Market Alert - Pre-Market

Futures vs FV: SP -2.14; -3.23; NASDAQ -3.53

After futures dropped afterhours Tuesday on the afterhours earnings, tax reform problems, and election results, futures improved upside overnight. Trading in a range all pre-market, now showing modest losses. Oh no; losses. Only in THIS upside market is a soft open considered possible major carnage. In all other uptrends in history, a softer open is not bad as it gives buyers the opportunity to come in and bid stocks.

News is rather light.

Earnings mostly okay but big stupid stocks such as SNAP were horrible, but even it recovered after someone threw a bunch of money on this 'dip' that looks like a collapse. I mean when your CEO says the app, THE product of the company, is hard to use, wow.

Beats: RGEN; Z; MAR; FOSL; WWW

Misses: HUM (TL); SNAP (everything)


TGT: Closing 12 underperforming stores in various states. I have not been in TGT in years, don't plan on going into one. No point there, just noting my utter lack in TGT as anything other than a possible trade now and then.


China: President is in China and is receiving a huge welcome from the Chinese people. Apparently THEY like his wealth, opulence, outspokenness. He is trying to cobble a coalition to support NKorea in giving up its nuclear program.


Election: Dems won governors in blue states VA, NJ. New York re-elected the socialist; talk about blue states.


Taxes: Senate is going to introduce its own bill on Thursday. House bill to be marked up by the weekend. Does this sound pathetically familiar, e.g. the healthcare absurdity? Republicans are pathetic. Pathetic. And they wonder why the party is imploding -- they get the power, they don't know what to do with it other than pee themselves. Did I say pathetic? I understand the reform aspect: states with low costs because they don't try to provide everything to everyone for free OR they are just more efficient don't want to subsidize those states with huge sate tax bills by allowing them to deduct their state taxes from their federal taxes owed. I get that. This is the problem you get when you have unconstitutional items the Founders saw would be a problem and thus barred are subsequently allowed. People from one state should not have to subsidize those of another state and that is what the reform is trying to accomplish -- as one part of the plan. But, the deduction is now at 'entitlement' status and thus you have the incongruity of cutting taxes yet raising taxes at the same time. Ripping the bandage off is painful.

The end result: RUTX broke support and is going to test the 50 day MA, likely the 38% Fibonacci retracement. that means for now the rally will need to focus on larger caps -- as it started to do the past two weeks.


OTHER MARKETS
Bonds: 2.313% vs 2.316%. Somewhat flat after the surge higher.

EUR/USD: 1.1592 vs 1.15915

USD/JPY: 113.53 VS 113.782

Oil: 56.98, -0.22. Oh no, oil is lower so the rally must be over because it was only about Saudi Arabia. Not.

Gold: 1282.00, +6.20


Futures continue to hold their morning slug-like action. Again, in an uptrend that is not bad as it allows bids to enter. The issue is how hard the tax reality hits.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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