Market Alert - Pre-Market

Futures vs FV: SP -8.42; dj -65.71; NASDAQ -17.99

A flurry of stories, most having nothing directly to do with the market, make for a softer open. Or so the meme goes; perhaps the market is just 'peak market' as stocks have slopped around since the Wednesday breakout to new highs post-SOTU address.

Market news:

DB: Anticipated equity offering is not being well-received as the sell side analysts find a lot they do not like in the offering. It is down 6.9% and appears to weigh on European markets.

Upgrades: NFLX, XRX (Barron's says it is cheap); HPQ; GRMN (neutral from sell); FDX

China 2017 Targets: GDP +/- 6.5%, CPI 3.0%


Geopolitical:

Trump accuses Obama admin of tapping Trump phones pre-election. Likely true given his access to the information and the President's ability to order the NSA to do pretty much anything with that vast capability to review (and from what we know, its daily capture) of all electronic communications in the US. NSA works for the President and doesn't need no stinking warrants. It is our version of the USSR spying on its own citizens. Thus, Comey's comments asking the DOJ to deny the accusation is absurd; the FBI was not needed to order the wiretaps.

EU elections: Worries welling up about the French and Dutch elections as it looks as if Europe is having its fill as well of the results of unlimited immigration. The establishment is very scared it is going to lose there as well.

North Korea: Fires four ballistic missiles into the Sea of Japan, two falling within 130 miles of Japan and in Japan's economic zone. China is rejecting NKorea as has everyone else but Iran and those kinds. Dangerous when it feels as if it is on its own.

ACA: GOP is reported to reveal its ACA replacement this week. Replacement is a malleable term as it does not necessarily mean a repeal. Many reports have said its is 'ACA lite' with some parts removed. Senators Paul, Cruz, and Lee are against that kind of bill, but the House GOP won't let anyone see it ahead of time. That is the new way of 'governing': secret documents, secret rooms, and other nonsense. That is what happened with the original debacle. We want to repeat that process? Sunlight on the process produces better results, but again, that is not how DC works now.


OTHER MARKETS
Bonds: 2.47% vs 2.48%

EUR/USD: 1.0596 VS 1.0618

USD/JPY: 113.693 VS 114.508

Oil: 53.23, -0.10

Gold: 1234.10, +7.60


The stories are blamed for the lower futures but the real issue is whether they are the problem or if it is just the market unable to maintain a breakout high. Thus, how SP500 and DJ30 react today will be the biggest story for us. Both held he breakout from Wednesday through the Friday close. Other indices did as well, but they tested more. Those two, however, are the strongest right now, and if they punt the breakout gain then that is a failed breakout attempt. It is not a trend break, but that kind of move has you watching to see if the trend does indeed break.

So, we watch for that, but also note that the sellers were not around last week during the fade; just a lack of bids. It will take sellers coming out with some force to break the trend.

We will see how the lower open is met, whether new bids return. If they don't come in today, that still does not mean a lot in terms of the uptrend, but it does have implications on nearer term trades that we will need to manage.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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