Market Alert - Pre-Market

Futures vs FV: SP -18.87; DJ -164.75; NASDAQ -43.44

The NYSE indices are finally making a break and it is going to be to the downside. The daily early evening stories hitting the wires relating to Comey appear to have finally broken the meme that there is still a chance the Trump administration can accomplish tax, healthcare and other reform. The public wants it, but it does not appear the politicians are going to allow it, either through their own missteps and resistance to the change. It seems axiomatic, but in politics perhaps not: if you are under scrutiny, you don't hand your critics or opposition the ammunition to use against you.

There are always two sides to a story and we tend to only hear one side these days, but regardless, the optics are bad and that puts the kibosh on tax reform, healthcare reform, etc.


Earnings Beats: TGT, JACK, RRGB

Misses: URBN


AMZN: appears to be positioning to enter the pharmacy market. Seems a rather natural fit.


Taxes: Senator Thune is set to put forth his own tax plan. So, at least some are still attempting to make something happen. Out of these times this kind of quiet, consensus building effort may work. People still want something done.


OTHER MARKETS
Bonds: 2.257% versus 2.32%. Bonds of course are rallying.

EUR/USD: 1.1118 vs 1.10882. Euro continues running upside.

USD/JPY: 111.863 vs 113.077. Dollar takes quite a hit this morning.

Oil: 48.84, +0.18

Gold: 1252.10, +15.70. Breaking upside again after that sharp break lower.


Futures are at session lows, steadily lower over the past 2 hours as the stories from last night are hashed and rehashed. As noted above, the optics are just not good in any respect because regardless, it could take weeks to get the details out to a point where people have any confidence in what actually happened. During that time the agenda people want done will not get done. Some say this is a planned coup attempt; saw that on CNBC of all places. This is certainly how you do it in a digital age.

The bottom line: the market has had enough for now and has decided to fold its hand for now, see what shakes out, and assess when it wants to try higher again.

This means a sharp gap lower. Will see what kind of relief move forms and how stocks can hold key support, but not anticipating this to be a one-day event. Why? the indices set up their bases, took their time getting into position, and now that is getting upended. Thus some bounces will likely be exit points. Futures are modestly bouncing into the opening bell, but that is likely a head fake.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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