products in its Surface line of tablets and PC's. AAPL's macbooks are basically the same product for several years. Interesting commentary to say the least.
In any event, perhaps AAPL's earnings and accompanying investor dividend bonuses will turn a mixed market into one that breaks higher without a test. SP500 or NASDAQ have bumped at the prior all-time highs for a week, unable to make a definitive move. DJ30, SP400, RUTX are similarly stymied at prior levels, not even new highs. AAPL may be the catalyst to have those two indices put some mileage over the old highs.
SP500 2.80, 0.10%
NASDAQ -66.46, -0.81%
DJ30 38.52, 0.15%
SP400 -0.16%
RUTX -0.45%
SOX 0.76%
NASDAQ 100 -0.73%
VOLUME: NYSE +40% to over 1 billion shares, well above average. NASDAQ +20% to 2.1B, but over half the volume was downside.
ADVANCE/DECLINE: NYSE +1.2:1; NASDAQ -1.4:1.
NEWS/ECONOMY
The data continues back and forth, good, not so good, worrisome. One positive: world stock markets are still on the mend. China is off the past three weeks, but it is putting in a normal test of a strong February to early April surge. European markets are starting to move back over their 200 day SMA's. That is a pretty good forward looking indicator even as the data swings back and forth.
China: April PMI reports did not fall back to contraction, but they missed expectations, holding just over 50 (50.1).
Housing
Pending home sales, March rallied 3.8% versus the 1.5% expected. Positive news.
San Francisco: Housing prices dropped for the first time in 7 years. New York City reported a drop in prices a week back. Not so positive news.
Chicago PMI, April: 52.6 versus 58.2 expected versus 58.7 March. Similar to China, not contracting but definitely not hitting the expected metrics.
Consumer Confidence, April: 129.2 versus 127.3 expected versus 124.2 March. Highest since February's 131.43. Okay, confidence is not bad but it tends to lag the economy.
Trade: After Mnuchin's 'last laps' comment Monday, White House chief of staff Mulvaney commented that in the next two weeks the trade negotiations will be resolved "one way or another" and that the US would not agree to any old deal, that it had to be a good one. Okay, the latter comments are old news. The others definitely cast the negotiations in a very problematic light. THAT did not help the stock market and stocks jogged hard lower midmorning when the comments hit the wire.
Safe to say stocks were as noncommittal as the data. Perhaps that changes tomorrow. You know, AAPL and its curse on modern man, the iPhone smartphone.
CHARTS
To view, click on the following links:
http://investmenthouse1.com/ihmedia/f/charts/sp500.jpg
http://investmenthouse1.com/ihmedia/f/charts/NASDAQ.jpg
http://investmenthouse1.com/ihmedia/f/charts/DJ30.jpg
http://investmenthouse1.com/ihmedia/f/charts/RUTX.jpg
http://investmenthouse1.com/ihmedia/f/charts/SP400.jpg
http://investmenthouse1.com/ihmedia/f/charts/SOX.jpg
http://investmenthouse1.com/ihmedia/f/charts/nasdaq100.jpg
Really no change Tuesday in relative position. With GOOG's results that is not really a bad thing. As noted, perhaps holding the line then AAPL's results will yield a more definitive move Wednesday.
SP500 put in a new closing high, coming back from a trade-induced dip to the 10 day EMA intraday. New high yes, no real change, however.
NASDAQ: GOOG gapped it lower, but after undercutting the 10 day EMA, a decent rebound to hold above it on the close. Nice doji with tail action that continues the advance up the 10 day EMA. Still at the major resistance from the prior high and the 2018 range, but overcame a real drag from a major component.
DJ30 continues bumping at the January 2018 peak, still below the two higher peaks from late last summer, early fall. AAPL will help DJ30 in the morning, but thus far DJ30 remains well-entrenched below the old highs.
SOX found some solid moves from AVGO, NXPI et al and managed a very solid session. After selling to test the 20 day EMA Friday intraday and reversing, SOX is managing a comeback. Not necessarily impressive, just making a comeback. For now, that works.
SP400 midcaps continue working laterally over the 20 day EMA and stuck at 1975ish. Not a bad pattern, just having a hard time making the next break higher.
RUTX rallied to the February high Monday then backed off modestly Tuesday. After leading the market for 2 sessions it tested but bounced nicely off the session low. Still in the six month inverted head and shoulders, still watching for a breakout move so it can at least try to start a run at the old highs.
NASDAQ 100: Gapped lower thanks to GOOG, managing to recover and hold over the 10 day EMA with a doji. AAPL will help rebuild the move after GOOG helped push it back. Nice test of the breakout point, so at least that is out of the way.
LEADERSHIP
FAANG: AAPL up 10 clicks afterhours and will clear the April high in the morning. GOOG lost 99 points on the day and is flat afterhours. FB surged early session but then it and other social faded off that move. Modest loss. AMZN making a rather gentle doji test of the 10 day EMA and actually looks ready to move higher. NFLX still testing the 10 day EMA after the surge last week lost its drive and faded back.
Software: ADBE was back up again and VMW added 1.37%. CRM looks as if it will make a breakout after this short test. HUBS taking a bit of a breather after its jump higher as is NOW. ZS, NEWR moving higher quietly.
Semiconductors: Some nice moves, e.g. AVGO, NXPI, MCHP. LRCX edged a bit higher. SWKS looks as if it can bounce and SMTC still has a really decent pattern. NVDA still stuck just over the 50 day EMA while QRVO shows a doji a the 20 day EMA. Still mixed after those INTC earnings sent that stock down hard. AMD reported after the close and is up about 1.5 clicks. INTC is not helping as it continues lower.
Social: Took off upside for both TWTR and FB but then the bids disappeared and the nice surged did as well. Still good patterns on those two but after giving up a surge they have to avoid sliding back more.
Manufacturing/Machinery: Manufacturing saw some gaps lower that did manage to recover decently, e.g. ETN, EMR. UTX still solid. CMI bounced decently on volume, CAT not bad.
Financial: MA reported good results and jumped 2.88%. V moved up with it but then faded to near flat and a doji. May have to bank the rest of the May option gain if it stalls again Wednesday. Banks took a bit of time off, more of a pause: JPM, C, BAC. MS paused as well after a good Friday and Monday surge.
MARKET STATS
DJ30
Stats: +38.52 points (+0.15%) to close at 26592.91
Nasdaq
Stats: -66.47 points (-0.81%) to close at 8095.39
Volume: 2.12B (+19.1%)
Up Volume: 871.3M (-128.7M)
Down Volume: 1.22B (+458.75M)
A/D and Hi/Lo: Decliners led 1.41 to 1
Previous Session: Advancers led 1.55 to 1
New Highs: 111 (-12)
New Lows: 49 (+20)
S&P
Stats: +2.80 points (+0.10%) to close at 2945.83
NYSE Volume: 1.037B (+40.42%)
Up Volume: 554.99M (+161.841M)
Down Volume: 468.019M (+134.849M)
A/D and Hi/Lo: Advancers led 1.21 to 1
Previous Session: Advancers led 1.52 to 1
New Highs: 197 (+59)
New Lows: 30 (+14)
SENTIMENT
VIX: 13.12; +0.01
VXN: 16.60; +0.16
VXO: 12.44; +0.17
Put/Call Ratio (CBOE): 1.04; +0.18
Bulls and Bears:
The surprise is that bulls fell instead of rising as the indices continued higher. The bigger surprise is that bears fell a significant amount. Of the two, I would suggest the drop in bears -- very stubborn to fall -- is the bigger news and more an indication of the market turning to the more ebullient side.
At this juncture there are no extremes in this indicator. It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: green (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 53.4 versus 54.8
Bears: 18.4 versus 19.2
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.
OTHER MARKETS
INTEREST RATES
Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread drops 1BP to 7BP
The 2 year versus the 10 year: Spread rises 1BP to 23BP
10 year: 2.505% versus 2.529%. Questionable economic data rallied bonds some.
3 month: 2.432% versus 2.423%
2 year: 2.266% versus 2.286%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
EUR/USD: 1.12146 versus 1.11843. Euro continues the rebound, up now four straight sessions to the 20 day EMA.
Historical: Back into the 6-month range formed after the euro sold off from the early 2018 peaks after a week below it.
USD/JPY: 111.435 versus 111.68. Dollar falls back to the 50 day MA, struggling to get traction to move up from it.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 63.91, +0.41
Gold: 1285.70, +4.20
WEDNESDAY
AAPL earnings perhaps regenerated the earnings upside drive. SP500 and NASDAQ definitely needed it as the bumping at the 20 day EMA was wearing a bit thin. GOOG did not sink them; can AAPL rally them?
There are still some stocks I want to play downside such as QCOM on its results given its huge surge and perhaps CSCO still though AAPL's reaction from a similar pattern makes you think twice. TGT certainly looks like crud after gapping below the 200 day SMA Friday.
On the upside, software looks to have found itself again after a 3 month hiatus. CRM is setting up well, putting in a higher low in its trading range. AMZN is making a nice post-earnings tap at the 10 day EMA. Still plenty of possibilities from some solid names.
Have a great evening!
End part 1
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Tuesday, April 30, 2019
Market Alert - AAPL 172.15 position
We still own some AAPL stock at 172.15. Earnings after the close. Picked up some puts on AAPL earlier. AAPL has faded to the 20 day MA ahead of results, leaving it in position to bounce on results. Still, we are considering selling some May $200 strike calls on our stock. The spread is 6.3 x 6.4. The delta is 54 and the 200 day SMA is at 192. An 8 point drop to the 200 day reduces the option by 4.32 plus the volatility decline once earnings is out. Sell for 6.3, buy for 2.1 or so, bank approximately $4.00 per option. If you think AAPL may fall on results -- a possibility given earnings are now not being treated so well, this is a pretty simple play.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Pre-Market
Futures vs FV: SP -4.43; DJ +56.61; NASD -62.29
Earnings are not providing the lift to stocks after 5 weeks upside with SP500, NASDAQ bumping the old highs. Some key misses as well as weaker Chinese economic news have the buyers putting the wallet on the hip as Art Cashen would say.
China: Weaker PMI with a miss: 50.1 vs 50.5 prior
Services PMI: 54.3 vs 54.8 prior
Caixin PMI; 50.2 vs 50.9 exp vs 50.8 prior.
Huawei: Vodafone says Huawei inserted hidden back doors in its equipment. MSFT and others have reported the same thing. Huawei apparently means 'snake' in Chinese.
Housing: Case/Schiller reports another month of slowing in February.
San Francisco: Housing prices fall for the first time in 7 years, joining Manhattan in price drops.
Earnings beats: MCD; AKS; YUM China; COP; MA
Misses: GOOG (TL); MGM; WDC; LLY (TL)
APC: Berkshire investing $10B in OXY preferred stock to aid in OXY winning the bidding.
OTHER MARKETS
Bonds: 2.541% vs 2.529%
EUR/USD: 1.1216, +0.0031
USD/JPY: 111.38, -0.25
Oil: 64.72, +1.22. Strong rebound.
Gold: 1282.70, +1.20
Futures were already soft then dove lower at 8:40ET. Now attempting to recover some of that loss. Obviously a tech-led weaker session. AAPL afterhours and we anticipate transitioning from upside to downside on that stock -- wish we had done the same on GOOG as it is off 106+ before the open.
We will be looking to see if oil stocks improve their strength again after a few days of weakness. Will look at positions on QCOM downside as well as a few others if they play out with a weakening tech areas.
At the same time we watch for upside in areas that have good patterns and see if they are getting some of the money rotated their way.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
Alert Key
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Earnings are not providing the lift to stocks after 5 weeks upside with SP500, NASDAQ bumping the old highs. Some key misses as well as weaker Chinese economic news have the buyers putting the wallet on the hip as Art Cashen would say.
China: Weaker PMI with a miss: 50.1 vs 50.5 prior
Services PMI: 54.3 vs 54.8 prior
Caixin PMI; 50.2 vs 50.9 exp vs 50.8 prior.
Huawei: Vodafone says Huawei inserted hidden back doors in its equipment. MSFT and others have reported the same thing. Huawei apparently means 'snake' in Chinese.
Housing: Case/Schiller reports another month of slowing in February.
San Francisco: Housing prices fall for the first time in 7 years, joining Manhattan in price drops.
Earnings beats: MCD; AKS; YUM China; COP; MA
Misses: GOOG (TL); MGM; WDC; LLY (TL)
APC: Berkshire investing $10B in OXY preferred stock to aid in OXY winning the bidding.
OTHER MARKETS
Bonds: 2.541% vs 2.529%
EUR/USD: 1.1216, +0.0031
USD/JPY: 111.38, -0.25
Oil: 64.72, +1.22. Strong rebound.
Gold: 1282.70, +1.20
Futures were already soft then dove lower at 8:40ET. Now attempting to recover some of that loss. Obviously a tech-led weaker session. AAPL afterhours and we anticipate transitioning from upside to downside on that stock -- wish we had done the same on GOOG as it is off 106+ before the open.
We will be looking to see if oil stocks improve their strength again after a few days of weakness. Will look at positions on QCOM downside as well as a few others if they play out with a weakening tech areas.
At the same time we watch for upside in areas that have good patterns and see if they are getting some of the money rotated their way.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
Alert Key
http://www.investmenthouse.com/alertkey.htm
PLEASE DO NOT REPLY TO THIS EMAIL. USE THE CONTACT US PAGE ON OUR WEBSITE.
Customer Support: http://investmenthouse.com/contact_us.php
Monday, April 29, 2019
The Daily, Part 1, 4-29-19
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4/29/2019 Investment House Daily
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Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: None issued
Entry alerts: C; FB
Trailing stops: VMC
Stop alerts: PTEN
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
https://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/ts/ts.mp4
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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.
MARKET SUMMARY
- More new highs for SP500, NASDAQ though nominal and on low volume
- Economic data remains overall positive as price decline. Powell has a dilemma if he didn't mean what he said about cutting rates. Or, even if he did.
- SOX continues to test, perhaps more to come.
- GOOG bombs on earnings as revenues miss. AAPL on deck, not sure if its results can make a difference.
- Techs look ready to test, but financials and others could take the upside lead.
New highs again on SP500 and NASDAQ. Much rejoicing. Yea. New highs, but they were the 'barely new' variety with SP500 up 0.11% and NASDAQ +0.19%. A new high is a new high, but some new highs are better than others. None of these from NASDAQ and SP500 have impressed. SP500 gapped higher, rallied nicely, then gave most of it back, showing something of a tombstone doji. NASDAQ gapped, rallied, gave some back as well. Neither move was powerful. Indeed, they were more noteworthy due to their equivocation or lack of conviction.
SP500 3.15, 0.11%
NASDAQ 15.45, 0.19%
DJ30 11.06, 0.04%
SP400 flat
RUTX 0.41%
SOX -0.19%
NASDAQ 100 0.61%
VOLUME: NYSE -3%, NASDAQ -10%. No volume, indeed a significant decline in volume, as the indices pushed to marginal new highs. Not getting any real upside volume, but also not getting any selling volume.
