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Tuesday, April 24, 2018

Market Alert - Pre-Market

Futures vs FV: SP +12.41; DJ +102.31; NASDAQ +33.70

President Trump and the French President are inspecting the troops at the White House as the French President is given full diplomatic welcome. The futures are up. Coincidence? Yes.

Stock futures are up, but after rising for 4 hours they are fading the gains the past hour. Not a big drop, just losing some bids/momentum. Hmm, sounds somewhat familiar.

Earnings are helping drive stocks higher early. Can they avoid the fade?

Beats: CAT (increased guidance); KO; VZ; UTX; PHM; HOG; GOOG; LLY; ZION MMM (TL, BL in line)

Misses: TRV (BL); WHR (TL, BL)

Case-Shiller: Housing prices rising at 6.8%, the fastest since 6/2014

AAPL: Supplier AMS AG reported what some are calling shockingly poor earnings. Everyone knew of a slowdown, but no of this magnitude.

Upgrades: HD, LOW

Sentiment: Dennis Gartman has taken a 'small' short position on equities. Stocks are set to bounce. Makes sense.

Bonds: 2.988% vs 2.962% 10 year

EUR/USD: 1.2204 vs 1.221

USD/JPY: 108.57 vs 108.71

Oil: 68.92, +0.28

Gold: 1326.90, +2.90

Stocks are set to open higher as noted, though eroding the gains as the market open nears. Monday saw good moves fade. Of course that remains the concern for this nicely stronger open. The market indices are well set to move higher as many stocks sport nice pullback patterns to near support. Nice pictures, but they must convert them into gains. The longer they fail to do so, the more times they rally only to give the move back, the less likely the move near term.

CAT is set to gap on earnings. We also have a new play on CMI from the same sector and will see if it provides an entry to us. This group is getting new money.

Jon Johnson, Chief Market Strategist
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Monday, April 23, 2018

Market Alert - Last Hour

Right now it truly looks as if the market's next move is indeed hanging on earnings. Stocks were modestly higher and rallied nicely to midmorning. Since that time, however, a steady slide into red. Some nice early gains given back to no gain or indeed a loss.

SP500 -2.96, -0.11%
NASDAQ -24.02, -0.34%
DJ30 -44.67, -0.18%
SP400 -0.05%
RUTX -0.31%
SOX -1.23%

There is a last hour rebound underway, but that is all subject to post-hours earnings, specifically GOOG.

Disappointing action for sure and if earnings fail to please the market will not perform well -- it is clearly waiting on them. The question then becomes how much long exposure to hold going into the close. If you are uncomfortable, taking half a position off is not a bad idea.

Oil prices (oil 68.87, +0.47), bonds (2.977% 10 year) are hot topics today, but trade is also ready to re-enter the headlines. Plenty to worry about, plenty to pin on earnings to save the day.

Some really good setups remain and indeed some areas are moving up, e.g. retail (M, RH). We may be picking up some M and would like to see HD make its move. Again, on the existing tech and tech related positions, the action today is disappointing and places a premium on GOOG's earnings. Nothing wrong with taking part of the position off to limit downside but leave some upside exposure.

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

Futures vs FV: SP +7.76; DJ +52.06; NASDAQ +27.50

Futures are on a slow burn higher toward the open. No big unleashing of bids after the 2-day slide to end the week, just some light bids in the direction of the current mini-trend off the February lows. Yes, still looking at this as a bounce -- nothing changed from the weekend. It is a 'show me' kind of upside move, a Missouri bounce.

Interest rates are the main focus even with earnings ready to roll today with GOOG after the bell. 10 year hit 2.9972% on the high, and CNBC is running a graphic 'RATE SHOCK' whenever rates are discussed. Shocking.

Not a lot of new news. Iran ready to extinguish Israel, Russia still says Syria did not gas people, etc. The one quiet area: tariff talk. Nothing on that today.

Beats: KMB; ALK
Misses: HAS (TL, BL)

Analysts: UA upgraded; CAT upgraded; MRK upgraded

Bonds: 2.97% vs 2.96%. Hit 2.9972% on the high before backing off some.

EUR/USD: 1.2235 vs 1.22876

USD/JPY: 108.21 vs 107.645. Solid break higher by dollar

Oil: 67.49, -0.91

Gold: 1325.70, -12.10

Some news here and there, some upgrades/downgrades, but earnings will be the driver with GOOG up today as noted. Of course, news can always trump anything near term so have to keep an ear out for China.

For now the main issue is whether the big NASDAQ earnings this week can re-trigger the upside and push the indices on the next leg, perhaps the last leg, of this rebound toward the prior highs.

