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Thursday, October 19, 2017

Market Alert - Pre-Market

Futures vs FV: SP -

This is the calendar date anniversary of the 1987 Black Monday crash. DJ30 failed to hold 23K Tuesday then took it out on Wednesday's close. Today it is going to give it up on the open as stocks globally head lower.

The selling started in Hong Kong with a very late session drop over 2% before closing down 1.9%.

US futures are off the lows, rebounding over the past two hours though hardly ripping back to the upside.

Earnings are starting to flow more and they are trying to build them up on the financial stations given the poor response to results thus far. For example, VZ is getting pumped because it actually managed a revenue beat as it did not have as much subscriber churn. Much rejoicing.

Beats: TRV; BX; AXP VAL (BL); EBAY (TL); TSM; URI; WBGO

Misses: PM (T,B -- who smokes anymore?); SAP (TL, BL)

In Line: Ebay

Spain: Getting blamed for much of the market issues though this seems a stretch; more like a compilation of issues. Anyway, Spain threatens to enact article 155 whatever that is and try to overturn Catalonian autonomy. The thrashing around of a government losing control. Going to see more of that.

We are seeing it in some places though it is in an orderly legal process. Austria elects at 31 year old leader. New Zealand elects a 37 year old labour party PM. Populism era is reborn in 2016 and is spreading.


Philly Fed, Oct: 27.9 vs 20.0 exp vs 23.8. Best since 5/17 (38.8)


AAPL: Perhaps as much as any story, the one about AAPL cutting orders to suppliers is impacting the market. Business Week and others report that companies feeding AAPL parts are receiving notice to lower delivery amounts. AAPL has supposedly cut production orders by more than 50% for the balance of the year. Think about it. You have a perfectly good product that is working fine and doing all you need. You put out the next version that starts incorporating the new technology you are developing, BUT you also tell everyone that the next release will be the ONE that really uses that new technology and is the bomb. Do you buy the interim phone or do you save your money and wait? I guess AAPL found out THAT answer. In other words, AAPL cannot put out poop and sell it as filet mignon.


OTHER MARKETS
Bonds: 2.314% vs 2.341%. A bid in bonds with the weak stocks

EUR/USD: 1.183 vs 1.17995

USD/JPY: 112.47 vs 113.01

Oil: 51.24, -0.80

Gold; 1288.00, +5.00


Futures are at the top of the morning range, but that still has them opening with a significant drop, especially after DJ30 hitting 23K Wednesday. That has kind of negative overtones does it not? Hit 23K on the close, break out the hats, then down over 100 points on the futures at the lows.

Stocks are coming back and that shows there is not an all-out dearth of bids in favor of sell orders. It does add another block to the notion that the rally is having issues maintaining itself at these levels.

We will see if stocks can continue to rise off the morning lows when the bell rings. I would not be surprised to see stocks sell off again after opening, but if the rally is running out of gas, these tops take a bit of time to form. I would suggest they have been doing that with the slow, no volatility crawl higher the past two weeks and now the volatility on some of the indices. That is almost laughable is it not? Volatility? Just shows how low volatility has been that a bit of an upside tick is a 'jump' in volatility.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Wednesday, October 18, 2017

Market Alert - Pre-Market

Futures vs FV: SP +4.39; DJ +114.56; NASDAQ +6.56

The hunch may have been the market was close to a flat line rollover, but earnings from IBM (a beat and saying it will actually make money in Q4) coupled with good results already from JNJ and UNH (both increased guidance) are sparking DJ30 higher. The other indices show positive futures, but nowhere near the level of DJ30. That still suggests the same issues for small and midcaps discussed in the Tuesday report, but for the morning stocks are going to open green. Indeed, futures are, after a lateral move for 2 hours, moving to higher pre-market highs.

It is not just IBM. China's Xi opened the China Congress with a rousing speech where he was looking to take China into 2050. He boasted how socialism has worked even as he opens the 'Communist Congress.' That's okay; most people in the world are so poorly educated, including the ones here in the US, to know the difference between the two.


