Wednesday, April 17, 2019

The Daily, Part 1 of 2, 4-17-19

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4/17/2019 Investment House Daily
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- SOX surges again, NASDAQ 100 hits a new high, gives it back.
- Gaps higher started to reverse, time to bank gain.
- Higher volume as the old highs push back with the first signs of some selling.
- Financials, transports solid, chips still up but get some sellers.
- Short week, 3-day closure, then we likely see how the market truly reacts to the old highs.

Once again it was SOX and the six dwarves. Led by QCOM, INTC, MCHP -- and several others before the gave up a solid early move -- SOX once again took the pole position, and if not for a handful of large cap NASDAQ stocks, SOX would have been the lone upside gainer.

But that is not wholly accurate is it? No, on the high, NASDAQ 100 posted a new all-time high at 7715, a whole 15 points above that prior high. Just had a hard time holding it as many large NASDAQ stocks faded off their early highs. Now it has to answer the question: can it hold the move or do the sellers take it out?

So, SOX and possibly NASDAQ 100 and the five dwarves.

SP500 -6.61, -0.23%
NASDAQ -4.15, -0.05%
DJ30 -3.12, -0.01%
SP400 -0.76%
RUTX -0.96%
SOX 1.56%
NASDAQ 100 0.34%

VOLUME: NYSE +11%, NASDAQ +10%. NYSE trade rallied to average on a session that saw mixed action at best. Some great upside moves but also some cracks forming as some stocks finally started to sell. NASDAQ trade moved back above average for the first time in 9 sessions, this on an upside gap that turned to negative. These are not good technical indications, suggesting the move toward the prior highs is starting to see some sellers attacking to see what damage can be done.

ADVANCE/DECLINE: NYSE -1.5:1, NASDAQ -1.7;1. Not crushing given the losses in the small and midcaps, but it does show the indices were controlled by the big cap stocks and those mitigated the damages.

The market had every reason to rally. It didn't.

China GDP surprised upside and other economic metrics showed improvement. They should. China created billions in credit to boost economics. Even so, can you trust the numbers? If you are a fool, yes. If you lived through the 1960's and 1970's, you know communism. It may be in vogue to think those regimes cannot possibly be that bad in this day and age. They are. China is worse than Iran or ISIS in dissident slaughter. China is rounding up the kids again just as what happened when Mao took power. They are being sent to what are reprogramming encampments. They either embrace what is foisted upon them or die. Mao knew he had to get rid of the dreamers first to eliminate their dissention, second to crush the spirit of their parents.

Okay, I digress. Chinese data was better than expected on GDP, on credit formation, on imports (showing domestic consumption). That was credited with the early rise in futures. China okay, you okay. No okay. Certainly semiconductors love better economic news from China. They reacted as you would expect, but then again, many did not hold the early moves.

February trade balance was improved at -$49.4B when -54B was expected. That also improved from the -51.1B in January. Much to rejoice about.

Earnings were okay as well, with MS, PEP, CSX, NFLX beating. MS' results helped keep the financial stocks improving. PEP results helped food stocks. CSX, KSU gapped higher as well, helping the rails. Good stocks in some important categories really helped the move. They were not, however, the norm for this session that saw a lot of good moves early fade to losses.


Some good moves higher by SOX and NASDAQ 100, but then some backtracking. Other indices ran into some selling on volume. Some sellers moved in and thus we were taking a lot of gain.

NASDAQ 100: Okay, starting here. Gapped upside then moved through the prior high from the October 1 high. That all happened in the opening moments before it was lost. Gapped higher, faded, higher volume, key resistance level. Just a pause before moving on a la SOX or are the sellers now locking in?

SOX: Thanks to QCOM (again) and a gap from INTC, SOX led the league with gains again. Farther past the prior all-time high, but 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 and perhaps NASDAQ 100.

SP500: Even with the help of the financial stocks and transports, SP500 bounced off the August 2018 high. Closed just over the 10 day EMA. Bumping into serious resistance and feeling it. Volume was up as some sellers entered.

DJ30: Volume was up again as DJ30 traded flat. A bit of churn just below the resistance. Thus far holding up well, but when indices bump key resistance, nothing can be taken for granted. Some selling is emerging near the highs.

NASDAQ: Big gap upside then a reversal to flat, volume moving just over average. Still off the prior highs and a higher volume reversal is not great news. On the other hand, just over 3 weeks to the upside and a bit of retrenching back perhaps toward the 20 day EMA has been the norm.

SP400: After the Friday upside gap and the lateral consolidation through Tuesday, the midcaps tried a bit higher but reversed to close near the 10 day EMA. Rising NYSE trade. Holding the late February high for now, but there was a good breakout, a test, and a continuation of the breakout. Then this beak lower. Not a great indication.

