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Friday, February 24, 2017

Market Alert - Last Hour

Many stocks that sold lower Thursday sold again Friday but are rebounding off the early lows (some held them into the afternoon). Overall the action looks good enough to keep them working, and indeed the SPY is starting to spike higher with about 35 minutes in the session.

SP500 -2.56, -0.11%, recovering 10 points off the low
NASDAQ -4.87, -0.08%, up 30 pts off its low
DJ30 -33.92, -0.16%
SP400 -0.05%
RUTX -0.28%
SOX -0.24%

New Home Sales, Jan: +3.7% but that was due to a downward revision in December.

Michigan Sentiment FEB final: 96.3 from 95.7 mid-month versus 98.5 JAN final. January was a 13 year high.

As noted Thursday, this session is not a great tell for the coming week. That said, the indices are not in any pain even with this fade. They are hanging in at the 10 and 20 day MA though some, e.g. SOX, had to come back from a gap lower to hold it. The salient point is, they did come back, i.e. buyers stepped in to buy the dip.

The market will have to show those bids not only entered on the dip but that they can drive the indices this coming week. The internal and sentiment issues are still there, and we are still waiting for the 'phenomenal' tax plan announcement, and thus we see if the bids do in fact continue next week, keeping the trend going. If so, the market would have fought off some weakness in key leaders and again found footing. As you can surmise, we don't plan on leaping into new plays on this recovery attempt from late week selling.


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

Futures vs FV: SP -9.99; DJ -71.38; NASDAQ -29.37

US futures are just off morning lows but trading at the bottom in a range for the pat 2 hours. The cracks from Thursday are still there to start Friday as some of the leaders test near support and with this open, likely beyond.

Lots of discussions on border taxes again. The Trump CEO meeting turned into a plea for H-1B visas as there just are no skilled workers in the US. Really? My response would have been to ask DIS CEO about why it was necessary to fire HIGHLY skilled US workers and replace them with wholly unskilled workers from Asia. Their hypocrisy knows no bounds.

Retail earnings in the spotlight.
BEATS: FL (top line was in line)

MISSES: JWN (TL); JCP (TL); HPE (TL)

Not a lot of financial news. Discussions about what was used to kill NKorea Leader's half-brother is a main story. Interesting, but hardly market moving unless China and/or Trump invades NK.


OTHER MARKETS
Bonds: 2.33% versus 2.38% 10 year

EUR/USD: 1.0596 vs 1.0583

USD/JPY: 112.110 vs 112.745. Dollar weaker again

Oil: 53.84, -0.61. Again stumbling at 54.

Gold: 1259.30, +7.90. Rising again.


Okay stocks are opening lower on top of an at best equivocal session Thursday, a session that saw leaders cracking and some falling. Prompted us to close positions and if need be we will close more even if Fridays are often head fakes. If they rebound with all of the negative internals, sentiment, etc. so be it.

With the market threatening a downside session and showing some stumbles on the week after a strong open . . .

Perhaps another promise on taxes or something 'phenomenal' needs to be thrown out?

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Thursday, February 23, 2017

Market Alert - Last Hour

Stocks overall have recovered off lows with NYSE large cap indices positive. Not much else is even close.

SP500 0.84, 0.04%
NASDAQ -27.42, -0.47%
DJ30 38.10, 0.18%
SP400 -0.44%
RUTX -0.59%
SOX -1.74%

A few stories have hit. Gasoline demand moved to its lowest in 16 years, down 5.2% over the prior week when Goldman Sachs said that the low levels necessarily meant a recession ahead.

There is also the belief that infrastructure spending may be the next area of the Trump administration agenda to be put off. As such the infrastructure stocks, e.g. metals, materials, are struggling.

In addition, the Chinese stocks are struggling as a leadership group is hit.

Overall the index patterns are fine as they put in tests of the 10 and 20 day EMA. It is not a market breakdown though there are breaks in some leadership groups. Overall they are holding and more than likely the dip can be ridden without too many issues. that is relying on a bounce in some areas, and the damage done in some areas is more than we like, and even some chips are down harder than you want to see. We will be closing several of these. Yes, they can rebound as the move has been able to fend off any selling. With some groups in stress, however, we would rather exit them, then re-enter if need be.


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

Futures vs FV: SP +4.11; DJ +40.4; NASDAQ +3.72

Stock futures trade at pre-market highs as the Wednesday sluggishness tries to swap out with a return to more bullish bias.