Taxes: Treasury Secretary Mnuchin says better reform better pass or the market will crash. Or something like that. There are those who say that the market rise has not built in any tax reform. Hmmm. Look at how the small and midcaps exploded higher and led the market through this run at the same time the tax plan was announced with its tax cuts on small business entities such as LLP's, LLC's, Sub Chapter S, partnerships. That is no coincidence; that is pricing in better profits thanks to lower taxes. It is a softball Mr. Experts. Hit it versus arguing the color of the ball.


Earnings: JNJ, UNH both jump guidance. IBM doesn't miss for once and says it will be profitable by Q4 (yes, the check is in the mail). For this market, that is good enough. buy, buy, buy. LRCS reports solid results and is up pre-market almost 3 clicks.

Miss: SCSS (TL, BL); who needs sleep?


Housing Starts, Sept: -4.7% vs -0.8% exp vs -0.2% Aug (from -0.8%)

Permits: -4.5%

Housing starts the lowest in a year, and WAY lower than the drop expected because of the storms. Even CNBC admits the housing market was 'stagnant' before the storms.


OTHER MARKETS
Bonds: 2.334% vs 2.30%

EUR/USD: 1.1762 VS 1.1771. Dollar a bit stronger

USD/JPY: 112.87 vs 112.21. Dollar continues its strength here as well

Oil: 52.20, +0.32. Oil continues its strength but is still at the top of the range, not breaking out yet.

Gold: 1280.20, -6.00. Gold continues is more recent weakness.


Futures remain strong into the open as the market is jumping off flat action on the large cap indices. LRCX helps lead chips higher with its earnings and we will see if that continues the chips' leadership.

DJ30 is relatively stronger in its pre-market move versus SP500, NASDAQ. As noted above, how small and midcaps perform in this more bullish move will be instructive. Heck, SP500 and NASDAQ as well as they are somewhat holding back on this early market move versus DJ30. How stocks finish today will be very important.





Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Tuesday, October 17, 2017

Market Alert - Pre-Market

Futures vs FV; SP -0.99; DJ +19.04; NASDAQ -3.92

Futures were modestly higher then faded the past 1.5 hours as earnings were okay, just not exciting much buying -- again.

MS, GS, JNJ beats help DJ30, but BA is down as Airbus/Bombardier kind of JV on a specific plane. That is a Dow Drag.

Misses: UNH (TL); SONC (TL)
Beats: MS; GS; JNJ; HOG (but a 40% profit decline)

Production: 0.3 vs 0.2 vs -0.7 August (from -0.9)

Capacity: 76.0 vs 76.1 exp vs 75.8 Aug (from 76.1)


Import/Export prices jump on fuel costs


OTHER MARKETS
Bonds: 2.325% vs 2.302%. Fading some after the rally

EUR/USD: 1.17512

USD/JPY: 112.36. Dollar stronger

Oil: 52.05, +0.18

Gold: 1286.90, -16.10


Lots more earnings to come as the day continues and after the close. NFLX is not providing much upside. Not many are despite results. Looks like another familiar session ahead, i.e. sluggish gains as there is no real reaction to results. Again, the question is whether the bids return in the small and midcaps after they led, tested, and are in good position.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Monday, October 16, 2017

Market Alert - The Close

Monday started higher once more with futures trending higher all morning. Stocks opened higher, rallied farther to new highs, then backslid into midday. It took an afternoon rally to move stocks back up by the last hour to paint the close with decent gains.

SP500 4.47, 0.18%
NASDAQ 18.20, 0.28%
DJ30 85.24, 0.37%
SP400 0.04%
RUTX 0.00%
SOX 0.47%
NASDAQ 100 0.36%

VOLUME: NYSE -9.5%, NASDAQ -7.5%.

ADVANCE/DECLINE: NYSE slightly negative. NASDAQ -1.1:1. Downside breadth on an upside day. Not a great market session.

When you look at the session's action you see a virtual repeat of last week: SOX leading, large caps edging higher, small and midcaps still in test mode. Thus a new week and no change in the action. Not a bad thing for the upside as the indices put in more new highs while many stocks post excellent moves. Less than a stampede higher, but a very steady, very solid trend higher continues.

That was not bad for us at all. We let many positions continue to run because they are running well. Picked up some other good breaks upside because they put up good breaks upside. There are some issues with the smaller biotechs as support is being broken by a sizeable number -- rotation that is helping keep the lid on any attempt by the small caps to advance off of the 2 week test back to the 10 day EMA.

