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Thursday, January 18, 2018

Market Alert - Last Hour

Only SOX is the upside holdout as NASDAQ just gave up the green, joining the other indices trading lower. A sell program hit about 15 minutes back that took SPY from matching the pre-market highs and toward the session lows hit early morning. Selling overtook the market early session, but it recovered. The sellers, however, are still out there.

SP500 -4.21, -0.15%
NASDQ -2.10, -0.03%
DJ30 -82.99, -0.32%
SP400 -0.32%
RUTX -0.34%
SOX +0.54%

We have not bought anything today but are considering DCPH, XXII, BLUE. Will have to see how they weather this late fade. All have shown great strength this in an overall modestly lower session.

Ah, selling, but thus far somewhat modest. While many of the newcomers to the market hate to see any downside, there are off days from time to time in uptrends and this is a typical one thus far. That said, DJ30 and SP500 are still quite extended on their runs and the recent volatility is an indication of that extension: sellers and buyers are back and forth session to session.

Will see if the sell program mitigates and how that leaves those potential buys.
Jon Johnson, Chief Market Strategist
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Market Alert - Pre-Market

Futures vs FV: SP -1.61; DJ +1.35; NASDAQ -15.03

Bonds top 2.6% on the 10 year and perhaps that has a squelching effect on the stock rally. Or, after a strong move stocks are taking a breather.

Soft opens after good moves are not bad. It gives bids a time to recharge and return. So, the watch is whether bids do return. NASDAQ is down relatively more than the other large cap indices; some FAANG has not looked good.

Key: Watch how SOX reacts to that breakout to a new all-time high Wednesday. Key group for the market as I have said so many times over the past two years you probably glaze over at the words.

Philly Fed, Jan: 22.2, lower and missing expectations just as NY PMI. Lower employment, lower new orders, just like NY.

Housing Starts, Dec: -8.2%, biggest drop since 11/16. +2.4% for 2017.
Single family: -11.8. Multi: +1.4%

M&A: WWW buying LQ ('next to Denny's')

Shutdown: Supposedly more likelihood of a shutdown as Congress puts an unrealistic idea it is going to solve immigration, etc. by Friday.

China: GDP beats, retail sales plunge. Reports are that 'raises questions' about the veracity of the data. Ha ha ha! As if there ARE NOT questions about all Chinese data.

Bonds: 2.611% vs 2.567%. Close to the 'magic' 6.2% level that some view as an equities killer.

EUR/USD: 1.2242 vs 1.2198

USD/JPY: 111.08 vs 111.25

Oil: 63.88, -0.09

Gold: 1330.70, -8.50

Okay, softer start, futures trying to rebound off the session lows. We will see if those bids return. Buyers and sellers are still fighting it out.
Jon Johnson, Chief Market Strategist
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Wednesday, January 17, 2018

Market Alert - The Close

The fight between buyers and sellers resumed. Tuesday futures gapped up, held the gap, stocks surged. Until they did not. Reversals gave back the gains, big volume, sellers won the day.

The question Tuesday night I posited was whether the sellers would have any staying power after another, this time quite serious, attempt to sell?

Not Wednesday. As fast as they appeared and as hard as the sold on Tuesday, they vacated the building on Wednesday. Futures started higher and trended higher into the open. Stocks started upside, continued upside through the morning, through midday, and to the last hour. At that point they slid back some, but the gains were impressive.

SP500 26.14, 0.94%
NASDAQ 74.59, 1.03%
DJ30 322.79, 1.25%
SP400 0.71%
RUTX 0.87%
SOX 2.89%
NASDAQ 100 1.09%

VOLUME: NYSE -18%, NASDAQ -6%. NYSE trade faded below the selling from Tuesday, but was still upside and the strongest outside of Tuesday since expiration. NASDAQ showed the same action. Rationalizing the upside? Perhaps; it was solid volume but it was still less than the selling trade and the sellers did not even show up Wednesday.