ADVANCE/DECLINE: NYSE +3:2, NASDAQ +3:2.
Not to continue beating the dead horse, but SP500 and NASDAQ are at the prior highs and are not making clear, definitive moves higher. Earnings better than expected helped keep the indices in the game, but they did not explode them over resistance. With GOOG off 90 clicks afterhours on its results, it could be the earnings magic lantern that kept the market bumping the new highs is perhaps a bit low on magic -- near term. Again, thus far no sellers -- at all -- outside that one Wednesday where the indices gapped higher then reversed the move on volume.
Thus, this is more a 'need to take a breather' time versus any kind of reversal. IF, of course, the indices pause and test at all. It would appear they should, but thus far the sellers are not there. Again, GOOG off 85 to 90 clicks afterhours on earnings (almost 7%) may be the catalyst for some bids to be pulled and allow the indices to test and set up for a better run at the highs.
NEWS/ECONOMY
The news and data showed more of the same from the past few weeks: economic data decent to good with little accompanying price appreciation.
Personal spending, March: 0.9% vs 0.8% expected vs 0.1% February. Largest gain since August 2009. Impressive.
Income: 0.1% versus 0.4% expected vs 0.2% February. Wow, quite a miss
Core PCE (inflation indicator): 0.1% vs 0.1% prior. 1.6% year/year, a 12 month low.
Fed chair Powell, unless he is 100% committed to his statements (and it would be GREAT if he was a person who meant what he said; quite rare today), would be worried. I know 99% of the politicians would be worried as they might actually have to act in accordance with their comments.
Powell has stated he would cut rates if the economy were strong and prices were simply showing no increases. By the government's metrics of measurement, inflation is running well below the Fed's so-called target rate.
This is how it should be. Supply side tax cuts, when they are actually supply side tax cuts as the ones that were passed under Trump, result in increased supply and thus no demand bottlenecks or imbalances. Former Dallas Fed governor Bob McTeer bucked the Fed's Phillip's Curve conventional wisdom during his last year on the Fed when he said that prices should indeed fall as supply increased. That is why tax cuts that focus on investment incentives are superior to the demand-centered cuts so often promulgated by politicians who act to get votes versus those who act to do the right thing. Supply side tax incentives have empirical, historically proven data showing they improve the economy and lift all boats. It is a far easier argument, however, to play to the emotions of people wanting to be given something versus wanting to go out and earn it. I would rather start a business, make a bunch of money, be my own boss versus having someone give me a subsistence amount for just sitting on my butt.
Okay, a slight digression, but the reasons for Powell opining about cutting taxes is rooted in the belief that the government should not inhibit growth, particularly when the conditions are set up correctly for growth with low to no inflation. We work so darn hard to get that situation, please don't do anything to louse it up. Thus, I have to like Powell for not wanting to get in the way of prosperity versus Greenspan who was the beneficiary of the Reagan/Clinton years and then started chasing inflation in the shadows and ended up killing the stock rally and the economy.
TRADE: Mnuchin says the negotiations are in the 'final laps,' whatever the hell that means. One would assume that means they are almost complete, but if that was the situation, then why the hell not just say that? Because Mnuchin is engaging in government-speak because the deal could happen or not happen. Final laps. Good grief.
THE MARKET
CHARTS
SOX: I said over the weekend SOX was still the market key. SOX traded slightly off Monday, the lone downside index. Nothing serious at all, just a doji at the 10 day EMA after the Friday selloff found support at the 20 day EMA and bounced. I would suggest SOX is going to test more here before it rallies. The 20 day EMA makes sense but it could slide back and test the prior high around 1480ish (closed at 1544).
NASDAQ: Gapped upside to a new high, rallied a bit more then backed off modestly. Held the move, held the new high, but not putting any real mileage on that high. GOOG won't help Tuesday morning though other names are mostly holding up just fine. AAPL is on tap for Tuesday after the close and just not too sure what AAPL will add to the equation as iPhone sales continue to concern me. In any event, NASDAQ is obviously at an important level, the all time high, and it is not putting a lot of mileage on that. At this point in earnings season it could be that it is time for the test.
SP500: Gapped slightly higher, rallied to 2950ish then faded most of the move. Doji on the candlestick right at the old highs. Plenty of good earnings pushed it higher and there are still solid moves being made in financials that are certainly helping. If tech comes under fire, SP500 may still show some strength . . . BUT I would not be surprised if SP500 tested back as well from the old highs and set up a better run at a breakout.
DJ30: A most modest gain as DJ30 tested the upper gap point from last Thursday, backing off to close. I don't think DJ30 is going to make the run at the prior highs on this particular move unless AAPL totally surprises everyone.
RUTX: Small caps improved for a second session, indeed leading the market higher for a second session. Wow, pushing up against the February intraday high, posting a new recovery high after the selloff into December. About 145 points off the all-time high. Okay, not going to threaten a break to a new high at any moment, but still working on that big 7 month inverted head and shoulders pattern, and that is not one to give up on. It is trying the breakout, and indeed, RUTX may just show the breakout even as the large cap indices test back from their foray at the all-time high level.
SP400: Flat on the session, unable to push the Friday gain. That keeps SP400 in the recent 3 week lateral range formed after breaking higher from the right shoulder to its 6 month inverted head and shoulders pattern. SP400 went ahead and broke higher ahead of RUTX, but it has not really expanded the break, a rather disappointing move post-breakout. Perhaps RUTX can do a better job.
NASDAQ 100: Not bad action, edging higher the past four sessions after breaking out the prior Tuesday. GOOG won't help, but it may not be the catalyst for NASDAQ 100 breaking back down below the breakout. Indeed, a perfect setup for a test of the breakout.
LEADERSHIP
FAANG: Have to lead with GOOG, up 15+ on the session, trading below 1200 after earnings. Several are saying it is a buy here. It likely will be, but perhaps not tomorrow. AAPL is next, out Tuesday after the close. Holding the 10 day EMA in a short 4-session pullback. Set up well but not sure earnings will drive it upside either. FB posted a solid move higher off the Friday doji test of the gap; picked up a new position. AMZN backed off 12 after a good Friday that saw it sell to the 10 day EMA on earnings but rebound sharply. I would not be surprised if it sells back from here or after a nudge up toward 2000-2050. NFLX After the surge Monday and Tuesday last week, NFLX fell back to the range and was there again Monday. Looks promising, but has to show the move.
Software: ADBE's price target was jumped and the stock shot higher but gave back a big part of the move. VMW added a bit more but looks about done on this nice upside leg of the continuing run. CRM is up to the top of the range. If you own it, contemplate selling some calls for a trip back down near 155. HUBS still spurting higher as is NOW. COUP tried to add to the move but closed with a tombstone doji; looks as if it will test the break higher, and frankly, that is the better entry for us. MSFT slid laterally a second session after gapping upside on earnings.
Semiconductors: INTC continued lower, down another 2.5%. LRCX held last week's late week gains. MCHP holding up well. NVDA trying to hold the 50 day MA after the Friday gap to that level. QRVO moved up off its Friday gap lower, but not much. SWKS still setting up decently, SMTC not bad. Somewhat mixed as a group.
Social: Nice move higher after the doji test Friday. TWTR added 2.87% as it rebounded from a 1-2-3 test of the earnings gap and rally; off modestly afterhours on GOOG. SNAP bounced off the 50 day EMA but not a lot of strength.
Manufacturing/Machinery: MMM faded a bit Monday to the earnings selloff low. UTX added ore upside, almost 1%. CAT flat as it tries to hold the initial bounce off the 200 day SMA. DE added more upside in its recovery. Not a bad scenario.
Financial: Excellent action. MS rallied 1.2%. JPM broke higher 1.44%, moving out of a weeklong lateral consolidation. BAC and C showed solid action upside in breakouts. V put in another new high. TCBI broke nicely higher from a 3-day lateral consolidation.
MARKET STATS
DJ30
Stats: +11.06 points (+0.04%) to close at 26554.39
Nasdaq
Stats: +15.46 points (+0.19%) to close at 8161.85
Volume: 1.78B (-10.1%)
Up Volume: 1B (-210M)
Down Volume: 761.25M (+4.2M)
A/D and Hi/Lo: Advancers led 1.55 to 1
Previous Session: Advancers led 2.11 to 1
New Highs: 123 (+14)
New Lows: 29 (-19)
S&P
Stats: +3.15 points (+0.11%) to close at 2943.03
NYSE Volume: 738.651M (-2.91%)
Up Volume: 393.149M (-139.768M)
Down Volume: 333.17M (+118.595M)
A/D and Hi/Lo: Advancers led 1.52 to 1
Previous Session: Advancers led 2.07 to 1
New Highs: 138 (+18)
New Lows: 16 (-13)
SENTIMENT
VIX: 13.11; +0.38
VXN: 16.44; +0.65
VXO: 12.27; +0.06
Put/Call Ratio (CBOE): 0.86; 0.00
Bulls and Bears:
The surprise is that bulls fell instead of rising as the indices continued higher. The bigger surprise is that bears fell a significant amount. Of the two, I would suggest the drop in bears -- very stubborn to fall -- is the bigger news and more an indication of the market turning to the more ebullient side.
At this juncture there are no extremes in this indicator. It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: green (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 53.4 versus 54.8
Bears: 18.4 versus 19.2
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.
OTHER MARKETS
INTEREST RATES
Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread drops 2BP to 8BP
The 2 year versus the 10 year: Spread rises 2BP to 22BP
10 year: 2.529% versus 2.50%
3 month: 2.423% versus 2.429%
2 year: 2.286% versus 2.33%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
EUR/USD: 1.11843 versus 1.11419. Euro making a bounce toward the 10 day EMA after it moved to a lower selloff low last week.
Historical: Breaking below the 1.12 level and that 6-month range formed after the euro sold off from the early 2018 peaks.
USD/JPY: 111.68 versus 111.565. Dollar hugging the 200 day SMA in a tight lateral move.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 63.50, +0.20. Modest bounce after the rougher Friday took oil to the 20 day EMA.
Gold: 1281.50, -7.30. After rallying up to the 20 day EMA Friday, Monday saw gold slump back away from that nearest resistance.
TUESDAY
Not many stocks are up afterhours on their earnings. AKS jumped on results but backed off most of the gain. GOOG down, WDC down, MGM down. It could be the earnings upside impetus has left the market for the moment. That would of course, allow for a test after a 5 week move higher to the highs.
As noted this weekend, not an upside run killer, just a test at a logical level.
Even so, while some test, perhaps money will move elsewhere, e.g. financial stocks. If so, that is great. We will play those areas getting the money upside as well as downside on some prime members of groups that are going to test the recent rally.
Nothing wrong with double dipping in a continuing move higher on the obvious plays, e.g. CMG last week.
Have a great evening!
End part 1
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4/29/2019 Investment House Daily
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MARKET ALERTS:
Targets hit: None issued
Entry alerts: C; FB
Trailing stops: VMC
Stop alerts: PTEN
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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.
MARKET SUMMARY
- More new highs for SP500, NASDAQ though nominal and on low volume
- Economic data remains overall positive as price decline. Powell has a dilemma if he didn't mean what he said about cutting rates. Or, even if he did.
- SOX continues to test, perhaps more to come.
- GOOG bombs on earnings as revenues miss. AAPL on deck, not sure if its results can make a difference.
- Techs look ready to test, but financials and others could take the upside lead.
New highs again on SP500 and NASDAQ. Much rejoicing. Yea. New highs, but they were the 'barely new' variety with SP500 up 0.11% and NASDAQ +0.19%. A new high is a new high, but some new highs are better than others. None of these from NASDAQ and SP500 have impressed. SP500 gapped higher, rallied nicely, then gave most of it back, showing something of a tombstone doji. NASDAQ gapped, rallied, gave some back as well. Neither move was powerful. Indeed, they were more noteworthy due to their equivocation or lack of conviction.
SP500 3.15, 0.11%
NASDAQ 15.45, 0.19%
DJ30 11.06, 0.04%
SP400 flat
RUTX 0.41%
SOX -0.19%
NASDAQ 100 0.61%
VOLUME: NYSE -3%, NASDAQ -10%. No volume, indeed a significant decline in volume, as the indices pushed to marginal new highs. Not getting any real upside volume, but also not getting any selling volume.
ADVANCE/DECLINE: NYSE +3:2, NASDAQ +3:2.
Not to continue beating the dead horse, but SP500 and NASDAQ are at the prior highs and are not making clear, definitive moves higher. Earnings better than expected helped keep the indices in the game, but they did not explode them over resistance. With GOOG off 90 clicks afterhours on its results, it could be the earnings magic lantern that kept the market bumping the new highs is perhaps a bit low on magic -- near term. Again, thus far no sellers -- at all -- outside that one Wednesday where the indices gapped higher then reversed the move on volume.
Thus, this is more a 'need to take a breather' time versus any kind of reversal. IF, of course, the indices pause and test at all. It would appear they should, but thus far the sellers are not there. Again, GOOG off 85 to 90 clicks afterhours on earnings (almost 7%) may be the catalyst for some bids to be pulled and allow the indices to test and set up for a better run at the highs.
NEWS/ECONOMY
The news and data showed more of the same from the past few weeks: economic data decent to good with little accompanying price appreciation.
Personal spending, March: 0.9% vs 0.8% expected vs 0.1% February. Largest gain since August 2009. Impressive.
Income: 0.1% versus 0.4% expected vs 0.2% February. Wow, quite a miss
Core PCE (inflation indicator): 0.1% vs 0.1% prior. 1.6% year/year, a 12 month low.
Fed chair Powell, unless he is 100% committed to his statements (and it would be GREAT if he was a person who meant what he said; quite rare today), would be worried. I know 99% of the politicians would be worried as they might actually have to act in accordance with their comments.
Powell has stated he would cut rates if the economy were strong and prices were simply showing no increases. By the government's metrics of measurement, inflation is running well below the Fed's so-called target rate.
This is how it should be. Supply side tax cuts, when they are actually supply side tax cuts as the ones that were passed under Trump, result in increased supply and thus no demand bottlenecks or imbalances. Former Dallas Fed governor Bob McTeer bucked the Fed's Phillip's Curve conventional wisdom during his last year on the Fed when he said that prices should indeed fall as supply increased. That is why tax cuts that focus on investment incentives are superior to the demand-centered cuts so often promulgated by politicians who act to get votes versus those who act to do the right thing. Supply side tax incentives have empirical, historically proven data showing they improve the economy and lift all boats. It is a far easier argument, however, to play to the emotions of people wanting to be given something versus wanting to go out and earn it. I would rather start a business, make a bunch of money, be my own boss versus having someone give me a subsistence amount for just sitting on my butt.