Afterhours NFLX added more subscribers than anticipated, mostly overseas. It moved up about 6 points afterhours but is up less than 3 clicks as time passes. Not the same reactions NFLX has shown in the past and we will see if the lethargic responses in the wake of earnings thus far (banks, NFLX) continues. The indices have rallied a long way, are still rising, and thus far lackluster responses to earnings have not stalled the move. Perhaps the tax reform hope is what keeps this rally going, and if so the Trump/McConnell get together today did not hurt. Tax cuts are powerful, but some positive responses to earnings would be a very solid indication as well.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Pre-Market

Futures vs FV: SP +3.83; DJ +40.28; NASDAQ +19.20

Stocks refuse to back off, continuing last week's move with more force today, the 30 year anniversary of Black Monday, at least at the open. SOX was strong last week while the large cap indices mostly just edged higher. Small and midcaps continued their tests. Today futures point to a strong open and we will see if the small and midcaps are ready to start back up yet or of it is just the large caps again.

New York Empire PMI: 30.2 vs 20.0 expected. Highest since 10/09.

New orders: 18 vs 24.9
Work hours: 0.0 vs 5.7
Inventories: -7.8 vs 6.5
Prices 27.3 vs 35.8

Why did it go up? 6-month outlook jumped to 44.8 from 39.3. The surge seems somewhat suspect as the outlook and prices led the gains.


Oil: Iraq and Kurds are fighting near Kirkuk, an important oil producing region. That is helping oli rise.


World issues: Stocks are up despite a bevy of world problems.

Brexit standstill
Catalonia forms its own central bank in the Face of Spain
Plague spreads big in Madagascar
Austrians elect at 31 year old populist millennial
NK: diplomacy will continue until the first bombs drop says the US
FBI: finds more documents on the Clinton/Lynch tarmac meeting

AAPL: upgraded
C: downgraded


OTHER MARKETS
Bonds: 2.2791 vs 2.275% 10 year. Off some after a strong rebound last week.

EUR/USD: 1.1806 vs 1.1822

USD/JPY: 111.90 vs 111.84. Holding its recent weakness, to put it one way

Oil: 52.31, +0.86. Rising on Iraq/Kurd fight in Kurkuk.

Gold: 1307.70, +3.10

Stocks are at pre-market highs as the bell approaches. There is some pre-earnings money going to work as the modest gains last week pick up some steam.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Friday, October 13, 2017

Market Alert - Pre-Market

Futures vs FV: SP +5.17; DJ +41.99; NASDAQ +23.61

After a day off stocks are in rally mode again with futures building all morning into a stronger and stronger open. AMZN is up. NVDA is up. Banks are still struggling still as earnings miss but the reports are not bad.

There is actual news.

Healthcare: Trump ends subsidies to insurance companies, the bribes made to keep them in markets where they would not be but for the subsidies. Thus they are not 'markets' but government created money pits. Headlines such as CNBC and Bloomberg call this a 'bombshell,' but as I said when the first healthcare attempt failed miserably, the thing that would change the landscape in a HURRY would be if the subsidies were immediately canceled. Here we are, 8 months down the road and just now it is done.


CPI: 0.5% vs 0.6% exp vs 0.4% prior. 2.2% year/year

CORE: 0.1% vs 0.2% exp vs 0.2% August. 1.7% core. Less than 2% now for 6 months.


Real Wages: -0.1% in September, now down 2 months straight. Gee, things are great.


Retail sales, advanced read: 1.6% vs 1.7% expected. 2.5 year high as sales snap back thanks to surging gasoline prices (highest in 4 years) and auto prices (after the inventory was washed away in Harvey).

REMEMBER: Sales are measured in prices. Thus, higher prices is recorded as more sales. That is another bogus measuring metric as tragedy means more 'sales' simply because supply is limited and prices rise.


Here is a question I saw posted today: Are you better off than you were 17 years ago (2000)? think about it.


OTHER MARKETS
Bonds: 2.287% vs 2.321%. Bonds surge on CPI, Retail misses.