ADVANCE/DECLINE: NYSE 1.9:1, NASDAQ 1.8:1. Wow, not that inspiring after the -2.4:1 and -2:1 on Tuesday. Then again, not that far off either.

Indeed, SOX, old potential triple top SOX, exploded higher to new all-time high. Yes, SOX finally took out the early 2000 high. DJ30 26K? Who cares? SOX new all-time high is the key. Any mention on the post-market shows? Nary a one. Possibly THE most important index for the market as shown time and again in the rallies, now at a new all-time high from a problematic pattern. Yes, the buyers were definitely buying.

Now Wednesday was not an all-inclusive powerhouse. There were many stocks that did fall off their intraday highs once again after posting impressive early moves. They just didn't reverse that hideously. Others didn't show much upside at all, and some names you know well: NFLX, AMZN, FB -- some FAANG continue upside (AAPL with its $2500 bonuses, GOOG), but key names looked weak. On the other hand, the stocks that moved higher really moved higher, e.g. BA, IBM, WMT, HD, AAPL, MSFT, TXN, AMAT, LRCX. Strong.

Does the Wednesday move give the all clear, the green light? Is the smoking light now on? Certainly the response was solid: new high on DJ30, new closing highs on SP500, NASDAQ, NASDAQ 100, SP400. Only RUTX missed out, but its pattern is not bad, holding the 10 day EMA and bouncing.

Yes, Wednesday was solid, but volume was lower than the Tuesday selling. Not bad, but lower. Breadth was so-so, no surprise given RUTX lagged. Moreover, RARELY does one day make a consolidation, particularly with the kind of reversal and volume shown Tuesday.

In short, the action looked good, we bought some stocks that moved well from good patterns, we let most positions continue to run. Yet, the action was not as widespread to the upside as it was downside Tuesday, and perhaps we should have used the upside to bank more gain. Perhaps. There were some ugly reversals in the indices on Tuesday but many leaders did not look that bad at all. Wednesday the indices surged back up and stocks posted good upside moves. It is harder to run up hill (i.e. move upside) versus downhill (the downside), but they were doing it Wednesday.

The fight is still on. Do not be lulled into the belief that Tuesday was it, the sellers' one shot. It is surprising they did not show up Wednesday, as if the broke camp under cover of darkness and when the morning came they had melted away. That in itself, however, is reason to be skeptical even as you play good moves. As soon as you do not do that, then as Shoeless Joe Jackson said in 'Field of Dreams,' to paraphrase, it is in your ear. So, play the good moves, but watch for in your ear.

With that in mind, we did pick up some good movers such as WMT, UCTT, TSLA, ORBK, BITA. Looking ahead on the week there are others we like upside in chips, drugs, and elsewhere. There are some downside we are interested in as well: not everything looks good upside. More stocks show some weaker patterns worth having at the ready if the Wednesday rebound runs into another pack of angry sellers as on Tuesday.

That means we also continue taking gain as presented. Wednesday we could have taken more on many plays that we took gain on before and rallied higher yet again. Several faded off the early highs; thus if there is another move up that stalls, taking some more of the gain is not a bad idea.

Bitcoin: The horror, the horror. That is what you hear on the financial stations. 'Fast Money' on CNBC is seeing its bitcoin 'expert' burned on Twitter, etc. for not being on the show as BC gets pounded. Ah, perfect.

I told you that once that when BC got to the point of having patterns then I would get interested. It now has patterns. The current pattern is an ABCD upside that has retraced to the 61% Fibonacci retracement on the close, 78% on the intraday low Wednesday. Nice big hammer doji with tail close over the 61%, touching that 78% level. This is a classic consolidation pattern. If BC can close over the 50 day MA's, then we are looking to play it upside back to near the 17,500 - 18,000 level.

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

Futures vs FV: SP +15.43; DJ +175.14; NASDAQ +44.36

Okay, round 2. Futures started early with a gap higher and have moved up since that open versus a static, flat line morning. That said, not a 45 degree ramp, just a steady climb that is being tested just a bit toward the open.