Jon Johnson, Chief Market Strategist
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Friday, April 20, 2018

Market Alert - Last Hour

The stock indices trade near the session lows hit in the most recent leg lower over the past 1.5 hours. All of the indices are solidly lower, and on the large cap indices, the 50 day MA tests have not held on this expiration Friday. Not a great upside signal. RUTX, SP400 easily holding the 10 day EMA on this test.

SP500 -28.40, -1.05%
NASDAQ -1-1.89, -1.41%
DJ30 -255.45, -1.04%
SP400 -0.77%
RUTX -0.72%
SOX -1.30%

Most of the market leaders are holding up very well. That said, FAANG is struggling as AAPL set the downside pace and has dropped almost 4% to the 200 day MA. AMZN is down 2%. Between those two, there is significant pressure on NASDAQ. Other FAANG is lower as well, but nothing major.

Oil continues holding its own with may of those stocks posting modest gains in a markedly down tape.

Semiconductors continue their weakness as well -- still an issue for the overall market -- though LRCX is up a bit. Sector remains weak overall, again not great news for the market overall.

Software and other leaders are holding up well in another session of a pullback.

The DNC has filed a lawsuit against Russia, WikiLeaks, and Trump for conspiracy to injure the DNC in the 2016 election. A quick read of the filing indicates it is basically garbage with unsupported allegations. It would not have been filed at my law firm and runs the risk of sanctions for frivolity. Of course, it is a political filing more than a legal filing: hamstring, obfuscate, resist, etc. We are quarreling while Rome burns. History has a deadpan methodology for repeating.

So, four Fridays straight to the downside as the headline risk still exists in the minds of traders. Don't like the action on the large cap indices, but do like the small/midcaps as well as the leader action that remains solid. Therefore we continue playing the current move and let this late week weakness dissipate.

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

Futures vs FV: SP +1.32; DJ -6.89; NASDAQ -6.89

Quiet futures trade perhaps belies expiration and a more volatile session. That said, Thursday was a gap lower by the indices to test the 50 day MA's recently broken through. Perhaps that was the volatility? Hmm.

More earnings, some company specific non-earnings news, Trump. Those dominate the morning headlines.

Trump: Last night it was reported that Trump is now not a Mueller target either in the Russia hoax or the Cohen/Porn star investigation. Is this what we are down to? Russia supposedly influencing our elections (as if it NEVER tried to do that in the Cold War, etc.) and whether a porn star was paid to keep quiet years and years ago? I guess so. Every side is after the other sides with investigators, criminal referrals, records subpoenas, ignored and otherwise. And still we have to make money in the market. But, I digress.

OPEC: Trump tweet states oil prices are held artificially high by OPEC and that is unacceptable. Well okay then. We don't like high oil prices. This of course comes on the heels of a report Thursday that Saudi Arabia had no problem with $80-$100/bbl oil. Of course it doesn't. Its primary resource at a higher price. Duh. Too high, however, and you get cut backs. Apparently SArabia feels the $80-100 level will not result in cutbacks. Perhaps the new crown prince is just operating another type of shakedown as he did with those imprisoned in the Ritz Carlton.

AAPL: Even more anlaysts are saying iPhone sales will be less than the lowered expectations they already have.

WFC: Reports are it could face a $1B fine. As good as a perp walk?

Earnings: GE doesn't miss. But who cares? WMT (TL miss)

Bonds: 2.917% versus 2.914%

EUR/USD: 1.2301 vs 1.2344

USD/JPY: 107.61 vs 107.39

Oil: 67.95, -0.38. Giving back some that it gained Thursday but still a breakout.

Gold: 1343.20, -5.60

Futures are off the 7:00ET highs, and we will see how they hang in, but the action this morning is rather muted. Thursday, however, saw futures fade into the open. Does not look as if this will get that ugly, but it is expiration and volatility can result.

Not planning on many new entries but will see how some of those testing good moves react, e.g. FSCT, VMW, XON. Likely keep testing today and even if not, entering today is not generating a lot of enthusiasm around here, at least not yet.

Jon Johnson, Chief Market Strategist
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Thursday, April 19, 2018

Market Alert - Last Hour

While the semiconductors are taking it square on the chin and all of the indices are lower, the index charts and nearly all leaders look solid. Yes AAPL and NVDA are weak and a drag, but they were not really the leaders right now. Chips are disappointing, but the guidance is at worst 50-50. Not trying to be Polly Anna, but let's look at the charts.