EUR/USD: 1.1861 vs 1.1834

USD/JPY: 111.82 vs 112.25. Dollar sliding hard vs yen

Oil: 51.59, +0.99. Nothing like a weaker dollar to boost oil. Also, oil technically looks as if it will breakout this time. It did fail at resistance but held a key support level in the upper half of the range and is rebounding. That typically spells breakout regardless what the bald guy says.

Gold: 1302.90, +6.40


Stocks set to gap higher, throwing the rest of the week out the window and looking for again new highs. Friday gaps higher; yuck for entries. Will still look at AMZN, LITE and the like and see if they entries are decent.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Thursday, October 12, 2017

Market Alert - Pre-Market

Futures vs FV: SP -4.94; DJ -22.89; NASDAQ -9.75

Futures down all morning and indeed trending lower in big sweeps up and down. Three days of, overall, modest upside gains (SOX moved very well) and testing is giving way to another session of early weakness as seen Wednesday, but of course this early weakness is a bit harsher.

Solid earnings from C and JPM (though JPM missed on its bond trading) are not exciting stocks though C is up a nice 0.90 pre-market -- individual results driving individual stocks while most stocks are sluggish to start Thursday.


PPI, Sept: 0.4 vs 0.4 exp vs 0.2 August. 2.6% year/year vs 2.4% Aug. Largest increase in 2 years

Core PPI: 0.4% vs 0.2% vs 0.1% prior. year/year 2.1% vs 1.9% Aug
5 year high.


Healthcare: President is set to issue an EO on the ACA, trying to curtail its impacts on those who did not receive waivers. There are limits on what a President can do given the specifics of the act designed to prevent tinkering. For example, the President can say you can buy across state lines but the ACA dictates how much the plan will cost. It is what always happens with the single-payer, government dominated systems: even if you want and can go somewhere else for a better deal, you are blocked by the government. THAT is the single most proof that these do not create 'markets' as the government likes to say: a market WANTS to spring up but is blocked.


OTHER MARKET
Bonds: 2.336% vs 2.345%

EUR/USD: 1.1848 vs 1.18612

USD/JPY: 112.36 vs 112.414

Oil: 50.60, -0.63

Gold 1294.50, +5.60


Stocks will open lower for a second session. WED saw bids return though rather weakly outside of SOX. We will see if the bids return as earnings just start to hit the wire.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Wednesday, October 11, 2017

Market Alert - Pre-Market

Futures vs FV: SP -0.65; DJ +12.32; NASDAQ -1.32

After trying two days opening higher and tossing the gains then having to attempt a comeback, futures are simply starting a bit lower and we will see if bids return again. The pre-market has shown a bid the past 1.5 hours as futures move to the pre-market highs.

The news cycle remains a bit tepid.

Fed: Charles Evans on Bloomberg talked incessantly of a 2% inflation rate. Incessant. He said he 'does not fear 2.5% inflation,' that inflation 'should spend time above 2.5% just as it spent time below it.' It is always trouble when the Fed talks cavalierly about inflation.

Evans shows two things. 1) He still pushes the discredited Phillips Curve model that has not worked for the past 10 years -- and for the prior history of economics outside of about six months in the 1970's. 2) this gives a very sobering view of the Fed's limited thinking on what is inflation. What about sizes declining but prices remaining the same? Quality and durability declines that you pay the same price for? We all learned in basic economics there are many forms inflation takes other than just prices. Remember how the kings used to 'sweat' gold coins by shaking them in bags to knock off bits and dust from the coins? Inflation.


OPEC: After begging the US to control shale oil production, the numbers show OPEC produced the second highest rate of 2017 in September. Look in the mirror. OPEC also said oil cannot likely go above $55/bbl.


IMF: Financial leverage outside banking is now greater than pre-crisis levels. Comforting.


OTHER MARKETS
Bonds: 2.337% vs 2.345%. Bonds rallying back some

EUR/USD: 1.1839. Euro remains stronger as it tries to recover 50 day MA.

USD/JPY: 112.19.

Oil: 51.10, +0.18

Gold 1292.80, -1.00


Stocks will open mixed to flat to start the midweek session. There are some stocks that struggled Wednesday on an upside session but most that were lower simply tested. Will see if bids start returning as some stocks are already in solid 1-2-3 pullbacks and RUTX is in a weeklong test.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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