The big news is Treasury Secretary Mnuchin's first interview since becoming Secretary (CNBC). Talked about 50 - 100 year US bond as a way to possibly fund infrastructure spending, but no real mention of infrastructure other than that. Said the administration wanted tax reform by August but said it was 'too early' to give details on a plan. So much for the Trump 2 -3 weeks to announce a 'phenomenal' plan. That is why Mnuchin was there--it wasn't ready to be announced so provide more of a tease. Border tax? The administration has 'some concerns' with it.

Tax cut for the 'rich' (and how do you define rich?)? He said the rate would be lower but the tax the same as it would close 'loopholes.'

Here is the problem with that: 'rich' will be defined as someone making $150K. The truly rich do not derive their money from income so a change in the income tax indeed does not change what they pay. A sleight of hand with the wording by Mnuchin. What this kind of 'no tax cut for the rich' does is squeeze the small business people who fall in this category who still depend upon a mortgage deduction and other deductions that are NOT loopholes but part of a bargained tax plan in Congress that people have built their businesses, etc. around.

Thus, the only fair way to go is a flat tax in the 11%-12% range. Then you can eliminate the 'loopholes', get everyone with skin in the game, and rocket the economy higher as it becomes much more cost effective to invest in the US than play games with tax shelters.

Oh, THAT will happen . . .


Oil: API reports a draw of 0.88M versus the +9.4M bbl last week. Oil jumps. Pavlov's dog.


Trump: meeting with big corporate CEO's today to see how to jumpstart jobs, economy, etc. You do that by lowering taxes across the board and giving incentives to start small businesses. We still are starting half the businesses we used to since 2005. It is NEW business that makes the difference, not these old moss-covered mature industries that already have a competitive advantage.


EARNINGS beats: HP, SQ, KS, TREE, W

MISSES: HRL (BL); TSLA (BL); SAFM (TL, BL); FIT; (TL, BL); JACK (TL,BL); LB (TL)


OTHER MARKETS
Bonds: 2.392% vs 2.42% 10 year. Bond rallied on Mnuchin comments

EUR/USD: 1.0581 vs 1.0557

USD/JPY: 112.76 vs 113.324. Dollar off post-Mnuchin

Oil: 54.69, +1.10. Up on API report.

Gold: 1248.70, +15.4. Jumped after Mnuchin as well.


Futures are running into the open. Looks like another pause then rally. Have to watch how gaps open are treated, but thus far in the move they have not been sold that hard.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Wednesday, February 22, 2017

Market Alert - To the Close

The Fed indicated in its minutes there might be a rate hike, sometime, particularly if the President gets his fiscal stimulus and corporate tax cut plans going. But, the Fed also feels those won't likely happen, just as it was not likely for Trump to get elected . . .

The stock market has range-traded all session, moving up off a weaker open. DJ30 made is positive, the other indices stalled at the Tuesday close. Basically showing doji on those indices as the market pauses after that solid price start to the week.

SP500

FOMC blustered about a rate hike. Ho hum.

Existing Home Sales: +3.2% as prices rise over 7%. Decade high for existing sales.

We are looking at positions on CORT, SOHU, OIH. Ready to close CNAT, PTEN.


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

Futures vs FV: SP -6.48; DJ -39.00; NADSAQ -8.58

After starting the week and new expiration with a ramp, stock futures are definitely lower though trading off the lows of the morning range. That raises the specter of whether the new money ramp Tuesday was just adding to an overdone market. Indeed, EVERY pullback in the morning raises that question.

This one has some sentiment issues adding to the pile of sentiment issues. GS says that market positive sentiment is hitting an inflection point. BAC reports that its big clients started selling some equities for the first time since the election. As noted Tuesday, if enough of the big buyers no longer buy, this can have a self-fulfilling prophecy. The one thing this market has enjoyed is a steady bid.

Small business: 54% expect the economy to improve in the coming year. Compare that to 29% in the summer 2016.

Earnings beats: GRMN; TOL; WWW; MBLY; FSLR

Misses: TXRH (TL, BL); PZZA (TL)


OTHER MARKETS
Bonds: 2.400% vs 2.43% 10 year

EUR/USD 1.0516 VS 1.0536

USD/JPY: 113.019 VS 113.68

Oil: 53.55, -0.79

Gold: 1239.80, +0.90


Today the market shows if the bids are still there after a soft open in a rally. Still many leaders, still people hawking for stocks even as a growing number are questioning the move. Watching how the semiconductors, materials hold their new moves.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Tuesday, February 21, 2017

Market Alert - Pre-Market

Futures vs FV: SP +4.04; DJ +54.95; NASDAQ +9.28

Futures are moving higher toward the bell as the new expiration starts off to the upside as the stock indices attempt to wipe off any notion that they are about to top this last rally.