Okay, a slight digression, but the reasons for Powell opining about cutting taxes is rooted in the belief that the government should not inhibit growth, particularly when the conditions are set up correctly for growth with low to no inflation. We work so darn hard to get that situation, please don't do anything to louse it up. Thus, I have to like Powell for not wanting to get in the way of prosperity versus Greenspan who was the beneficiary of the Reagan/Clinton years and then started chasing inflation in the shadows and ended up killing the stock rally and the economy.
TRADE: Mnuchin says the negotiations are in the 'final laps,' whatever the hell that means. One would assume that means they are almost complete, but if that was the situation, then why the hell not just say that? Because Mnuchin is engaging in government-speak because the deal could happen or not happen. Final laps. Good grief.
THE MARKET
CHARTS
SOX: I said over the weekend SOX was still the market key. SOX traded slightly off Monday, the lone downside index. Nothing serious at all, just a doji at the 10 day EMA after the Friday selloff found support at the 20 day EMA and bounced. I would suggest SOX is going to test more here before it rallies. The 20 day EMA makes sense but it could slide back and test the prior high around 1480ish (closed at 1544).
NASDAQ: Gapped upside to a new high, rallied a bit more then backed off modestly. Held the move, held the new high, but not putting any real mileage on that high. GOOG won't help Tuesday morning though other names are mostly holding up just fine. AAPL is on tap for Tuesday after the close and just not too sure what AAPL will add to the equation as iPhone sales continue to concern me. In any event, NASDAQ is obviously at an important level, the all time high, and it is not putting a lot of mileage on that. At this point in earnings season it could be that it is time for the test.
SP500: Gapped slightly higher, rallied to 2950ish then faded most of the move. Doji on the candlestick right at the old highs. Plenty of good earnings pushed it higher and there are still solid moves being made in financials that are certainly helping. If tech comes under fire, SP500 may still show some strength . . . BUT I would not be surprised if SP500 tested back as well from the old highs and set up a better run at a breakout.
DJ30: A most modest gain as DJ30 tested the upper gap point from last Thursday, backing off to close. I don't think DJ30 is going to make the run at the prior highs on this particular move unless AAPL totally surprises everyone.
RUTX: Small caps improved for a second session, indeed leading the market higher for a second session. Wow, pushing up against the February intraday high, posting a new recovery high after the selloff into December. About 145 points off the all-time high. Okay, not going to threaten a break to a new high at any moment, but still working on that big 7 month inverted head and shoulders pattern, and that is not one to give up on. It is trying the breakout, and indeed, RUTX may just show the breakout even as the large cap indices test back from their foray at the all-time high level.
SP400: Flat on the session, unable to push the Friday gain. That keeps SP400 in the recent 3 week lateral range formed after breaking higher from the right shoulder to its 6 month inverted head and shoulders pattern. SP400 went ahead and broke higher ahead of RUTX, but it has not really expanded the break, a rather disappointing move post-breakout. Perhaps RUTX can do a better job.
NASDAQ 100: Not bad action, edging higher the past four sessions after breaking out the prior Tuesday. GOOG won't help, but it may not be the catalyst for NASDAQ 100 breaking back down below the breakout. Indeed, a perfect setup for a test of the breakout.
LEADERSHIP
FAANG: Have to lead with GOOG, up 15+ on the session, trading below 1200 after earnings. Several are saying it is a buy here. It likely will be, but perhaps not tomorrow. AAPL is next, out Tuesday after the close. Holding the 10 day EMA in a short 4-session pullback. Set up well but not sure earnings will drive it upside either. FB posted a solid move higher off the Friday doji test of the gap; picked up a new position. AMZN backed off 12 after a good Friday that saw it sell to the 10 day EMA on earnings but rebound sharply. I would not be surprised if it sells back from here or after a nudge up toward 2000-2050. NFLX After the surge Monday and Tuesday last week, NFLX fell back to the range and was there again Monday. Looks promising, but has to show the move.
Software: ADBE's price target was jumped and the stock shot higher but gave back a big part of the move. VMW added a bit more but looks about done on this nice upside leg of the continuing run. CRM is up to the top of the range. If you own it, contemplate selling some calls for a trip back down near 155. HUBS still spurting higher as is NOW. COUP tried to add to the move but closed with a tombstone doji; looks as if it will test the break higher, and frankly, that is the better entry for us. MSFT slid laterally a second session after gapping upside on earnings.
Semiconductors: INTC continued lower, down another 2.5%. LRCX held last week's late week gains. MCHP holding up well. NVDA trying to hold the 50 day MA after the Friday gap to that level. QRVO moved up off its Friday gap lower, but not much. SWKS still setting up decently, SMTC not bad. Somewhat mixed as a group.
Social: Nice move higher after the doji test Friday. TWTR added 2.87% as it rebounded from a 1-2-3 test of the earnings gap and rally; off modestly afterhours on GOOG. SNAP bounced off the 50 day EMA but not a lot of strength.
Manufacturing/Machinery: MMM faded a bit Monday to the earnings selloff low. UTX added ore upside, almost 1%. CAT flat as it tries to hold the initial bounce off the 200 day SMA. DE added more upside in its recovery. Not a bad scenario.
Financial: Excellent action. MS rallied 1.2%. JPM broke higher 1.44%, moving out of a weeklong lateral consolidation. BAC and C showed solid action upside in breakouts. V put in another new high. TCBI broke nicely higher from a 3-day lateral consolidation.
MARKET STATS
DJ30
Stats: +11.06 points (+0.04%) to close at 26554.39
Nasdaq
Stats: +15.46 points (+0.19%) to close at 8161.85
Volume: 1.78B (-10.1%)
Up Volume: 1B (-210M)
Down Volume: 761.25M (+4.2M)
A/D and Hi/Lo: Advancers led 1.55 to 1
Previous Session: Advancers led 2.11 to 1
New Highs: 123 (+14)
New Lows: 29 (-19)
S&P
Stats: +3.15 points (+0.11%) to close at 2943.03
NYSE Volume: 738.651M (-2.91%)
Up Volume: 393.149M (-139.768M)
Down Volume: 333.17M (+118.595M)
A/D and Hi/Lo: Advancers led 1.52 to 1
Previous Session: Advancers led 2.07 to 1
New Highs: 138 (+18)
New Lows: 16 (-13)
SENTIMENT
VIX: 13.11; +0.38
VXN: 16.44; +0.65
VXO: 12.27; +0.06
Put/Call Ratio (CBOE): 0.86; 0.00
Bulls and Bears:
The surprise is that bulls fell instead of rising as the indices continued higher. The bigger surprise is that bears fell a significant amount. Of the two, I would suggest the drop in bears -- very stubborn to fall -- is the bigger news and more an indication of the market turning to the more ebullient side.
At this juncture there are no extremes in this indicator. It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: green (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 53.4 versus 54.8
Bears: 18.4 versus 19.2
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.
OTHER MARKETS
INTEREST RATES
Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread drops 2BP to 8BP
The 2 year versus the 10 year: Spread rises 2BP to 22BP
10 year: 2.529% versus 2.50%
3 month: 2.423% versus 2.429%
2 year: 2.286% versus 2.33%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
EUR/USD: 1.11843 versus 1.11419. Euro making a bounce toward the 10 day EMA after it moved to a lower selloff low last week.
Historical: Breaking below the 1.12 level and that 6-month range formed after the euro sold off from the early 2018 peaks.
USD/JPY: 111.68 versus 111.565. Dollar hugging the 200 day SMA in a tight lateral move.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 63.50, +0.20. Modest bounce after the rougher Friday took oil to the 20 day EMA.
Gold: 1281.50, -7.30. After rallying up to the 20 day EMA Friday, Monday saw gold slump back away from that nearest resistance.
TUESDAY
Not many stocks are up afterhours on their earnings. AKS jumped on results but backed off most of the gain. GOOG down, WDC down, MGM down. It could be the earnings upside impetus has left the market for the moment. That would of course, allow for a test after a 5 week move higher to the highs.
As noted this weekend, not an upside run killer, just a test at a logical level.
Even so, while some test, perhaps money will move elsewhere, e.g. financial stocks. If so, that is great. We will play those areas getting the money upside as well as downside on some prime members of groups that are going to test the recent rally.
Nothing wrong with double dipping in a continuing move higher on the obvious plays, e.g. CMG last week.
Have a great evening!
End part 1
_______________________________________________________
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Market Alert - Pre-Market
Futures vs FV: SP -0.08; DJ -10.33; NASD -4.43
Flattish open after a strong end to last week, somewhat normal but in no way suggesting selling. A soft open after a strong finish remains bullish.
The data helps. Even with a stronger GDP read Friday (3.2%), today the spending and income numbers show prices remain subdued, at least according to the government indicators.
Consumer Income, March: 0.1 vs 0.4% exp vs 0.2% February
Spending, March: 0.9% vs 0.8 exp vs 0.1 Feb. That is the biggest jump since August 2009
PCE Core: 0.1 vs 0.1 prior. 1.6% year/year, lowest since 1/2018.
The pricing remains weaker in the light of stronger growth. The Fed is getting an easier ride and Powell looks quite sensible and smart, even if the President and all his men were hounding him about rates.
Big week of data, some already out as seen. FOMC, ISM, jobs, and lots and lots of earnings with GOOG out after the Monday close.
Upgrades: TGT; AAL; DIS; CL; AAPL
Downgrades: CVS; DB; OXY; AXP
M&A: APC reopening negotiations with OXY. GDI being sold to a unit of IR.
Trade: Mnuchin says the trade talks are in the "final laps." Talking in generalities, just as has been the case
BA: Revealed that BA did not tell LUV and other airlines the safety light that was on prior 737 was not turned on as it was an option. Okay, so there is this safety light that has been on all prior models. It is not that it had a place for it and the light was not there. No, it was there but no one told the pilots it was not activated, was dead. That is a problem. Was it BA, the airlines that bought the plane not telling the pilots, both, others? Not a good scenario. Hello, FAA? Where were you as well?
OTHER MARKETS
Bonds: 2.516% vs 2.50% 10 year
EUR/USD: 1.1151, +0.0003
USD/JPY: 111.73, +0.17
Oil: 63.17, -0.13
Gold: 1285.10, -3.70
Futures are mushy. A mushy Monday morning. Again, after a strong finish to last week, nothing nefarious at all. No news to initiate selling as indeed the market looks to GOOG earnings after the close and AAPL Tuesday after the close. The market is looking to those as further catalysts. Whether they are remains to be seen, but the sellers are not hitting the market in advance.
Still the same issues, e.g. SP500, NASDAQ at resistance, trying to break through, not doing so yet. That is the next 'proof' for the market rally. At some point this rally has to test a bit, and the prior highs are a logical point. We are watching to see what kind of entries we can get in this context. Would love to see that short test but outside of SOX, not occurring just yet.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
Alert Key
http://www.investmenthouse.com/alertkey.htm
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Flattish open after a strong end to last week, somewhat normal but in no way suggesting selling. A soft open after a strong finish remains bullish.
The data helps. Even with a stronger GDP read Friday (3.2%), today the spending and income numbers show prices remain subdued, at least according to the government indicators.
Consumer Income, March: 0.1 vs 0.4% exp vs 0.2% February
Spending, March: 0.9% vs 0.8 exp vs 0.1 Feb. That is the biggest jump since August 2009
PCE Core: 0.1 vs 0.1 prior. 1.6% year/year, lowest since 1/2018.
The pricing remains weaker in the light of stronger growth. The Fed is getting an easier ride and Powell looks quite sensible and smart, even if the President and all his men were hounding him about rates.
Big week of data, some already out as seen. FOMC, ISM, jobs, and lots and lots of earnings with GOOG out after the Monday close.
Upgrades: TGT; AAL; DIS; CL; AAPL
Downgrades: CVS; DB; OXY; AXP
M&A: APC reopening negotiations with OXY. GDI being sold to a unit of IR.
Trade: Mnuchin says the trade talks are in the "final laps." Talking in generalities, just as has been the case
BA: Revealed that BA did not tell LUV and other airlines the safety light that was on prior 737 was not turned on as it was an option. Okay, so there is this safety light that has been on all prior models. It is not that it had a place for it and the light was not there. No, it was there but no one told the pilots it was not activated, was dead. That is a problem. Was it BA, the airlines that bought the plane not telling the pilots, both, others? Not a good scenario. Hello, FAA? Where were you as well?
OTHER MARKETS
Bonds: 2.516% vs 2.50% 10 year
EUR/USD: 1.1151, +0.0003
USD/JPY: 111.73, +0.17
Oil: 63.17, -0.13
Gold: 1285.10, -3.70
Futures are mushy. A mushy Monday morning. Again, after a strong finish to last week, nothing nefarious at all. No news to initiate selling as indeed the market looks to GOOG earnings after the close and AAPL Tuesday after the close. The market is looking to those as further catalysts. Whether they are remains to be seen, but the sellers are not hitting the market in advance.
Still the same issues, e.g. SP500, NASDAQ at resistance, trying to break through, not doing so yet. That is the next 'proof' for the market rally. At some point this rally has to test a bit, and the prior highs are a logical point. We are watching to see what kind of entries we can get in this context. Would love to see that short test but outside of SOX, not occurring just yet.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
Alert Key
http://www.investmenthouse.com/alertkey.htm
PLEASE DO NOT REPLY TO THIS EMAIL. USE THE CONTACT US PAGE ON OUR WEBSITE.
