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Friday, June 22, 2018

Market Alert - Pre-Market

Futures vs FV: SP +14.79; DJ +145.30; NASDAQ +25.01

Friday after over a week lower and the Dow is ready to bounce, other indices with it. A bit oversold, Friday, some short covering on the Dow. Perhaps buying in growth returns after a 1-day hiatus.

Not a lot of news compared to earlier in the week and perhaps that gives stocks a breather.

OPEC: Hiked production 700K bbl/day and oil prices rise. Why? Less of a hike than the 1M bbl/day discussed.


Stress tests: Banks pass as you would expect the headline to read regardless of issues. Why? Because times are good and they are supposed to be strong. Tell that to the yield curve.


Trade: Stories out that 'moderates' in the White House are pushing to restart talks with China. Of course. This is part of the negotiation process and the perception the WHouse wants to put out. Then Trump comes back as harsh. At least this time he is letting someone else play good cop -- he usually plays good cop and bad cop all himself!


Canada: Retail sales -1.2% vs 0.0% expected. Core sales -0.1% versus +0.5% expected. Ouch. CPI 2.2% vs 2.6% expected. So much for the global synchronized recovery. Canada is struggling right next to us while we expand. Bummer, eh?


RHT: Beat top and bottom but current guidance is not good. Will have to see the coattails for the other software companies.


OTHER MARKETS
Bonds 2.922% vs 2.899%

EUR/USD: 1.1653 vs 1.1604. Euro continues to bounce

US/JPY: 110.07 vs 109.96. Dollar up here

Oil: 67.75, +2.21

Gold: 1270.00, -0.50


Futures are holding in at the session highs. Gapped upside very early on and have drifted higher toward the open. After a day off growth is back on and after 8 days down industrials will put in a modest bounce. Will a rotation come? Won't know that based upon today's actions as they are in response to a week of downside by large cap NYSE and a week of upside by growth.

We will see if anything is worth buying. HD has set up a nice new handle to a now larger cup with handle base, and if it moves higher we are comfortable in picking up that position. Others, we will see. Also, some are on the bubble, e.g. DATA, NPTN, GRUB -- they need to at least show they can bounce a bit with the market today to give them life into next week.


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Thursday, June 21, 2018

Market Alert - To the Close

Obviously DJ30 is not going to trade positive today. Not close. Money is leaving NASDAQ, RUTX, SP400 today but it is not going to the NYSE large caps.

The Supreme Court overturned a 1992 ruling regarding sales tax for online transactions, now allowing states to charge tax. AMZN and other online retailers are off, but AMZN already charges tax so the ruling is not so big for it. For others . . .

Congress cannot pass the first attempt at an immigration bill. The other one is more centrist but it likely won't pass either. The former wants change, the latter status quo. So what do we get? Status quo.

NASDAQ, RUTX holding over the 10 day EMA, SP400 holding over the 20 day MA. DJ30 heading toward the 200 day MA, SP500 breaking the 20 day MA.

No positives today to keep the growth stocks moving after a fairly sharp move higher. Thus the give back. We closed some positions, and with a sloppy close setting up we likely have a few more to close.

SP500 -17.05, -0.61%
NASDAQ -65.92, -0.85%
DJ30 -191.42, -0.78%
SP400 -0.75%
RUTX -1.13%
SOX -1.22%
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Pre-Market

Futures vs FV: SP -1.76; DJ -60.80; NASDAQ +13.29

Futures are mixed but showing the same bias of the past several sessions, i.e. NASDAQ leading as NFLX, AMZN, et al continue higher premarket. Unlike other sessions, quite a bit of news today.

MU: Solid earnings rallying this stock as well as other chip stocks. Case in point, the INTC CEO just resigned for a relationship with another INTC employee (violating company policy), and the stock is jumping after initially tanking.


Trade: Wilbur Ross says the ultimate objective of the US actions is to lower tariffs. Simple. Get tariffs lower and the playing field equal.

China: Market News International reports that China is quietly approaching the US to decrease the US tariffs and proposed tariffs on Chinese goods. At the same time the official China news rails about the illegal trade activities of the US, etc. That they can make these claims with a straight face is somewhat comical in itself.


Philly Fed, June: 19.9 vs 27.0 ex vs 34.4 prior. Low for 2018 and the lowest since 11/2016 (10.0).


BOE: Leaves rates unchanged, but the chief economist says he wants a rate hike. Pound is up, dollar lower.


Oil: The day before the OPEC meeting, Saudi Arabia proposes a 1M bbl/day production increase.


