Thursday, April 04, 2019

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

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


Targets hit: ZS
Entry alerts: CMI; FDX
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.

Access to all current videos will remain assessable each day using the play links in the reports.

If any market circumstances arise where we see additional plays we want to prepare for the next session, we will of course issue those plays regardless of the day of the week.


- Trade deal still the topic du jour, and after helping the chips rally Wednesday, it helped industrials stir.
- NYSE indices trekking higher as large growth pauses a bit.
- Jobs Friday and market is looking for a better report.
- Money still likely moving toward the older investors.

More trade 'excitement' with Trump meeting the Chinese VP, holding out hope for that final meeting between Xi and Trump, a meeting that Xi won't have unless there is a deal. Later in the day we heard that T and X will meet. We also heard, however, that Trump is willing to let 5 or so years go by before China has to meet its purchase commitments and allow full ownership by US companies of US companies operating in China. Okay, a deal that defers key elements and possibly allows China to continue doing what China does best -- steal -- for another half decade.

Economics were more back burner ahead of the US jobs report Friday, but Germany did release its factory orders and they were dismal. -8.4% annually, the fastest rate of decline since the financial crisis. Europe is likely in recession right now, and despite China's miracle on rice bounce back to 50+ PMI, it is likely not any better than it was a month ago.

Heading toward the jobs report, US stocks were decidedly mixed. Tech struggled after a good leadership move, semiconductors closed basically flat after excellent surges. There was buying, however, skewed toward the old industry names, e.g. manufacturing, machinery, Boeing -- a bit of old school action that is not bad at all.

Thus, a bit of a shift on the session but not major. Some money finding the more industrial areas in addition to still working the NASDAQ names. Software was a notable target with some sharp drops though most hung on at near support for now.


To view, click on the following links:

SP500 put in its first 6-day win streak in over a year, and that edged SP500 to a new recovery closing high. SP500 sits 79 points over 2800 and some are saying that provides enough buffer zone to give investors worried about that level some comfort. Sure beats failing at that level, but as one resistance point is left, another appears: SP600 is right at the January 2018 peak that started the year-plus lateral range.

NASDAQ was down for the first time in 6 sessions -- down all of 3.77 points. More like a pause than a down day, and most of the downside pressure came from software stocks that, after a long dormant period near the highs, suffered a fairly sharp downside session. The action showed a second doji after NASDAQ gapped upside Wednesday but could not advance the ball. Maybe a bit overdone near term, but thus far NASDAQ is consolidating in place, and that is not bad action.

DJ30 broke to a higher recovery high, moving through the middle peak in the October/December resistance range as investors looked to more industrial-type stocks on the day as well as some energy.

SOX showed similar action to NASDAQ. After the Wednesday gap higher and move to a new high but then not, it tried higher again Thursday but again failed at 1475. Still held a gain, but a heck of a move for the past week and may want to pause a bit -- as it is doing.

SP400 midcaps added some solid enough upside, but they are still in the 6 week lateral range. A nice bounce off the 61% Fibonacci retracement, now facing the late February high. A solid pattern, still looks as if it needs some more work, but that is what we said about DJ30 and it kept moving right on up.

RUTX moved steadily higher as well; not terribly exciting, but steady. It is approaching the 200 day SMA and is at the mid-March peak. As with SP400, working on its pattern and doing a decent job.


FAANG: All decent, most sporting a similar look: up nicely for the past week, now showing a bit of a pause -- AMZN, AAPL, FB. NFLX still trying to do something. GOOG still very solid in its rebound.

Software: Hit. TEAM, NOW sold but they did hold support on the low. ADBE sold to the 20 day EMA and rebounded. DATA broke the 50 day MA's and did not rebound. NEWR stuck at the 200 day SMA for now. Gaming software sluggish but trying to continue setting up. WDAY fell hard to the 50 day MA. VMW sold to the 20 day EMA and bounced some; still looks good . . . but needs to hold here to keep the near trend working. COUP still in a very nice consolidation. MSFT at the mid-March high on lower MACD; important level.

Machinery/Manufacturing: Some nice patterns setting up and we picked up some CMI and looking at CAT. Manufacturing solid, e.g. MMM, EMR. BA tested the break over the 50 day EMA from Monday and bounced on excellent volume. Gap to fill up at 415ish. Money is moving to the group.

Semiconductors: Mostly holding steady after a great week upside. LRCX, AVGO, XLNX, RMBS off modestly. MCHP continued upside as did AMAT and to a lesser extent, AMD. Have to like the way SWKS is setting up.

Food/Restaurants. PEP looks ready to break higher after this weeklong test. DRI (Olive Garden etc.) showing a nice 10 day EMA test. CAKE looks kind of interesting as a turn; kind of. KO looks bad. MKC, under the radar, has moved 32 points in small, small increments since gapping lower in late January. MDLZ in a 1.5 week tight lateral move over the 10 day EMA after a new recovery high. Oh, and CMG also in a tight, tight, tight, weeklong lateral move over the 10 day EMA. Have to eat.


