Market Alert - Pre-Market

Futures vs FV: SP

While Monday resulted in some serious tech damage, overall the stock indices held support. Tuesday with the US stating it seeks a 'diplomatic' solution with North Korea (B1-B diplomacy?), futures have rebounded.

As noted last night, there are still plenty of sectors sporting good leadership and setups even as some of the recent leaders fell hard. We will see if the latter can recover or if the more vicious rotation continues. It looks as if for the open, however, some general relief buying is taking hold.

Futures are at the pre-market highs and they rallied to that level the past 45 minutes after one of those mornings where futures were up all morning. Those are typically not very instructive, but this more recent rally to the upside shows the bids are still active.


Case/Shiller, July: 5.8% vs 5.6% exp vs 5.6 prior (from 5.7%)

Fastest increase for C/S in three years AND a record high. Okay, start the home equity loans just as before the financial crisis! You are seeing a lot of commercials on TV to do just that though they don't quite style it that way.


Earnings beats: RHT; FDS; DRI (Top line, bottom line in line)


OTHER MARKETS

BONDS: 2.232% vs 2.222%. Continuing their strength despite an equity recovery

EUR/USD: 1.1789 VS 1.1854. Dollar stronger

USD/JPY: 112.11 vs 111.65. Dollar posting a renewed move higher.

Oil: 51.84, -0.38. Stronger dollar, weaker oil

Gold: 1302.20, -9.30. After a big recovery, giving over 2/3 back.


Futures are easily holding their last hour rally to session highs. Can stocks shake of Monday and go about their same business? All indices did hold support, but it looks as if there was real rotation away from certain areas, and after a morning relief bounce in those we anticipate the rotation will continue.

That means the indices can all still rise UNLESS the large cap tech/NASDAQ selling gets too virulent. Otherwise, we could see the S&P indices rise off support. RUTX is at a nominal new high; it may feel some need to test. Overall I still would not be surprised to see the overall market continue its test cycle.



Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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