NFLX: Receives its second $500 price target for the week. Frothy?


Earnings beats: DRI; KR; MU


OTHER MARKETS
Bonds: 2.911% vs 2.937%. Bonds rebound again after the Wed weakness

EUR/USD: 1.1587 vs 1.1576

USD/JPY: 110.29 vs 110.37

Oil: 65.00, -0.71

Gold: 1266.60, -7.90


Futures are well off the early morning lows. Rallied into 8:00ET but then were hit with a quick round of selling. They have since fought back.

DJ30 is about to start its ninth session lower. NASDAQ FAANG are starting higher yet again, indeed new highs. Do not be surprised if DJ30 reverses to positive today and starts at least a relief move. SP500 as well.

Last night I pointed out that the DJ30, SP500 charts are NOT bad charts. They just are not getting any bids right now. That has the look and now the feel it is about to change.

The question is whether funds come out of the recent leaders (RUTX, NASDAQ) and go back into industrial areas and perhaps even the chips that have lagged. MU's earnings appear to have reignited that group.



Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Wednesday, June 20, 2018

Market Alert - Pre-Market

Futures vs FV: SP +9.68; DJ +136.79; NASDAQ +38.21

Futures rebound and just moved back up to premarket highs as the trade issues now ebb after rising the prior few sessions.

Trade: Specifically, Germany offers to remove the 10% tax/tariff on US autos. Some movement where none existed before. You have to want to make a change and take actions to affect the change versus just sit there as the US has done for decades. As we have seen, it is messy at times. Interestingly, GS' Blankenfien has said that what Trump is doing is exactly what you do to let the other side know how much ammunition you have to use.

Talk of fading trade worries aside, today the White House stated that China engages un "persistent economic espionage and aggression." Apparently the White House does not want to let the heat die down too much.


M&A: DIS ups its bid for Fox assets. That is most of what is being discussed this morning on the financial stations. Yawn.


DJ30: Kicks out GE, puts in WAG. DJ30's managers are like the management of a perennially bad football team: they consistently make the wrong moves and thus consistently stink. AMZN, perhaps?


Earnings beats: WGO, FDX, ORCL


Mortgage apps: +5.1% for the week, rebounding nicely.


OTHER MARKETS
Bonds: 2.902% vs 2.889%. Bonds sell back some after the move to safety Tuesday.

EUR/USD: 1.1594 vs 1.15861

USD/JPY: 110.02 vs 110.03

Oil: 65.49, +0.59

Gold: 1275.40, -3.20


No different news today, no significant changes in the US/China trade issues (indeed, the US is keeping the heat on), but after 6 days downside on DJ30 it is set to bounce. Many other areas held up quite well during the pullback and you would anticipate those resuming their upside. That will be key for this market, more so than the DJ30 bouncing. DJ30 is likely going to struggle until a clearer resolution of the US/China trade issues. During that time we see if RUTX, NASDAQ and even SP400 can again take the lead and push to higher new highs.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Tuesday, June 19, 2018

Market Alert - The Close

RUTX has cracked positive by a hair and other growth indices have recovered significant lost ground. SP500 held he 20 day MA and rebounded to cut the losses. NASDAQ rallied back over the 10 day EMA after a gap lower. SOX looks shaky, but it held the 50 day EMA on the low and has bounced some. Once again stocks try their hand at recovering from trade war news, this one a serious ramp up in the trade battle.

SP500 -10.39, -0.37%
NASDAQ -19.87, -0.26%
RUTX +0.01%

Not all is candy and nuts as industrials lag on any rebound, e.g. BA, HON, CAT. Indeed, it can be argued they are not rebounding. Contrast that with NFLX up 3.8%, AMZN +0.60%. NVDA is off but is rebounding off the 20 day MA toward the close.

One can see the similarity between the 1980's USSR/USA head butting over nukes in Europe, Star Wars, and the US' willing to spend as much on weapons (thanks to a booming economy) as necessary to put USSR at a strategic disadvantage. Today Trump is gambling the US has more economic resources than China given China relies so heavily on the US buying Chinese goods while China only buys $130B of US goods. The US is also showing China the US will spend to patrol the South China Sea and protect our allies there. It is once again a fascinating dynamic that is playing out necessarily after 30 years of doing nothing. Unfortunately that is how it works here as it takes a certain type of President to do these things.