SP500, DJ30, NASDAQ just broke through the 50 day MA Tuesday. They are in a an excellent, tight test of that break. We will have to see how they close after this last half hour of the session passes, but right now they are in tight doji over the 50 day in, again, a very textbook test of the breakout over that resistance.

Leadership is very similar, holding the moves with very narrow losses after good upside breaks: CRM, RHT, WDAY, GRUB, FND, FFIV, NFLX, NTNX, HLF, ATHM -- Many. AMZN is up. So is CERS, FCX, GLUU, AMED -- in short, it is not carnage. The bids have just not returned today.

MCD, AMAG not performing that well, NVDA as well. LITE is problematic, and LRCX dropped to the 200 day MA fast, so letting it gel there and make a bounce.

Looking at FCX as still in the buy zone after the WED upside gap; it has added some today and while it is near the February high, we may pick up a partial late session as it is showing the kind of volume that could keep pushing it.

SP500 -14.31, -0.53%
NASDAQ -51.00, -0.70%
DJ30 -69.49, -0.28%
SP400 -0.42%
RUTX -0.42%
SOX -4.15%
NASDAQ 100 -0.75% (thanks AAPL, NVDA)
Jon Johnson, Chief Market Strategist
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Market Alert - Pre-Market

Futures vs FV: SP -9.89; DJ -78.07; NASDAQ -30.61

Futures were modestly lower but the downside kicked into gear over the past hour as some negative stories hit. What was a nice softer open is now more problematic. Soft opens in rallies are positive: it gives buyers a chance to put in bids at lower prices and typically there is a reversal. With the large cap indices past the 50 day MA's but at the next resistance from prior price points (e.g. the December consolidation for DJ30), this might mean a pause for the day to regroup. We will see the half life of the stories.

Main story: TSMC (semiconductors for smart phones) issues lower revenue guidance due to softer high end smartphone demand. That has directly impacted AAPL and NVDA, and when those two are down, NASDAQ is down as well. MS focuses the blame on the iPhone. No secret the X sales are weaker than expected. I said it when the iPhone 8 was released just ahead of the X phone expected release: AAPL was going to learn a lesson in marketing and its own arrogance.

In any event, that news has hit two big NASDAQ players and thus the market weakness accelerated in NASDAQ and this had a bleed over effect into other indices.

Main story 2: Bond yields moving near 3%. That will supposedly hurt earnings (smaller and midcaps especially) and give savers an alternative to the stock market. Maybe, but a poor alternative still.

Philly Fed, April: 23.2 versus 21.0 exp vs 22.3 March

Ostensibly good, but prices paid surged to a 7 year high while prices received pulled back. That means a profits squeeze, and profits are the key in earnings, particularly future profits. Of course, the doom and gloom sites are saying stagflation is ahead. Good grief.

AMZN says 100M prime members. That was the news last night, but that is getting lost in the crowd today with the other stories.

Earnings beats: PG; BX; BBT (BL); BK; AXP; AA (BL)

Bonds: 2.908% vs 2.867%. Creeping toward 3% and of course that gets blamed for the stock weakness.

EUR/USD: 1.238 VERSUS 1.2373

USD/JPY: 107.34 vs 107.40

Oil: 69.25, +0.78. Continues to new highs post breakout test. And yes, Gartman is still wrong.

Gold: 1350.50, -3.00. Gartman not shorting gold right now so it is a bit lower.

Okay, futures remain at the lows though holding the line the past 20 minutes. AMZN is off the morning high (1549 vs 1565) but still up 20+ clicks. Definitely a very mushy, problematic open ahead. Looks as if DJ30 tests the 50 day MA's broke over Tuesday, NASDAQ/SP500 testing back a bit toward those levels.

Keys will be if key techs catch a renewed bid (MSFT, INTC, MU, LRCX, software) and if oil, retail, drugs continue to step up.

Jon Johnson, Chief Market Strategist
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Wednesday, April 18, 2018

Market Alert - Pre-Market

Futures vs FV: SP +7.91; DJ +28.45; NADSAQ +16.38

Futures opened higher and rallied to modest pre-market highs. Some backsliding the past hour but still holding some gains into the open. Not a great pre-market after a good Tuesday that saw the large cap indices join RUTX, SP400 over the 50 day MA. A lower open would be fine, but stocks such as AMZN (+11) are moving NASDAQ up much stronger than the other indices.

The sluggish open may mean some early testing versus another straight shot to the upside today.

Earnings are the key and they are mixed. The bald headed guy says they are not what he wanted to see over the past 24 hours, meaning mostly IBM, LRCX.