Customer Support: http://investmenthouse.com/contact_us.php
Sunday, April 28, 2019
SOX Remains the Market Key (Weekend Newsletter)
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| Market Summary (continued) You could hear the excitement in the final few seconds of Friday trade. The British CNBC anchor gave the play by play as to whether NASDAQ and SP500 would post new highs. NASDAQ looked to be a done deal but SP500 was going down to the wire. Then, yes, a new NASDAQ AND SP500 high exclaimed the usually reserved Brit. SP500 13.71, 0.47% NASDAQ 27.72, 0.34% DJ30 81.25 0.31% SP400 0.96% RUTX 1.03% SOX -0.83% NASDAQ 100 0.12% VOLUME: NYSE -4%, NASDAQ -4%. Volume remained well below average as SP500 and NASDAQ pushed at new highs. Just not a lot of volume as NASDAQ and SP500 attempt new highs, and that is typically an indication the move will at least have a harder time making it happen. ADVANCE/DECLINE: NYSE 2.1:1, NASDAQ 2.1:1. Not bad breadth, but that was thanks to the small and midcaps coming back around after a weak Thursday. Perhaps with the GDP they will try to exert some leadership in the coming week as well. Yes, new highs for certain. By a fraction. Actually, SP500 failed to take out the all-time high just a point or so higher though it was a new closing high. NASDAQ put in a new closing high and topped the prior intraday highs from 2018, though it closed below Thursday's high hit on that day's opening gap higher. Read "The Daily" Entire Weekend Summary Watch Market Overview Video Watch Technical Summary Video Watch Next Session Video
Another upside week, now five weeks on this rally leg as SP500 and NASDAQ bump highs. Time to take some upside gain and we also played some downside. CMG (Chipotle Mexican Grill Inc.) Company Profile Entered a downside position Wednesday right before the close with May $705.00 put options at $28.30. Of course CMG announced decent results but after such a run higher it was primed to give some back. CMG sold down to the 50 day MA's on the Thursday open and we sold the options for $44.70, banking almost 58% within about a half hour in the market. STLD (Steel Dynamics, Inc.) Company Profile Another downside play, this one showing a negative pattern versus just being overbought as with CMG. STLD broke lower then failed to get back over the 50 day MA on the rebound to test. We entered the position with some May $35.00 put options at $2.10. STLD bounced up and down but kept trending lower below the 10 day EMA, then last week selling harder. Touched the target Thursday and we sold the options for $3.25, banking 54%. Lots of upside as well. FB (Facebook, Inc.) Company Profile Of course with the earnings announcement and gap higher the option volatility was pumped a bit. We had positions entered March 5 and April 9. Solid moves into earnings then the big gap. We banked our June options with 140%ish gains on each. GOOG (Alphabet, Inc.) Company Profile Jumped on the FB earnings excitement and we banked part of the option gain on the $1198 and $1172 positions entered 3/19 and 3/11, respectively. Nice 90% and 50% gains. LRCX (Lam Research Corporation) Company Profile Nice gap higher Thursday and we used that to bank half the 12+% stock and 145% option gain. ODFL (Old Dominion Freight Line, Inc.) Company Profile Entered 4/1 with some July $150.00 calls for $8.75 and stock at $149.15. ODFL, a trucking company, put in a steady haul from entry to last Thursday. It gapped higher and rallied Thursday, hit our target, and we sold the stock for $158.49 (6.2%) and the options for $14.00 (60%). Receive a 2 week trial and if you stay on receive a $30 per month discount! | ||
| 2) STOCK SPLIT REPORT Here's a leader play and our current analysis.
Company Profile EARNINGS: 06/10/2019 STATUS: COUP is in the process of a breakout from a 3 month flat base formed the past 8 weeks along the 50 day MA. COUP made us money in its runs up to this base, and it did a particularly good job of holding up during the 3 month software stock consolidation of those prior 2018 gains. After a last test of the 50 day MA last week, COUP rallied and Friday showed a breakout on strong volume. It may want to come back and test a bit to start the week, often the case after a strong move through the close of a week. If so, we look to pick it up off a test that likely holds around 100. All the better if it does, but if not, if it continues higher from Friday, we want to go ahead and start some positions. A move to the initial target gains 11+% on the stock, 75%ish on the options. CHART VIDEO Volume: 1.794M Avg Volume: 1.638M BUY POINT: $102.12 Volume=1.5M Target=$114.04 Stop=$98.11 POSITION: COUP JUN 21 2018 100.00C - (60 delta) &/or Stock Learn more about our Stock Split Report and how we have made gains of 321% with our powerful stock split plays! Save $360 per year on the Stock Split Report! Plus 2 week trial! | ||
DNKN (Dunkin Brands--$75.40; +0.71; optionable) Company Profile EARNINGS: 05/02/2019 before the open STATUS: DNKN is kind of toppy of late, having rallied to the August/September 2018 highs and showing a short head and shoulders topping action the past 5 weeks. Earnings are not far off and with this pattern DNKN is setting itself up for a test to the downside if earnings are not solid, or frankly even if they are. Thus, we are looking to move into some put options ahead of the earnings results to play a move toward the 200 day SMA. That move gains 55%ish on the put options. CHART VIDEO Volume: 407.49K Avg Volume: 576.16K BUY POINT: $74.77 Volume=650K Target=$71.71 Stop=$75.77 POSITION: DNKN JUN 21 2018 75.00 P - (-49 delta) Save $600 per year and enjoy a 2 week trial of our IH Alerts Service! | ||
|
--by the MarketFN STG Team FB (Facebook Inc.) Company Profile Our Success Trading Group members scored two winning trades this week including a position on Facebook Inc. (Ticker: FB). We are watching some of our other favorite stocks for possible trades next week. Our Success Trading Group closed 7 years with 0 losses on our Main Trade Table. In fact, we closed 100% winning trades for the calendar years 2016, 2015, 2013, 2012, 2011, 2010 and 2009 (we still have 1 open position from 2017 (all others were winners) and 1 trade that we opened in 2014 was closed as a losing trade). All of these trades are posted on our Main Trade Table for your review during your free membership trial period. Get Our Next Trade Free - Save $50 per month! Details Here. | ||
|
MRVL - Marvell Technology Group Ltd. is currently trading at $25.06. The June $25.00 Calls (MRVL20190622C00025000) are trading at $1.79. That provides a return of about 8% if MRVL is above $25.00 on expiration Friday in June. Company Profile Learn more about our Covered Call Tables | ||
Stock Split Report: Forbes.com Best of the Web Covered Calls: Allowed in your IRA - Energize your portfolio! The Daily: "The Daily" is a must read for all investors! Success Trading Group: 7 years without a trading loss! | ||
| The foregoing is commentary for informational purposes only. All statements and expressions are the opinions of Online Investment Services, LP., or Split Ventures, Ltd. This information is not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on the related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolios of writers for this issue may, in some instances, include securities mentioned herein and on the related web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. No one associated herewith receives compensation in any manner from any of the companies that are discussed in this newsletter or on the related websites. This email was sent to tweet@investbilling.com. | ||
|
The Daily, Part 1 of 3, 4-27-19
* * * *
4/27/2019 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: AMZN
Entry alerts: LSCC; TWTR
Trailing stops: ARQL; AVGO; FB; QRVO; TSM
Stop alerts: CRZO; STX; WDC
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
https://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
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.
MARKET SUMMARY
- SP500, NASDAQ start breaking to new highs, but despite the excitement on the Friday close, the breaks higher are still nominal and on no volume.
- Lots of earnings, lots of movement, little upside advancement by the major indices.
- SOX remains the market key, and it shows some cracks.
- GDP Q1 surprises big upside. Sure it can be explained away, but with lower prices and inflation, Powell's comments about cutting rates could be put to the test.
- Huge week of data, FOMC decisions, and more and more big name earnings.
- Struggle at the old highs after 5 weeks upside and lots of better than expected earnings suggests the market may be a bit winded near term.
You could hear the excitement in the final few seconds of Friday trade. The British CNBC anchor gave the play by play as to whether NASDAQ and SP500 would post new highs. NASDAQ looked to be a done deal but SP500 was going down to the wire. Then, yes, a new NASDAQ AND SP500 high exclaimed the usually reserved Brit.
SP500 13.71, 0.47%
NASDAQ 27.72, 0.34%
DJ30 81.25 0.31%
SP400 0.96%
RUTX 1.03%
SOX -0.83%
NASDAQ 100 0.12%
VOLUME: NYSE -4%, NASDAQ -4%. Volume remained well below average as SP500 and NASDAQ pushed at new highs. Just not a lot of volume as NASDAQ and SP500 attempt new highs, and that is typically an indication the move will at least have a harder time making it happen.
ADVANCE/DECLINE: NYSE 2.1:1, NASDAQ 2.1:1. Not bad breadth, but that was thanks to the small and midcaps coming back around after a weak Thursday. Perhaps with the GDP they will try to exert some leadership in the coming week as well.
Yes, new highs for certain. By a fraction. Actually, SP500 failed to take out the all-time high just a point or so higher though it was a new closing high. NASDAQ put in a new closing high and topped the prior intraday highs from 2018, though it closed below Thursday's high hit on that day's opening gap higher.
NASDAQ 100 showed the same action as NASDAQ, a new closing high but below the Thursday intraday high. SOX gapped lower gratis INTC's guidance, and though it put in an admirable recovery, it still closed below the prior week's upside gap point. Even so, SOX and NASDAQ 100 cleared the path for the other indices to hit new highs.
DJ30 dutifully followed though it is still well off the old highs thanks to a series of setbacks starting with BA and most recently INTC on Friday. In between it dealt with MMM, IBM, CAT, WBA, XOM, CVX, DOW -- all of these have recently caused DJ30 to stumble despite solid results from other components. Thank goodness for CSCO, MSFT, AXP, JPM (hard to believe), UTX, DIS, V.
SP400 midcaps and RUTX small caps put in solid Friday performances, leading the indices, no doubt in response to the 3.2% Q1 GDP growth rate. Still, they are back and forth on a daily basis, hanging in but not doing much more. That said, this kind of action is base-building, and both continue working on their large inverted head and shoulders patterns, very bullish bases. Lagging yes, but lagging with a purpose? Could be.
SOX remains the key to the rally, lagging Friday but making a very game showing of coming back. Prior to Friday, SOX posted the first new high and then a lot more after that breakout. But now, some stumbles, perhaps a victim of its own success and needing a pullback, perhaps also a victim of expectations out in front of reality as INTC's guidance indicated. SOX is so important to the market: the market could not hold together a sustained move until SOX took the lead in January. Even then it was problematic overall until SOX broke out.
But even then, even now with SOX testing after a breakout and rally lasting four weeks, the other indices are struggling to get through resistance, and those that are cannot really drive through it a la SOX. As noted, so much excitement on the Friday close (okay, in a British way), but it was for MARGINALLY higher closes. With SP500 +0.47% and NASDAQ +0.34%, these were not explosive moves. With marginal new highs they were not clear new moves.
Indeed, with SOX in a test and SP500 and NASDAQ sitting on the top of 5 week moves and still at key resistance, the new high euphoria Friday may need a bit of a pause. The market makers purposefully rallied the indices to those highs at the close. Buy on Monday, sell on Friday, right?
More than just a Friday surge, those 5 upside weeks have two key indices at resistance. Lots of positive earnings reports have helped get them there. Yes, there are other big names to announce this next week, starting with GOOG Monday after the close and AAPL Tuesday after the close. Perhaps they will drive NASDAQ and SP500 sharply higher through resistance. Perhaps, but as noted before, at some point earnings news and moves reach a saturation point in each season. With all the surprisingly strong results thus far (e.g. AMZN's impressive beat, F, MAT, SBUX, etc.), the indices for the most part have not made breakouts.
I am not saying a rollover is imminent. Nope. Just that near term -- near term -- things are perhaps a bit overdone in terms of the move (5 weeks on this leg), sentiment (new high watches every session), economics (GDP just hit 3.2%), and the Fed (with stronger GDP will Powell REALLY still say he would cut rates if inflation remained low? Would he leave them as is or perhaps start wondering about resuming hikes?). It seems realistic to consider the indices may need to test relatively near term in order to better set up the next leg higher.
That is not a bearish position, it is just acknowledging the run to this point and that the indices, after all the good news and good moves, are still struggling at resistance. Some retracing and resetting would not be signs the market is in trouble. SOX needs to be watched as it will forecast the rest of the market down the road, but as of Friday, there was nothing overtly negative or worrisome in the larger picture.
LEADERSHIP
FAANG: A solid week overall. AMZN earnings Thursday night pushed it to a higher recovery high after a sluggish start. FB gapped upside Thursday on earnings, off some Friday, testing the upside gap. NFLX surged early week, tested, started to bounce again Friday. GOOG up early week then Friday after a 2-day lateral move. Earnings Monday, up 5 weeks into the results and at the mid-2018 all-time highs. You make the call on the direction Tuesday post-earnings. AAPL faded modestly to end the week ahead of the Tuesday earnings.
Software: Came to life upside for some key members. NOW gapped upside Thursday. WDAY broke to a new high Friday. HUBS is on a 4-day rally after coming off the bottom of its range. VMW up nicely on the week. ZS looks really good. COUP broke to a higher high Friday. Game stocks TTWO, ATVI showing some life.
Semiconductors: INTC bombed lower on weak guidance. NVDA struggled in sympathy, but held the 50 day SMA and bounced to a doji with tail. AMD, MU struggled. MCHP opened lower, rebounded nicely. XLNX continued its struggles after the Wednesday gap lower through the 50 day MA's. SWKS sold but looks as if it could set up again. QRVO gapped lower Friday to test the 50 day MA. On the other hand, LRCX gapped upside Thursday and continued Friday. A good group still, but getting a bit volatile with regard to some of its big leaders.
Social: FB gapped upside on earnings. TWTR gapped and tested and we moved in on the test. SNAP dropped on results, but managed to hold the 50 day EMA as of Friday.
Manufacturing/Machinery: MMM bombed on earnings. UTX remains solid near the 2018 highs. ETN, EMR decent but slowly trending. CAT trying to come off the 200 day MA after dropping there on earnings. DE fell to the 50 day MA and is trying a bounce. CMI broke below the 20 day EMA Thursday and we closed it. Still decent, but experiencing very recent issues.
Financial: Still quite solid. MS moved up Friday and we picked up a position Thursday. BAC broke over the 2 week range Friday. C started higher off a weeklong test to the 10 day EMA. JPM not bad, trying higher after a test. TCBI a decent move on the week. V broke to a new high Friday. Man, it just keeps moving higher.
MARKET STATS
DJ30
Stats: +81.25 points (+0.31%) to close at 26543.33
Nasdaq
Stats: +27.72 points (+0.34%) to close at 8146.40
Volume: 1.98B (-4.35%)
Up Volume: 1.21B (+386.58M)
Down Volume: 757.05M (-462.95M)
A/D and Hi/Lo: Advancers led 2.11 to 1
Previous Session: Decliners led 1.47 to 1
New Highs: 109 (+31)
New Lows: 48 (-11)
S&P
Stats: +13.71 points (+0.47%) to close at 2939.88
NYSE Volume: 760.816M (-3.64%)
Up Volume: 532.917M (+265.653M)
Down Volume: 214.575M (-302.033M)
A/D and Hi/Lo: Advancers led 2.07 to 1
Previous Session: Decliners led 1.79 to 1
New Highs: 120 (+51)
New Lows: 29 (-13)
SENTIMENT
VIX: 12.73; -0.52
VXN: 15.79; -0.70
VXO: 12.21; -0.62
Put/Call Ratio (CBOE): 0.86; +0.01
Bulls and Bears:
The surprise is that bulls fell instead of rising as the indices continued higher. The bigger surprise is that bears fell a significant amount. Of the two, I would suggest the drop in bears -- very stubborn to fall -- is the bigger news and more an indication of the market turning to the more ebullient side.
At this juncture there are no extremes in this indicator. It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: green (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 53.4 versus 54.8
Bears: 18.4 versus 19.2
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.
OTHER MARKETS
INTEREST RATES
Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread drops 2BP to 8BP
The 2 year versus the 10 year: Spread rises 2BP to 22BP
10 year: 2.50% versus 2.536%
3 month: 2.423% versus 2.429%
2 year: 2.286% versus 2.33%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
EUR/USD: 1.11419 versus 1.11350. Euro rebounds ever so modestly after a dump lower early week.
Historical: Breaking below the 1.12 level and that 6-month range formed after the euro sold off from the early 2018 peaks.