Anyway, we closed out several China related positions, e.g. BABA, BZUN, BIDU. Perhaps too hasty as BZUN is showing a nice doji with tail, but if they hold and look good, okay, we can move back in. Otherwise we are sitting pretty tight.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Pre-Market

Futures vs FV: SP -26.07; DJ-328.47; NASDAQ -92.41

I did say there would be ups and downs as the trade 'negotiations' continued, but goodness. Trump has asked his people to find another $200B in tariffs on Chinese goods.

China vows to respond in kind, but it just does not have that many goods it buys from the US (only $130B from US). That means would it attack US businesses individually? Boycotts? Could be, and that uncertainty is what causes stocks to fall.

Combined with the issues with European economies slowing and their fear of slowing farther and there are not many positives out there.

Other than this event, there is not much news out there, just upgrades and downgrades from analysts.


Okay, some other news out there.

Existing home sales, May: +5.0% vs +1.8% expected. Biggest gain in 11 years.

Single family +3.9%. Multi-family +7.5%

Permits: -4.6%. Second month lower, suggesting slowing ahead.

Rates apparently were not that high in May, but starts are not sales. We will see how the sales perform in July, August, September.


OTHER MARKETS
Bonds: 2.878% vs 2.915%. Bonds rally as a bit of a safe haven play

EUR/USD: 1.1553 vs 1.1621. Dollar stronger another move toward safety

USD/JPY: 109.98 vs 110.53

Oil: 64.87, -0.98

Gold: 1279.90, -5.20


Futures gapped lower as we noted last night in the report. I had heard from sources after the close that something was up so we waited to see if something hit and sure enough it was the potential for quintupling the amount of tariffs on Chinese goods.

Not much recovery from the gap lower. Very modest. The question will be what emerges out of the initial rubble at the open. Is the open the low? Will small caps again prevail or will they be also dragged lower?

As Captain Mancuso of the Dallas said in 'The Hunt for Red October,' the hard part about playing chicken is knowing when to flinch. This trade head butting between the US and China is just that. The US has a clear objective: get rid of the absurd IP stealing partnerships, get rid of China's 'emerging economy' status, get rid of tariffs on US goods, open China's markets to US producers. Basically we want what China gets from us. The problem is China has had its way forever and doesn't want to give it all up and certainly does not want to look as if it has been forced to do so.

You can see the resolution is not anywhere close just yet barring some kumbaya moment between the two. That means stocks will be operating in this environment and they will show who can survive.

We will see how the indices and leaders react off the lower open, if they bounce, if they can hold a bounce, etc., and then if necessary, start closing some upside versus riding through on everything.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Monday, June 18, 2018

Market Alert, Part 1, 6-18-18

* * * *
6/18/2018 Investment House Alerts
* * * *

Alerts Subscribers:

MARKET ALERTS:

Targets hit: ARWR
Entry alerts: AKAM; BOX; LULU
Trailing stops: None issued
Stop alerts: XNET

********************************************************************
The Market Video is DIVIDED into component parts: Market Overview, Economy, Technical Summary, and the Next Session. Choose the segments you are interested in without having to search a longer video. Click on the link to the portion you wish to view.

TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
http://investmenthouse1.com/ihmedia/f/mo/mo.mp4

********************************************************************

The REPORTS SCHEDULE is as follows:

WEDNESDAY and the WEEKEND reports contain NEW PLAYS, Market Summary Video, Play Videos, and Play Table with play annotations.

MONDAY report will contain a Market Summary Video, new plays, annotated play table.

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.


MARKET SUMMARY

- More tariff worries start stocks lower, but the same indices recover.
- RUTX puts in a new all-time high as small caps lead. Still.
- Even so, large cap NYSE is not garbage.
- All the good recovery work may be for naught as Trump calls for $200B more in Chinese tariffs within the past hour.

The Sunday articles regarding tariffs and potential trade wars were large in number and heavy on hyperbole. Many were quick to extend a relatively miniscule $50B in tariffs in terms of the US economy's overall size to almost absurd extremes. One calculated an 11% decline in S&P earnings if a 10% tariff was placed on all US goods. Yes, and many argued that the stock market would crash if Trump was elected, we would have war with North Korea, etc. It is to the point you simply cannot believe what any 'expert' says.

In any event, 95+% of the articles hammered on the potential negatives. Very hard to be positive after that. Most people read the headlines and form their positions accordingly. It is the rare person, and I posit that most of you ARE the rare person, who thinks beyond the parameters set by the media, pundits, and hallowed experts, who does not accept their analysis as correct or even germane to the issue.