No major news driving it, just a very strong uptrend that is not going to go away quietly. Thus the but the dip reflex remains very strong as evidenced today with upside without a lot of news.

Earnings beats: BAC, GS. BAC much better overall than GS

Misses: CSX (TL)

Budget impasse likely on DACA and they are talking about a budget extension or funding extension again. That works. No reason to hurry on DACA and immigration right now with the court order. Get it right.

Sales: TIF reports +5% holiday sales.

M&A: CELG buying JUNO

GE: Talk of a breakup as soon as spring.

Upgrades: IBM, DG, DLTR

Downgrades: AAPL

California: Rural counties (all those outside the coastal counties just north of San Francisco to just south of LA) want a vote to split into the 51st state and present it to Congress under Article IV, Sections 3 and 4.

Industrial Prod, Dec: 0.9% vs 0.5% ex vs -0.1 prior (from 0.3%)

Capacity: 77.9 vs 77.3 exp vs 77.2 prior from 77.1

Bonds: 2.563% vs 2.535% 10 year. Bonds fall a bit, still under pressure

EUR/USD: 1.2217 vs 1.22698. Dollar a bit stronger.

USD/JPY: 110.79. Dollar still struggling

Oil: 63.65, -0.08

Gold: 1336.00, -1.10

Futures are off the highs but are starting higher. That, again, gives any sellers the opportunity to sell the market and likely they will take a shot again as they were successful Tuesday. Again we will see the buyers and sellers fight it out and who can get the upper hand today.

Jon Johnson, Chief Market Strategist
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Tuesday, January 16, 2018

Market Alert - Pre-Market

Futures vs FV: SP +14.96; DJ +237.81; NASDAQ +40.71

Dow 26K is in play as futures started higher in the early hours and have held the range all morning. Not the low to high rise in the pre-market, but the gap upside that always makes you (at least me) wonder if the sellers will take shots THIS time. Thus far, however, no one has been interested in taking that side of the trade.

Lots of news, some meaningful, a lot amusing.

GE: Takes a $6.2B charge and will eliminate the GE Capital dividend paid to GE.

Japan: Sees ever so slight growth. The amount is almost a rounding error, but after 30 years of contraction, ANY sign of green shoots is noteworthy. So, I note it.

Jobs: WMT is cutting 1K corporate jobs. This is the same pattern WMT has shown over the past three year: raise front-line wages, pay for it by cutting corporate staff. Not saying that is bad because for WMT its main contact with people is the front line. Cutting perhaps unneeded overhead at corporate is not a bad step.

Earnings: C, UNH beat

Blow off? ore articles discussing this. This morning CNBC ponders if this 2018 start is part of the 'overshoot' phase (another way of saying blow off). Good! Let's have a LOT of skeptics. The more the better for the market.

Empire State PMI, Jan: 17.7 vs 19.0 exp vs 19.6 December (from 18.0). Lowest in six months as employment, hours worked and orders fall.

China: Downgrades US credit to BBB+ from A- and warns 'US insolvency' could trigger next crisis. Is China serious? Not about the US credit rating but about creating the mindset of US weakness and thus promoting its new yuan based petro currency.

Government: Shutdown talks if no immigration deal. Okay, who says there MUST be an immigration deal? Only a few people who want certain things. A federal court ruled Trump's DACA executive order was unconstitutional (the ultimate irony since DACA was CREATED by EO) and thus DACA is still the rule and there is no need to rush because no one is being blocked.

Sam Zell: Says market is showing irrational exuberance and that he is mostly in cash. That is MUCH easier for a billionaire to say and do because he can afford to miss out on 30% upside and be no worse off. Those trying to build wealth need to get as much of the fat of the moves as they can.

Bonds: 2.533 vs 2.55% 10 year

EUR/USD: 1.2209. Euro continues rising against dollar

USD/JPY: 110.69. Dollar bounces from Monday, but still lower overall

Oil: 64.00, -0.30

Gold: 1333.20, -1.70

Futures are off the highs but holding in the morning range. Just another day upside right? No reason to change what we are doing because the market certainly is not changing right now. Have new plays to look at that are not extended, will see if this early gap higher does indeed hold.