Retail is providing the impetus this morning. It was thought all retail outside Amazon died last Christmas. A rebound in home spending, turns out, has kept the other retailers alive.

HD never really died; its earnings are and have been solid. It beat again.

WMT posted its best sales growth in 4 years. All is well though it still missed on its sales expectations. So the market buys the stock.

M missed on its top line as well with a 4% year/year decline. But, it is up as well.

What does this tell you? This is a market that is still in a very forgiving mood, i.e. trying to find silver linings in all clouds so they can put more money to work. That is pretty much the definition of an upward bias in the market. Market is certainly starting that way on this shortened week.

Oil: Citi says crude can hit $70/bbl by year end. Oil is up nicely on the day as OPEC says its production cuts are working.

EU PMI: 55.5 vs 55.2 prior. Jobs creation the best since 4/11. Yes, Brexit is bringing carnage to Europe. An improving economy helps everyone, it is just that some countries want to be in control of their economies. Live with it.


OTHER MARKETS
Bonds: 2.452% vs 2.42%

EUR/USD: 1.0538 VS 1.0613. Dollar moving again against euro.

USD/JPY: 113.87 vs 112.836. Dollar moving higher here as well.

Oil: 54.60, +1.20

Gold: 1229.50, -9.60


Stocks clearly shaking off any lethargy they may have felt as new money hits the market early. Staying power is always the key as the past two weeks have seen a lot of early moves not reversed, but given back intraday. Even so, the market has continued its climb as there are, as noted last week, no sellers daring to sell the market overall. They are hitting some sectors and we will see how they fare; we have a few downside positions on some stocks in those areas that broke trends/patterns. Most of the market is, however, holding their support/trend.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Friday, February 17, 2017

Market Alert - To the Close

An afternoon rally has the stocks indices trading basically flat. Standard fare for an expiration session that is light on news.

SP500 0.99, 0.04%
NASDAQ 16.6, 0.29%
DJ30 -24.59, -0.12%
SP400 0.02%
RUTX -0.07%
SOX 0.46%

There are some plays breaking lower (IP, HAL, OIH), some breaking higher (SWKS). It is always a case you can get caught the wrong way on a Friday and particularly on expiration Friday. OIH is tempting, but SLB, a major component, is holding the 200 day MA for a second time. IP does indeed look week. SWKS does indeed look strong. We are looking at positions on those latter two. We already bought some MET puts earlier.

Positions are mostly holding up. The indices can still fade early next week, but SP500 looks quite good with its 10 day EMA rising quickly below a modest fade. DJ30, SOX already touching the 10 day. While there are a lot of sentiment and internals issues, the index action and thus overall stock action looks good with leaders still holding up.

Long weekend, anything can happen, but the patterns are still strong enough overall and are not giving you a flashing light to bail.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Pre-Market

Futures vs FV: SP -5.77; DJ -62.77; NASDAQ -7.89

It is expiration but also the Friday before a 3-day weekend for the stock market. The news flow is quite low and stocks, in the absence of news, are down. That is something of a change of typical action for this market where no news tends to still show modest gains thanks to the overall upside bias.

Not a ton of news.

M&A: KHC covets UL in the foods sector, but UL doesn't want KHC, at least not at the asking price. Playing hard to get.

Others in the sector are down as they are not the ones KHC is buying: MDLX; GIS; K.

Earnings beats: DE

Misses: VF (TL); MCO (BL); NUS (TL, BL)

The rest of the news is the same political morass of late. Russia says its relations with the US have not cooled. Republicans complain that the democrats have obstructed Trump's cabinet getting in place, democrats claim victory in obstructing Trump's cabinet. It goes on and on.


OTHER MARKETS
Bonds: 2.406% vs 2.45%

EUR/USD: 1.0657 vs 1.0665

USD/JPY: 112.76 vs 113.39. One of the weights on the market this morning.

Oil: 53.01, -0.35

Gold: 1242.10, +0.50


Futures are off the morning lows, trading in an up and down range since opening. While we anticipated a depressed Friday after that run higher, a 3-day weekend, and the Thursday index doji, there is expiration after the indices put in some solid upside runs. That will require some to shuffle their positions some. Also, we will see if the weaker open brings in some bids. Not counting on that, but watching to see how the good setups react, how those testing support hold. Thus far the move is holding, but not going to assume it will given the internal and sentiment indications.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Thursday, February 16, 2017

Market Alert - NVDA Call Buy

The NVDA calls sold for $2.15 are asking 0.39. Not a bad profit as NVDA is holding support at the 50 day SMA, so buying them back.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - To the Close

Sluggish session trading around flat line, and rallying in the past 1.5 hours to make it so.