Yet, even with the negative lead from the headlines and the predisposition of most to follow those headlines, half the indices we follow managed to recover from very negative opens to positive closes. SP500 closed lower, but its loss was marginal at 0.21%. NASDAQ 100 was basically flat (-0.06%). It would appear the market money gets it, i.e. gets the 4+% GDP this quarter and that it is the US generating those gains, not China, Europe or any other country or region of the world where the economies were already stalled and falling far behind US growth. Once again the US proves that if we focus on freeing up our entrepreneurs and businesses that we can produce the world's best economic output. Investors simply used the lower open to enter new positions.

SP500 -5.91, -0.21%
NASDAQ 0.65, 0.01%
DJ30 -103.01, -0.41%
SP400 0.14%
RUTX 0.51%
SOX -0.99%
NASDAQ 100 -0.06%

VOLUME: NYSE -63%, NASDAQ -31%. NASDAQ trade fell back to pre-expiration levels, i.e. still nicely above average and on a recovery off lows. I consider that good action. NYSE trade remained above average as well, also near the pre-expiration highs. Given the comebacks, not bad actions.

ADVANCE/DECLINE: NYSE +1.3:1, NASDAQ +1.1:1. Not so negative as I have said.

Sure it was no massive overall move up, but check out the stocks that were moving:

FAANG: FB put in a new high with a low to high reversal. AMZN showed the same action, just missing closing at a new high. GOOG surged 1.84%. NFLX was quiet, AAPL still struggled, but the leaders of the group were again leading upside.

Software: DATA punched in a new high. RHT bounced nicely off the 10 day EMA. NTNX jumped almost 3%. GLUU at a new high, ATVI moving up as well.

China: Many low to high moves. IQ added another 9+%. BABA gapped lower, recovered to positive. HTHT surged to a new high. YNDX surged. SOHU as well.

Drugs/Biotech/Health: EXAS jumped again. ARWR exploded upside. IMMU is bouncing from the 20 day MA test.

Chips: Not a great session though QRVO rallied again along with AMD. MU looks great to move up. SIMO broke resistance. Important group and some big names struggled, e.g. INTC, AVGO, AMAT, MLNX.

Retail: A 'tapped out' consumer yet retail stocks continue driving higher after a rest. WSM up again. LULU moving to a new high. M coming off a 20 day EMA test, BKE as well. ROST in a nice test, COST continuing its strength. Discounters such as DLTR, WMT struggling. That is not an indication of a weak consumer or economy.

As you would expect, the industrial names took the blows. CAT, CMI, DE. At the same time, some of these gapped lower but recovered nicely, e.g. HON, EMR. Indeed, UTX gapped lower and reversed to positive off the 20 day MA.

In sum, it looks very much as if the same pattern is in place as before the late week tariff talk and the weekend 'analysis.' Of course the pundits and the doom and gloom websites will say that the stupid investors are wrong and will get caught holding the bag. Of course they will get caught; that always happens. Thing is, is THIS the time versus the other 1,000 calls for a top and crash made the past two years?

CHARTS

RUTX: Opened flat, sold to the 10 day EMA on the low, rebounded to a nice 0.51% gain and a new all-time high. Tariffs? Good! At least from the small cap perspective.

NASDAQ: No new high, but a gap to the 10 day EMA and a rebound to a modest gain. Very solid action in line with the uptrend and the breakout. Does not appear to be showing such a negative harbinger for the big tech stocks as the experts would have you believe.

SP400: Nothing huge, but an early test of the 20 day EMA and then a reversal back above the 10 day EMA to a modest gain. Good test of the last move, setting up SP400 for a run at that January high after testing it on the prior move.

SP500: Looked like business as usual, fading to test the 20 day EMA on the low, rebounding to near flat. Nice break higher through the first week of June then a week of testing to near support. Nothing here that suggests an imminent rollover, just SP500 testing, trying to get back upside and play some catchup to the other indices.

SOX: Not well. Gapped lower to a doji that undercut the 20 day EMA intraday, recovered to hold it. Perhaps this signals the end of this selling, but as noted last week, its pattern is still problematic.

DJ30: Similar to SP500 but a deeper test, tapping near the 50 day EMA on the low before rebounding to hold the 20 day EMA. It can put in a higher low holding here and be in great position to rally to take out that late February high. Okay, will need some help with some of the big names breaking higher off those tests and still fairly decent patterns.