Jon Johnson, Chief Market Strategist
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Friday, January 12, 2018

Market Alert - Pre-Market

Futures vs FV: SP +3.99; DJ +98.27; NASDAQ -9.24

Futures are mixed in a volatile morning. Started higher, holding gains all morning, then FB news soaked in (changing the news feed to focus on people 'experiences') and all dropped. DJ has recovered, but NASDAQ was up 25 pts dropped to negative. It would appear that the FB news was an excuse to sell some GOOG, AMZN as well. The loudmouth on CNBC is saying this is brilliant. Perhaps, but FB used this in six other countries as an experiment and usage plunged and I mean plunged. Enough so that a FB VP said they tried it and obviously would not implement it given how it cut usage. Hmmm.

CPI: 0.1 vs 0.2 exp vs 0.4 Nov

Core: 0.3 vs 0.2 vs 0.1. 1.8% year/year, highest since 4/17

Healthcare, rents led the move. NOT the groups you want to see.

Retail sales, Dec: 0.4 as expected vs 0.9 Nov (from 0.8)

Control group (less auto, gas): 0.3 vs 1.4 Nov (revised up 3x)

Strongest Nov/Dec in 10+ years.

Earnings beats: BLK; JPM

Misses: WFC

AMD: Its chips ARE susceptible to the same attacks as INTC. Surprise. How many more will be admitting flaws?

Bonds: 2.583% vs 2.53%

EUR/USD: 1.12144 vs 1.12059

USD/JPY: 111.64 VS 111.22

Oil: 63.26, -0.54. Giving some back off that Thursday doji after a big run

Gold: 1327.00, +4.50

Futures are off the lows but are weakened and problematic after the FB news started getting sellers to hit FAANG and large cap tech. The string of gains and strong Fridays could be in jeopardy today. Not sure the market has absorbed the rise of the selling this morning.

Jon Johnson, Chief Market Strategist
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Thursday, January 11, 2018

Market Alert - Pre-Market

Futures vs FV: SP +6.37; DJ +40.87; NASDAQ +14.09

The biggest story is a counter to the Wednesday China story. China says the story that it was planning to slow or halt US treasury purchases was 'fake news.' Or was it a trial balloon to gauge market reaction and confirm to China it is the US' banker? If so, it was a success . . . for China. As Rick Santelli put it, China cannot even be honest with the world regarding its GDP, so why would anyone believe it would be honest about its plans for finance even if it was the Chinese government as the source? Points taken on all the above.

WMT: Increasing minimum wage to $11/hour, issuing bonuses for longer term employees up to $4K.

PPI: -0.1 vs 0.2 vs +0.4%. First decline since 8/2016

Core: -0.1 vs 0.2 vs 0.3 prior

Final Demand: 2.6% year/year vs 3.0 exp vs 3.1 prior

Core year/year: 2.3% vs 2.4% prior

Trump: Hints at internet tax, aimed at Amazon? But what about everyone else that is NOT Amazon? Will they suffer to 'punish' Amazon? Give me a break. How is that good for America?

Earnings beats: DAL; KBH; PRGS

Upgrades: CVX

Bonds: 2.568 vs 2.559% 10 year. Bonds down a bit more even on China debunking Wednesday treasury story

EUR/USD: 1.2015 vs 1.1949. Euro stronger on a more hawkish BOE

USD/JPY: 111.51 vs 111.37

Oil: 63.82, +0.25. Up again.

Gold: 1321.90, +2.60

Okay, futures are up today on a 'retraction' of the story Wednesday re China stopping treasury purchases. Not a roaring open, but recovering the rest of what was lost and up a bit, trying to look at new highs.

That is good for the upside, but we will watch and see how FAANG reacts as well as other leaders. Do they shake it off? They were due a test anyway after the last run.

