Market Alert - The Close

Passage of the Senate tax bill had futures surging across the board. Thing is, they didn't take across the board. First, it was the techs that started to fall away after a stronger open. They backtracked, rebounded decently in a recovery into midday, but then fell away again toward the close, ending the session lower again and at the early morning lows.

Second, the NYSE indices and stocks started to struggle in the afternoon session. They backpedaled from a higher open but didn't give up a lot of ground. That changed in the afternoon with all flipping negative by the close sans DJ30.

Not a great session of power on the passage of the second tax bill, both now to be reconciled in the third round of sausage making.

SP500 -2.79, -0.11%
NASDAQ -72.22, -1.05%
DJ30 58.46, 0.24%
SP400 -0.03%
RUTX -0.30%
SOX -2.45%
RUTX -1.17%

VOLUME: NYSE +5%; NASDAQ +6%. NYSE trade ticked higher, still above average and not great action given the surge and purge of gains. NASDAQ trade was higher and above average again as well, this on an upside gap and rollover. Not good action as the upside was used to sell on higher volume, meaning more sellers than buyers.

ADVANCE/DECLINE: NYSE 1.03:1, NASDAQ -1.3:1. Very tight breadth indicating a few stocks doing the rallying . . . and selling.

Again, not a great price/volume session for most indices and many individual stocks in the NASDAQ. The rotation continues with money even finding is way into US metals stocks Monday in addition to the recent winners in retail, financial, and to a lesser extent transports as the latter gave up a good chunk of early gains.

Notably lower of the recent leaders were manufacturing and machinery, drugs and healthcare.

Techs continued the selling with software, FAANG, chips all boxed around again. Getting roughed up still, now down a week, many at important support. Now can they bounce or continue to get trounced.

Of course this was a day and also a weekend where talk of DJ30 25,000 started to filter into the market. Jeremy Siegel opined that after the tax cut passed the Senate that the quarter-hundred thousand level was in play by yearend. Of course this is something I talked about a month back when DJ30 powered to and through 23K.

At first with the futures up that looked to be a pretty good thing, i.e. new money chasing the Dow to 25K would push our positions higher. For the day at least, however, it turned out to be a contra indicator. DJ30 hit 24,534 then reversed. It has come a long way on this move, extending itself even more over the 200 day SMA, and perhaps 24.5K was close enough.

Interestingly, if the Dow decides to deflate a bit and take a breather, perhaps the bids look around at some of the leaders that were roughed up the past week and are at support levels. Rotation, right? Worth watching.

On the session we picked up some DVN (oil) and ULTA. DVN we picked up earlier and it came back on us some as the market faded early gains. We bought ULTA late session as it was still holding a good move though it was backsliding a bit as well. Still a solid break upside. On the other side of the ledger we closed COUP, ARWR, INFI. There are others that are down but are at some key support, e.g. big techs, FAANG, and we will see how they and if they can bounce. Lots of panic in those, and again, after a week's downside, if the Dow takes a breather, money can rotate their way. Question is it can but will it, and if so, how much of a bounce.

Have a great evening!
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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