Market Alert - The Close

Stocks started higher again, but once again muffed some early upside, falling into midday. That fade took the indices negative, with SP500, DJ30, NASDAQ, SP400, RUTX falling to the 10 day EMA. SOX didn't factor into this move; it is on its own trajectory, and given it is upside, that is not bad or the overall market.

In any event, the non-SOX indices gave up their early upside by midday. Then it happened. The Comey testimony unleashed. Hmmm. CNN told us over two weeks ago that in the testimony Comey would say he never told the President he was not under investigation. But, as the President stated, three times before the cock crowed Comey assured Trump he was not under investigation. Further, Trump never ordered or otherwise required Comey to drop any investigation. After Flynn was fired, Trump told Comey he 'hoped' Comey would let the 'good guy' Flynn be. Comey agreed Flynn was a good guy though he did not go further. The testimony goes on, but there is not the ax grinding tell all that we were supposed to hear. Comey said he became uncomfortable with the Trump lobbying (our word) and asked AG Sessions to pass that along to Trump. At that point, the talk ceased.

As noted earlier this week, I did not think the testimony would live up to the hype. The market bottomed on its release and rallied back to new sessions highs with a half hour left. A bit of weakness at the close took back a bit of the move, leaving the gains quite tepid -- outside of SOX -- but not bad given all the worry and intrigue.

SP500 3.81, 0.16%
NASDAQ 22.32, 0.36%
DJ30 37.46, 0.18%
SP400 -0.01%
RUTX 0.13%
SOX 0.74%

VOLUME: NYSE +6%, NASDAQ -3%

A/D: NYSE -1.1:1, NASDAQ +1.1:1

The afternoon rebound bounced those above referenced indices off the 10 day EMA to gains. Small gains for certain, but the indices are again showing some pretty solid 1-2-3 tests of near support and are in great position to continue the prior Thursday/Friday breakouts to higher highs.

Not all stocks rallied of course as breadth shows, but the same leaders did a credible job. China stocks worked well with NTES, BZUN and ATHM surging while CTRP, SOHU worked well and even some laggards such as VIPS and BITA rallied very well. Some semis were excellent, e.g. NVDA, MU, ON solid. Metals still look interesting though did not move yet. Oil stocks stink. FAANG just hung around, still in position to run higher with a modest lateral move.

Very little news before the Comey testimony preview. Sears closing 66 more stores. Macy's warns on profits for the quarter. The EU bailed in Banco Popular in Spain; yes all is well in the EU. I guess because of that it was rumored the ECB on Thursday would lower its inflation outlook and that took some air out of the euro. None of that moved the market; it was Comey relief from midday on, but even that was not huge.

We picked up some BZUN as it surged and some NVAX though it came back some on us. Took some gain on XXII, closed some positions that started to struggle. Just keeping it cleaned up, trying to focus on solid winners. The short pullback looks good to set a new move, and Thursday will be the time to do so.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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