Tuesday, April 16, 2019

The Daily, Part 1, 4-16-19

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4/16/2019 Investment House Daily
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Targets hit: ARQL
Entry alerts: AMZN
Trailing stops: ISRG
Stop alerts: None issued

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- But for SOX and financials, catatonic would have described the action.
- Fink calls for a melt up, a play on our 'falling upward' description of this market.
- Bank earnings decent enough, afterhours earnings turning in a mixed response.
- I am surprised China beats GDP expectations -- said no one.
- Still playing the indices falling forward.

The market showed three solid upside indicators Tuesday: SOX rallied 3.19%, financial stocks posted solid gains, and SOX rallied 3.19%. The rest of the market just followed along -- outside a few stocks here and there such as QCOM (settlement with AAPL), AMZN, and small fry such as ARQL.

Those were plenty to send the indices higher after a Monday pause from the Friday rally. Higher, but sadly less than impressive outside SOX and the financials. Of course, some would argue SOX' action was impressive enough for all. And it was SOX, and it was up. Solidly.

SP500 1.48, 0.05%
NASDAQ 24.22, 0.30%
DJ30 67.89, 0.26%
SP500 0.08%
RUTX 0.23%
SOX 3.19%
NASDAQ 100 0.34%

VOLUME: NYSE +1%, NASDAQ +15%. Modest NYSE volume gain, but NASDAQ was much more robust, moving up near average but still not average.


After talking up the importance of SOX I am not going to carp about the session as those stocks as well as financials, a long-forgotten and generally despised of late group, propelled the action. If you are going to have one group lead, SOX is in the short list, perhaps the top of the list.

That said, while the other indices added upside, it was bare minimum in some cases and in the others just mediocre. I would call it a crawl but I don't want to be too critical. It was an upside move that took a minimalist approach as in the minimum it could do and still notch a higher session.

In other words, the upside bias remained and the indices 'fell' upward overall with bids hitting just a few specific sectors, particularly chips and financials. Indeed, at the very least those stocks moved particularly well, sporting very good volumes on the moves.

Interestingly, Mr. Fink from Blackrock commented this morning that stocks could be in a position to 'melt up.' All due respect, but that is what we have talked about here for the past two weeks, i.e. the 'falling upward' move of stocks.

Earnings will of course play a big role in any move toward the old highs and Tuesday more bank earnings before the open, more after the close, and some more upgrades that had impact (WDC).

BAC missed on the top line as all other banks other than JPM and PNC, but it gapped lower and recovered nicely.

BLK beat and jumped 3+%. JNJ beat. JBHT (trucking) missed the top and bottom (caught TB) and gapped almost 5% lower. Containerboard sales are flat to lower and JBHT noted the decline in freight. YET . . . ODFL, SAIA managed upside. JBHT's loss is their gain?

Afterhours NFLX, IBM, CSX reported. NFLX beat but guidance was light. IBM missed top line. CSX posted solid beats. UAL rallied on its results. NFLX closed at 359 and traded 3 clicks lower afterhours. IBM sold 4 points (141ish). CSX was rewarded, rising a solid 3+ points.

The afterhours reports were decent enough. NFLX was almost a relief given fears about missing its metrics. Guidance was light; we will see how that plays out in light of DIS and other competition.

Overall the futures were unimpressed with the afterhours results. In the morning Pepsi pops the top on its results, MS tries to show GS how it is done, and ASML in chips reports. AA, TEAM, TCBI and a cast of lesser known names report after the close. The deluge is on.

China: Wednesday is another round of 'you make the call' as GDP data issues. The news is just coming out and the reading was . . . 6.4%. Wow, just edged expectations -- who would have thought?

Fact or fiction? Substance or crapola? You know what? The market does not care. It just wants to hear good news. If so, who cares if it comes from communists? They are new era communists and they would never lie, right? No, and they would never take US or European tech, mass produce using it, and dump it on the US and EU markets.


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SOX is on its own road, punching out more new highs. The other indices are rising, drawing ever nearer to the prior highs -- at least for the large caps -- and in so doing, could be drawing toward their next serious resistance. Certainly the moves at this juncture are lacking serious punch -- again, outside of SOX.

SOX: Brilliant move, gapping up from the 10 day EMA test and surging to a new high. Powerful. But . . . don't get too cocky. Mid-March SOX did the same thing and was slammed the next session, struggling for a week. Solid move, many chips rallied well. That is what we take from this.