USD/JPY: 111.565 versus 111.547. Dollar weakened late week but managed to hold the 50 day MA in its 8 week lateral range. Perhaps just a shakeout before breaking higher. Perhaps.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 63.30, -1.91. Weak Friday and started weakening midweek after a higher recovery high. Gave up the Monday breakout move.
Gold: 1288.80, +9.10. Sold to the upper trendline of its large triangle, held for a week, then bounced nicely Friday. Not buying the economic data?
MONDAY
Huge week of data. Personal income, Spending, and PCE Monday. Tuesday Chicago PMI, Consumer Confidence. Wednesday ADP, FOMC rate decision, ISM. Thursday productivity, factory orders. Friday the Jobs Report.
Earnings. More earnings. GOOG Monday after the close AAPL Tuesday after the close along with MA, MCD, GM, TWLO, AMD and about a billion others. Heavy earnings week.
Lots of data, 5 weeks upside, lots of earnings on top of lots of earnings. Nominal at best breaks to new highs by SP500, NASDAQ while SOX is showing some signs of wear after a long rally and breakout to a new high.
Yes, I am focusing on the probabilities of significant more upside from here without a test being lower. GOOG and AAPL can drive a further move and can certainly drive themselves higher, but even GOOG is sitting on a substantial upside leg of over 100 points since its last test of note. That is pretty much the definition of building in the good news ahead of results.
Thus, we added some downside plays to the report last week in the event of some rotation rollovers or the market overall gets a bit winded and needs to drop a bit.
Even so, there are still many, many solid patterns in many sectors. To ignore those is to ignore the continued upside bias and falling forward posture of the market.
Therefore, we will still have new upside plays for this week; just too many good setups not to. Moreover, even if the leaders of the rally need to rest and test, this move has shown rotation to new areas that then rally as the leaders take deserved break. Not to acknowledge that ignores the ongoing theme in the market, i.e. money moving to new areas and driving them higher, maintaining the upside bias.
Accordingly, some more upside plays in some new and even recycled areas that have now had some rest. A few downside remain on the report as well because as we saw with CMG, the gains can be quite satisfying and come in very quickly.
Have a great weekend!
End part 1
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4/27/2019 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: AMZN
Entry alerts: LSCC; TWTR
Trailing stops: ARQL; AVGO; FB; QRVO; TSM
Stop alerts: CRZO; STX; WDC
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
https://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/ts/ts.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
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.
MARKET SUMMARY
- SP500, NASDAQ start breaking to new highs, but despite the excitement on the Friday close, the breaks higher are still nominal and on no volume.
- Lots of earnings, lots of movement, little upside advancement by the major indices.
- SOX remains the market key, and it shows some cracks.
- GDP Q1 surprises big upside. Sure it can be explained away, but with lower prices and inflation, Powell's comments about cutting rates could be put to the test.
- Huge week of data, FOMC decisions, and more and more big name earnings.
- Struggle at the old highs after 5 weeks upside and lots of better than expected earnings suggests the market may be a bit winded near term.
You could hear the excitement in the final few seconds of Friday trade. The British CNBC anchor gave the play by play as to whether NASDAQ and SP500 would post new highs. NASDAQ looked to be a done deal but SP500 was going down to the wire. Then, yes, a new NASDAQ AND SP500 high exclaimed the usually reserved Brit.
SP500 13.71, 0.47%
NASDAQ 27.72, 0.34%
DJ30 81.25 0.31%
SP400 0.96%
RUTX 1.03%
SOX -0.83%
NASDAQ 100 0.12%
VOLUME: NYSE -4%, NASDAQ -4%. Volume remained well below average as SP500 and NASDAQ pushed at new highs. Just not a lot of volume as NASDAQ and SP500 attempt new highs, and that is typically an indication the move will at least have a harder time making it happen.
ADVANCE/DECLINE: NYSE 2.1:1, NASDAQ 2.1:1. Not bad breadth, but that was thanks to the small and midcaps coming back around after a weak Thursday. Perhaps with the GDP they will try to exert some leadership in the coming week as well.
Yes, new highs for certain. By a fraction. Actually, SP500 failed to take out the all-time high just a point or so higher though it was a new closing high. NASDAQ put in a new closing high and topped the prior intraday highs from 2018, though it closed below Thursday's high hit on that day's opening gap higher.
NASDAQ 100 showed the same action as NASDAQ, a new closing high but below the Thursday intraday high. SOX gapped lower gratis INTC's guidance, and though it put in an admirable recovery, it still closed below the prior week's upside gap point. Even so, SOX and NASDAQ 100 cleared the path for the other indices to hit new highs.
DJ30 dutifully followed though it is still well off the old highs thanks to a series of setbacks starting with BA and most recently INTC on Friday. In between it dealt with MMM, IBM, CAT, WBA, XOM, CVX, DOW -- all of these have recently caused DJ30 to stumble despite solid results from other components. Thank goodness for CSCO, MSFT, AXP, JPM (hard to believe), UTX, DIS, V.
SP400 midcaps and RUTX small caps put in solid Friday performances, leading the indices, no doubt in response to the 3.2% Q1 GDP growth rate. Still, they are back and forth on a daily basis, hanging in but not doing much more. That said, this kind of action is base-building, and both continue working on their large inverted head and shoulders patterns, very bullish bases. Lagging yes, but lagging with a purpose? Could be.
SOX remains the key to the rally, lagging Friday but making a very game showing of coming back. Prior to Friday, SOX posted the first new high and then a lot more after that breakout. But now, some stumbles, perhaps a victim of its own success and needing a pullback, perhaps also a victim of expectations out in front of reality as INTC's guidance indicated. SOX is so important to the market: the market could not hold together a sustained move until SOX took the lead in January. Even then it was problematic overall until SOX broke out.
But even then, even now with SOX testing after a breakout and rally lasting four weeks, the other indices are struggling to get through resistance, and those that are cannot really drive through it a la SOX. As noted, so much excitement on the Friday close (okay, in a British way), but it was for MARGINALLY higher closes. With SP500 +0.47% and NASDAQ +0.34%, these were not explosive moves. With marginal new highs they were not clear new moves.
Indeed, with SOX in a test and SP500 and NASDAQ sitting on the top of 5 week moves and still at key resistance, the new high euphoria Friday may need a bit of a pause. The market makers purposefully rallied the indices to those highs at the close. Buy on Monday, sell on Friday, right?
More than just a Friday surge, those 5 upside weeks have two key indices at resistance. Lots of positive earnings reports have helped get them there. Yes, there are other big names to announce this next week, starting with GOOG Monday after the close and AAPL Tuesday after the close. Perhaps they will drive NASDAQ and SP500 sharply higher through resistance. Perhaps, but as noted before, at some point earnings news and moves reach a saturation point in each season. With all the surprisingly strong results thus far (e.g. AMZN's impressive beat, F, MAT, SBUX, etc.), the indices for the most part have not made breakouts.
I am not saying a rollover is imminent. Nope. Just that near term -- near term -- things are perhaps a bit overdone in terms of the move (5 weeks on this leg), sentiment (new high watches every session), economics (GDP just hit 3.2%), and the Fed (with stronger GDP will Powell REALLY still say he would cut rates if inflation remained low? Would he leave them as is or perhaps start wondering about resuming hikes?). It seems realistic to consider the indices may need to test relatively near term in order to better set up the next leg higher.
That is not a bearish position, it is just acknowledging the run to this point and that the indices, after all the good news and good moves, are still struggling at resistance. Some retracing and resetting would not be signs the market is in trouble. SOX needs to be watched as it will forecast the rest of the market down the road, but as of Friday, there was nothing overtly negative or worrisome in the larger picture.
LEADERSHIP
FAANG: A solid week overall. AMZN earnings Thursday night pushed it to a higher recovery high after a sluggish start. FB gapped upside Thursday on earnings, off some Friday, testing the upside gap. NFLX surged early week, tested, started to bounce again Friday. GOOG up early week then Friday after a 2-day lateral move. Earnings Monday, up 5 weeks into the results and at the mid-2018 all-time highs. You make the call on the direction Tuesday post-earnings. AAPL faded modestly to end the week ahead of the Tuesday earnings.
Software: Came to life upside for some key members. NOW gapped upside Thursday. WDAY broke to a new high Friday. HUBS is on a 4-day rally after coming off the bottom of its range. VMW up nicely on the week. ZS looks really good. COUP broke to a higher high Friday. Game stocks TTWO, ATVI showing some life.
Semiconductors: INTC bombed lower on weak guidance. NVDA struggled in sympathy, but held the 50 day SMA and bounced to a doji with tail. AMD, MU struggled. MCHP opened lower, rebounded nicely. XLNX continued its struggles after the Wednesday gap lower through the 50 day MA's. SWKS sold but looks as if it could set up again. QRVO gapped lower Friday to test the 50 day MA. On the other hand, LRCX gapped upside Thursday and continued Friday. A good group still, but getting a bit volatile with regard to some of its big leaders.
Social: FB gapped upside on earnings. TWTR gapped and tested and we moved in on the test. SNAP dropped on results, but managed to hold the 50 day EMA as of Friday.
Manufacturing/Machinery: MMM bombed on earnings. UTX remains solid near the 2018 highs. ETN, EMR decent but slowly trending. CAT trying to come off the 200 day MA after dropping there on earnings. DE fell to the 50 day MA and is trying a bounce. CMI broke below the 20 day EMA Thursday and we closed it. Still decent, but experiencing very recent issues.
Financial: Still quite solid. MS moved up Friday and we picked up a position Thursday. BAC broke over the 2 week range Friday. C started higher off a weeklong test to the 10 day EMA. JPM not bad, trying higher after a test. TCBI a decent move on the week. V broke to a new high Friday. Man, it just keeps moving higher.
MARKET STATS
DJ30
Stats: +81.25 points (+0.31%) to close at 26543.33
Nasdaq
Stats: +27.72 points (+0.34%) to close at 8146.40
Volume: 1.98B (-4.35%)
Up Volume: 1.21B (+386.58M)
Down Volume: 757.05M (-462.95M)
A/D and Hi/Lo: Advancers led 2.11 to 1
Previous Session: Decliners led 1.47 to 1
New Highs: 109 (+31)
New Lows: 48 (-11)
S&P
Stats: +13.71 points (+0.47%) to close at 2939.88
NYSE Volume: 760.816M (-3.64%)
Up Volume: 532.917M (+265.653M)
Down Volume: 214.575M (-302.033M)
A/D and Hi/Lo: Advancers led 2.07 to 1
Previous Session: Decliners led 1.79 to 1
New Highs: 120 (+51)
New Lows: 29 (-13)
SENTIMENT
VIX: 12.73; -0.52
VXN: 15.79; -0.70
VXO: 12.21; -0.62
Put/Call Ratio (CBOE): 0.86; +0.01
Bulls and Bears:
The surprise is that bulls fell instead of rising as the indices continued higher. The bigger surprise is that bears fell a significant amount. Of the two, I would suggest the drop in bears -- very stubborn to fall -- is the bigger news and more an indication of the market turning to the more ebullient side.
At this juncture there are no extremes in this indicator. It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: green (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 53.4 versus 54.8
Bears: 18.4 versus 19.2
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.
OTHER MARKETS
INTEREST RATES
Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread drops 2BP to 8BP
The 2 year versus the 10 year: Spread rises 2BP to 22BP
10 year: 2.50% versus 2.536%
3 month: 2.423% versus 2.429%
2 year: 2.286% versus 2.33%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
EUR/USD: 1.11419 versus 1.11350. Euro rebounds ever so modestly after a dump lower early week.
Historical: Breaking below the 1.12 level and that 6-month range formed after the euro sold off from the early 2018 peaks.
USD/JPY: 111.565 versus 111.547. Dollar weakened late week but managed to hold the 50 day MA in its 8 week lateral range. Perhaps just a shakeout before breaking higher. Perhaps.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 63.30, -1.91. Weak Friday and started weakening midweek after a higher recovery high. Gave up the Monday breakout move.
Gold: 1288.80, +9.10. Sold to the upper trendline of its large triangle, held for a week, then bounced nicely Friday. Not buying the economic data?
MONDAY
Huge week of data. Personal income, Spending, and PCE Monday. Tuesday Chicago PMI, Consumer Confidence. Wednesday ADP, FOMC rate decision, ISM. Thursday productivity, factory orders. Friday the Jobs Report.
Earnings. More earnings. GOOG Monday after the close AAPL Tuesday after the close along with MA, MCD, GM, TWLO, AMD and about a billion others. Heavy earnings week.
Lots of data, 5 weeks upside, lots of earnings on top of lots of earnings. Nominal at best breaks to new highs by SP500, NASDAQ while SOX is showing some signs of wear after a long rally and breakout to a new high.
Yes, I am focusing on the probabilities of significant more upside from here without a test being lower. GOOG and AAPL can drive a further move and can certainly drive themselves higher, but even GOOG is sitting on a substantial upside leg of over 100 points since its last test of note. That is pretty much the definition of building in the good news ahead of results.
Thus, we added some downside plays to the report last week in the event of some rotation rollovers or the market overall gets a bit winded and needs to drop a bit.
Even so, there are still many, many solid patterns in many sectors. To ignore those is to ignore the continued upside bias and falling forward posture of the market.
Therefore, we will still have new upside plays for this week; just too many good setups not to. Moreover, even if the leaders of the rally need to rest and test, this move has shown rotation to new areas that then rally as the leaders take deserved break. Not to acknowledge that ignores the ongoing theme in the market, i.e. money moving to new areas and driving them higher, maintaining the upside bias.
Accordingly, some more upside plays in some new and even recycled areas that have now had some rest. A few downside remain on the report as well because as we saw with CMG, the gains can be quite satisfying and come in very quickly.
Have a great weekend!
End part 1
_______________________________________________________
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Friday, April 26, 2019
Market Alert - Pre-Market
Futures vs FV: SP +1.23; DJ +7.08; NASD +7.42
Futures picked up steam around 8:00ET and continue moving higher, overcoming a much stronger than expected GDP report along the way.
GDP Q1, prelim: 3.2% vs 1.9% exp vs 2.2% Q4
Consumption: +1.2%
PCE: 1.3% vs 1.8% prior
Prices: 0.9% vs 1.7% prior.
IP investment surges.
The usual commentary: will be revised lower, not sustainable, etc.
Also, the Fed is now in a box. Really? Growth with no inflation -- at least as the government measures it -- that is a very good box to be in. This notion you have to raise rates because of growth and inflation that MAY show up some day is the same one that the 1929 central bank used to crash the market and help precipitate the Great Depression. Idiocy, but it is hard to argue with history of the central bank. Powell is trying to change that by being a bit more proactive and ahead of the curve, but those rate hikes are still out there doing their damage. If this was a true 3.2% with those hikes there, it could have been 4+%.
Bonds and dollar: Weirdly, bond yields dropped as did the dollar on the stronger GDP number. Not believing it?
