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4/15/2019 Investment House Daily
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Investment House Daily Subscribers:
Targets hit: V
Entry alerts: SYMC
Trailing stops: AMZN; TXN
Stop alerts: DNR; SFIX
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- Monday doldrums after the solid Friday price gains.
- Most stocks test, very few do any damage to their patterns.
- NY Empire beats -- by a bit -- GS, C miss on the top line.
- Fed's Evans comfortable with the way things are.
- Test of the Friday upside break is in, and now the indices show if they can resume the move toward the old highs.
Sure looked like some Monday sluggish trade following a solid Friday. Not a reversal though at one point some big names were struggling. Most of that downside was over around midday and stocks managed a rise into the close. Not a return to positive, but mitigated the downside in a slow session that was basically a consolidation of Friday's upside.
SP500 -1.83, -0.06%
NASDAQ -8.15, -0.10%
DJ30 -27.53, -0.10%
NASDAQ 100 +0.01%
VOLUME: NYSE -6%, NASDAQ -8%. Lower trade on a soft test. That works.
ADVANCE/DECLINE: NYSE -1.2:1, NASDAQ -1.6:1. Any tech stocks that moved up were large caps from the look of it.
Tech, particularly some big names, were modestly positive, hence NASDAQ 100's slight gain. GOOG, FB and other FAANG just edged higher. Software stocks enjoyed modest gains as well. It was not a washout obviously: some gains, some tests of support and recoveries. Sure, at one point it looked sketchy, but stocks manded a pretty decent recovery.
Again, in the end, it was just a consolidation of Friday's gains. Wish I could tell you more, or perhaps not. The general idea remains the same: the indices are being drawn toward the prior highs. After a week of lateral consolidation a good break higher Friday, a pause Monday. Now will they need to show the upside again to keep the theme going, but Monday was definitely in line with that theme.
NY Empire PMI, April: 10.1 versus 9.0 expected versus 3.7 March. Improvement, but not showing a solid improvement.
FOMC: Evans appeared yet again on CNBC. You listen to these people and they sound sane. The old mantra is always trotted out, i.e. the Fed needs independence. There are also more nuanced arguments such as there is no way Congress could do what the Fed does. Imagine that: arguing for no oversight (in the name of independence) and shunning control from elected officials. In short, an independent body controlling our currency that answers to no one. Now, please, tell me just where that clause appears in the Constitution. Hint: it doesn't, but as recent history shows, that provides absolutely no impediment to Congress, the Executive, or the Court. Everything is ends driven; the means? Let the next generation deal with that.
In any event, Charles Evans was on CNBC once again and, after the usual discussion of fed independence, etc., said 1) he had no problem with Trump's weekend tweet because the Fed can take it, and 2) he sees no need for rate hikes on into the fall of 2020. He also said something about the December rate hike being a good idea, that the economic data was starting to heal of late. No one asked the question whether things would not have become so worrisomely weak if the Fed had NOT hiked. Of course, they want him to come back and talk about golf versus answering real accountability questions, so no tough follow ups.
DJ30: Modest loss Monday, holding over the 10 day EMA. No issues with this action at all following that Friday gap upside after a nice flag consolidation.
SOX: Came within a point of filling Friday's gap and then barely bounced. As a result, SOX gave up most all the Friday move to a higher high. Even so, looking at the chip leaders the patterns remain solid.
NASDAQ: Tested lower to the 10 day EMA and the last August peak then rebounded, recouping just about all the session's downside. Modest test of Friday, still holding gains, but recall that NASDAQ did not really participate Friday.
SP500: Very similar to NASDAQ, except SP500 actually moved higher Friday. Tested intraday into the gap zone, held well over the 10 day EMA, and rebounded to recapture most of the losses. Pretty standard post-upside break on a Friday test.
SP400: Midcaps lost just a bit of ground, holding the lion's share of the Friday gap higher that was quite a solid move.
RUTX: The small cap index tapped the converged 10 day EMA and the 200 day SMA on the low, rebounded nicely. Nice doji with tail shakeout.
Even the stocks that closed with upside tested lower intraday. It was simply that kind of session. Very few damaged their patterns.
Machinery/Manufacturing: This will be a familiar pattern tonight. Modest losses as the good moves from late last week, e.g. CMI, MMM, UTX, CAT.