Still good stocks in good position that are ready to try to make their moves and we are watching those as new entry possibilities.

Jon Johnson, Chief Market Strategist
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Wednesday, January 10, 2018

Market Alert - The Close

Bloomberg reported at 5:00 AM ET that 'officials' from China stated that the country may slow or even halt its purchase of US treasuries. As a big creditor of the US and holding anywhere from $2T to $3T in treasuries, this is an important development, and markets reacted.

US bonds tanked, pushing the 10 year yield to 2.59% from 2.551%. Stocks dropped in one of their sharpest moves downside in quite some time. Yet, by the close bonds were back to flat (2.559% 10 year) while stocks, though still negative, were mostly unscathed. On the first test, buyers did return.

SP500 -3.06, -0.11%
NASDAQ -10.01, -0.14%
DJ30 -16.67, -0.07%
SP400 -0.48%
RUTX -0.02%
SOX -1.24%

VOLUME: NYSE +1.5%, NASDAQ -1.5%. NYSE trade remains below average, and if you have selling that works. It was never that strong on the upside either, so good to have it remain weak on the downside. NASDAQ trade remained above average for a sixth session and slightly lower. That shows no dumping of shares on the selling.

That does not mean the indices do not use the China news as a reason to test a bit more. The large cap indices all reached lower but held ground easily above the 10 day EMA before recovering most of the day's losses. A 10 day MA test, particularly after such nice upside moves, is really nothing in market terms.

SP400, RUTX both tapped the 10 day EMA on the low and recovered lost ground to varying degrees. RUTX made out the best, recovering to a tight doji while SP400 held the 10 day but bounced just modestly. SOX held the 10 day EMA on the close, but it had to recover to do so, closing with a tight doji with tail just above that support.

Stocks for the most part recovered a la the indices. For the most part. There were some continuing breaks lower from Tuesday and I will discuss those ramifications if any.

The stock action shows at least two things to us. First, several big names look as if they can test back from their recent nice upside moves. For example, AMZN, FB, GOOG all recovered, but they still dipped off their week or longer last legs on the close. A 10 day EMA test would be very normal after such runs. As discussed this week, leaders that pushed the last leg higher were in position to test and that is one reason we took gain Monday and Tuesday on GOOG, NFLX, AMZN and others that surged for us over the past two weeks. Even so, while the action Wednesday may lead to test, it does not look to be anything severe.

Second, and this follows on the last comment, we saw some stocks rally even as most of the market faded. Retailers that tested recently started to bounce again, e.g. TLRD, DDS. Not all retailers, but then again, retailers are moving in different waives inside the group. Software performed well, e.g. DATA breaking higher and FFIV continuing its move for us. XNET surged higher again and hit the target so we banked some gain. VCEL, LEDS surged as well. The point: as some the recent leaders test, others break higher.

Third (okay, there are 3 things), there were not a lot of breakdowns, those reversals from breakouts or good moves. There were breakdowns, but when you look at the names, they are few in number and in many cases there is a specific story tied to them. INTC continued lower sharply for a second session, unable to overcome the drop on the news of the flaws in its chips. More bad news was piled on with the performance degradation for those using Windows 7 and 8, so much so that those PC's will be useless in the eyes of many; certainly those using them did not get what they paid for. Or KSU, reversing sharply after a nice rise in its ABCD pattern on reports that the White House is close to notifying Canada and Mexico it is going to pull out of NAFTA. GRUB doesn't have a real story behind it as it sold aggressively for a second day. AMBA is off hard for a second session; it supplies GPRO its chips and GPRO is in trouble. RES bombed but it has a lot of interests in . . . Canada and Mexico. Another NAFTA-related bloodletting.

Further, don't get distracted by stocks that tank but are not leaders or were not near highs or recovery highs; they have problems different from leaders that are rallying then reverse hard.

In sum, you have leaders coming off highs on grudging tests, bouncing off early lows. You have other stocks rising even as the leaders in the last rally take a breather. Finally, while there were stocks heading lower in sharp selloffs, they were not that great in number, many were not leaders, and many that did sell had specific stories related to them versus just reversing off the highs.

