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Wednesday, March 21, 2018

Market Alert - To the Close

Stocks are basically holding flat heading toward the close. The FOMC and chairman presser were not bad at all. The market action afterward is down a bit. We do like some and could enter, e.g. LRCX, ON, QIWI, . . . QIWI. Although we do like how QIWI is holding up.

Would rather see how they open tomorrow and work from there. Why? Because many times the market things about the FOMC statements overnight and reacts the next session.

That said, we will wait and see how tomorrow opens.

SP500 flat
NASDAQ -13.18, -0.18%
DJ30 flat
SP400 0.42%
RUTX 0.87%
SOX 0.21%
NASDAQ 100 -0.43%

Indices are struggling some coming into the finish line.
Jon Johnson, Chief Market Strategist
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Market Alert - FOMC Decision

+25BP, 3 more hikes next year on top of 2198 3.

Inflation outlook: Sees little change despite upgrading the economy. See inflation at roughly 2% where it expects it to stabilize.

Unemployment: 3.6% in 2019

Basically the Fed sees the economy strengthening with low unemployment but little inflation. That is very Austrian/Chicago School versus Phillips Curve/Princeton.

Bond yields jumped to 2.345% 10 year. 2.37% was the high on the statement.

Dollar: Fell quickly on the news but is near unchanged.

Stocks: Initial reaction was upside in a big way, then they sold it off back to the pre-FOMC levels (modest gains after that lower open). Now they are moving up off that pre-FOMC level, but this is likely a bit of back and forth as the market digests a Fed that sees a good economy ahead but also sees 'tame' inflation. Perhaps a bit more hawkish statement, and if the market can swallow this and not regurgitate it later, that is a stock positive.

SP500 15.82, 0.59%
NASDAQ 34.12, 0.46%
DJ30 189.60, 0.77%
SP400 0.71%
RUTX 0.64%
SOX 0.88%
NASDAQ 100 0.35%
Jon Johnson, Chief Market Strategist
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Market Alert - Pre-Market

Futures vs FV: SP -1.94; DJ -17.23; NASDAQ -22.77

Soft open ahead in a somewhat volatile premarket. Futures sold, rallied to positive, then fading into the open. FB continues to dog techs to a certain extent, down another 1.25 clicks. Oh, Zuckerburg is going to speak in the next 24 hours; whew, thought things would never be straightened out. Now one of the lords of the universe will talk, assure us again that we can trust him to take care of us. Sadly, that will work for much of the world.

FOMC day with Powell's first rate decision and statement. Many are nervous Powell will say something to hint of a stronger Fed. If so, not good for stocks. They are simply in no mood to handle anything but hugs from mom.

Tariffs: Some interesting news. China is 'indicating' according to reports that it will counter target US ag products. Not surprising but clever as that segment represents a lot of Trump country voters.

NAFTA: Reports are that the US is dropping auto imports from the proposals, a breakthrough for Canada, Mexico.

Budget: A $1.3T spending bill compromise is said to be close to avoid a shutdown Friday. Whew, I was worried that some government workers might be furloughed.

Earnings beats: GIS (but lowered guidance); FDX; SCS

Misses: WGO (BL)

M&A: CRM buying MULE

Austin bomber: Does the right thing and saves us all money by blowing himself up. Interesting there is readily available closed circuit video when the authorities want it. What happened to the CCTV video from Mandalay Bay that is in every hallway of every floor? Guess that was not useful to the authorities for what they wanted. Just saying.

Bonds: 2.90% vs 2.90% 10 year. Last time closed at 2.9 or more was February. Is this a breakout attempt or double top in yields?

EUR/USD: 1.228 vs 1.2247

USD/JPY: 106.22 vs 106.47

Oil: 64.11, +0.55

Gold: 1316.50, +4.60

Futures are tripping to lower morning lows as the open approaches. The foul mood continues for investors, and they are note seeing many good possibilities out of the FOMC, Congress (budget), or trade (tariffs and retaliation).

Looks like another day of seeing whether the indices and leaders hold support trying to wait for a bit better environment to have the bids return.

