Wednesday, April 10, 2019

The Daily, Part 1, 4-10-19

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4/10/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: HON; MCHP
Entry alerts: DOCU; LSCC; SNAP
Trailing stops: None issued
Stop alerts: HUYA

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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.

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If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.


- The bias remains, the emphasis shifts back to the small caps and midcaps
- Prices relatively tame, FOMC clarifies it is not ready to cut, ECB on holiday.
- Many stocks in many sectors look ready to try another move upside toward those highs. And earnings.

A theme of late is back and forth rotation. Friday, after lagging, the small and midcaps led. Monday they paused as the large caps led, and Tuesday they flat out sold. Wednesday, however, they were back on the buy side with the small caps leading the market rally just as on Friday.

SP500 10.01, 0.35%
NASDAQ 54.96, 0.69%
DJ30 6.58, 0.03%
SP400 0.95%
RUTX 1.40%
SOX 0.86%
NASDAQ 100 0.57%

VOLUME: NYSE +4%; NASDAQ -4%. Trade still below average, definitely no surge in buying taking place. Almost the summer doldrums come visiting in April.

ADVANCE/DECLINE: NYSE 2.8:1, NASDAQ 2.3:1. Quite decent with the smaller caps leading the market.

The term 'rally' is a bit overstated when referring to the entire stock market and the Wednesday action. DJ30 flat, SP500 +0.35% -- not a surge as many of the recent leaders from the industrial side tested or rested. Not bad action at all -- MMM, UTX, CMI are examples sporting excellent near term consolidations.

Another indication that money is moving around the market, and doing it rather rapidly. For now, money is mostly staying in the game, and that floats the areas that lose the bids near term as money runs elsewhere, i.e. back to the smaller caps as on Wednesday.

This back and forth continues putting stocks in position to move and breaks them higher as well. Stocks from various sectors are setting up again: semiconductors, industrials, energy, tech, materials -- to name some of the more prominent.

It is interesting that as several sectors continue setting up solid patterns to move higher, the proximity to the prior highs has calls for a more serious pullback making the rounds.

As noted last week, the prior highs certainly could precipitate a more aggressive selloff. That is still hanging out there, but the patterns continue setting up nicely and breaking higher. Sellers may appear, and of course being aware of the prior highs and the potential for sellers entering must be factored into the prognosis. As long as stocks continue setting up well and breaking higher, however, the leaders are worth playing to make money.


Prices remain fairly tame as the most recent CPI iteration demonstrated.

Overall prices 0.4% after rising 0.2% in February. Year/year 1.9% up from 1.5%

Core prices 0.1%, holding steady. Yearly 2.0%, down from 2.1% in February.

Average wages rose 1.3%, down from 1.9%.

Weekly wages fell 1.3% from 1.6% -- with the workweek vacillating month to month, not surprising to see wages bouncing around. If you work less hours you get less wages.

The FOMC minutes were middle of the road. Some members mentioned concern over the yield curve and the narrow spreads, but overall the FOMC seemed to rain a bit on anyone expecting a rate cut anytime soon. And of course that was the case: with the President and his men calling for a rate cut what could the FOMC do?

Bank testimony. Seven hours. Nothing learned.

ECB decision: Lots of words, nothing changed.


Not a lot of change in the indices. Still positive action -- NASDAQ moved to a higher recovery high, the small caps enjoyed a solid session -- but no new clean upside breaks.

NASDAQ: Yes, a new recovery high, moving a bit farther over the late July penultimate high. Not much of a drop from this last leg higher from late March, not much at all. Thus, still a bit wary of any new upside attempts, but as noted over the weekend, those highs can act just like a magnet and pull the indices toward them before repelling them in a test.

SOX: Key market leading index bounced right back from the Tuesday test of the prior high. Solid enough action though still in a 5-session lateral move after breaking past the mid-March peak and the prior all-time highs.

RUTX: After a fast drop to the 10 day EMA from over the 200 day SMA, RUTX rallied right back over that key level. The action nonetheless looks similar to the late February action where RUTX cleared the 200 day but then started faltering and could not hold the move. Very important test upcoming as to whether the small caps have the chops to hold the 200 day and move higher off it.

SP500: Fell to the 10 day EMA Tuesday, bounced Wednesday on light trade, still below the Friday and Monday closes. As with NASDAQ, not much of any kind of test, holding over the 10 day EMA when it tested the 20 day after its last run. Doesn't mean it has to, just not ay volume on the upside thus far to get it moving upside again.

DJ30: Quite a nice test to the 10 day EMA, showing a tight doji there Wednesday and sitting right on top the late February and mid-March highs. Great setup to move higher.

SP400: Very similar pattern to DJ30, though bouncing off the 10 day EMA Wednesday. That double bottom at the 50 day EMA and 61% Fibonacci retracement in March broke higher, moving back to the late February high. Now a handle, and setting up quite well to make a new break upside.