Earnings beats: AAL (BL); AMZN; F; INTC (weak guidance); MAT; SBUX
Misses: CVX (TL); XOM (TL, BL)
Downgrades: FDX; QRVO; WDC
China: Xi says he is committed to change, e.g. subsidies, IP rights. A subtle indication on the trade 'deal.' Remember, a delegation of 'top' US negotiators is on the way to China . . .
F: good earnings but the feds are opening a probe into whether it was involved in emissions tinkering.
OTHER MAREKTS
Bonds: 2.50% vs 2.536%
EUR/USD: 1.115, +0.002
USD/JPY: 111.64, +0.02
Oil: 64.03, -1.18
Gold: 1285.00, +5.30
Futures are flat but that is not bad given the INTC guidance that is hammering some of the chip sector. Overall tech is working well this morning despite flat to lower futures as a result of INTC and its coattails.
Impressive strength, but STILL have to get through the resistance and make it stick. NASDAQ has tried but just can't quite get there. It is really showing resilience, however, in the face of some negative -- but also positive -- earnings results. It needs more than just playing footsie with the old highs.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
Alert Key
http://www.investmenthouse.com/alertkey.htm
PLEASE DO NOT REPLY TO THIS EMAIL. USE THE CONTACT US PAGE ON OUR WEBSITE.
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Futures picked up steam around 8:00ET and continue moving higher, overcoming a much stronger than expected GDP report along the way.
GDP Q1, prelim: 3.2% vs 1.9% exp vs 2.2% Q4
Consumption: +1.2%
PCE: 1.3% vs 1.8% prior
Prices: 0.9% vs 1.7% prior.
IP investment surges.
The usual commentary: will be revised lower, not sustainable, etc.
Also, the Fed is now in a box. Really? Growth with no inflation -- at least as the government measures it -- that is a very good box to be in. This notion you have to raise rates because of growth and inflation that MAY show up some day is the same one that the 1929 central bank used to crash the market and help precipitate the Great Depression. Idiocy, but it is hard to argue with history of the central bank. Powell is trying to change that by being a bit more proactive and ahead of the curve, but those rate hikes are still out there doing their damage. If this was a true 3.2% with those hikes there, it could have been 4+%.
Bonds and dollar: Weirdly, bond yields dropped as did the dollar on the stronger GDP number. Not believing it?
Earnings beats: AAL (BL); AMZN; F; INTC (weak guidance); MAT; SBUX
Misses: CVX (TL); XOM (TL, BL)
Downgrades: FDX; QRVO; WDC
China: Xi says he is committed to change, e.g. subsidies, IP rights. A subtle indication on the trade 'deal.' Remember, a delegation of 'top' US negotiators is on the way to China . . .
F: good earnings but the feds are opening a probe into whether it was involved in emissions tinkering.
OTHER MAREKTS
Bonds: 2.50% vs 2.536%
EUR/USD: 1.115, +0.002
USD/JPY: 111.64, +0.02
Oil: 64.03, -1.18
Gold: 1285.00, +5.30
Futures are flat but that is not bad given the INTC guidance that is hammering some of the chip sector. Overall tech is working well this morning despite flat to lower futures as a result of INTC and its coattails.
Impressive strength, but STILL have to get through the resistance and make it stick. NASDAQ has tried but just can't quite get there. It is really showing resilience, however, in the face of some negative -- but also positive -- earnings results. It needs more than just playing footsie with the old highs.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
Alert Key
http://www.investmenthouse.com/alertkey.htm
PLEASE DO NOT REPLY TO THIS EMAIL. USE THE CONTACT US PAGE ON OUR WEBSITE.
Customer Support: http://investmenthouse.com/contact_us.php
Thursday, April 25, 2019
The Daily, Part 1 of 2, 4-25-19
* * * *
4/25/2019 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: AMZN; CMG; FB; GOOG; LRCX; ODFL; STLD
Entry alerts: ZS
Trailing stops: CMI; SWKS
Stop alerts: FDX
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
https://www.investmenthouse.com/alertdaily.html
********************************************************************
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.
MARKET SUMMARY
- FB, MSFT earnings push the indices higher, but holding the move proves difficult.
- Indices again struggle at or near the old highs.
- Earnings 1/4 over, and despite some impressive big name beats, overall they are negative.
- AMZN earnings afterhours sport a massive bottom line beat, but the stock is virtually flat.
- The longer a breakout over the old highs remains elusive, the more likely it doesn't happen this time. But, GOOG is still to come next week . . .
Lots of earnings fanfare from FB and MSFT and both of those stocks gapped upside, leading an early market surge. MMM on the other side of the ledger gapped sharply lower on an impressively bad miss. UPS and NOK were notably poor performers as well, and CMG's early plunge to the 50 day EMA gave us close to 60% gain in a very fast downside earnings play.
Yes, there was the good, the bad, and the ugly. All in one session.
What was certain to be a breakout session for the indices was not so grand. Not terrible, but not up to many expectations in the aftermath of FB and MSFT earnings. There were gaps higher, but most faded at least part of that move. The result was at best a mixed session, more indices ending negative versus positive.
SP500 -1.08, -0.04%
NASDAQ 16.67, 0.21%
DJ30 -134.97, -0.51%
SP400 -1.14%
RUTX -0.79%
SOX -1.81%
NASDAQ 100 0.42%
VOLUME: NYSE -2%, NASDAQ -2%. Lower volume, still below average, no churning, no buying. Nothing seriously negative.
ADVANCE/DECLINE: NYSE -1.8:1, NASDAQ -1.5:1. Lagging small and midcaps.
It was not a bad session. Do not get me wrong. It just was not up to the possibilities.
And . . . not up to any new index breakouts.
To view, click on the following links:
http://investmenthouse1.com/ihmedia/f/charts/sp500.jpg
http://investmenthouse1.com/ihmedia/f/charts/NASDAQ.jpg
http://investmenthouse1.com/ihmedia/f/charts/DJ30.jpg
http://investmenthouse1.com/ihmedia/f/charts/RUTX.jpg
http://investmenthouse1.com/ihmedia/f/charts/SP400.jpg
http://investmenthouse1.com/ihmedia/f/charts/SOX.jpg
http://investmenthouse1.com/ihmedia/f/charts/nasdaq100.jpg
Earnings season is about a quarter over. The fear was this season would reveal a serious economic slowdown. First blush from some big names is that those fears were overblown. Thus, some great moves from some big names. But, the overall market is not making serious headway against the prior highs. Good news, some movement, but nothing definitive to the upside.
This morning CNBC reported that one-quarter through the season bottom line earnings are running -1.1% year/year. Not huge, but it surprised everyone on the set given the beats by big headline companies. Revenues, on the other hand, are up a solid 5.1%. Hey, that is better than prior quarters and to us a good indication. Still, earnings are missing and that is an indication that perhaps there IS an earnings recession in progress.
More importantly, earnings season has seasons of its own. The initial results where the first reveals are made either surprises upside or downside. A lot of enthusiasm exists, and on solid results stocks jump. Once the gist of the season is known then the excitement dulls. Individual stocks still move on the results, but the market overall tends not to follow as much . . . unless there are a series of really big results that simply surprise the heck out of everyone.
With the indices at the prior highs and the first group of big names unable to surge them through with some pretty darn good results, the probabilities of that breakout surge wane. Certainly GOOG and company can provide the catalyst for a serious breakout, but as the season progresses and initial solid results could not do it, it becomes less likely subsequent results can do the trick either.
Accordingly, as you move ahead in the season you look at the rising probability the indices put in a near term peak and test back off that before moving on.
Look at AMZN. A multi-DOLLAR beat. $7.09 vs 4.72 per share. Revenues were, however, just in line. Those were explained, however, as AMZN was working on converting Prime from 2-day to 1-day delivery. That is a big upgrade and costly. Makes sense. STILL, afterhours AMZN is basically flat, up 10 clicks after gyrating up and down though in a narrow range. No real excitement on a huge beat. Volatility in its options is going to get utterly crushed tomorrow and they will lose a lot of value with the stock going nowhere.
That is beside the main point, however: huge beat, huge things brewing at AMZN, but virtually no stock reaction. Earnings running their course for this season? We will see.
Watching the action in MSFT, FB, AAPL, CMG and others, we of course were banking gain early on. ODFL gapped upside and we took the gain; had a feeling it would reversed off that early move. We banked CMG puts bought just ahead of the Wednesday close as it sold hard and fast to the 50 day MA then started to build a shelf. Took the 60% gain and moved on to take gain on STLD (downside), AMZN, GOOG, FB, LRCX. The indices bumping resistance, stocks gapping up on good results then starting to fade. They can still advance of course; we were just playing the probabilities, particularly with positions in May options.
Afterhours more earnings outside of AMZN. MAT beat and jumped 1.50 -- very nice for a $12 stock. SBUX beat bottom line and gapped upside; it missed on the top line, however, and sold back a lot of the gain.
A big potential problem is INTC and its weak guidance. It beat on the top and bottom but margins were mediocre and it guided lower. Afterhours it was hit pretty hard, off 4 clicks or about 7%. Other stocks are lower in sympathy, e.g. NVDA. INTC may have some serious coattail effects in the leading market sector. That said, its i7 gen 8 with the Radian graphics chip on board is pretty incredible. Okay, a bit of a digression, but we are running those right now in some new computers in the office and they are smoking. That, however, is not helping INTC afterhours.
It would thus appear the Dow is going to get hit yet again by another of its components. BA, IBM, MMM -- oh well.
More than that, the midcaps and small caps are again at or in the lead of the decliner board.
Okay, that sounds like a fairly gloomy prognosis. Not at all. A bit of rest and recovery sets a new move. The overall thesis remains in place: compliant Fed, yield curve heading -- slowly -- in the right direction, good enough earnings, solid enough leadership.
That is still a good scenario, we just need to be ready in the event earnings cannot push stocks on through to the next level, at least just yet. Money has rotated in the market, finding new leaders. That continues setting up new patterns and new breakouts. Perhaps that will thin a bit near term, but we are continuing to look for plays that can make us money -- upside and down. CMG and SHLD worked well downside and others are in position to move lower after more earnings hit the wire.
At the same time we have banked large chunks of upside gain as well over the past week as the indices and stocks moved to some resistance. With earnings not breaking the indices through resistance with clear moves we are very comfortable doing that. EVEN IF they do move through, we still feel we will get great entries as they test that move, and they always test.
Therefore, we will be looking at those downside plays we have on the report, and if they break lower we will be ready to enter. As for more upside, no issues IF the play is right. The beauty of this market is that some areas may be extended but others are getting the money rotated to them. If they are in the latter groups, the moves will show it and we can pick some up with confidence, but also knowing that the indices overall, perhaps outside of SOX, are having difficulty getting through the old highs and putting moves on them. And, even SOX may have some issues now due to its own success followed by the INTC disappointment.
MARKET STATS
DJ30
Stats: -134.97 points (-0.51%) to close at 26462.08
Nasdaq
Stats: +16.67 points (+0.21%) to close at 8118.68
Volume: 2.07B (+1.47%)
Up Volume: 823.42M (-216.58M)
Down Volume: 1.22B (+238.12M)
A/D and Hi/Lo: Decliners led 1.47 to 1
Previous Session: Decliners led 1.09 to 1
New Highs: 78 (-50)
New Lows: 59 (+14)
S&P
Stats: -1.08 points (-0.04%) to close at 2926.17
NYSE Volume: 789.532M (-1.46%)
Up Volume: 267.264M (-56.687M)
Down Volume: 516.608M (+49.999M)
A/D and Hi/Lo: Decliners led 1.79 to 1
Previous Session: Advancers led 1 to 1
New Highs: 69 (-61)
New Lows: 42 (+15)
SENTIMENT
VIX: 13.25; +0.11
VXN: 16.49; -0.18
VXO: 12.83; +0.17
Put/Call Ratio (CBOE): 0.85; -0.02
Bulls and Bears:
At this juncture there are no extremes in this indicator. It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: green (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 54.8 versus 53.9
Bears: 19.2 versus 19.2
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.
OTHER MARKETS
INTEREST RATES
Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread rises 1BP to 10BP
The 2 year versus the 10 year: Spread holds at 20BP
10 year: 2.536% versus 2.522%
3 month: 2.429% versus 2.437%
2 year: 2.33% versus 2.32%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
EUR/USD: 1.1350 versus 1.11538. Euro continues heading lower below recent lows.
Historical: Breaking below the 1.12 level and that 6-month range formed after the euro sold off from the early 2018 peaks.
USD/JPY: 111.547 versus 112.144. Dropped to the 200 day SMA on the close, this after trying to breakout Wednesday and failing. Now a critical test for the dollar to hold up.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 65.21, -0.68. Fading to test the break higher, holding over the 10 day EMA.
Gold: 1279.70, +0.30. After the drop to the upper trendline of the triangle, gold is trying to hang on.
End part 1 of 2
_______________________________________________________
Member: tweet@investbilling.com
Customer Support: http://www.InvestBilling.com
1153 Bergen Pkwy - Suite I #502 - Evergreen, CO 80439
PLEASE DO NOT REPLY TO THIS EMAIL. USE THE CONTACT US PAGE ON OUR WEBSITE.
4/25/2019 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: AMZN; CMG; FB; GOOG; LRCX; ODFL; STLD
Entry alerts: ZS
Trailing stops: CMI; SWKS
Stop alerts: FDX
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
https://www.investmenthouse.com/alertdaily.html
********************************************************************
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.
MARKET SUMMARY
- FB, MSFT earnings push the indices higher, but holding the move proves difficult.
- Indices again struggle at or near the old highs.
- Earnings 1/4 over, and despite some impressive big name beats, overall they are negative.
- AMZN earnings afterhours sport a massive bottom line beat, but the stock is virtually flat.
- The longer a breakout over the old highs remains elusive, the more likely it doesn't happen this time. But, GOOG is still to come next week . . .
Lots of earnings fanfare from FB and MSFT and both of those stocks gapped upside, leading an early market surge. MMM on the other side of the ledger gapped sharply lower on an impressively bad miss. UPS and NOK were notably poor performers as well, and CMG's early plunge to the 50 day EMA gave us close to 60% gain in a very fast downside earnings play.
Yes, there was the good, the bad, and the ugly. All in one session.
What was certain to be a breakout session for the indices was not so grand. Not terrible, but not up to many expectations in the aftermath of FB and MSFT earnings. There were gaps higher, but most faded at least part of that move. The result was at best a mixed session, more indices ending negative versus positive.
SP500 -1.08, -0.04%
NASDAQ 16.67, 0.21%
DJ30 -134.97, -0.51%
SP400 -1.14%
RUTX -0.79%
SOX -1.81%
NASDAQ 100 0.42%
VOLUME: NYSE -2%, NASDAQ -2%. Lower volume, still below average, no churning, no buying. Nothing seriously negative.
ADVANCE/DECLINE: NYSE -1.8:1, NASDAQ -1.5:1. Lagging small and midcaps.
