Futures vs FV: SP +2.97; DJ +15.24; NASDAQ +1.92
Futures are up again though fading off their highs the past half hour as the opening bell approaches. It is a positive for the upside that the futures again start upside, but the same question lingers, i.e. can stocks make a real move that challenges the late 2016 highs and indeed reaches new highs once more? Notably, NASDAQ lags again.
It is hard to quantify the moves, at least to causation. That is, of course, always dangerous, i.e. trying to pin the tail on the reason for a market move. We prefer to take them at face value and thus factor in the Tuesday action of the rally yet one that gave back half or more of the session's upside move. Nonetheless, all you hear on the financial stations is speculation about the why and wherefore in a massive vacuum of information ahead of the next administration taking power. Indeed, the upside ahead of the inauguration has some big name brokerages suggesting to sell ahead of the inaugural given the days of Tweets controlling the headlines will give way to actually having to put forth policy that Congress will act upon. Assuming, of course, there is no 'phone, pen, and crown' type action of the current administration and the one before it.
China: Yuan pegged to the lowest level since 5/08 even as China tries to keep capital from fleeing and talks capital controls. That is sending Bitcoin surging the past week, blowing past 1,000.
Japan: PMI beats expectations
EU: CPI, PMI beat expectations. All must be well if inflation is taking hold. As the IMF showed Tuesday, prices are far outpacing actual activity improvement. Stagflation is getting bandied about by the fringe analysts, but the fringe has been correct more often than the main stream.
Mortgage Apps: last week of December saw a 12% drop. Rates are too damn high, as the saying goes. Perhaps it was also year end . . .
Auto Sales: to be released today. TSLA reported it missed its delivery goals. Again. Shocking. Get it? Yes, the wit flows like molasses around here at times.
FOMC Minutes: Investors awaiting with un-baited breath for what the FOMC had to say at its last meeting when it found the incredible courage to hike rates 25BP for the second time in 13 months. What risk takers.
OTHER MARKETS
Bonds: 2.468% vs 2.448%
EUR/USD: 1.0438 vs 1.0407
USD/JPY: 117.54 vs 117.651
Oil: 52.44, +0.11
Gold: 1165.20, +3.20
Futures modestly higher as stock investors and traders are still trying to decide what to do in the new year and what the inauguration in 16 days will accomplish. The overall bias is upside so in the indecision stocks are trending higher, but very modestly.
Energy stocks continue to look good; they held up very well Tuesday even as the price of oil gapped higher then reversed sharply. Very important level for oil right here to hold its breakout.
Financial stocks held up as well and have provided a lot of leadership for the market. Semiconductors are decent enough but some important names struggled and we will see how they work today as an indication of the market's ability to hold and continue higher.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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