Jon Johnson, Chief Market Strategist
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Tuesday, March 20, 2018

Market Alert - Pre-Market

Futures vs FV: SP +7.88; DJ +63.09; NASDAQ +25.32

Futures rebound from the Monday drubbing. Started higher early morning, continued rising to 8:00ET. Over the past hour futures are backing down, coming well off the highs.

What do upside futures mean? Not much. It is a snap back move, similar to the covering bounce late Monday. It likely does not last, does not turn into a new rally, at least today. The sellers returned Monday, though not a huge number of sellers as shown by the NYSE volume. Even if sellers were lower in numbers, the buyers were not there, and thus it is hard for a rebound to sustain unless they return. The upside will have to deal with sellers taking a shot at the early rise.

SP500, DJ30 have the 50 day MA's overhead as they try to bounce. DJ30 is in that pennant/triangle, trying to come off the lower trendline. Overall the action is weaker of course as leaders test, hold on, but are unable to push their good patterns. The market's negativity is feeding on itself; if the leaders can hang on that bodes well for a rebound in the future, but it has to work through the current negative feedback loop and that can take some time.

FOMC: Day 1 in the FOMC rate hike meeting.

FB: Still struggling as it says it is 'beyond disturbed' by the data scandal. Sure it is, because that is its business (data) and it does not want to be regulated. But, this data gathering about each of us has to be curtailed. It is impossible to be part of society without going online, but everything you do is monitored, collected, collated, analyzed, commercialized, etc. Laws have to catch up to the technology; we have to be able to opt completely out. It is true someone could hire someone to follow you around and figure out your habits, etc., but the cost would be high. To do it to the entire population would require an army of investigators -- hey there is a jobs creation idea -- and thus not feasible. Electronically, however, it can be done for pennies. There will need to be a balance struck and Zuckerburg is going to get to explain why they are so virtuous ('we are just a social media platform, nothing more' he will say in trying to con lawmakers) as the UK is already calling him to testify.

FB is lower and this issue is one that is going to impact GOOG and others (AMZN?) as it unfolds.

Tariffs: Still an angst areas for markets. It is difficult and requires stamina to change the status quo of other countries getting to impose tariffs on anything they want, dump products, etc., but the US cannot do the same. As I have said before, we allowed other countries to establish their industries by uneven trade deals, and now that those were successful and the industries are established, we want to have them removed. But they won't change their practices. So, when we ultimately decide to take action on our side because they won't change, suddenly we are the bad guys. After helping them get their industries up, we are now the bad guys.

Bonds: 2.879% vs 2.852%

EUR/USD: 1.2281 vs 1.2342

USD/JPY: 106.51 vs 105.95

Oil: 63.06, +1.00

Gold: 1310.70, -7.10

Futures continue to fritter away the morning gains moving into the open. Does not look as if this bump has much umph behind it.

Jon Johnson, Chief Market Strategist
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Monday, March 19, 2018

Market Alert - The Close

The next move for stocks was not higher after that 3-session lateral move to end the week. We felt the resolution to this lateral move following the Tuesday upside gap and reversal would come this week. It didn't wait. Before the open stock futures were solidly lower, NASDAQ leading the way in percentage terms.

Tech in general was slammed as FB is part of a data mining operation by another entity that gathered information from FB, information FB says the entity should not have had, but about which FB did nothing. At a minimum bad optics. With use already down 25%, this is not the kind of news investors welcomed as the way to get that 25% usage back. FB was slammed and it took techs with it.

It did not that reports said AAPL was attempting to make its own screens for future products -- in 3 to 5 years. Suppliers were hit, and again, tech in general. If APPL does it then who next, right? Better sell now, 3 to 5 years ahead of time, right?

Then GS said TSLA deliveries will fall and that TSLA will reduce its guidance. Just no good news.

Futures were already down, and those stories were extra gasoline tossed on the fire. Stocks gapped lower then sold steadily lower into midday. A double bottom set up from lunchtime to mid-afternoon and the indices then rebounded the last 1.5 hours to mitigate the sharp downside. It came nowhere near turning any index positive, but there were some technically interesting holds at support by the indices and leaders.