BEATS: MS; TXT; IBM (lowered guidance); UAL; CSX; ISRG; LRCX (beat, increased guidance)

China/Trade: China says it has "emergency response" plans at various levels to retaliate against more US tariffs.

Speaking of which, the US has initiated a probe into steel wheels from China as to whether they are being dumped in the US.

North Korea: CIA Director Pompeo met with Kim Jong In over the Easter weekend. After years of molly coddling him, you have an administration taking a tough stand and the chips appear to be falling into place. In our family we have a saying, if you expect nothing, you get nothing. It appears for decades the world fretted over what NK could do and tried to placate its leaders instead of demanding they act responsibly. I think there was a 'Twilight Zone' about this with the kid with incredible powers and everyone feared him. Then one woman came along, recognized he was a kid, treated him accordingly. Oh well. Good things to hear, very good things. This is big.

Bonds: 2.849% vs 2.83%

EUR/USD: 1.239 vs 1.237

USD/JPY: 107.21 vs 107.01

Oil: 67.70, +1.18. Made the test of the breakout and now surging back upside.

Gold: 1355.30, +5.80

Futures remain sluggish toward the open. More and more earnings are coming out. LRCX will open down 10, but that is well off the 15 last night. It still looks as if there is a bid under this move, and after an ambivalent open that likely sees stocks sluggish for the first hour or so, bids likely return. AMZN is going to open higher, continuing the Tuesday gap and rally. We want to pick up some of that after we see the initial trade direction and then try to get a good entry.

Jon Johnson, Chief Market Strategist
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Tuesday, April 17, 2018

Market Alert - Pre-Market

Futures vs FV: SP +20.01; DJ +233.86; NASDAQ +72.07

Stocks are set to gap higher for a second session. They held gains Monday -- for the most part -- but on very light trade and the large cap indices closed below the 50 day MA's again. This morning's action should push them through that level to join RUTX and SP400. The question is whether they can hold those moves.

Futures gapped higher and then continued a steady climb toward the open. Not just a gap and stall, but a steady build as more earnings have hit the wires.

NFLX was out first Monday afterhours and posted very good guidance. GS, JNJ, UNH have followed, all with very solid earnings. Thus far earnings are definitely helping, Again, will the indices hold the moves and continue the tradable rally off the SP500, DJ30 test of the Feb lows and double bottom?

AMZN is up 18 clicks. It appears the NFLX earnings (+22) are ginning up interest in other somewhat dormant stocks.

Housing Starts, March: +1.9%
Single Family -3.7%. Multifamily +14.4%.
Meaning? Rentals are still highly favorable post-housing crash and then the long period when no young people could afford a down payment on a house thanks to the terrible economy from 2008 to 2016.

Trade: China slaps a 179% tariff on US sorghum

China: Cuts its banks reserve ratio requirements, effectively devaluing their currency. This after Trump accused China and Russia of manipulating their currencies. Of COURSE China does so; it always has and always will. China does not have the same view of business ethics as the western world. Just the way it is. Thus, the decades of 'velvet gloved' negotiations have resulted in the opposite effects we wanted, and now we get more in your face negotiations as a result. China protests the tactics, but China had it so easy for so long it is upset that the cozy arrangements for it are being called into question. It is difficult extricating yourself from bad deals/arrangements.

Taxes: Tax day. As Ron Paul says, income taxes and freedom are not compatible.

Bonds: 2.841% vs 2.829%

EUR/USD: 1.2348 vs 1.2379

USD/JPY: 107.15 vs 107.11

Oil: 65.86, -0.36

Gold: 1341.10, -9.00

Stock futures continue edging higher into the open, an obvious upside gap to come. A move over the 50 day MA's on the open looks likely.

You can bet there will be some early profit taking and we will see if stocks survive that, if the indices can hold the ground gained. That is the key for the day.

NFLX is set to open near 330. Its closing high from March is 331.44, intraday 333.56. Not a breakaway gap on the open, and likely some early profit taking on the move. Then, however, we see if it stabilizes and can take out that 333 level. It helps that other stocks are reporting solid results as well.

Jon Johnson, Chief Market Strategist
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Monday, April 16, 2018

Market Alert - The Close

Stocks were set to rally on a 'mission accomplished,' one and done missile attack on Syria. Over the weekend I noted that the US coalition claimed all the targets were hit while Russia claimed it shot down 70+ of 100 or so missiles. The pictures released today show that if Russia was correct, it didn't matter. The munitions targets attacked were not only hit, but nothing but scorched ground was left. Okay, perhaps mission was accomplished.

