There is some concern ahead of the inauguration. Thus far no 'getting ahead of the move' kind of move, unless that move is going to be lower and the Dow and RUTX lead. If DJ30 closes here it will undercut the late December low and put in a lower low following the run to a high in December.
SP500 -9.67, -0.43%
NASDAQ -17.46, -0.31%
DJ30 -84.10, -0.42%
SP400 -0.79%
RUTX -0.83%
SOX -0.51%
DJ30's two slow rounded tops are exerting pressure on that index. The small and midcaps are back at the range lows already after a rather weak bounce attempt. SOX and NASDAQ are not bad, not great, holding the trends. All indices are holding the recent trends/ranges, but that is nothing new, nothing that changes the equation other than how much faster they tested this time.
There is not a lot of news after this morning's flurry of stories on housing starts (+11.3), Philly Fed (23.6), and NFLX' earnings (up but not surging as in October).
Much of the stories center around the inauguration, and that makes sense. Of course you have CNN producing a segment that speculates 'what if' Trump and Pence both somehow died before tomorrow morning? I can only imagine the howls from all sides if CNN ran that story ahead of 2008 or 20012. Or even better, FOX. It has been entertaining no doubt, if not a bit irresponsible.
More talk from Davos with MS CEO saying no 4% growth and criticizing the new administration, forgetting apparently that the inauguration is tomorrow. Soros says Trump will fail, etc. Ironic. Limbaugh said he 'hoped' Obama would fail while Soros just says he will fail. Just as the market sold off and crashed as Soros predicted would happen post-election. Even Davos is all about Trump.
Oil is off on an unexpected build of 2.347M bbl according to the DOE.
As for the data, it is still suspect as the Education Department reveals it has sharply overstated the rate of payback of student debt. Oh well, just another day in the world of high quality, professional data acquisition and compilation.
Plays have toyed with breaking higher, but there is not a lot of conviction in anything today. Even NFLX is off its high after gapping upside. There are some plays struggling more than the market and we may close them, e.g. PETX, KERX. Also, on our remaining WLL stock position, consider selling some calls, letting it drop to the 11ish level and buy them back.
Financial stocks are still fading, chips are a bit off their feed, but nothing major. Problem is, you can several 'nothing major' sessions strung together and then have something a bit more major on your hands. Thus if not holding support, not that wild about holding.
The WILD CARD is the reaction to the inauguration and news of those first executive orders coming out. That could be the turn back up, but of course, this is a Missouri market so it will have to show it.
So, still like the upside potential a lot of stocks show, but they are not making the move and with the two 60+ sentiment readings, a bit more cautious. The question in our minds is whether the market shows a post-inauguration move or just goes straight to jail, i.e. a deeper pullback.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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