SP500 -2.6, -0.11%
NASDAQ -6.35, -0.11%
DJ30 4.93, 0.02%
SP400 -0.13%
RUTX -0.47%
SOX flat

Some good movers of course, e.g. NTES, RS, XLNX -- again good movers from good sectors.

We took some gain on NFLX again, left some to continue working and it is doing just that.

As for new entries, we are looking at CRMD as it shows a doji on the 10 day EMA, but very light trade today. May pick up a partial.

Kind of sluggish and heavy, but still not many hard breaks downside.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Market Alert - Pre-Market

Futures vs FV: SP +0.35; DJ +18.19; NASDAQ +2.86

Europe was lower but US futures are higher though not screaming upside after the Wednesday surge on top of a surge, occurring on the best volume of the move. As I postulated last night, it sure looks as if money is being thrown at the market by those missing. Also there is talk all over the place of a large bearish trade being unwound and adding fuel to the upside fire.

The economic news is in some cases, mostly dealing with sentiment, astounding.

Yesterday saw NY Empire PMI crush expectations with new orders also surging to 13.5 from 3.1, production to 18.2 from 7.3, workweek 7.1 versus -3.1. Today it is the Philly Fed, posting levels not seen since Reagan, a very good comparison.

Philly Fed, Feb: 43.3 vs 17.5 exp vs 23.6 (already a massive jump)
New orders 43.9
Shipments 37.7
Inventories are down as product is bought faster than made
Employment 13.3 vs 12.8
Average workweek 21.1 versus 6.8 prior

Housing starts, Jan: -2.9%

Permits: -2.7%

Outside economic news, but really it is related to economics, is the White House and the cabinet appointments. WSJ says the intelligence people are withholding information from the President for fear of leaks. How is that their call? He is Commander in Chief elected by the process in place in the US. Again, how can they make that call? When the prior President's staff had their unsecured emails hacked and nothing happened and they are withholding information? If they were doing this to President Obama I would be outraged as much as I am now. It gives credence to the theories that the intelligence community, the 'deep state,' really is in control.

How is this economic? Because the more delay and issues for the administration, the less chance of enacting meaningful tax cuts and regulatory reform. That is the connection, and that is what I am concerned about for the market.


OTHER MARKETS
Bonds: 2.484% vs 2.50% 10 year

EUR/USD: 1.0637 vs 1.06148

USD/JPY: 113.783

Oil: 53.49, +0.38

Gold: 1238.60, +5.60. Continues the rebound off the test.


So, outside of war in the bureaucracy (something a fellow in my undergraduate course predicted over 35 years ago) the market continues to move higher. Again, not as much strength today, but still showing the bias. Worried about all of the contrary indicators but this lukewarm opening does give buyers a shot and we will see if they respond again.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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Wednesday, February 15, 2017

Market Alert - The Close

The day started with stocks trading flat to lower pre-market as a rally built on the promise of implementation of tax and regulation reforms suffered a bit of a setback. HSA nominee Flynn resigned due to allegations he discussed sanctions with Russia pre-inauguration and then lied to Vice President Pence about it. That is the media story though the other side is that he was set up by an intelligence bureaucracy that did not like his views on cutting the hundreds of billion dollar intelligence network to a more manageable, accountable, and efficient size. Beyond Flynn, there continues to be delay in approving Trump nominees, thus delaying action. One of my favorites, Labor Secretary nominee Puzder withdrew due to weak-kneed 'republican' opposition. If you take a stand on anything these days or actually speak unvarnished facts, you are too controversial to be in government. Thus we get the schmucks we get and then wonder why things are so screwed up. But, as usual, I digress.

The point: delays in nominations make it harder and harder to get anything accomplished in the first 100 days, and that is the opposition's exact plan. Fight everything, everyone, every second. As such, questions arise as to whether promised or announced policies ever become law.

So, stocks started a bit weak. From the open, however, stocks started upside and quickly turned positive. After a midmorning breather, stocks rallied higher and into the close. More new highs, except for SOX; it has tested but did start back upside Wednesday.

SP500 11.67, 0.50%
NASDAQ 36.87, 0.64%
DJ30 107.45, 0.52%
SP400 0.29%
RUTX 0.54%
SOX 0.82%

VOLUME: NYSE +4%. NASDAQ +10%. Still below average volume on NYSE, but NASDAQ enjoyed a shot back above average, posting the strongest volume in two weeks. Volume looks a bit better as the rally is now 10 days old on NASDAQ, five days on SP500. Volume rallying well into a rally. I know I will get accused of finding the shadows in every sunny day, but higher volume as a rally is extended shows money flooding in -- typically late. That said, the really didn't show any signs of shirking its advance.

