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6/18/2018 Investment House Alerts
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Alerts Subscribers:
MARKET ALERTS:
Targets hit: ARWR
Entry alerts: AKAM; BOX; LULU
Trailing stops: None issued
Stop alerts: XNET
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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
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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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