Market Alert - Pre-Market

Futures vs FV: SP

Stocks are managing a flat pre-market session though as seen Tuesday, the pre-market trade does not necessarily forecast the actual trade. Trying to get some momentum but still range bound.

Fed: Today is Fed day with the FOMC decision at 2:00ET. A 7.2% chance of a rate hike today, 73.6% in December.

Kroezner: Anticipates 2 hikes in 2017 after a hike in December. He would prefer the Fed to move now than later because 1) inflation possibilities, and 2) price dislocation (whatever the heck that is). He notes that Yellen wants to run a 'hot' economy, meaning bordering on the edge of too much inflation, though Kroezner says Yellen has not stated she wants inflation in excess of 2%.

News flash: the important items for the US consumer are already beyond 'hot': housing, education, healthcare and steadily rising food costs.

Oil: Struggling again. API reports +9.3M vs +4.8M prior Gasoline -3.6M vs +1.7M prior.

ADP Employment: 147K vs 165K exp vs 202K prior (from 154K). Zandi says job market still strong, just cannot find the people to hire to fill all of those great jobs.

How long are we going to fall for this malarkey that there are not enough qualified candidates for jobs when we have tens upon tens upon tens of thousands of college graduates at home without jobs in their STEM fields? Are we saying that US colleges are not turning out qualified employees? If so, why are we subsidizing these shoddy educations? Of course they are not poorly educated; it is companies wanting to insource jobs to foreign workers brought to the US on visas to work jobs at half the cost of US citizens. Good grief.

M&A: AVGO buying BRCD


OTHER MARKETS
Bonds: 1.81% vs 1.827%. Bonds were rallying back as the safe haven trades were back on (hit 1.79%), but coming under pressure again.

EUR/USD: 1.1095 VS 1.1059. Euro continues strengthening

USD/JPY: 103.245 vs 103.997. Yen recovering some more lost ground.

Oil: 45.99, -0.68

Gold: 1300.20, +12.20. Wow, back over 1300 even with the Fed set to hike.


Tuesday stocks sold though managed a rebound off the lows, a significant, loss cut in half kind of rebound. That closed DJ30 above its September low. Seemed rather miraculous and the more we analyze what happened it has the tracks of intervention. Seven days before an election is no time for the market to bomb lower. Thus enter the central banks. We are going to watch for those phone logs though the last ones we saw were rather sparse in terms of a call log. Bleachbit or did they just wipe it with a cloth?

Nobel prize winners are urging voters not to vote for Trump. Well, if you ever needed a reason to vote for someone, that is it. Just look at the list of who has won the prize and you see it is, as with most institutions this day and age, a farce. Is it too late for a write in campaign?

The FOMC is at 2:00 but that is likely to be a real non-event. The market is in pre-election, pre-jobs, pre-unknown land and overall in a negative bias thanks to the indices breaking lower, leaving SOX as the odd index out.

There is commentary that the market HAS NOT priced in the 50-50 presidential race that is out there and thus there could be more volatility heading into the election. That makes sense based upon the index patterns we see. They weakened WELL AHEAD of this current volatility, forecasting a fall on the NYSE indices.

The key is still whether the NASDAQ completes its roll a la RUTX, SP400. There have been some serious drops and an oversold bounce could occur if there is some more downside. We have not been jumping into a ton of new positions but making buys downside and some upside on very good patterns. The downside seems a bit more in vogue but there has been a selloff to an oversold condition and it looks as if the market got some help on Tuesday to avoid a really big selloff. Thus it might be good for a bounce to enter more downside though there are some great setups out there, e.g. AMZN.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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