MARKET STATS

DJ30
Stats: -103.01 points (-0.41%) to close at 24987.47

Nasdaq
Stats: +0.65 points (+0.01%) to close at 7747.03
Volume: 2.09B (-31.25%)

Up Volume: 1.14B (-210M)
Down Volume: 910.16M (-729.84M)

A/D and Hi/Lo: Advancers led 1.07 to 1
Previous Session: Advancers led 1.02 to 1

New Highs: 192 (+25)
New Lows: 48 (+4)

S&P
Stats: -5.91 points (-0.21%) to close at 2773.75
NYSE Volume: 856.261M (-63.72%)

A/D and Hi/Lo: Advancers led 1.27 to 1
Previous Session: Decliners led 1.1 to 1

New Highs: 106 (+20)
New Lows: 78 (+7)


SENTIMENT

VIX: 12.31; +0.33
VXN: 16.82; +1.40
VXO: 11.18; +0.17

Put/Call Ratio (CBOE): 1.03; +0.10

Bulls and Bears:

Bulls up 5.5 points over the past three weeks, bears -1.4 over the same period. After dropping rather sharply during the stock rebound, bulls finally feel the upside a bit. Likewise, bears rallied into the selling, now tailing off after a few weeks of upside. That is the way it works.

Bulls: 55.5 versus 52.9

Bears: 17.8 versus 17.7

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: 55.5 versus 52.9 versus 50.0
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 versus 49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00 versus 64.7 versus 66.7 versus 64.4 versus 61.9 versus 64.1 versus 64.2 versus 62.3 versus 61.5 versus 63.5 versus 64.4 versus 63.5 versus 62.3 versus 60.6 versus 60.4 versus 57.5 versus 54.3 versus 50.5 versus 47.1 versus 49.5 versus 49.5 versus 48.1 versus 50.5 versus 57.5 versus 60.0 versus 60.2 versus 57.8 versus 50.0 versus 52.5 versus 54.9 versus 51.5 versus 50.00 versus 55.8 versus 50.00 versus 51.9 versus 58.1 versus 58.7 versus 58.5 versus 54.7 versus 51.9 versus 56.3 versus 55.8 versus 49.5

Bears: 17.8 versus 17.7 versus 19.2
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 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2


OTHER MARKETS

Bonds: 2.915% versus 2.922%.

Historical: the last sub-2% rate was in November 2016 (1.867%). 2.922% versus 2.933% versus 2.977% versus 2.963% versus 2.952% versus 2.948% versus 2.928% versus 2.974% versus 2.935% versus 2.944% versus 2.902% versus 2.86% versus 2.857% versus 2.79% versus 2.931% versus 2.992% versus 2.982% versus 3.063% versus 3.056% versus 3.06% versus 3.123% versus 3.096% versus 3.069% versus 2.997% versus 2.97% versus 2.966% versus 3.006% versus 2.952% versus 2.948% versus 2.968% versus 2.954% versus 2.959% versus 2.975% versus 3.0245% versus 3.00% versus 2.962% versus 2.96% versus 2.914% versus 2.867% versus 2.83% versus 2.829 versus 2.825% versus 2.781%


EUR/USD: 1.1624 versus 1.1607. Euro continued to show a bit of backbone after the Wednesday plunge, but it was no strong move upside, just hanging on.

Historical: 1.16245 versus 1.15678 versus 1.17973 versus 1.17454 versus 1.17761 versus 1.17737 versus 1.17987 versus 1.1774 versus 1.1762 versus 1.1697 versus 1.166 versus 1.16993 versus 1.16643 versus 1.15446 versus 1.17148 versus 1.17096 versus 1.17022 versus 1.17826 versus 1.1786 versus 1.17714 versus 1.1802 versus 1.1811 versus 1.18272 versus 1.19358 versus 1.19411 versus 1.1913 versus 1.18533 versus 1.18672 versus 1.19150 versus 1.19619 versus 1.1983 versus 1.1978 versus 1.19896 versus 1.20741 versus 1.21291 versus 1.21788 versus 1.2163 versus 1.22232 versus 1.22094 versus 1.22876 versus 1.23464 versus 1.23748 versus 1.23712 versus 1.238532 versus 1.23313 versus 1.23299 versus 1.23720 versus 1.2359 versus 1.2311 versus 1.22812 versus 1.2247 versus 1.2285


USD/JPY: 110.549 versus 110.668. Holding the 10 day EMA test.

