Tuesday, April 30, 2019

The Daily, Part 1 of 3, 4-30-19

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4/30/2019 Investment House Daily
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Investment House Daily Subscribers:


Targets hit: None issued
Entry alerts: AAPL; ACAD; AAPL; AVGO; ETSY
Trailing stops: AAPL; DRI; NBR
Stop alerts: COHR; DO

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Market Summary Video, Plays and Play Videos, and Play Table with play annotations will issue Wednesday, Weekend.

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Tuesday and Thursday reports will contain the market summary, chart links to view the index charts, and updated play table.

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- Even with GOOG dropping 100, the indices hold their position ahead of AAPL
- Data does not really help the outlook as Chicago PMI misses, China PMI misses.
- Pending home sales solid, confidence still high.
- Administration causes issues with a 'it will happen or not' view of the trade deal.
- Up to AAPL to drive the large cap indices higher.

Despite GOOG's impressive $99, 7.7% plunge to just below the 50 day MA, the stock market held up well enough. A mixed close, still bumping old highs (SP500, NASDAQ are the two trying to get past those highs), but holding up in the face of adversity.

That might pay off: afterhours tonight AAPL beat the street on most metrics and included a serious buyback and a 5% increase to its dividend. The combination was plenty to satisfy and even excite investors, and the stock is up 10+ points after losing 4 points on the session. That leaves AAPL over the recent highs and dragging SPY up with it afterhours. Hello? GOOG? Want to take a lesson from AAPL on buybacks and actually answering questions in a conference call? Might help avert $100 price plunges as traders and investors tend to dump a stock when they feel the company is playing hide the ball.

Even with AAPL's apparent aplomb at media relations, it is highly entertaining listening to analysts comment on AAPL's results. Billions upon billions of profits and amassed fortune and the best this high tech firm, the inventor of the smartphone, can come up with are buybacks. I would say AAPL is the same as MSFT now, just making refinements to its cash cow product. Thing is, MSFT has actually put out some really nice products in its Surface line of tablets and PC's. AAPL's macbooks are basically the same product for several years. Interesting commentary to say the least.

In any event, perhaps AAPL's earnings and accompanying investor dividend bonuses will turn a mixed market into one that breaks higher without a test. SP500 or NASDAQ have bumped at the prior all-time highs for a week, unable to make a definitive move. DJ30, SP400, RUTX are similarly stymied at prior levels, not even new highs. AAPL may be the catalyst to have those two indices put some mileage over the old highs.

SP500 2.80, 0.10%
NASDAQ -66.46, -0.81%
DJ30 38.52, 0.15%
SP400 -0.16%
RUTX -0.45%
SOX 0.76%
NASDAQ 100 -0.73%

VOLUME: NYSE +40% to over 1 billion shares, well above average. NASDAQ +20% to 2.1B, but over half the volume was downside.



The data continues back and forth, good, not so good, worrisome. One positive: world stock markets are still on the mend. China is off the past three weeks, but it is putting in a normal test of a strong February to early April surge. European markets are starting to move back over their 200 day SMA's. That is a pretty good forward looking indicator even as the data swings back and forth.

China: April PMI reports did not fall back to contraction, but they missed expectations, holding just over 50 (50.1).


Pending home sales, March rallied 3.8% versus the 1.5% expected. Positive news.

San Francisco: Housing prices dropped for the first time in 7 years. New York City reported a drop in prices a week back. Not so positive news.

Chicago PMI, April: 52.6 versus 58.2 expected versus 58.7 March. Similar to China, not contracting but definitely not hitting the expected metrics.

Consumer Confidence, April: 129.2 versus 127.3 expected versus 124.2 March. Highest since February's 131.43. Okay, confidence is not bad but it tends to lag the economy.

Trade: After Mnuchin's 'last laps' comment Monday, White House chief of staff Mulvaney commented that in the next two weeks the trade negotiations will be resolved "one way or another" and that the US would not agree to any old deal, that it had to be a good one. Okay, the latter comments are old news. The others definitely cast the negotiations in a very problematic light. THAT did not help the stock market and stocks jogged hard lower midmorning when the comments hit the wire.

Safe to say stocks were as noncommittal as the data. Perhaps that changes tomorrow. You know, AAPL and its curse on modern man, the iPhone smartphone.


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Really no change Tuesday in relative position. With GOOG's results that is not really a bad thing. As noted, perhaps holding the line then AAPL's results will yield a more definitive move Wednesday.

SP500 put in a new closing high, coming back from a trade-induced dip to the 10 day EMA intraday. New high yes, no real change, however.

NASDAQ: GOOG gapped it lower, but after undercutting the 10 day EMA, a decent rebound to hold above it on the close. Nice doji with tail action that continues the advance up the 10 day EMA. Still at the major resistance from the prior high and the 2018 range, but overcame a real drag from a major component.

DJ30 continues bumping at the January 2018 peak, still below the two higher peaks from late last summer, early fall. AAPL will help DJ30 in the morning, but thus far DJ30 remains well-entrenched below the old highs.

SOX found some solid moves from AVGO, NXPI et al and managed a very solid session. After selling to test the 20 day EMA Friday intraday and reversing, SOX is managing a comeback. Not necessarily impressive, just making a comeback. For now, that works.