It was not a bad session. Do not get me wrong. It just was not up to the possibilities.
And . . . not up to any new index breakouts.
To view, click on the following links:
http://investmenthouse1.com/ihmedia/f/charts/sp500.jpg
http://investmenthouse1.com/ihmedia/f/charts/NASDAQ.jpg
http://investmenthouse1.com/ihmedia/f/charts/DJ30.jpg
http://investmenthouse1.com/ihmedia/f/charts/RUTX.jpg
http://investmenthouse1.com/ihmedia/f/charts/SP400.jpg
http://investmenthouse1.com/ihmedia/f/charts/SOX.jpg
http://investmenthouse1.com/ihmedia/f/charts/nasdaq100.jpg
Earnings season is about a quarter over. The fear was this season would reveal a serious economic slowdown. First blush from some big names is that those fears were overblown. Thus, some great moves from some big names. But, the overall market is not making serious headway against the prior highs. Good news, some movement, but nothing definitive to the upside.
This morning CNBC reported that one-quarter through the season bottom line earnings are running -1.1% year/year. Not huge, but it surprised everyone on the set given the beats by big headline companies. Revenues, on the other hand, are up a solid 5.1%. Hey, that is better than prior quarters and to us a good indication. Still, earnings are missing and that is an indication that perhaps there IS an earnings recession in progress.
More importantly, earnings season has seasons of its own. The initial results where the first reveals are made either surprises upside or downside. A lot of enthusiasm exists, and on solid results stocks jump. Once the gist of the season is known then the excitement dulls. Individual stocks still move on the results, but the market overall tends not to follow as much . . . unless there are a series of really big results that simply surprise the heck out of everyone.
With the indices at the prior highs and the first group of big names unable to surge them through with some pretty darn good results, the probabilities of that breakout surge wane. Certainly GOOG and company can provide the catalyst for a serious breakout, but as the season progresses and initial solid results could not do it, it becomes less likely subsequent results can do the trick either.
Accordingly, as you move ahead in the season you look at the rising probability the indices put in a near term peak and test back off that before moving on.
Look at AMZN. A multi-DOLLAR beat. $7.09 vs 4.72 per share. Revenues were, however, just in line. Those were explained, however, as AMZN was working on converting Prime from 2-day to 1-day delivery. That is a big upgrade and costly. Makes sense. STILL, afterhours AMZN is basically flat, up 10 clicks after gyrating up and down though in a narrow range. No real excitement on a huge beat. Volatility in its options is going to get utterly crushed tomorrow and they will lose a lot of value with the stock going nowhere.
That is beside the main point, however: huge beat, huge things brewing at AMZN, but virtually no stock reaction. Earnings running their course for this season? We will see.
Watching the action in MSFT, FB, AAPL, CMG and others, we of course were banking gain early on. ODFL gapped upside and we took the gain; had a feeling it would reversed off that early move. We banked CMG puts bought just ahead of the Wednesday close as it sold hard and fast to the 50 day MA then started to build a shelf. Took the 60% gain and moved on to take gain on STLD (downside), AMZN, GOOG, FB, LRCX. The indices bumping resistance, stocks gapping up on good results then starting to fade. They can still advance of course; we were just playing the probabilities, particularly with positions in May options.
Afterhours more earnings outside of AMZN. MAT beat and jumped 1.50 -- very nice for a $12 stock. SBUX beat bottom line and gapped upside; it missed on the top line, however, and sold back a lot of the gain.
A big potential problem is INTC and its weak guidance. It beat on the top and bottom but margins were mediocre and it guided lower. Afterhours it was hit pretty hard, off 4 clicks or about 7%. Other stocks are lower in sympathy, e.g. NVDA. INTC may have some serious coattail effects in the leading market sector. That said, its i7 gen 8 with the Radian graphics chip on board is pretty incredible. Okay, a bit of a digression, but we are running those right now in some new computers in the office and they are smoking. That, however, is not helping INTC afterhours.
It would thus appear the Dow is going to get hit yet again by another of its components. BA, IBM, MMM -- oh well.
More than that, the midcaps and small caps are again at or in the lead of the decliner board.
Okay, that sounds like a fairly gloomy prognosis. Not at all. A bit of rest and recovery sets a new move. The overall thesis remains in place: compliant Fed, yield curve heading -- slowly -- in the right direction, good enough earnings, solid enough leadership.
That is still a good scenario, we just need to be ready in the event earnings cannot push stocks on through to the next level, at least just yet. Money has rotated in the market, finding new leaders. That continues setting up new patterns and new breakouts. Perhaps that will thin a bit near term, but we are continuing to look for plays that can make us money -- upside and down. CMG and SHLD worked well downside and others are in position to move lower after more earnings hit the wire.
At the same time we have banked large chunks of upside gain as well over the past week as the indices and stocks moved to some resistance. With earnings not breaking the indices through resistance with clear moves we are very comfortable doing that. EVEN IF they do move through, we still feel we will get great entries as they test that move, and they always test.
Therefore, we will be looking at those downside plays we have on the report, and if they break lower we will be ready to enter. As for more upside, no issues IF the play is right. The beauty of this market is that some areas may be extended but others are getting the money rotated to them. If they are in the latter groups, the moves will show it and we can pick some up with confidence, but also knowing that the indices overall, perhaps outside of SOX, are having difficulty getting through the old highs and putting moves on them. And, even SOX may have some issues now due to its own success followed by the INTC disappointment.
MARKET STATS
DJ30
Stats: -134.97 points (-0.51%) to close at 26462.08
Nasdaq
Stats: +16.67 points (+0.21%) to close at 8118.68
Volume: 2.07B (+1.47%)
Up Volume: 823.42M (-216.58M)
Down Volume: 1.22B (+238.12M)
A/D and Hi/Lo: Decliners led 1.47 to 1
Previous Session: Decliners led 1.09 to 1
New Highs: 78 (-50)
New Lows: 59 (+14)
S&P
Stats: -1.08 points (-0.04%) to close at 2926.17
NYSE Volume: 789.532M (-1.46%)
Up Volume: 267.264M (-56.687M)
Down Volume: 516.608M (+49.999M)
A/D and Hi/Lo: Decliners led 1.79 to 1
Previous Session: Advancers led 1 to 1
New Highs: 69 (-61)
New Lows: 42 (+15)
SENTIMENT
VIX: 13.25; +0.11
VXN: 16.49; -0.18
VXO: 12.83; +0.17
Put/Call Ratio (CBOE): 0.85; -0.02
Bulls and Bears:
At this juncture there are no extremes in this indicator. It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: green (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 54.8 versus 53.9
Bears: 19.2 versus 19.2
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.
OTHER MARKETS
INTEREST RATES
Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread rises 1BP to 10BP
The 2 year versus the 10 year: Spread holds at 20BP
10 year: 2.536% versus 2.522%
3 month: 2.429% versus 2.437%
2 year: 2.33% versus 2.32%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
EUR/USD: 1.1350 versus 1.11538. Euro continues heading lower below recent lows.
Historical: Breaking below the 1.12 level and that 6-month range formed after the euro sold off from the early 2018 peaks.
USD/JPY: 111.547 versus 112.144. Dropped to the 200 day SMA on the close, this after trying to breakout Wednesday and failing. Now a critical test for the dollar to hold up.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 65.21, -0.68. Fading to test the break higher, holding over the 10 day EMA.
Gold: 1279.70, +0.30. After the drop to the upper trendline of the triangle, gold is trying to hang on.
End part 1 of 2
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Market Alert - Pre-Market
Futures vs FV: SP flat; DJ -170.05; NASD +69.34
Futures are widely mixed thanks to earnings. DJ30 taking it on the chin as MMM posted a disturbing earnings report missing the top and bottom lines, announcing layoffs, etc. Contrast MSFT, FB et al and you have NASDAQ surging.
There is economic and other data, but earnings, as they should, are the most important.
Beats: LUV; WM; DRH; FB; MSFT; CMB; V; PYPL (BL)
Misses: CMCSA (TL); MMM (TL, BL); UPS (TL); TSLA (TL, BL); NOK (BL)
Initial jobless claims: after historically lower and lower numbers, a bounce up to the largest increase in 18 mos. Oh no, time to panic.
Durable Goods Prelim, March: 2.7% vs 0.8 exp vs -1.1 prior (from -1.6)
Ex-transp: 0.4 vs 0.2
Non-defense ex-aircraft (business investment): +1.3% vs 0.1 prior (from -0.1%)
This is just the preliminary number. A volatile iteration in a very volatile series. Indeed, last month the preliminary was the opposite direction of the final.
NKorea: Putin meets with NK. Says it wants to de-nuke but needs assurances. Same story, no change, no deal.
South Korea: Economic numbers flop the most in 10 years. Not reported on the financial stations but on regular news. Huh? Oh, it does no fit the current meme.
OTHER MARKETS
Bonds: 2.531% vs 2.522%
EUR/USD: 1.113, -0.0022
USD/JPY: 111.78, -0.39
Oil: 66.01, +0.12. Down a day, but right back up.
Gold: 1278.90, -0.50
Futures rallied from 6:00ET to 8:00. They have since backtracked some gains. NASDAQ remains strong and will of course lead the action. Already up 4 weeks and breaking to new highs, some are saying it only goes up. More to reality, those kind of moves lead to tests.
Thus, not too sure the gains for ALL NASDAQ stocks will hold. Lots of euphoria, but overall at this point, earnings are DOWN 1.1% though revenues are up 5.1%. There are a few stocks killing it while the others are more mediocre. Might be a good time to bank some more GOOG gain and others though will see how the initial surge is holds.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
Alert Key
http://www.investmenthouse.com/alertkey.htm
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Futures are widely mixed thanks to earnings. DJ30 taking it on the chin as MMM posted a disturbing earnings report missing the top and bottom lines, announcing layoffs, etc. Contrast MSFT, FB et al and you have NASDAQ surging.
There is economic and other data, but earnings, as they should, are the most important.
Beats: LUV; WM; DRH; FB; MSFT; CMB; V; PYPL (BL)
Misses: CMCSA (TL); MMM (TL, BL); UPS (TL); TSLA (TL, BL); NOK (BL)
Initial jobless claims: after historically lower and lower numbers, a bounce up to the largest increase in 18 mos. Oh no, time to panic.
Durable Goods Prelim, March: 2.7% vs 0.8 exp vs -1.1 prior (from -1.6)
Ex-transp: 0.4 vs 0.2
Non-defense ex-aircraft (business investment): +1.3% vs 0.1 prior (from -0.1%)
This is just the preliminary number. A volatile iteration in a very volatile series. Indeed, last month the preliminary was the opposite direction of the final.
NKorea: Putin meets with NK. Says it wants to de-nuke but needs assurances. Same story, no change, no deal.
South Korea: Economic numbers flop the most in 10 years. Not reported on the financial stations but on regular news. Huh? Oh, it does no fit the current meme.
OTHER MARKETS
Bonds: 2.531% vs 2.522%
EUR/USD: 1.113, -0.0022
USD/JPY: 111.78, -0.39
Oil: 66.01, +0.12. Down a day, but right back up.
Gold: 1278.90, -0.50
Futures rallied from 6:00ET to 8:00. They have since backtracked some gains. NASDAQ remains strong and will of course lead the action. Already up 4 weeks and breaking to new highs, some are saying it only goes up. More to reality, those kind of moves lead to tests.
Thus, not too sure the gains for ALL NASDAQ stocks will hold. Lots of euphoria, but overall at this point, earnings are DOWN 1.1% though revenues are up 5.1%. There are a few stocks killing it while the others are more mediocre. Might be a good time to bank some more GOOG gain and others though will see how the initial surge is holds.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
Alert Key
http://www.investmenthouse.com/alertkey.htm
PLEASE DO NOT REPLY TO THIS EMAIL. USE THE CONTACT US PAGE ON OUR WEBSITE.
Customer Support: http://investmenthouse.com/contact_us.php
Wednesday, April 24, 2019
The Daily, Part 1, 4-24-19
* * * *
4/24/2019 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: FB; MSFT
Entry alerts: MS; CMG
Trailing stops: None issued
Stop alerts: SNAP
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
https://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
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.
MARKET SUMMARY
- Nervous trade ahead of key afterhours earnings stymies large cap advance.
- Indices try new highs, fade the gains. Most indices faded the gains.
- No heavy selling, just lighter volume as bids were idled ahead of earnings results.
- FB, MSFT afterhours earnings help stocks recover the pre-close losses, setting up an upside Thursday with new attempts on new highs.
The stock indices continue to trade around the old highs, some breaking through, others trying but not quite there, while others continue rising to take their shot as well. Wednesday they tried higher again though with major earnings after the close the early rather modest upside was pushed back by the close. The result was a mixed close. The large cap indices traded lower ahead of key earnings while RUTX and SP400 played catch up, managing some rather mediocre upside.
SP500 -6.43, -0.22%
NASDAQ -18.18, -0.23%
DJ 30 -59.34, -0.23%
SP400 0.35%
RUTX 0.19%
SOX 0.95%
NASDAQ 100 -0.34%
VOLUME: NYSE -2%, NASDAQ -2%. A modest reduction in trade as the large cap indices faded slightly. No selling, just nervous trade that saw bids dry up.
ADVANCE/DECLINE: NYSE flat; NASDAQ -1.1:1. Ho hum. Matched the rather flat indices, up or down.
Once again NASDAQ traded at a new high just to backpedal and close below those highs. SP500 again came close but no cigar. DJ30 tried farther over the January 2018 high but then backtracked to close below that level.
SOX, SP400 and RUTX did a better job of holding onto some gains -- they actually closed positive -- but even those indices closed well off their intraday highs. That said, it is notable that SP400 put in a new recovery high and held onto it. RUTX put in a higher recovery high as well, hung onto some of it for a slightly higher recovery close.
NASDAQ 100 backtracked off its Tuesday high ahead of those major earnings announcements from FB, MSFT, TSLA, V, CMG, XLNX (yes, some others not in NASDAQ 100, but they are having afterhours impact). FB is up 12+ clicks afterhours and that is taking up other 'social' stocks such as GOOG (+11 afterhours), though AAPL is flat.
It is not all afterhours glory. MSFT, V, CMG beat as well, and while MSFT trades higher, V initially traded lower before recovering some lost ground while CMG is flat. XLNX beat on revenues (+23.1%) but rather strangely missed on the bottom line. It is getting pounded afterhours and is acting as a drag on some semis such as AVGO, INTC afterhours.
TSLA was almost an hour late in releasing its earnings. A dramatic piece of showmanship by Musk? No! It was the same as a school kid who did not do his homework and was scrambling at the last minute to throw something together (kind of like Tesla cars of late?). The miss was shockingly bad: -2.90/share vs -0.69 expected. Revenues 4.54B versus 5.19B expected. But . . . the company confirmed it will reach its production goals. Whew, I was worried about that. At this stage of the game, with such horrid metrics, stating you will reach your production goals is the same as a school giving a beleaguered head football coach a 'vote of confidence.' In short, get your resume in order.
