Market Alert - Pre-Market

Futures vs FV: SP +2.58; DJ +12.09; NASDAQ +16.10

Plunge Protection Team at work? Last night on Fast Money (CNBC) Asher Edelman openly talked about the PPT, created after the 1987 crash, and how it is supporting the current market. I have gone through the litany of times the market was rolling over but magically found support and reversed technical breakdowns. Last year I penned it as 'magic,' being of course facetious. There were obvious times we highlighted contemporaneously how the team had stepped in based upon the market action. Of course the on air personalities scoffed at the idea, showing their expert naivety. We like to refer to it as a big fund or funds doing buying. That is true, but who is directing them? Anyway, the market has done things it technically should not have done, overcoming several rollovers, getting help at the most opportune times. Take that for what you will.

What we take it for is the notion that while the market can of course and will roll over in sharp corrections, right now it continues to show resilience in recovering from events such as last Wednesday and offering up stocks with good setups. And of course other funds are buying it because they are still accumulating stocks and thus setting them up for the breakouts, bounces off support, etc. that we love to play. The PPT cannot make the market rise on its own, but it can step in at the right times to hold the line and give the big funds the courage to step in and buy. Voila, mission accomplished.


So, futures are up again as the indices prepare to again test the recent highs. This is another important day for the markets, but as noted last night, we expect something of a pause here before trying to take out the highs. The PPT likes it to look as natural as possible, right? Actually, a good run after it stepped in, now it tests for a few sessions, then a new break higher. That is normal upside action and we would not be surprised to see the market hang around this level again today but not yet make the upside break.


Oh, and Robert Shiller, the Nobel Prize winner, says to stay in the market because it could go up 50% from here. Okay, there is a counterbalance to the negative comments about the market rally.


Oil: OPEC meets in Vienna to try and extend the production cuts.


Earnings: Lots of misses today. TIF (TL); LOW (TL, BL); AAP (TL, BL)

Beats: INTU (Turbo Tax) beat estimates


China: Moody's downgraded to A1 on debt issues. First downgrade since 1989, but Asian markets are higher. Seems no one cared.


FOMC minutes out today. Everyone will wait for it, no one will care. Move on, nothing to see here.


OTHER MARKETS
Bonds: 2.276% vs 2.287%. Bonds rallying off the short test, still look as if want to break higher and push yields lower.

Euro/USD: 1.1197 vs 1.11868. Euro back up versus dollar as ECB warns housing prices are too exuberant.

USD/JPY: 111.815 vs 111.835

Oil: 51.29, -0.18

Gold: 1252.60, -2.90


Futures are holding at the top of the range held all morning. Tuesday futures were up all morning as well in a range, not necessarily a good thing as they are not rising and thus a target for sellers, but the market held the gains. They were, however, not much in terms of gains, and we anticipate something similar at least during the first half of the session as we wait for the FOMC.

Of course as soon as that is penned the S&P futures spike to morning highs, breaking from the top of range. There is buying out there still, and of course there are some good patterns out there in position to take advantage of it.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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