Market Alert - To the Close

Immigration issues, protectionist worries, and second guesses about when tax relief may be coming continue weighing on stocks. The indices and most stocks are off their session lows hit midmorning, but they are not racing back upside. The move off the lows has been a nip and tuck battle for 4 hours, and the indices are still sporting hefty losses -- outside of SOX.

SP500 -16.68, -0.73%
NASDAQ -53.71, -0.95%
DJ30 -145.15, -0.72%
SP400 -0.93%
RUTX -1.32%
SOX -0.56%

Immigration is getting the headlines in this heightened political environment though looking at past Presidents and their immigration 'pauses' is like looking at the same plan again and again. A differentiating factor is it is today and it is Trump. Likely immigration is not the real issue, but what the method of implementation means for protectionist worries as well as what is going to happen on the deregulation and tax cutting front. A new EO stating 2 regulations must be eliminated for each new regulation implemented would appear to give a clue, but today that kind of story is not really changing market outlook.

SOX is hardly noticing the issues. NASDAQ sold but has recovered its 10 day EMA. SP500 is testing the 2016 trendline. DJ30 is holding the 20 day EMA. SP400 touched the 50 day SMA and rebounded sharply, but still sports a hefty loss. RUTX touched the 50 day EMA and rebounded to cut some losses.

FAANG stocks outside of GOOG tested the 10 day EMA and are doing a good job of holding and even rebounding. Transports are good, chips are good as they test their recent overall surge. Industrial machinery not bad. China stocks are making quite nice tests. Materials are not bad though some are struggling. Oil stocks are having issues.

This certainly does not look good for the breakout from Wednesday. Those gaps higher have been filled with SP500, DJ30, NASDAQ holding at the gap up points, but SP400 and RUTX look quite weak. Given many stocks are holding support we will see if the worries die down. If stocks cannot get off of support as the week progresses, however, that shows a lack of confident bids in this last move and suggests it was a false break.

Looking at closing some oil stock positions such as ESV, NE, WLL.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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