Financials: GS, C beat bottom line, missed top line. GS developed a bad case of the downside gaps. C sold but then recovered to flat, leaving a very decent doji with tail test of the Friday upside gap. JPM, BAC and others performed as many other sectors, i.e. a modest decline on lower trade.
Transports: Same thing with rails and truckers, after a good Friday fading. Again, not a bad decline, but it will be necessary to hold and rebound: CSX, ODFL, and even DAL is in a nice test.
Software: Some upside, showing relative strength, though not a groundswell. SYMC broke higher, one of our plays. PANW was quite decent, TEAM was up modestly as was MSFT. Nothing major, but a good showing given the type of session.
Semiconductors: Sluggish but held up very well across the board. AVGO, TSM, INTC. LRCX in a very nice doji test of the 10 day EMA. AMD a bit deeper test, but not bad. MU actually setting up.
Energy: Very mixed. Big names struggled, e.g. XOM, CVX, MRO. Offshore drillers setting up well, e.g. DO. OII also not a bad setup Some small issues so-so and some struggling: CRZO, DNR, PTEN. Oil itself looked fine with a 10 day EMA test.
FAANG: GOOG, FB, AMZN, AAPL managed gains (AMZN after shaking us out). NFLX still struggling. Decent recoveries off the lows.
Biotechs/Drugs: Some decent moves, e.g. ARQL surging over 6% for us; needed it. ARWR put in a token bounce after selling to the 50 day MA Friday. Still quite mixed.
Stats: -27.53 points (-0.10%) to close at 26384.77
Stats: -8.15 points (-0.10%) to close at 7976.01
Volume: 1.82B (-7.61%)
Up Volume: 712.04M (-507.96M)
Down Volume: 1.09B (+364.81M)
A/D and Hi/Lo: Decliners led 1.56 to 1
Previous Session: Advancers led 1.3 to 1
New Highs: 113 (-8)
New Lows: 51 (+6)
Stats: -1.83 points (-0.06%) to close at 2905.58
NYSE Volume: 747.009M (-6.19%)
Up Volume: 303.13M (-183.753M)
Down Volume: 436.42M (+144.788M)
A/D and Hi/Lo: Decliners led 1.17 to 1
Previous Session: Advancers led 1.76 to 1
New Highs: 139 (-14)
New Lows: 24 (+3)
VIX: 12.32; +0.31
VXN: 15.93; +0.30
VXO: 11.89; +0.15
Put/Call Ratio (CBOE): 0.91; +0.17
Bulls and Bears:
Bulls rose on an up week, bears faded on that week, but the moves were modest. The big moves are in the bank so to speak after the bulls and bears crossed over in the big year end selloff.
Bulls: 53.9 versus 53.4
Bears: 19.2 versus 19.4
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 53.9 versus 53.4
53.4 versus 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: 19.2 versus 19.4
19.4 versus 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 doubles to 14BP
The 2 year versus the 10 year: Spread rises 6BP to 20 BP.
10 year: 2.556% versus 2.495%
3 month: 2.418% versus 2.431
2 year: 2.354% versus 2.356%
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: 1.13034 versus 1.12896. Holding over the 50 day MA after cracking over it Friday.
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: 111.972 versus 111.757. Holding the move over the 200 day SMA Thursday.
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: 63.40, -0.49. Fading to complete the 10 day EMA test. Nice pause/test leaving oil in position to move higher again.
Gold: 1291.30, -3.90.
Good break higher to end the week, a modest test Monday, and now can the indices resume the march toward the old highs?
As noted, hardly any damage to the patterns on Monday, just some backfilling of the Friday moves. They are thus fully in position to continue the move toward the highs. Looks solid enough, but the quality stocks in those quality patterns will need to make some good moves.
Saw some of that in stocks such as SYMC, and the FAANG tested then rebounded, but it will have to spread out. That they showed some decent action on a weaker session is a positive for a continued move. Again, the leaders and those in good patterns just have to step up and make the moves.
Earnings are going to start coming in faster and we are looking for them to be an aide to the move higher, providing some good numbers to go with good patterns. As such, we still look for entries to take advantage of those good patterns and that run toward the old highs -- if they can show the moves.
Have a great evening!
End part 1
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