Historical: 110.668 versus 110.578 versus 110.247 versus 110.381 versus 110.314 versus 109.466 versus 109.705 versus 110.164 versus 109.878 versus 109.90 versus 109.53 versus 108.767 versus 108.699 versus 108.699 versus 109.385 versus 109.667 versus 109.502 versus 110.833 versus 110.95 versus 110.76 versus 110.935 versus 110.376 versus 110.246 versus 109.693 versus 109.384 versus 109.40 versus 109.746 versus 109.038 versus 109.022 versus 109.08 versus 109.175 versus 109.628 versus 109.91 versus 109.354 versus 109.051 versus 109.28 versus 109.373 versus 108.894 versus 108.728 versus 107.645 versus 107.404 versus 107.409 versus 107.027 versus 107.010


Oil: 65.69, +0.63. Gapped lower, sold farther, then rebounded to positive. Not bad intraday action, but overall the pattern remains weak.


Gold: 1280.10, +1.60. A most modest bounce after the Friday dump lower.


TUESDAY

With $50B in tariffs, even if the trade war issues did not go away, the market was handling it. Big techs, small caps, drugs/healthcare, China, software, retail, and more held up just fine. It appeared the market viewed the trade talks as something that will ultimately lead to better situations for US companies as well as, of course, the benefits to smaller US companies whose goods become more attractive.

We found some nice upside plays to look at adding, but within the past hour the White House has called for $200B more in tariffs on Chinese goods. That has bombed futures lower nearly 125 points. At some point the tariff talk is too much for the markets to soldier through and they will have to sit it out. Just when the market looked good with the 'what doesn't cause a selloff makes you stronger' action, the White House ups the ante 4-fold.

Now it is again a process of whether the market can hold on, if the growth indices can continue to receive bids, even with the ramped up tariff war. In theory the small caps should continue to do well, but even they could feel the bite at some point if other companies are hurt by the trade issues.

We see some good patterns and will have them ready, but the news this evening may stymie some new upside entries near term.

Have a great evening!

End part 1
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - The Close

The Sunday articles regarding tariffs and potential trade wars were large in number and heavy on hyperbole. Many were quick to extend a relatively miniscule $50B in tariffs in terms of the US economy's overall size to almost absurd extremes. One calculated an 11% decline in S&P earnings if a 10% tariff was placed on all US goods. Yes, and many argued that the stock market would crash if Trump was elected, we would have war with North Korea, etc. It is to the point you simply cannot believe what any 'expert' says.

In any event, 95+% of the articles hammered on the potential negatives. Very hard to be positive after that. Most people read the headlines and form their positions accordingly. It is the rare person, and I posit that most of you ARE the rare person, who thinks beyond the parameters set by the media, pundits, and hallowed experts, who does not accept their analysis as correct or even germane to the issue.

Yet, even with the negative lead from the headlines and the predisposition of most to follow those headlines, half the indices we follow managed to recover from very negative opens to positive closes. SP500 closed lower, but its loss was marginal at 0.21%. NASDAQ 100 was basically flat (-0.06%). It would appear the market money gets it, i.e. gets the 4+% GDP this quarter and that it is the US generating those gains, not China, Europe or any other country or region of the world where the economies were already stalled and falling far behind US growth. Once again the US proves that if we focus on freeing up our entrepreneurs and businesses that we can produce the world's best economic output. Investors simply used the lower open to enter new positions.

SP500 -5.91, -0.21%
NASDAQ 0.65, 0.01%
DJ30 -103.01, -0.41%
SP400 0.14%
RUTX 0.51%
SOX -0.99%
NASDAQ 100 -0.06%

VOLUME: NYSE -63%, NASDAQ -31%. NASDAQ trade fell back to pre-expiration levels, i.e. still nicely above average and on a recovery off lows. I consider that good action. NYSE trade remained above average as well, also near the pre-expiration highs. Given the comebacks, not bad actions.

ADVANCE/DECLINE: NYSE +1.3:1, NASDAQ +1.1:1. Not so negative as I have said.

Sure it was no massive overall move up, but check out the stocks that were moving:

FAANG: FB put in a new high with a low to high reversal. AMZN showed the same action, just missing closing at a new high. GOOG surged 1.84%. NFLX was quiet, AAPL still struggled, but the leaders of the group were again leading upside.

Software: DATA punched in a new high. RHT bounced nicely off the 10 day EMA. NTNX jumped almost 3%. GLUU at a new high, ATVI moving up as well.

China: Many low to high moves. IQ added another 9+%. BABA gapped lower, recovered to positive. HTHT surged to a new high. YNDX surged. SOHU as well.

Drugs/Biotech/Health: EXAS jumped again. ARWR exploded upside. IMMU is bouncing from the 20 day MA test.