Given that background and the recoveries, we did not do a lot. We took some gain on XNET and LEDS, but let others keep running where we had taken some gain earlier according to our play plan. We bought DATA as it was a new mover coming back around upside with a strong move. Sold a couple of chips, AVGO and MXL, though MXL was problematic. In short, we let most work as they held up rather well and played around the edges, picking up good positions and banking gain as stocks make what could be a logical test of the recent last leg surge that started the new year.

The pullback would likely give some new entries on those stocks that are still not extended despite the market move, read FAANG and some others that based and broke out more recently than industrials, etc.

Even before they test, however, there are stocks right now that look good to move, and that makes sense if the market remains bullish: as leaders test and rest, other stocks get money and break higher from good patterns.

Thus, we have some plays to add that look to be ready to make upside breaks to those put on the report this week. An upside run feeds on leaders, and as stocks set up in good patterns, those are the logical choices to help lead as the leaders of the last leg pullback. So we look at those.

Now, the cautionary word. Solid patterns in the wings and ready to go are necessary for a run to continue, but they are not alone sufficient. Rallies can die even with stocks ready to make their moves. THUS, you must watch the pullback in the leaders and monitor if they remain healthy in terms of upside. You also watch the market in general and see if other areas start to struggle and start giving back upside on high volume. Basic stuff, but in the glamor of the rally and the gushing of the professionals and television personalities it can get lost. As always, remain calm, remain as dispassionate as possible, watch and listen to what the market is showing and saying, and use those to take what the market gives.

Have a great evening!
Jon Johnson, Chief Market Strategist
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Market Alert - To the Close

The stock indices remain negative after gapping lower at the open as China treasury buys or non-buys in the future triggered some selling. Across the market stocks are mostly lower, but looking at leaders, not seeing a lot of rollover action (KSU is down hard and trying to find why).

For example, FAANG stocks are lower but not getting whacked. They are off the session low but this could be the start of a pullback for GOOG, AMZN, FB. AAPL is putting in a higher low in its range and NFLX is actually higher after a lower start.

Thus, mostly some fading to test recent moves. Even so, some are higher, e.g. some software such as FFIV, and we are looking at DATA as a new entry. Financials are not bad given interest rates rising; duh. C, however, is up but has faded off the entry point.

SP500 -3.60, -0.13%
NASDAQ -12.66, -0.18%
DJ30 -20.02, -0.08%
SP400 -0.49%
RUTX -0.10%
SOX -1.21%

NYSE volume is running about 5% hotter, NASDAQ trade about even with Tuesday. No major surge.
Jon Johnson, Chief Market Strategist
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Market Alert - Pre-Market

Futures vs FV: SP -6.99; DJ -59.8; NASDAQ -34.44

Futures are off the 5:00am ET lows when the news from Bloomberg was that China is considering slowing or halting US Treasury buys. BBG quotes 'officials' saying China is considering these actions. BBG has reported news from 'officials' in the past that were not in the government and turned out to be full of hot air. Nonetheless, it is out there and impacting all world markets, debt, equity, currency, precious metals.

After the news hit, futures have trended slowly back upside, paring losses but still well off the Tuesday close.

Import Prices, Dec: Core prices (ex-oil) -0.2% mo/mo. That is driving the Phillips Curve clingers insane. US consumers love it even with a lower dollar.

Davos: It is time for the very wealthy upper crust and the wannabes to congregate for snow skiing, toddies, the world's best food and wine, and discuss how they can continue their vice grip on the world wealth. On the list (or not?) is President Trump. There goes the neighborhood, right? A working man's billionaire who will be passing out Trump ties as gifts no doubt. I would love to be there to watch, but alas, I do not qualify. Not even for the wait staff.