SP400 midcaps continue working laterally over the 20 day EMA and stuck at 1975ish. Not a bad pattern, just having a hard time making the next break higher.

RUTX rallied to the February high Monday then backed off modestly Tuesday. After leading the market for 2 sessions it tested but bounced nicely off the session low. Still in the six month inverted head and shoulders, still watching for a breakout move so it can at least try to start a run at the old highs.

NASDAQ 100: Gapped lower thanks to GOOG, managing to recover and hold over the 10 day EMA with a doji. AAPL will help rebuild the move after GOOG helped push it back. Nice test of the breakout point, so at least that is out of the way.


FAANG: AAPL up 10 clicks afterhours and will clear the April high in the morning. GOOG lost 99 points on the day and is flat afterhours. FB surged early session but then it and other social faded off that move. Modest loss. AMZN making a rather gentle doji test of the 10 day EMA and actually looks ready to move higher. NFLX still testing the 10 day EMA after the surge last week lost its drive and faded back.

Software: ADBE was back up again and VMW added 1.37%. CRM looks as if it will make a breakout after this short test. HUBS taking a bit of a breather after its jump higher as is NOW. ZS, NEWR moving higher quietly.

Semiconductors: Some nice moves, e.g. AVGO, NXPI, MCHP. LRCX edged a bit higher. SWKS looks as if it can bounce and SMTC still has a really decent pattern. NVDA still stuck just over the 50 day EMA while QRVO shows a doji a the 20 day EMA. Still mixed after those INTC earnings sent that stock down hard. AMD reported after the close and is up about 1.5 clicks. INTC is not helping as it continues lower.

Social: Took off upside for both TWTR and FB but then the bids disappeared and the nice surged did as well. Still good patterns on those two but after giving up a surge they have to avoid sliding back more.

Manufacturing/Machinery: Manufacturing saw some gaps lower that did manage to recover decently, e.g. ETN, EMR. UTX still solid. CMI bounced decently on volume, CAT not bad.

Financial: MA reported good results and jumped 2.88%. V moved up with it but then faded to near flat and a doji. May have to bank the rest of the May option gain if it stalls again Wednesday. Banks took a bit of time off, more of a pause: JPM, C, BAC. MS paused as well after a good Friday and Monday surge.


Stats: +38.52 points (+0.15%) to close at 26592.91

Stats: -66.47 points (-0.81%) to close at 8095.39
Volume: 2.12B (+19.1%)

Up Volume: 871.3M (-128.7M)
Down Volume: 1.22B (+458.75M)

A/D and Hi/Lo: Decliners led 1.41 to 1
Previous Session: Advancers led 1.55 to 1

New Highs: 111 (-12)
New Lows: 49 (+20)

Stats: +2.80 points (+0.10%) to close at 2945.83
NYSE Volume: 1.037B (+40.42%)

Up Volume: 554.99M (+161.841M)
Down Volume: 468.019M (+134.849M)

A/D and Hi/Lo: Advancers led 1.21 to 1
Previous Session: Advancers led 1.52 to 1

New Highs: 197 (+59)
New Lows: 30 (+14)


VIX: 13.12; +0.01
VXN: 16.60; +0.16
VXO: 12.44; +0.17

Put/Call Ratio (CBOE): 1.04; +0.18

Bulls and Bears:

The surprise is that bulls fell instead of rising as the indices continued higher. The bigger surprise is that bears fell a significant amount. Of the two, I would suggest the drop in bears -- very stubborn to fall -- is the bigger news and more an indication of the market turning to the more ebullient side.

At this juncture there are no extremes in this indicator. It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.

Indicator level: green (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).

Bulls: 53.4 versus 54.8

Bears: 18.4 versus 19.2

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.



Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.

The 3 month yield versus the 10 year: Spread drops 1BP to 7BP

The 2 year versus the 10 year: Spread rises 1BP to 23BP

10 year: 2.505% versus 2.529%. Questionable economic data rallied bonds some.

3 month: 2.432% versus 2.423%
2 year: 2.266% versus 2.286%

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: 1.12146 versus 1.11843. Euro continues the rebound, up now four straight sessions to the 20 day EMA.

Historical: Back into the 6-month range formed after the euro sold off from the early 2018 peaks after a week below it.

USD/JPY: 111.435 versus 111.68. Dollar falls back to the 50 day MA, struggling to get traction to move up from it.

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: 63.91, +0.41

Gold: 1285.70, +4.20


AAPL earnings perhaps regenerated the earnings upside drive. SP500 and NASDAQ definitely needed it as the bumping at the 20 day EMA was wearing a bit thin. GOOG did not sink them; can AAPL rally them?

There are still some stocks I want to play downside such as QCOM on its results given its huge surge and perhaps CSCO still though AAPL's reaction from a similar pattern makes you think twice. TGT certainly looks like crud after gapping below the 200 day SMA Friday.

On the upside, software looks to have found itself again after a 3 month hiatus. CRM is setting up well, putting in a higher low in its trading range. AMZN is making a nice post-earnings tap at the 10 day EMA. Still plenty of possibilities from some solid names.

Have a great evening!

End part 1
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