Monday, April 08, 2019

The Daily, Part 1, 4-8-19

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4/8/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: CRZO; DNR; SWKS
Trailing stops: None issued
Stop alerts: None issued

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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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- Not a great Monday but an upside Monday after a negative open.
- A slew of downgrades and BA woes trumped trade news
- Kudlow gushing on trade has really no effect.
- Sluggish action but the recent improvement in oil stocks, more old school stocks continues.

After a soft start gratis BA production cuts and a Chinese order suspension, not to mention a slew of downgrades for many stocks, the stock market recovered and closed mostly positive. Not a blast higher, but a solid low to high move that again shows the upside bias and lack of sellers willing to enter at this juncture.

SP500 3.03, 0.10%
NASDAQ 15.19, 0.19%
DJ30 -83.97, -0.32%
SP400 0.02%
RUTX -0.26%
SOX 0.25%
NASDAQ 100 0.28%

VOLUME: NYSE -4%, NASDAQ -4%. Volume slid further below average on a modest advance. At least there was no churn as some indices sold.


Definitely a yawn of a session, but as noted, a yawn to the upside, the default direction of drift. This even with Larry Kudlow coming out positive on the trade talks. I think the market, after jumping last Monday on positive trade comments has hit trade news saturation level.

BA lost an order of 100 737 Max planes to China and also lowered production numbers on the aircraft. BA personally accounted for the losses on the Dow.

Analysts were very active this Monday after a hiatus last week.

Upgrades: WFC; PG; SNAP; STX; WYNN


Active analysts indeed.


Even so, the stock indices performed decently if uninspired.

SP500 put in an eighth upside session, slowly rising toward those highs.

NASDAQ broke through the July 2018 penultimate high. Nice to see but not a strong move.

DJ30 faded just modestly toward the 10 day EMA thanks to BA.

SOX added another new high after starting lower. Nice low to high action.

RUTX, SP400, after leading to end last week, resumed their laggard status, letting the other indices rise in the lead Monday.


Leadership was mixed but some good moves continued while some tested modestly.

Financials: Overall an upside session with BAC joined by C over the 200 day SMA. V and made very nice, easy tests of the 10/20 day EMA. Not bad.

FAANG: AAPL, AMZN led while the others posted very modest tests of support. Overall still rising, still somewhat uninspired.

Materials: CX surged 2.4%. LPX tested a solid Friday. Industrial metals such as CLF not bad.

Energy: Some solid moves while others just hung around -- very similar to the other sectors. CRZO, DNR solid moves. XOM not bad. CVX, APC tried higher but slid back most of the gains. Overall still some solid patterns.

Machinery/Manufacturing: Some nice tests, e.g. CAT, CMI. UTX still looks very solid. MMM taking a short breather after a good move. Still quite solid.

Biotech/Drugs: Tested Monday after some initial upside late last week: ARQL, BLUE, ARWR.

Semiconductors: Some continued higher, e.g. MCHP. Other strong movers tested, e.g. LRCX, AVOG still testing near support. RMBS tested and bounced some off the 10 day. SWKS moved up and we picked up a position.


Stats: -83.97 points (-0.32%) to close at 26341.02

Stats: +15.19 points (+0.19%) to close at 7953.88
Volume: 2.07B (-3.72%)

Up Volume: 1.22B (-320M)
Down Volume: 836.88M (+244.89M)

A/D and Hi/Lo: Decliners led 1.16 to 1
Previous Session: Advancers led 2.29 to 1

New Highs: 92 (-12)
New Lows: 34 (+3)

Stats: +3.03 points (+0.10%) to close at 2895.77
NYSE Volume: 741.728M (-3.64%)

Up Volume: 412.809M (-159.915M)
Down Volume: 309.826M (+127.8M)

A/D and Hi/Lo: Advancers led 1.05 to 1
Previous Session: Advancers led 2.54 to 1

New Highs: 97 (-19)
New Lows: 6 (-2)


VIX: 13.18; +0.36
VXN: 16.82; +0.65
VXO: 12.36; +0.13

Put/Call Ratio (CBOE): 0.76; -0.06

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 remains below the 10 year: Spread 9BP from 7BP

The 2 year remains below 10 year: Spread 16BP from 17BP

10 year: 2.522% versus 2.508%

3 month: 2.429% versus 2.434%
2 year: 2.36% versus 2.339%

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: 1.1262 versus 1.12224.

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: 111.47 vs 111.655

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

Plunged lower in December then a recovery to the 200 day SMA in March. Has struggled at that level below the Q4 2018 trading range. 114.60 is the top of the longer term range.

Oil: 64.46, +1.42. Moving up off the 200 day SMA test.

Gold: 1301.60, +6.00


There was not a lot of movement given the indices are up over a week and are somewhat sluggish. The upside bias of course remains as stocks started weak and recovered, albeit limping along in the recovery.

We picked up some new positions in oil and also SWKS in chips. Decent moves and we like what we see in the machinery/manufacturing for entries if they can break back upside.

Patterns continue to look good in many new areas and that continues providing a boost to the market.

Nonetheless, the action was pretty sluggish after such a move and it could be that you see some areas testing more as the older school areas continue to get more money pushed their way.

Many are skeptical of the move, but as is often the case, skepticism leads to additional upside. That is the near term outlook as many leaders are still in good shape and others are stepping up. Longer term the indices still have to deal with the 2018 topping pattern. Yes, we know that is out there. For now, the upside bias remains and we can pick up gains as that bias continues.

Have a great evening!

End part 1
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