The remaining indices are almost carbons of one another.

RUTX A gain, but a flat lateral move continues just below the February peak.

SP500 edged up to the late August peak, the penultimate peak before the short double top that marked the prior all-time high.

DJ30 gave back much of the session move but still held a decent gain. Almost to the January 2018 peak that leads to the September then the October all-time high. Getting close.

NASDAQ received some semiconductor support as well as some FAANG gains. Even so, it could only muster a doji as it is in the last zone over the July high and heading toward the late August all-time high.

SP400 put in another solid hold of the Friday upside gap. It has broken higher from its inverted head and shoulders, is working toward the old highs just as the larger cap indices.


Semiconductors: Some very solid, yea verily, impressive moves. AMAT, MCHP, QRVO, TSM, SWKS -- solid moves. Not all were tearing it up, but they are coming in waves.

Machinery/Manufacturing: Solid enough. CMI a good move, DE, CAT as well. MMM, UTX solid

Financials: Rebirth? JPM started upside again and C popped 2.8%. PNC moved up again after a Monday pause. GS still struggling but MS has its say tomorrow.

Transports: JBHT struggled on earnings but other truckers rallied. AAL up afterhours on earnings. Rails are solid enough with CSX up afterhours and KSU on deck Wednesday.

Energy: Very mixed. Still. CVX, XOM struggling again. On the other hand, PTEN broke higher off a 200 day SMA test. OII not bad. Taking turns from the look of it.

FAANG: GOOG gapped to a doji near the early March high. AMZN broke higher from its lateral consolidation. AAPL still in the lateral move. NFLX up before the earnings, bouncing off a 200 day SMA test but afterhours is all over the place. FB off just a bit, still solid.

Biotechs/Drugs: ARQL hit our initial target. ARWR bounced quite nicely. AXSM looks interesting.


Stats: +67.89 points (+0.26%) to close at 26452.66

Stats: +24.21 points (+0.30%) to close at 8000.23
Volume: 2.09B (+14.84%)

Up Volume: 1.33B (+617.96M)
Down Volume: 741.61M (-348.39M)

A/D and Hi/Lo: Decliners led 1.56 to 1
Previous Session: Decliners led 1.56 to 1

New Highs: 131 (+18)
New Lows: 51 (0)

Stats: +1.48 points (+0.05%) to close at 2907.06
NYSE Volume: 752.372M (+0.72%)

Up Volume: 417.375M (+114.245M)
Down Volume: 326.304M (-110.116M)

A/D and Hi/Lo: Decliners led 1.17 to 1
Previous Session: Decliners led 1.17 to 1

New Highs: 129 (-10)
New Lows: 26 (+2)


VIX: 12.18; -0.14
VXN: 15.88; -0.05
VXO: 12.00; +0.11

Put/Call Ratio (CBOE): 0.92; +0.01

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 increases another 2 to 16 BP

The 2 year versus the 10 year: Spread fades 2 BP to 18BP

10 year: 2.603% versus 2.556%

3 month: 2.439% versus 2.418%
2 year: 2.421% versus 2.354%

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: 1.12994 versus 1.13034.

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: 111.987 versus 111.972

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: 64.05, +0.65

Gold: 1277.20, -14.10. Bombing to the trendline at the top of the triangle.


China GDP is out with a 6.4% beat of 6.3% expected. Man, I was sweating that one.

More earnings are coming, but one of the more interesting reactions has to be what happens with NFLX after it beat but guided softer.

Perhaps NFLX will be a tone setter, but I will say the earnings of the evening are not blowing things up or down. The market is in a crawl -- for the most part -- as it slowly edges toward those prior highs. The only index in a hurry is SOX, and it is already the new high index, trying to pull the others with it.

As the indices draw near those highs, still see patterns to like though many Tuesday moved higher only to fade parts of the gains. Not the greatest action, but there are groups moving in larger chunks and it looks as if that action rotates through the market as well.

Okay, so at this juncture there are still good patterns and we will certainly consider more positions if the right combination of reward to risk remains after factoring in earnings ahead, moves to this point by the market overall. With many of these the risk/reward still remains solid.

Oh, and China beat on GDP. Party on.

Have a great evening!

End part 1
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