Stats: +166.50 points (+0.64%) to close at 26384.63

Stats: -3.77 points (-0.05%) to close at 7891.78
Volume: 2.14B (-14.4%)

Up Volume: 1.21B (-490M)
Down Volume: 919.64M (+148.23M)

A/D and Hi/Lo: Advancers led 1.31 to 1
Previous Session: Advancers led 1.43 to 1

New Highs: 67 (-38)
New Lows: 36 (-4)

Stats: +5.99 points (+0.21%) to close at 2879.39
NYSE Volume: 707.8M (-18.31%)

Up Volume: 508.352M (+72.884M)
Down Volume: 193.068M (-220.398M)

A/D and Hi/Lo: Advancers led 1.88 to 1
Previous Session: Advancers led 1.42 to 1

New Highs: 93 (-73)
New Lows: 10 (-6)


VIX: 13.58; -0.16
VXN: 16.79; +0.17
VXO: 13.48; -0.18

Put/Call Ratio (CBOE): 0.81; -0.05

Bulls and Bears:

Very status quo after the big recovery. Both bulls, bears holding position.

Bulls: 52.0 versus 53.9

Bears: 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: 52.0 versus 53.9
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 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2

Bears: 20.6 versus 20.6
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 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8



The 3 month yield remains below the 10 year: Spread 7BP from to 9.4BP

The 2 year remains below 10 year: Spread back to 17 from 19BP

10 year: 2.508% versus 2.528%

3 month: 2.434% versus 2.434%
2 year: 2.339% versus 2.341%

Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018.

2.528% versus 2.469% versus 2.496% versus 2.381% versus 2.281% versus 2.421% versus 2.443% versus 2.437% versus 2.538% versus 2.524% versus 2.616% versus 2.601% versus 2.591% versus 2.628% versus 2.625% versus 2.60% versus 2.641% versus 2.632% versus 2.641% versus 2.693% versus 2.715% versus 2.724% versus 2.759% versus 2.717% versus 2.673% versus 2.636% versus 2.672% versus 2.654% versus 2.695% versus 2.641% versus 2.641% versus 2.664% versus 2.654% versus 2.706% versus 2.686%

EUR/USD: 1.12224 versus 1.12444. Gave back some of the Wednesday bounce to the 10 day EMA.

Historical: 1.12444 versus 1.12034 versus 1.12058 versus 1.12178 versus 1.12310 versus 1.12452 versus 1.12754 versus 1.13145 versus 1.13009 versus 1.13713 versus 1.14314 versus 1.13526 versus 1.13359 versus 1.13248 versus 1.13070 versus 1.13271 versus 1.12895 versus 1.12592 versus 1.12344 versus 1.1191 versus 1.13123 versus 1.13050 versus 1.13344 versus 1.13650 versus 1.13725 versus 1.13790 versus 1.1391 versus 1.13598 versus 1.13332 versus 1.13363 versus 1.14490 versus 1.13544 versus 1.12922 versus 1.12955 versus 1.12616 versus 1.3323 versus 1.12816 versus 1.13218 versus 1.13396 versus 1.13645 versus 1.1396 versus 1.14350

USD/JPY: 111.655 versus 111.483. Breaking up through the 200 day SMA, giving it a run again after failing here in the first half of March.

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

111.483 versus 111.309 versus 111.43 versus 110.867 versus 110.816 versus 110.132 versus 110.537 versus 110.113 versus 109.92 versus 110.72 versus 110.673 versus 111.374 versus 111.432 versus 111.470 versus 111.715 versus 111.314 versus 111.428 versus 111.165 versus 111.482 versus 111.624 versus 111.845 versus 111.856 versus 111.921 versus 111.433 versus 110.873 versus 110.53 versus 110.979 versus 110.670 versus 110.664 versus 110.786 versus 110.848 versus 110.469 versus 110.462 versus 110.945 versus 110.523 versus 110.488 versus 109.754

Oil: 62.10, -0.36. Still holding over the 200 day SMA in its test of the break over this level.

Gold: 1294.30, -1.00. Still just below the 50 day EMA.


Jobs Report, and the trillion dollar question is whether they will rebound from the rather pathetic 20K reported in February. A decent 170K is anticipated. Also, will February be revised higher?

The market needs decent jobs to assure it that the economy is not rolling over. Jobs are of course lagging, so there could be an upsetting surprise, but the jobless claims hit a low not seen since 1969. Perhaps that more leading indicator holds sway -- even if it means little given so many are out of the workforce and are able to collect enough benefits to stay that way.

I would suspect that the powers that be will not allow a second clinker of a jobs report. Thus, I anticipate a decent report. Even so, I am not sure the market rallies farther on the news, or at least not all the market.

There was some rotation Thursday, and that would likely continue, i.e. movement toward more industrial type stocks and away from some of the highly successful but more highly valued sectors, e.g. software.

Nothing wrong with rotation, just need to be aware of where the money is going. Thus far money has stayed in sectors, but the cloud software names suggest that some money may leave some areas for others. Overall, not seeing a lot of dramatic moves out of sectors, just pauses that let the bids recharge while shoppers look elsewhere near term.

We picked up CMI and FDX today and are not averse to some others such as CAT, BA, et al. Accordingly, even though it is Friday, if there are continued moves into this area we are ready to move in deeper.

Have a great evening!

End part 1
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