Chips: Not a great session though QRVO rallied again along with AMD. MU looks great to move up. SIMO broke resistance. Important group and some big names struggled, e.g. INTC, AVGO, AMAT, MLNX.

Retail: A 'tapped out' consumer yet retail stocks continue driving higher after a rest. WSM up again. LULU moving to a new high. M coming off a 20 day EMA test, BKE as well. ROST in a nice test, COST continuing its strength. Discounters such as DLTR, WMT struggling. That is not an indication of a weak consumer or economy.

As you would expect, the industrial names took the blows. CAT, CMI, DE. At the same time, some of these gapped lower but recovered nicely, e.g. HON, EMR. Indeed, UTX gapped lower and reversed to positive off the 20 day MA.

In sum, it looks very much as if the same pattern is in place as before the late week tariff talk and the weekend 'analysis.' Of course the pundits and the doom and gloom websites will say that the stupid investors are wrong and will get caught holding the bag. Of course they will get caught; that always happens. Thing is, is THIS the time versus the other 1,000 calls for a top and crash made the past two years?

CHARTS

RUTX: Opened flat, sold to the 10 day EMA on the low, rebounded to a nice 0.51% gain and a new all-time high. Tariffs? Good! At least from the small cap perspective.

NASDAQ: No new high, but a gap to the 10 day EMA and a rebound to a modest gain. Very solid action in line with the uptrend and the breakout. Does not appear to be showing such a negative harbinger for the big tech stocks as the experts would have you believe.

SP400: Nothing huge, but an early test of the 20 day EMA and then a reversal back above the 10 day EMA to a modest gain. Good test of the last move, setting up SP400 for a run at that January high after testing it on the prior move.

SP500: Looked like business as usual, fading to test the 20 day EMA on the low, rebounding to near flat. Nice break higher through the first week of June then a week of testing to near support. Nothing here that suggests an imminent rollover, just SP500 testing, trying to get back upside and play some catchup to the other indices.

SOX: Not well. Gapped lower to a doji that undercut the 20 day EMA intraday, recovered to hold it. Perhaps this signals the end of this selling, but as noted last week, its pattern is still problematic.

DJ30: Similar to SP500 but a deeper test, tapping near the 50 day EMA on the low before rebounding to hold the 20 day EMA. It can put in a higher low holding here and be in great position to rally to take out that late February high. Okay, will need some help with some of the big names breaking higher off those tests and still fairly decent patterns.


On the day we took some ARWR gain as the second position surged to its initial target (22% stock, 53% options). Bought some AKAM, BOX, and LULU. Some really good moves, particularly BOX. With the stock indices and leaders testing lower then reversing it looked as if the same pattern was holding, so we had no issues moving into new plays.

Now we see if the pattern holds into Tuesday and growth leads the move back up. It would be great to see SOX repair itself and of course DJ30/SP500 break higher. Thus far the pattern is holding and that gives them that shot.

Have a great evening!
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Pre-Market

Futures vs FV: SP -17.77; DJ -210.48; NASDAQ -54.26

Futures are just off the lows of the morning having steadily declined since opening lower. Trade tariffs slowing global growth is the main story. The guy on CNBC has it right: the rest of the world is just slower even before this tariff talk started. Oil and other issues are having the impact; there is no way the tariffs from Friday are impacting what has been the case for months. Not that they won't have an impact, and that is what the markets are focused on, not what has been.

Germany exports 5% of its steel. Canada is a steel importer. Tariffs on German steel imports to the US will hurt it badly? Will Canada experience issues in its steel industry if the US puts tariffs on Canada steel sent to the US -- which does not happen? Nonetheless, tariff talks increase prices and prices are indeed higher.


Germany: Another key story is Merkel possibly on the way out in Germany thanks to the upheaval against her migrant policies. That is rather important to the world and to markets.


UK: GDP said to be running 1.3%, a serious slowdown for the country, another story that has the markets unsettled -- where is that synchronized global expansion everyone was talking about two months ago? It never really was that great -- kind of like the Fed's view of the economy as discussed over the weekend -- they might think it is great, but historically it is not as strong as they profess.


GOOG: Investing $550M in JD. At least that helps us this morning with our JD position.


Analysts: Upgrades and downgrades, but today it is all noise in the background of tariffs, Germany politics.


OTHER MARKETS
Bonds: 2.906% vs 2.922%. A bit of a safe haven flight.