Immigration: A Ninth Circuit judge (surprise!) blocks Trump's DACA order. Okay, now get this. DACA was a creation of Obama actuated by executive order. Trump writes an executive order overturning it. Executive orders are not laws passed by Congress and can be overwritten by subsequent executives. Yet, now a judge says an executive order cannot be rescinded by the current executive, as if the prior executive had more power. Is our court system politicized? You think?

Earnings: LEN miss (BL), SVU miss (BL)

Upgrades: STZ, DE, TGT. After CAT was upgraded at a new high, I guess it is only right DE was upgraded at a new high as well.

Bonds: 2.59% vs 2.551% 10 year. Bonds continued to dive with yields surging past 2.50. Bill Gross says the bond bear market as officially arrived while others consider 2.62% as the tipping point for the equities market as well.

EUR/USD: 1.1991 vs 1.1935

USD/JPY: 111.57 vs 112.62. Dollar dives against the yen on the China news. Weak, now weaker.

Oil: 63.43, +0.47. A confluence of issues raising oil prices. A weak dollar of course is a driver along with the US economic surge along with a world recovery.

Gold: 1321.30, +7.6

Futures may be off their low but as noted, are a long way from flat. SP, DJ futures are in much better position than NASDAQ as the FAANG for example are off fairly briskly. Growth looks to lag so to speak, again. Or put another way, they will lead downside.

Have to watch and see how virulent this is. Perhaps it is just backing off from the bids and a pause, perhaps the sellers get aggressive given the important issues at hand. We will watch how aggressive this is. If stocks come back with fight, great. If they wait a day or so and the selling is mild, that is not bad and gives entries. If leaders roll over hard on sharp volume, that may start changing the game.

Jon Johnson, Chief Market Strategist
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Tuesday, January 9, 2018

Market Alert - Pre-Market

Futures vs FV: SP +4.74; DJ +57.00; NASDAQ +18.12

Futures are up the second day of the week after a lower start Monday yielded some upside outside of DJ30. Today all are pointing higher as world markets are up and the US is set to start higher. Thus far the US markets have had no issue holding gains if they get them in a session.

Holiday sales: Helping provide some of the upside impetus for the session gains. TGT reports sales that beat expectations and raised its full year as a result. While companies such as URBN reported lower sales, the consensus is sales were much better than expected across the board.

NFIB Small Business Optimism Index: While it fell some in December from a blistering November, the survey takers say they have never seen anything like 2017 in terms of small business optimism. The year set a record high and the NFIB says small business optimism spiked on 11-9-16, the day after the election and has rallied since.

NKOREA: Reaches a deal to send a team to the Olympics, raising the question whether the athletes will pass any health, drug, and radiation tests. NKOREA also agrees to military talks with other powers.

INTC: MSFT has halted some of its patches to fix Intel's vulnerable chips because it is generating blue screens. I wonder when the lawsuits will start about this? You were sold a chip that was supposed to run at a certain speed, but to make it safe to use you have to have a 'fix' that significantly slows the speed. That is a Deceptive Trade Practices Act situation in Texas and other states.

Federal Reserve: Atlanta Fed signals the Fed may be changing its views on rate hikes as Atlanta says there may not be three hikes in 2018. Shocking. They are so wedded to the Phillips Curve they just cannot figure what is happening. At least some are saying they need to rethink things; likely the Austrian or Chicago school economists on the Fed. I think there are one or two, but they are not on the FOMC.

Upgrades: AMZN, PYPL

Bonds: 2.50% vs 2.482%. Milestone level.

EUR/USD: 1.1922 VS 1.1965. Dollar higher today

USD/JPY: 112.61 vs 113.06. Dollar lower today

Oil: 61.96, +0.23

Gold: 1312.70, -7.70

Futures are holding gains though off the highs the past 15 minutes. As noted last night, every session at this juncture has to be viewed to see if there are stocks just testing and resting or rolling over, particularly for SP500, DJ30. At the same time, other stocks in other indices continue to set up good patterns and AMZN is set to open 10 clicks higher after its upgrade.

Jon Johnson, Chief Market Strategist
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