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Thursday, December 14, 2017

Market Alert - Last Hour

As the tax reform bill gets closer to the end of the funnel the usual 'but I want this!' no vote threats come out. Rubio and Lee want more credits for the poor, while McCain and another senator are in the hospital. The last minute anxiety, even the ACA had it, has stocks on edge, selling off in the afternoon session. Now trying to bounce off the lows toward the close, but the jitters are there.

So, Rubio and Lee will get appeased, then perhaps McCain (hospitalized for a reaction to his cancer medication) and Cochran (non-cancerous lesion removed from nose) will get a B-12 injection and hobble onto the senate floor. Cannot vote via the internet.

With this issue, many stocks in leadership areas gave up gains: financial, retail. Biotechs were up but have reversed; taxes apply to them in a big way as well. FAANG is still up but well off earlier highs that gave them the look that they perhaps were not as tired as we chided last night.

SP500 -6.8, -0.26%
NADSAQ -11.33, -0.17%
DJ30 -29.64, -0.12


The FCC voted to remove the Obama regulation of the internet, the so-called net neutrality rules. Before that could take place, a bomb scare forced the members to move the explosive vote elsewhere.

Stocks are on the rebound over the past 20 minutes as the worries subside a bit. The tax issues are the norm for any piece of big legislation though the illnesses are the wildcard. The momentum on this is such that it should pass unless something very serious happens. In any event, VP Pence cancelled a trip to be on hand as the tiebreaker, just in case. I am reminded of an old TV MASH episode where Hawkeye wanted new boots and made a series of deals with people from all different areas of the army. Then one deal fell through and in a cascade all of the deals fell. Hawkeye ended up wearing a golf bag on one leg.

That said, most stocks are holding support, and given the market fade coincided with the tax related news, once those issues are resolved the pressure dissipates. That means deals will likely be cut tonight in order to keep the bill moving on the timetable of before Christmas. Then the stocks should bounce. Looking at the charts it looks as if many moving downside are doing so on lighter volume.

Picked up some biotechs early (CUR, ENDP) and they looked good, but they got caught in the afternoon pullback. NUVA still looks interesting today.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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