SP500 -39.09, -1.42%
NASDAQ -137.75, -1.84%
DJ30 -335.60, -1.35%
SP400 -0.93%
RUTX -0.98%
SOX -1.95%

VOLUME: NYSE -66%, NASDAQ -24%. Of course a hefty volume drop after that big expiration volume surge.

ADVANCE/DECLINE: NYSE -3.6:1, NASDAQ -2.7:1. Hefty downside breadth as the majority of sectors were sold though there were groups that showed strength, e.g. transports.

The market is not in a good mood and even good stories are not received well. That happens when the mood changes. Perhaps investors and traders reached a saturation point with the continual parade of news stories about FBI corruption, investigations of everything in the government, and the seeming unlimited time this can all continue.

More and more people I talk to are sick of our government. Sick of the spying, the lying, the disrespect for the votes of the individuals, the politics dragged up every time there is a key event in the country, good or bad. It is not specifically about Trump, it is not specifically about the democratic opposition. It is the notion that the government is entirely out of control in every aspect from spending to spying to graft to corruption and more. It is hard to get enthused about earnings valuations when there are so many headwinds and tentacles trying to drag everything down.

The indices were down, but SP400 and RUTX did manage to recover to less than 1% down. That is not a bad move considering the entire market was in a raging selloff and all indices were down well over 1%, NASDAQ and SOX down over 2%.

At the session close, however, there were moves off the lows that left the indices in various states of decline.

SOX gapped below the 10 day EMA, sold below the 20 day EMA, but then rebounded to hold the 20 day on the close. Big reach lower below midrange, then a recovery to mid-range support. Perhaps that was enough of a shakeout to put in a higher low inside the channel; that can lead to renewed upside and breakouts, but after the gap lower, there is likely a bit more work to do.

NASDAQ gapped below the 10 day as well, sold to tap the 50 day SMA, then recovered some lost ground. It too is about midrange in what looks to be its channel, trying to find support at the 50 day MA and avoid the need to test that early February low. Can put in a higher low here; not holding the breath just yet.

RUTX sold off to the 50 day SMA then rebounded quite nicely to hold near the 10 day EMA on the close. Some serious buying came in that pushed RUTX 16 points up off the low, cutting the losses in half. Still interest here as it traded just off the late January 2018 high.

SP400: Tested the 50 day EMA on the low, rebounded to hold the 20 day EMA and 50 day SMA. This also keeps SP400 over the early December high and December consolidation. Okay, it too found some buyers at that pretty solid support.

SP500: Gapped downside, sold through the 50 day EMA, held the trendline drawn from the early February closing low and the early March low. Okay, it held and bounced back just a bit, but it was nothing major. At best, still an upward pointing wedge, and if SP500 can bounce toward the upper trendline at 2800, a nice move, you still have to watch for a breakdown from there.

DJ30: Sold, not aggressively, holding 24,500 on the low, bouncing modestly to close. Still in the triangle/pennant pattern, still at the lower trendline of the pennant/triangle. Unlike SP500 and its upward pointing wedge, this one is more neutral, meaning it has to show which direction it will go. The current market mood is sour and DJ30 looks less than strength. Nonetheless we will see which way it breaks.


Most everything closed lower, but many leaders held support as they continued lower. AMZN, NFLX, NTES, ATHM, MU, LRCX, NVDA, ETSY, PII, SQ -- holding up very well indeed. Transports, notably trucks and some airlines, were solid.

Yes many leaders held up well enough, but right now that is about all of the positive there is. It would be great if Monday was a shakeout that leads to new buying, but there is nothing to indicate that is the situation just yet.

Thus, we closed positions that were giving up support, leaving those that still held their patterns/trends and support. I still like many of the leaders in terms of their patterns, whether the old guard or some new patterns in a group that had to take some time off (e.g. truckers), but they have to prove they can hold and then show then can make solid upside moves. Today some held and that was a bit encouraging, but there is more to be done to warrant putting money to work.

Have a great evening!
Jon Johnson, Chief Market Strategist
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Market Alert - Last Hour

The indices continue sporting losses in excess of 1% and 2% in some cases.