A/D: NYSE 1.1:1; NASDAQ 1.3:1. Another session of pathetic breadth. So, with the increase in volume you can see that more money is being thrown a fewer stocks versus a nice broad rally. Again, hate to find shadows in the sunshine, but this is also indicative of a rally that is working, but is also on borrowed time.

The news was good and not so good. Regional manufacturing sentiment soared while consumer prices spiked (0.6% overall, 0.3% core), Retail Sales slipped to 0.3% from 1.0% though ex-autos they rose 0.8%. Industrial Production and Capacity slipped. Gee, a lot like the markets: sentiment is riding high, but the reality is not keeping up. Expectations are leading higher while the hard data is not following along. That is not surprising; while business activity IS higher post-election on the belief change is coming, the policies have not been changed and thus while there is improved activity, it is not great activity.

The rising inflation, the biggest year over year core spike since 9/2008, was nonetheless viewed as positive. Hey, the Fed created some inflation just as it said it was going to do 8 years ago. Wow, it must really know what it is doing and of course if the Fed says inflation is good, it must be good. So, buy the market because of inflation. That is the biggest misconception and dangerous falsehoods of the Phillips Curve crowd, but for many, many years the wrong side of the economics theory spectrum have been in control, and they think inflation is good. So, the go between panicking and promoting inflation to then panicking and fighting inflation. So productive.

Financials continued to perform well, adding onto the Tuesday gains, but not as powerful. A group that moved big were large biotechs as CELG, BIIB, AMGN and company surged. Some metals continued nicely higher. Chips were up but still somewhat pensive after the pullback.

A good indication is that while some areas are moving up as others are not, those that did put in good gains are holding those gains while the other areas rise. That shows the more virtuous rotation where new money enters and chases new sectors while the money already invested is left where it is. That helps the market build on gains versus chasing its tail round and round.

So, while the internals and sentiment remain at levels that show low power for the former and approaching extremes for the latter, the market still rallies. New areas are still coming forth so the market continues the rally and we continue to enter plays. Today we picked up CELG, CY and tried to get OREX but got the alert late (we don't enter until the alert hits us and we are last on the list it sends to); we will look at OREX again in the morning. Took some gain on NTES ahead of earnings, but let everything else work as the market was still working. It will stall at some point but that certainly was not Wednesday.

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

Futures vs FV: SP -2.33; DJ +19.59; NASDAQ -5.32

Futures were flattish heading into the morning's data and anticipating Yellen day two and contemplating the Flynn resignation and what it means for the Trump agenda. There are wild stories on both sides, one of interest being the CIA and NSA joined forces to oust Flynn as payback (or more) for Trump's stand on the intelligence community as evidenced by appointing Flynn, a known antagonist to what he called 'bloated' US intelligence agencies.

Futures are down a bit after the morning data.

Empire Manufacturing: 18.7 vs 7.0 exp vs 6.5. Highest since 9/2014.

CPI: 0.6% vs 0.3% prior. 2.5% year/year

Core CPI: 0.3% vs 0.2% prior. 2.3% year/year. 15 months of 2+%. Ties May 2012, 9/2008 was the last time core was higher year/year.

Retail Sales, Jan: 0.4% vs 0.1% ex vs 1.0% Dec (from 0.6%)
Ext autos: 0.8%
Ex-autos and gas: 0.7%
Clearly autos were lower, a drag on otherwise decent consumption.

Industrial Production, Jan: -0.3% vs 0.0% exp vs 0.6% Dec

Capacity Utilization: 75.3 vs 75.5 exp vs 75.6 Dec

Earnings beats: PEP; HLT

Misses: AIG (BL); ESRX (TL); FOSL (TL)

Trump: Meeting with retailers about a border tax.


OTHER MARKETS
Bonds: 2.515% vs 2.473%. Bonds continue selling, yields rising

EUR/USD: 1.0533 VS 1.0572

USD/JPY: 114.879 vs 114.356

Oil: 53.02, -0.18

Gold: 1222.40, -3.00


Futures are mixed with the banks helping DJ30 to positive while all other areas are somewhat off to start midweek. Lots of talk about how the rally just continues even in the face of some skeptics, but those are skeptics come lately and they are not really taking away from the bullishness that is shown in Baron's covers, etc. Nonetheless, the sellers remain in hibernation, having seen their shadow three weeks ago when their attempt to sell the gaps to new highs were bought and subsequent new highs were hit. Was that an indication of another 6 weeks of a rally?

So, we look and see how the chips, China, metals perform after many leaders took a day off Tuesday, more in some other cases. Upside still looks in control because the sellers are still absent.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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