Market Alert - Pre-Market

Futures vs FV: SP +9.82; DJ +64.67; NASDAQ +26.21

Futures have rallied over the past 3 hours to pre-market highs. Once again, after a generally sluggish session that saw RUTX breakout the bottom of its range stocks are set to move higher. Up one day, down the next, the life of a trading range. Questions today are will RUTX recover (false break) and will the other NYSE indices take out the 50 day EMA?

Catalysts? Pinning the tail on the rally started with DB. That bank, the epicenter of the Friday plunge 6+ weeks back, reported a surprise beat in earnings. That, in many trader's minds, signals something of an 'all clear.' It started the issues, its earnings were fine, thus no issues. Of course earnings are NOT DB's problem. It is the massive overhang of derivatives that threaten its future. This quarter's earnings don't change that at all.


Durable Goods, September: -0.1% vs 0.0% exp vs 0.4% Aug (from 0.0%)

Durables Business investment: -1.2% vs _1.2% August. Year/year -3.6%. 21 months of contracting business investment year/year. Steve Liesman of CNBC was downbeat on this aspect, stating there was just "no headway" in business investment and that was going to negatively impact Q3 GDP expectations.


Earnings beats: TSLA, TWTR, BMY CELG, F


Money flow: Oct 12 - 19 stock mutual funds lost $16.9B. More than $200B has left in 2016. Insiders are buying at the slowest pace in 5 years. Again, who is buying? Central banks? Hmmm.


OTHER MARKETS
Bonds: 1.829 VS 1.791% 10 year. Now a 74% chance of a December rate hike.

EUR/USD: 1.0915 VS 1.0906

USD/JPY: 104.81 vs 104.505

Oil: 49.41, +0.23

Gold: 1271.30, +4.7


Overall acceptable earnings and the DB surprise have given a lot of managers a 'whew' moment and they are obviously in buying. Down one day and now up today. Again, the RUTX action and the NYSE index action at the 50 day EMA (and then the 50 day SMA) will be instructive. It looks as if NASDAQ is going to do a good job of erasing the Wednesday gap lower that had it questionable. One day it looks as if there is divergence with breaks lower, the next the mood changes. Love investing in a market that has the moral hazard of a very interventionist central bank. Or should I say 'banks' given the Fed uses other banks to do its buying when needed. Right now others are going to fill that role this morning.

We put 3 new upside on the report Wednesday and we also bought 3 new upside positions Wednesday. That is what the leaders are showing so we will see if we can get some good entries.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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