SP500 -44.76, -1.63%
NASDAQ -156.70, -2.09%
DJ30 -383.25, -1.53%
SP400 -1.08%
RUTX -1.37%
SOX -2.29%
NASDAQ 100 -2.5%

Holding the 50 day MA: NASDAQ, SP400

Holding the 20 day MA: SOX; RUTX

Below the 50 day MA: SP500, DJ30

The relative strength remains the same, but again, all are selling off harder.

Leadership is down of course though many are holding the 20 day MA, 50 day, or other support within their trends/patterns. FB is not , nor is GOOG, but the rest of FAANG is at some support (AMZN 20 day, NFLX 20 day, AAPL 50 day).

Chips are at support as well. AMAT at 20 day; MU hardly lower. LRCX 10 Day MA. NVDA 50 day. XLNX 10 day MA.

China: Hit as well but holding support. NTES over 50 day. ATHM 10 day. BABA 10 day. BIDU does not look good. BZUN ignoring the market.

If positions are holding support we will see if they can bounce early Tuesday. If that move stalls, then we can exit.

If positions are not, we are closing them, and we have several on the chopping block.
Jon Johnson, Chief Market Strategist
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Market Alert - Pre-Market

Futures vs FV: SP -14.51; DJ -136.51; NASDAQ -79.70

It would appear the indices are not waiting but are getting right to the next move. Over the weekend we discussed the importance of this week for the stock indices and leaders. How they had hit highs on SOX, NASDAQ and reversed, but then held up very well with the sellers leaving Wed/Friday. The Monday after expiration the sellers are back and will gap the indices lower as some leaders are hit.

FB: FAANG was a group that would either go higher or not at this juncture. FB is down 8+ clicks on a report that its user data was harvested by a political consulting firm. The EU is PO'ed among others, and thee are heightened calls for FB to be regulated. FB is not really social media now is it? It is a data collection and data sales company; that is where the money is, not in its intrinsic value as a place where people can communicate about events in their lives. Hello, McFly.

AAPL: Reports that AAPL is developing its own microscreens for production in 3-5 years has some AAPL suppliers lower.

TSLA: GS opines that deliveries will be down and that TSLA will guide lower.

UK: Says it has struck a deal with the EU for the 21 months following actual Brexit, forestalling fears of a cliff dive after Brexit becomes effective.

Tariffs: Supposedly renewed worries about tariffs are on topic as a group of senators beg to let China continue what it is doing to American businesses. Oh, and today is the day that countries can apply for exemptions. So, let those worthy get exemptions, those that are not playing fair not get them.

Bonds: 2.872% vs 2.844%

EUR/USD: 1.2301 vs 1.2287

USD/JPY: 106.21 vs 106.00

Oil: 62.28, -0.06

Gold: 1311.00, -1.30

The market mindset to start the week is to not look past any issues but to bemoan them, and thus the morning gap lower. Futures are off their morning lows hit just after they opened, but there is hardly what you would call a recovery into the open.

Okay, watch to see if there is any recovery, watch where the indices hold the line. NASDAQ is set to open near the late February peak (7421). That fills the upside gap from two Fridays back and a good litmus test as to the strength of the selling. From a bigger picture perspective, the gap lower after attempting to hold the line last week after the Tuesday reversal is just more indication that the Tuesday reversal is the dominant move last week and it is still dominant.

Jon Johnson, Chief Market Strategist
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Friday, March 16, 2018

Market Alert - Pre-Market

Futures vs FV: SP +7; DJ +41; NASDAQ +16

Futures struggled all morning to open a quad expiration (options, futures, rebalance). Hey, after failing to hold gaps higher the prior two sessions, opening lower is not bad. They have, however, recovered as the morning progressed and now they again look to open higher. Even the pre-market is resilient . . .

Housing Starts, Feb: -7.0%, Jan revised higher

Single family: +29%; Permits -0.6%

Multifamily: -26.1%; Permits -14.8%

Earnings beats: TIF; HIBB; ADBE; BRCM; JBL; BKL

Misses: ULTA (BL); OSTK; ZUMZ (BL)

Politics: Rumors that more are going to be out at the White House, but of course, the White House denies all such rumors.