As for the overall afterhours trade, SPY traded lower initially -- after diving downside in the last 10 minutes of regular session trade on those earnings nerves -- but has recovered to a modest gain.
Ah, the market showing resilience yet again. Able to be scared or harbor doubts about the economy and earnings, but also able to look on the bright side when fears are somewhat allayed. Falling upwards as I have said before.
One of the big tells will be the semiconductors. TXN managed to surge Wednesday after a down afterhours and pre-market on its results. INTC, AVGO, TSM, LRCX, SWKS, QRVO continue performing even if recently in test mode, and many tried to move higher Wednesday. Several closed well off the intraday highs, unable to hold most of the session move. Will they be able to resume the upside from these rather solid setups? They tried Wednesday, but not all were ready. A very important group that led the stock market to the new highs, now in a good test, in position to move. Will it?
With some of the afterhours indications in the wake of MSFT and FB -- and the lack of destruction of CMG and V and even TSLA after is impressive miss is down just 2.5 clicks -- it appears Thursday will be at least initially an earnings relief move higher.
NEWS/ECONOMY
M&A: OXY upped the ante on CVX, making a $76 bid for APC, shaming CVX' $65 bid. Thus, for a second time in two weeks APC gapped higher. At least things are more interesting for the shareholders, but who knows if any deal closes?
BA: It is serious for BA. Today it pulled its share purchase program and its 2019 guidance due to 737 Max issues. At least the stock remains in its 7 week range after that sharp gap lower early March.
Trade: The US is sending a 'high level' delegation to China next week to talk more trade. Ah yes, hope springs eternal the communists will agree to something they cannot agree to. Do you see the pattern here? Since February Xi is the one playing it aloof, apparently not tied to a deal: trying to play the Trump card on Trump.
China: Supposedly there are 'clear signals' China is scaling back its massive stimulus, as if anything that is news can be a 'clear signal' in a communist regime. There is a modest pause in the Shanghai stock rally. Just a pause. And modest.
THURSDAY
It looked as if the indices might run into some near term issues at the prior highs. After a 4-week rally to those highs or near them, some concern ahead of results. Bids were pulled ahead of them just in case, some profits banked.
Any pullback, however, looks to have been shelved in favor of Zuckerberg's hollow promises of privacy that everyone heralds but no one believes. People delude themselves into believing steps are being taken, that they and their data is safe. They go on posting their coffee preferences, bathroom habits, aunt Martha's recipe for never fail cornbread, secure in the belief everyone is enveloped in a bubble of invisibility.
But, that is their issue. The market loves big earnings beats and potential FCC settlements that are in the $3B to $5B range versus higher.
SPY are higher late after initially dropping. Recoveries from V, CMG, and TSLA are augmenting the surges from FB and MSFT. There is also a coattail effect pushing others higher.
Chips will be a key as noted earlier. After a pullback some jumped higher, e.g. TXN, but XLNX afterhours -- Cramer's NVDA replacement -- is getting the treatment NVDA received in late 2018 when its results disappointed. Chips are important, and while a lot of areas are happy, we will see if they participate Thursday.
Still solid pullbacks in financials, transports testing, manufacturing as well. Machinery took some punches as CAT's earnings dropped it to the 50 day MA, DE faded to the 10 day EMA; CMI is holding up well.
Still trying the old highs, refusing to back down. Stocks still showing leaders, some rallying, some already rested and tested. We will see if the afterhours excitement on earnings coming in better than expected rallies the troops and leads to new highs that hold. The bias of the market suggests that is more likely than say a reversal.
Have a great evening!
MARKET STATS
DJ30
Stats: -59.34 points (-0.22%) to close at 26597.05
Nasdaq
Stats: -18.81 points (-0.23%) to close at 8102.01
Volume: 2.04B (-1.92%)
Up Volume: 1.04B (-500M)
Down Volume: 981.88M (+485.89M)
A/D and Hi/Lo: Decliners led 1.09 to 1
Previous Session: Advancers led 2.83 to 1
New Highs: 128 (+26)
New Lows: 45 (-7)
S&P
Stats: -6.43 points (-0.22%) to close at 2927.25
NYSE Volume: 801.225M (-2.29%)
Up Volume: 323.951M (-273.272M)
Down Volume: 466.609M (+255.674M)
A/D and Hi/Lo: Advancers led 1 to 1
Previous Session: Advancers led 2.97 to 1
New Highs: 130 (-6)
New Lows: 27 (+7)
SENTIMENT
VIX: 13.14; +0.86
VXN: 16.67; +0.52
VXO: 12.66; +0.80
Put/Call Ratio (CBOE): 0.87; +0.06
Bulls and Bears:
At this juncture there are no extremes in this indicator. It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: green (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 54.8 versus 53.9
Bears: 19.2 versus 19.2
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.
OTHER MARKETS
INTEREST RATES
Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread holds at 9BP
The 2 year versus the 10 year: Spread falls 1BP to 20BP
10 year: 2.522% versus 2.57%. Bonds rallied with TLT gapping up off the 50 day MA test.
3 month: 2.437% versus 2.481%
2 year: 2.32% versus 2.36%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
EUR/USD: 1.11538 versus 1.12214. Euro bombs lower, undercutting the March and November 2018 lows.
Historical: 1.12 to 1.13 for the past 6 months as the pair trades in a range after the euro sold off from the early 2018 peaks. Okay -- starting to break below the range of the past 6 months.
USD/JPY: 112.144 vs 111.843. Dollar breaking higher from the 2 week tight range . . .
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 65.89, -0.41. After a good surge, oil paused as inventories showed a much larger than expected build.
Gold: 1279.40, +6.20. Trying to bounce off the drop to the upper trendline of the triangle pattern. Broke from it in late January and has not been able to do much with it since, now back to the breakout point. If the economy is working, inflation tame, then gold's fade makes sense.
End part 1
_______________________________________________________
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4/24/2019 Investment House Daily
* * * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit: FB; MSFT
Entry alerts: MS; CMG
Trailing stops: None issued
Stop alerts: SNAP
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the alert service you can sign up at the following link:
https://www.investmenthouse.com/alertdaily.html
********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/mo/mo.mp4
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
https://investmenthouse1.com/ihmedia/f/nxt/nxt.mp4
********************************************************************
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.
MARKET SUMMARY
- Nervous trade ahead of key afterhours earnings stymies large cap advance.
- Indices try new highs, fade the gains. Most indices faded the gains.
- No heavy selling, just lighter volume as bids were idled ahead of earnings results.
- FB, MSFT afterhours earnings help stocks recover the pre-close losses, setting up an upside Thursday with new attempts on new highs.
The stock indices continue to trade around the old highs, some breaking through, others trying but not quite there, while others continue rising to take their shot as well. Wednesday they tried higher again though with major earnings after the close the early rather modest upside was pushed back by the close. The result was a mixed close. The large cap indices traded lower ahead of key earnings while RUTX and SP400 played catch up, managing some rather mediocre upside.
SP500 -6.43, -0.22%
NASDAQ -18.18, -0.23%
DJ 30 -59.34, -0.23%
SP400 0.35%
RUTX 0.19%
SOX 0.95%
NASDAQ 100 -0.34%
VOLUME: NYSE -2%, NASDAQ -2%. A modest reduction in trade as the large cap indices faded slightly. No selling, just nervous trade that saw bids dry up.
ADVANCE/DECLINE: NYSE flat; NASDAQ -1.1:1. Ho hum. Matched the rather flat indices, up or down.
Once again NASDAQ traded at a new high just to backpedal and close below those highs. SP500 again came close but no cigar. DJ30 tried farther over the January 2018 high but then backtracked to close below that level.
SOX, SP400 and RUTX did a better job of holding onto some gains -- they actually closed positive -- but even those indices closed well off their intraday highs. That said, it is notable that SP400 put in a new recovery high and held onto it. RUTX put in a higher recovery high as well, hung onto some of it for a slightly higher recovery close.
NASDAQ 100 backtracked off its Tuesday high ahead of those major earnings announcements from FB, MSFT, TSLA, V, CMG, XLNX (yes, some others not in NASDAQ 100, but they are having afterhours impact). FB is up 12+ clicks afterhours and that is taking up other 'social' stocks such as GOOG (+11 afterhours), though AAPL is flat.
It is not all afterhours glory. MSFT, V, CMG beat as well, and while MSFT trades higher, V initially traded lower before recovering some lost ground while CMG is flat. XLNX beat on revenues (+23.1%) but rather strangely missed on the bottom line. It is getting pounded afterhours and is acting as a drag on some semis such as AVGO, INTC afterhours.
TSLA was almost an hour late in releasing its earnings. A dramatic piece of showmanship by Musk? No! It was the same as a school kid who did not do his homework and was scrambling at the last minute to throw something together (kind of like Tesla cars of late?). The miss was shockingly bad: -2.90/share vs -0.69 expected. Revenues 4.54B versus 5.19B expected. But . . . the company confirmed it will reach its production goals. Whew, I was worried about that. At this stage of the game, with such horrid metrics, stating you will reach your production goals is the same as a school giving a beleaguered head football coach a 'vote of confidence.' In short, get your resume in order.
As for the overall afterhours trade, SPY traded lower initially -- after diving downside in the last 10 minutes of regular session trade on those earnings nerves -- but has recovered to a modest gain.
Ah, the market showing resilience yet again. Able to be scared or harbor doubts about the economy and earnings, but also able to look on the bright side when fears are somewhat allayed. Falling upwards as I have said before.
One of the big tells will be the semiconductors. TXN managed to surge Wednesday after a down afterhours and pre-market on its results. INTC, AVGO, TSM, LRCX, SWKS, QRVO continue performing even if recently in test mode, and many tried to move higher Wednesday. Several closed well off the intraday highs, unable to hold most of the session move. Will they be able to resume the upside from these rather solid setups? They tried Wednesday, but not all were ready. A very important group that led the stock market to the new highs, now in a good test, in position to move. Will it?
With some of the afterhours indications in the wake of MSFT and FB -- and the lack of destruction of CMG and V and even TSLA after is impressive miss is down just 2.5 clicks -- it appears Thursday will be at least initially an earnings relief move higher.
NEWS/ECONOMY
M&A: OXY upped the ante on CVX, making a $76 bid for APC, shaming CVX' $65 bid. Thus, for a second time in two weeks APC gapped higher. At least things are more interesting for the shareholders, but who knows if any deal closes?
BA: It is serious for BA. Today it pulled its share purchase program and its 2019 guidance due to 737 Max issues. At least the stock remains in its 7 week range after that sharp gap lower early March.
Trade: The US is sending a 'high level' delegation to China next week to talk more trade. Ah yes, hope springs eternal the communists will agree to something they cannot agree to. Do you see the pattern here? Since February Xi is the one playing it aloof, apparently not tied to a deal: trying to play the Trump card on Trump.
China: Supposedly there are 'clear signals' China is scaling back its massive stimulus, as if anything that is news can be a 'clear signal' in a communist regime. There is a modest pause in the Shanghai stock rally. Just a pause. And modest.
THURSDAY
It looked as if the indices might run into some near term issues at the prior highs. After a 4-week rally to those highs or near them, some concern ahead of results. Bids were pulled ahead of them just in case, some profits banked.
Any pullback, however, looks to have been shelved in favor of Zuckerberg's hollow promises of privacy that everyone heralds but no one believes. People delude themselves into believing steps are being taken, that they and their data is safe. They go on posting their coffee preferences, bathroom habits, aunt Martha's recipe for never fail cornbread, secure in the belief everyone is enveloped in a bubble of invisibility.
But, that is their issue. The market loves big earnings beats and potential FCC settlements that are in the $3B to $5B range versus higher.
SPY are higher late after initially dropping. Recoveries from V, CMG, and TSLA are augmenting the surges from FB and MSFT. There is also a coattail effect pushing others higher.
Chips will be a key as noted earlier. After a pullback some jumped higher, e.g. TXN, but XLNX afterhours -- Cramer's NVDA replacement -- is getting the treatment NVDA received in late 2018 when its results disappointed. Chips are important, and while a lot of areas are happy, we will see if they participate Thursday.
Still solid pullbacks in financials, transports testing, manufacturing as well. Machinery took some punches as CAT's earnings dropped it to the 50 day MA, DE faded to the 10 day EMA; CMI is holding up well.
Still trying the old highs, refusing to back down. Stocks still showing leaders, some rallying, some already rested and tested. We will see if the afterhours excitement on earnings coming in better than expected rallies the troops and leads to new highs that hold. The bias of the market suggests that is more likely than say a reversal.
Have a great evening!
MARKET STATS
DJ30
Stats: -59.34 points (-0.22%) to close at 26597.05
Nasdaq
Stats: -18.81 points (-0.23%) to close at 8102.01
Volume: 2.04B (-1.92%)
Up Volume: 1.04B (-500M)
Down Volume: 981.88M (+485.89M)
A/D and Hi/Lo: Decliners led 1.09 to 1
Previous Session: Advancers led 2.83 to 1
New Highs: 128 (+26)
New Lows: 45 (-7)
S&P
Stats: -6.43 points (-0.22%) to close at 2927.25
NYSE Volume: 801.225M (-2.29%)
Up Volume: 323.951M (-273.272M)
Down Volume: 466.609M (+255.674M)
A/D and Hi/Lo: Advancers led 1 to 1
Previous Session: Advancers led 2.97 to 1
New Highs: 130 (-6)
New Lows: 27 (+7)
SENTIMENT
VIX: 13.14; +0.86
VXN: 16.67; +0.52
VXO: 12.66; +0.80
Put/Call Ratio (CBOE): 0.87; +0.06
Bulls and Bears:
At this juncture there are no extremes in this indicator. It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: green (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 54.8 versus 53.9
Bears: 19.2 versus 19.2
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.
OTHER MARKETS
INTEREST RATES
Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread holds at 9BP
The 2 year versus the 10 year: Spread falls 1BP to 20BP
10 year: 2.522% versus 2.57%. Bonds rallied with TLT gapping up off the 50 day MA test.
3 month: 2.437% versus 2.481%
2 year: 2.32% versus 2.36%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
EUR/USD: 1.11538 versus 1.12214. Euro bombs lower, undercutting the March and November 2018 lows.
Historical: 1.12 to 1.13 for the past 6 months as the pair trades in a range after the euro sold off from the early 2018 peaks. Okay -- starting to break below the range of the past 6 months.
USD/JPY: 112.144 vs 111.843. Dollar breaking higher from the 2 week tight range . . .
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 65.89, -0.41. After a good surge, oil paused as inventories showed a much larger than expected build.
Gold: 1279.40, +6.20. Trying to bounce off the drop to the upper trendline of the triangle pattern. Broke from it in late January and has not been able to do much with it since, now back to the breakout point. If the economy is working, inflation tame, then gold's fade makes sense.
End part 1
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