RUTX: Broke lower from the flat lateral range to the 20 day EMA on the low. Similar to SP400, a good break higher, a consolidation, then threatening to dump it.


Semiconductors: Some strong moves again though some were unable to hold on: QRVO, SWKS. Others surged and held on, e.g. TSM, MCHP. INTC held on to a decent gain.

Financials: Surging again. JPM added 2.8%. C, PNC, BAC to a lesser extent. MS gapped nicely. GS is recovering up toward the 200 day SMA. V is still climbing higher but stalling a bit.

Transports: Rails were on rails -- upside. CSX and KSU gapped big. JBHT in trucking still struggled, but ODFL rallied another session. As did SAIA. FDX added a bit more upside, rising day by day.

Machinery/Manufacturing: After some good moves, a bit mixed. CAT jumped higher but gave back much of the gain. CMI gapped upside but then closed lower, still trending up the 10 day. DE added some more upside. UTX up on a bit stronger volume. ETN, MMM up modestly as well.

Energy: Tried higher then most faded. PTEN gapped upside then faded. CVX faded from its rebound. XOM up but a slow move. HAL, SLB gapped higher to continue their short uptrends but faded. VLO in refining added a good move on good volume. Very mixed.

FAANG: GOOG continued upside with a gap, but may be a bit extended on this move as it is up 6 straight sessions. NFLX gapped upside then faded to close at the 50 day EMA. AMZN gapped higher faded most of the move. Still a decent move over the 10 day EMA. AAPL Surged up off the weeklong lateral consolidation. FB after a nice run is taking a breather.

Biotechs/Drugs: Looked promising but struggling. ARQL backed off some after a good move; it is okay. ARWR fell right back down. AXSM surged higher then faded the move. Getting bumpy.


Stats: -3.12 points (-0.01%) to close at 26449.54

Stats: -4.15 points (-0.05%) to close at 7996.08
Volume: 2.29B (+9.57%)

Up Volume: 1.06B (-270M)
Down Volume: 1.22B (+478.39M)

A/D and Hi/Lo: Decliners led 1.74 to 1
Previous Session: Decliners led 1.56 to 1

New Highs: 83 (-48)
New Lows: 41 (-10)

Stats: -6.61 points (-0.23%) to close at 2900.45
NYSE Volume: 834.373M (+10.90%)

Up Volume: 320.538M (-96.836M)
Down Volume: 498.973M (+172.669M)

A/D and Hi/Lo: Decliners led 1.45 to 1
Previous Session: Decliners led 1.17 to 1

New Highs: 82 (-47)
New Lows: 30 (+4)


VIX: 12.60; +0.42
VXN: 15.86; -0.02
VXO: 12.58; +0.58

Put/Call Ratio (CBOE): 0.81; -0.11

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 drops the 2BP picked up Wednesday, now at 14 BP

The 2 year versus the 10 year: Spread holds at 18BP

10 year: 2.579% versus 2.603%

3 month: 2.441 versus 2.439%
2 year: 2.395 versus 2.421%

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: 1.12958 versus 1.12994. Dollar modestly stronger but the pair continues a lateral move at the 50 day MA.

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: 111.941 versus 111.987. Also moving laterally the past week, this pair just over 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: 63.82, -0.18

Gold: 1276.80, -0.40.


Last trading day of the week and of the April expiration as Friday the markets are closed for Good Friday. Three day closure, market was under some selling pressure Wednesday as the indices approached those tops. NASDAQ 100 hit the top, moved through it, then coughed it up. SOX held onto a strong gain, but it also slid back some. The small and midcaps struggled the most in terms of losses, but the large cap indices were not immune to the brick wall effect as they hit that well early session.

As noted earlier, that is one reason we banked a lot of gain. The old highs act as a magnet and have pulled the indices closer and indeed to them and beyond, but when they leaders hit and turn, bank some gain.

That did not keep us from moving into some positions, however. There are still good moves and money is still moving into different market areas. We jumped on them when they showed the moves. We will continue watching where the money is going and follow it, but a bit of caution here as the indices felt the first push back from the old highs.

Thursday we see how the leaders that jumped and faded react. It may be just some nervous feet ahead of a 3-day closure and will come out on the other side of Easter just fine, rising again. Okay, forgive me. It is the season.

Anyway, not anticipating buying much tomorrow though some downside could be interesting (e.g. CRM), and some upside could still provide great opportunity: PTEN, AMD, AXSM, MU.

Accordingly, we will see how they react and what shows itself as a good entry. May not materialize, may have to wait until the following week to see the reaction to the Wednesday reaction. Near a top you have to be vigilant and yes, that is why we banked quite a bit of gain today and closed positions that were problematic.

Have a great evening!

End part 1 of 2
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