Bonds: 2.832% vs 2.826%. Bonds fade after a short bounce

EUR/USD: 1.2322 vs 1.2304

USD/JPY: 105.73 vs 106.33

Oil: 61.36, +0.17

Gold: 1319.40, +1.60

Friday of a week that saw stocks open higher then close lower on the session, but even with that the indices engaged in rather orderly declines to near support. As discussed last night, SOX and NASDAQ and SP500 sport really nice 3-session pullbacks. Of course SOX and NASDAQ have to break out from their channels to make new highs, and the last time they tried that they were sold.

All told, there are some good looking patterns out there but this could be a wilder session with volume that is deceiving given the expiration. Still like AKAM, BZUN, BIDU patterns, and if they look good we likely pick up some even if we feel today may be a head fake for most of the market. Those stocks, however, look very good.

Jon Johnson, Chief Market Strategist
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Thursday, March 15, 2018

Market Alert - Last Hour

The market was cruising into mid-morning then a test. Then mid-afternoon as the market was starting to rebound a story hit that Mueller is subpoenaing the Trump companies. That takes it beyond collusion and into that 'professional politicians only' argument that some are making that if you have foreign business operations where foreign dignitaries might stay, you are violating a law that says an office holder cannot receive benefit from any foreign sovereign. Thus I call it the 'professional politicians only' argument as any person owning businesses in an international market would be excluded.

So, when the headlines hit the algos sold and the indices went negative. Now flirting with flat though DJ30 holds a better gain as it decides to lead after looking like cr*p Wednesday.

SP500 flat
NASDAQ -13.25, -0.18%
DJ30 136.94, 0.56%
SP400 -0.42%
RUTX -0.64%
SOX -0.04%

Still mushy overall. Some China stocks look decent, led by BABA gapping higher. Picked up some NTES and looking at BZUN, BIDU, AKAM for possible buys; they moved higher with a gap but are sitting there.

Basically the same kind of action. SOX, NASDAQ testing the 10 day EMA. SP500 showing a doji at the 50 day SMA after basically a 1-2-3 pullback. SP400 back to test the 50 day SMA. Ditto RUTX. DJ30 is up but it is showing a doji below the 50 day EMA; still not a strong pattern.

Jon Johnson, Chief Market Strategist
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Market Alert - Pre-Market

Futures vs FV: SP +3.98; DJ +81.12; NASDAQ +2.77

Futures started higher, sold off, and have trudged back up near early morning highs. Better action than WED as futures have had to move higher on increased bids versus that gap open that holds for sellers to shoot at. Of course, the market will open higher, and that still gives sellers a higher price to sell, so bids still have to hang in.

An interesting session as it is something of a rubber match after the Tuesday gap and higher volume reversal followed by the WED much easier session. The market has shown these reversals before only to have the sellers vacate shortly thereafter. This one warrants a bit more caution in our book given the patterns outside NASDAQ, SOX. There are good patterns in those indices that are very enticing and we will see if they decide to lead higher.

Earnings beats: WSM; DDD

Misses: DG (but buyback increase, increases same store sales); ADT (BL).

DG has built stores like crazy in the US. The biggest expanding retailer during the prior administration as its cheap items in smaller towns was about the only growth market. The missed earnings is a result of that expansion. Now it shows if it was a good move.

Empire PMI, March: 22.5 vs 15.0 exp vs 13.1 prior

Philly Fed, Mar: 22.3 vs 23.7 vs 25.8 prior

One on the upswing, one missing and moving lower, but both still very solid. One month is just one month. The trend is still up, but Philly does show some of that soft patch softening discussed last night.

Dodd-Frank: Rollback of certain provisions passes the Senate.

Bonds: 2.819% vs 2.819%. After rallying, bonds start today flat

EUR/USD: 1.2339 vs 1.2364

USD/JPY: 106.02 vs 106.33

Oil: 61.35, +0.39

Gold: 1320.30, -5.299

Futures hold modest gains, not too strong, definitely not showing sellers piling on. That is the key: what do sellers do? If they do not assert themselves again, there is enough natural buoyance in the market to rise. What the upside really needs is for the tech and chip leaders to move up off their good patterns, but they are at the channel tops. Thus what the market really needs is for new leadership. China? Perhaps. Drugs could also help more, but there are not many new areas coming up.