Stock futures gapped higher early morning and held the gains into the open. Stocks did waffle a bit on some profit taking after the gap, but held their ground into midday and then started rallying early afternoon. Then another range formed into the close.

Nice gains, not blowout, but solid enough with some better internals as well.

SP500 21.54, 0.81%
NASDAQ 49.63, 0.70%
DJ30 212.90, 0.87%
SP400 1.01%
RUTX 0.87%
SOX 0.23%
NASDAQ 100 0.71%

VOLUME: NYSE +4%, NASDAQ +2%. Not scaring anyone with the volume, but trade again expanded, even if just slightly, on the upside. Still well, well below average and really, when you are honest, rather shaky trade. That may change, however, after the NFLX earnings as many were quite nervous about earnings expectations. NFLX' earnings were decent, but the guidance was the key.

ADVANCE/DECLINE: NYSE 2.7:1, NASDAQ 1.8:1. Not blowing the socks off here either. You can see the RUTX, SP400 lead helping bump up NYSE breadth.

Gains on the indices, but outside RUTX and SP400, the indices are still stymied at the 50 day MA's. Again they have bumped into the 50 day MA's, and again they faded. Perhaps the NFLX earnings will embolden investors to move in ahead of other earnings. That is of course the basis for the current rally even with its pensive internals thus far. The next big step is whether investor confidence increases and enough buying occurs to push the big cap indices through that near resistance. It is good to see the small and midcaps leading, but it is time for the others to kick in.

We did not pick up many new positions. We grabbed some GLUU early on as it broke higher; nice. Passed on VMW and FSCT; good moves but they gapped upside so we wanted to see how they hold the move. If so, they are still buys. Others still look good, e.g. VRX, FCX, ICLK, PANW improving, FND still nice -- plenty of stocks to help led upside.

Others we are already in are set up as well, e.g. LRCX (earnings Tuesday after the close), MU, WYNN, PENN, CASA, VCEL, RHT, ZBRA, HAL, DO, NTNX, AMED -- many. Some clinkers as well, e.g. DVAX that looked super with a nice gap but then tanked. Or LITE that scratched a good setup and gapped lower to the 200 day SMA and the early April lows.

Overall, however, the action remains quite solid, but it is getting to be time, now that earnings are starting to come in, when these stocks should start showing their moves. Again, perhaps the NFLX earnings can push them into buying.

Speaking of NFLX, it closed at 307.76, gapped higher to 328.65 immediately on results, and has settled in at 324ish late in the afterhours session. We will see how it holds the afterhours moved in the open session Tuesday.

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

Futures vs FV: SP +20.95; DJ +189.89; NASDAQ +54.41

Futures gapped higher early morning and rose steadily to 6:00ET. Since it has been a lateral move with an upside kicker the last half hour as the bell approaches.

The catalyst appears to be that 'mission accomplished' comment from The President. Putin threatens 'chaos' if there is another strike on Syria, but again that tweet suggests there are none contemplated. Instead, the US is putting n new sanctions against Russia today. With an economy roughly the size of Texas, while not tiny, Russia just does not have economic clout. These sanctions hurt it, and going after the oligarchs, Putin's friends and henchmen, was dramatic.

Retail Sales, March: 0.6 vs 0.4 exp vs -0.1 Feb

Ex-auto: 0.2 as expected and matching FEB

Furniture +0.7, Autos 2.0%, Apparel -0.8

Overall a decent number after 3 months of down.

Empire PMI, April: 15.8 vs 19.1 exp vs 22.5 March. Yes, a slow patch.

China: News is quiet this morning. Trump issued a tweet stating China and Russia are manipulating their currencies. Of course the establishment economists, etc. say untrue. But if you look at the yuan's movement since the US proposed those tariffs and that is exactly what is going on.

Alternate realities: Scanning the news, the latest President approval ratings are out. CNBC reports approval is declining. Others report approval is the highest since the first 100 days and has moved up the past quarter to levels higher than the predecessor. The point: read the actual numbers, not the headlines (like the stock-trading algos).

Bonds: 2.856% vs 2.825%. Yields jumping back up as bond bounce may be over.

EUR/USD: 1.2373 vs 1.2329

USD/JPY: 107.27 vs 107.33

Oil: 66.65, -0.74

Gold: 1347.80, -0.10

Futures are holding solid gains into the close. Will have to see if this move holds, but as suspected Friday with that low volume decline, it was an event-worry weekend that caused that dip. The earnings rally is set to continue to start the week.

Jon Johnson, Chief Market Strategist
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