EUR/USD: 1.1609 vs 1.1607

USD/JPY: 110.44 vs 110.66

Oil: 65.17, +0.11

Gold: 1282.10, +3.60


Friday the markets weathered the US/China tariff back and forth, but the weekend suffered through multitudes of stories about how bad this is and markets are reflecting the negative sentiment to start the week and the new expiration.

The indices will gap lower and then we will look to see whether the industrial patterns are holding together -- along with other stocks as well. There are many good patterns out there but now they will have to hold the line on the renewed negativity regarding trade.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Friday, June 15, 2018

Market Alert - Pre-Market

Futures vs FV: SP -10.49; DJ -158.31; NASDAQ -33.44

Futures gapped lower and are floundering around in the same range ever since, trading at the bottom of the range as the opening bell approaches.

As we knew would happen, the trade negotiations ebb and flow and now they are ebbing as the US announces a 25% tariff on $50B of Chinese goods including technology. China vows immediate retaliation and in response soy bean prices dropped hard. As a US trade representative said today on Fox Business, China does not admit it steals US IP even when presented with facts on companies that have Chinese manufacturing 'partners' taking its US 'partner's' design, making an identical copy, and selling it in the US.

China knows it is doing this but of course, of course it will not admit this in public--it is a cultural thing. So, the US has to follow through with its threats to bring about change, change that will happen after the fact and rather quietly as China changes its policies without a lot of fanfare. That has been how this has worked since Trump and Xi started this process.


Germany: Merkel government in trouble over the migration issue. Euro dropped hard but has since rebounded positive.


Expiration: Quad expiration may add to some of the volatility, but the main story of the day is trade.


OTHER MARKETS
Bonds: 2.908% vs 2.933%. Bonds rallying in the uncertainty

EUR/USD: 1.1606 vs 1.1566

USD/JPY: 110.46 vs 110.55

Oil: 66.59, -0.30

Gold: 1295.70, -12.60


Once again the trade issues are pushed to the fore and the new highs from Thursday are tested. We will see how the small caps respond; they have performed well during the trade war worries. Also key is tech and its gains, some of which are taken back today given they are targets as they rose higher.

Also important are the industrials and how they manage to hold patterns. Last night I discussed how many were still holding up despite the disdain for these stocks right now, and how that is a technical positive. Okay, we will see if they can maintain that positive after today.

For now we see how the bids return. Overall the market trend is positive, and we will see if the trend continues to shake off the trade worries as the President seems to keep making positive gains for the US on these fronts despite the negatives that are highlighted.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Thursday, June 14, 2018

Market Alert - Pre-Market

Futures vs FV: SP +9.00; DJ +99.98; NASDAQ +27.24

Futures started the morning session lower than the WED close, but have steadily recovered, rallying starting 7:00ET as the ECB news hit that QE would end likely at the beginning of 2019. Seems the markets are thus far handling a perceived more hawkish Fed and ECB.

ECB: Draghi says the ECB will end bond buying (its QE) at the end of the year. Rates will remain unchanged until the summer 2019, a year from now. That leaves more than enough wiggle room for the ECB to do something else if it so desires, e.g. nothing.


NKorea: Pompeo says NK lied about Trump agreeing to end sanctions. Honeymoon over.


China: Reiterates its threat that if the US imposes tariffs it will scrap any agreements reached thus far on trade. Never was a honeymoon here.


Retail Sales, May: 0.8% vs 0.4% exp vs 0.4 April (from 0.3%). Biggest jump since 9/2017.

Ex-Auto: 0.9 vs 0.5 exp vs 0.4 prior (from 0.3%)

Control Group: +0.5% vs 0.6% April (revised up, likely May will be as well).

Energy costs were up thanks to gasoline (17%), but the price profile for this time of year matches historical patterns so that is not really a big shock. Remember, however, retail sales is price based, not unit based. Thus if things cost more, retail sales rise, and it may just be inflation.


Downgrades: ORCL downgraded by JPM


Earnings beats: MIK; TLRD (but SSS missed estimates)


Tech: MSFT working on a system that would make cashiers and standing in line obsolete. AAPL is working on making data harder for law enforcement to retrieve from iPhones. Both are worth endeavors.


OTHER MARKETS
Bonds: 2.942% vs 2.977%

EUR/USD: 1.1725 VS 1.179

USD/JPY: 110.11 vs 110.30

Oil: 66.85, +0.21

Gold: 1307.50, +6.20


Futures are just off the highs the past 10 minutes as the Draghi holds his press conference, tap dancing around as usual. Still holding a good rebound for the morning, but of course the question is still how will the market react. Premarket is positive enough, but the bells still have to ring to open and close the session.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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