Jon Johnson, Chief Market Strategist
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Wednesday, March 14, 2018

Market Alert - Pre-Market

Futures vs FV: SP +9.49; DJ +98.97; NASDAQ +32.24

Futures gapped up to start the session and have worked laterally in the same narrow range ever since. Those gap ranges have a mixed track record in projecting the market direction, but in times such as these coming off a downside session they provide a target for the sellers to take shots at. So, don't take too much upside solace in this higher open.

That said, the futures held up even as some data came in less than anticipated.

Retail sales, Feb: -0.1 vs 0.3 exp vs -0.1 (from -0.3 Jan)

ex-Auto: 0.2 vs 0.4 exp vs 0.1 prior (from 0.0)

Control group: 0.1 vs 0.0 prior.

Second straight negative reading, the first since 10/2015. Very so-so data but it is apparent that auto sales were a factor after that surge in sales post-Harvey and other flooding storms. It does cast some doubts on the consumer.

PPI, Feb: 0.2 vs 0.1 vs 0.4 prior

Core: 0.2 vs 0.2 exp vs 0.4 prior

Core (less food, energy, trade services): 2.7% year/year, the highest ever.

Prices for producers are rising, but the question -- as it always is and has been ever since the 1970's -- is whether it passes through into the CPI. As Tuesday showed, as of February, not.

Earnings beats: SIG, EXPR

Geopolitics: UK/Russia ramp it up over the poisoning of a spy that was traded for. The Spy's Handbook says that when a spy is traded for you don't mess with him/her anymore. UK claims Russia broke that rule, Russia shakes its missiles at UK, UK now expels 23 diplomats, freezes Russian assets.

Bonds: 2.852 vs 2.844

EUR/USD: 1.2373 vs 1.2392

USD/JPY: 106.50 vs 106.47

Oil: 61.25, +0.54

Gold: 1326.20, -0.90

Futures are range bound premarket. A gap open is coming, but want to see how it holds given the action yesterday that saw a gap higher get sold and saw NASDAQ give up a break to a fresh new high on some volume.

Jon Johnson, Chief Market Strategist
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Tuesday, March 13, 2018

Market Alert - Pre-Market

Futures vs FV: SP +13.98; DJ +120.39; NASDAQ +38.65

Futures were up then really moved up post CPI data that showed prices moving as expected. Other news is more political as Tillerson is out as Secretary of State, not in a resignation but in a replacement.

CPI, Feb: 0.2% vs 0.2% exp vs 0.5% Jan. Year/year +2.2%, highest since 3/2017 at 2.4%

Core: 0.2% vs 0.2% exp vs 0.3% Jan. Yr/yr +1.8%

Apparel, car insurance up; drugs down

The in line or even softer inflation data jumped futures and pushing the Dow to triple digits.

Tillerson is out and the CIA director is in at Secretary of State. Tillerson was a businessman working on some deals. Trump wants to go another direction that appears to be one of distrusting China even more. Pompeo, the replacement, has specific ideas about China's theft of US intellectual property and other bad acts, and he is also against the Iran deal. Things are heating up in the effort to move the goal posts in the fight against unfair trade and trade secrets theft, basically the nonsense allowed to happen since the early 1990's when the Chinese had free run of the White House and stole us blind. As I have said before, when this stuff has gone on for so long, they squeal we are bad for trying to get things back in line.

Bonds: 2.848 versus 2.866. Bonds rally a bit

EUR/USD: 1.2363 vs 1.2335

USD/JPY: 106.91/106.31

Oil: 61.16, -0.20

Gold: 1326.50, +5.70

Futures are holding most of the post-CPI gains and stocks will again open higher. Looking for opportunities on stocks that are not extended. Again have to watch a pop on the open after so many upside sessions.

Jon Johnson, Chief Market Strategist
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