Some nice setups from earlier leader and leader wannabes.

Financials: Given the banks were on the Hill we give them first billing. No real change, but that is not bad considering some pattern improvement from C, BAC, MS. V started upside, MA still solid.

Semiconductors: Some quality stocks are in quality tests and some of them started higher already. AVGO posted a solid move, LRCX looks ready to be bought again. We picked up some LSCC as it broke higher. AMAT, AMD are in very nice tests as well. INTC looks as if it can be a new buy as well.

Materials: Some interesting setups remain. CX has now faded into a good position for a buy if it breaks higher. FCX testing the move through the 200 day SMA. LPX decent but has to show it can hold a move through the 200 day.

Energy: VLO (refining) broke nicely higher. APC still looks ready to move. CRZO, DNR making quick tests after initial upside breaks. XOM testing as well. Still solid as a group.

FAANG: AAPL downgraded but managed to recover for a gain after a gap lower. AMZN is slowly dragging itself up the 10 day EMA. FB modest gain after a good price and volume upside break Tuesday. GOOG bounced but no power at all; trying to put in a higher low at the 20 day EMA. NFLX is trying as well, still stuck in a 3 month trading range.

Machinery/Manufacturing: MMM showing a nice doji with tail 20 day EMA test. UTX bouncing off a 20 day MA test of its own. EMR in a nice lateral test with the 10 day EMA coming up under it. CAT in a nice 20 day EMA test, showing a doji that blunts the Tuesday selling. CMI holding well at the 10 day EMA.

Biotech/Drugs: Some nice setups outside the usual big names. ARWR, BLUE. ARQL continued upside.


Stats: +6.58 points (+0.03%) to close at 26157.16

Stats: +54.97 points (+0.69%) to close at 7964.24
Volume: 2B (-3.38%)

Up Volume: 1.44B (+792.39M)
Down Volume: 533.24M (-856.76M)

A/D and Hi/Lo: Advancers led 2.27 to 1
Previous Session: Decliners led 2.69 to 1

New Highs: 78 (+13)
New Lows: 43 (+9)

Stats: +10.01 points (+0.35%) to close at 2888.21
NYSE Volume: 741.663M (+3.78%)

Up Volume: 451.942M (+303.551M)
Down Volume: 281.984M (-277.445M)

A/D and Hi/Lo: Advancers led 2.76 to 1
Previous Session: Decliners led 2.99 to 1

New Highs: 123 (+56)
New Lows: 10 (-5)


VIX: 13.30; -0.98
VXN: 16.76; -0.89
VXO: 12.81; -0.72

Put/Call Ratio (CBOE): 0.89; +0.03

Bulls and Bears:

After a pause, bulls starting back upside, now near the top of the range for 2019 yet again. Bears falling back again after consolidating for a few months.

Bulls: 53.4 versus 52.0 versus 53.9

Bears: 19.4 versus 20.6 versus 20.6

Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.

Bulls: 53.4 versus 52.0
52.0 versus 53.9 versus 52.4 versus 52.9 versus 52.4 versus 51.9 versus 49.5 versus 48.6 versus 45.8 versus 45.4 versus 34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9

Bears: 19.4 versus 20.6
20.6 versus 20.6 versus 21.4 versus 20.6 versus 20.4 versus 20.7 versus 21.5 versus 20.6 versus 20.6 versus 21.3 versus 29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3



The 3 month yield versus the 10 year: Spread falls another 3 points to 4BP.

The 2 year versus the 10 year: Spread falls 3 to 16 BP.

10 year: 2.465% versus 2.502%

3 month: 2.426% versus 2.437%
2 year: 2.327% versus 2.342%

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: 1.1275 versus 1.1266. Bounced off the low the past 1.5 weeks, off the bottom of the big range.

Historical: 1.12 to 1.13 for the past 5 months as the pair trades in a range after the euro sold off from the early 2018 peaks.

USD/JPY: 111.07 versus 111.15. Dollar showing a doji with tail at the 50 day MA after a week's pullback from the 200 day SMA.

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

Oil: 64.61, +0.63. After a day off, oil moved to a new recovery closing high.

Gold: 1313.90, +5.60. Bouncing toward the late March lower peak.


A day before the first bank earnings. The indices still showing some upside bias and still many stocks from many areas showing quite good pullbacks off the recent moves, some already moving back upside. We will see if others follow -- until they do, they are just pretty pictures.

Of course we will be ready to play the pretty pictures if they can make the pretty moves. LRCX, AVGO, INTC, CX, VLO, ADBE, APC, MMM, UTX -- a broad spectrum with good patterns.

Again, the upside bias remains and the indices are being drawn toward the old highs. Might be rejected when they get there, but they are drawing toward them as earnings approach.

Have a great evening!

End part 1
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