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Tuesday, January 2, 2018

Market Alert - The Close

The rally that did not show to end 2017 came with the new market year Tuesday, at least for a session. Buying started across the board, fizzled on DJ30, but held on elsewhere, centered on NASDAQ, NASDAQ 100, SOX and RUTX.

SP500 22.20, 0.83%
NASDAQ 103.51, 1.50%
DJ30 104.79, 0.42%
SP400 0.8%
RUTX 0.94%
SOX 2.77%
NASDAQ 100 1.80%

VOLUME: NYSE +14%, NASDAQ +22%. Nice jumps, but it was holiday volume last week and trade still came in below average.

ADVANCE/DECLINE: NYSE 1.6:1, NASDAQ 2.2:1. Very tepid for NYSE given small and midcaps led. Still too narrow. NASDAQ not bad at 2+:1 given NASDAQ 100 led the way upside.

Why do I say for a session? Because strong first moves in a year can be deceiving. Yes the old 'as the first 3 days go,' and 'as the first month goes' so goes the market adages are valid, but the market does need to put in the 3 days, week, month, etc. -- whatever adage you prefer.

So no buying Tuesday then. Not. Some impressive moves in stocks we had plays on begged the buys. GOOG, BIDU, INTC, NFLX to name a few buys. Moreover, took some gain as plays punched the target, e.g. FLR, NOG, VCEL.

Others are out there if they continue to move. I suppose that means Tuesday would be more than a one-day event -- meaning the money was not shot totally to start the year.

That remains to be seen. In the meantime NASDAQ closed over 7000 for the first time, SP500 put in a new high, SP400 a new high, RUTX a new closing high. NASDAQ 100 just missed out and SOX was in no position for a new high even with the impressive 2.77% move. DJ30? Tried, lost its push as the financials and industrials gave back ground they won to end 2017 when other stocks, the stocks that rallied Tuesday, went nowhere. One session shot? Again, that remains to be seen.

Leaders saw machinery stocks, financials fade modestly. Retail was up in some situations, most were soft. Elsewhere it was upside. Oil surged, chips were impressive, FAANG became exciting, China stocks jumped, drugs/biotech not bad.


Scheduled data was slow but picks up as the week progresses, the December Jobs Report capping it on Friday.

Markit National PMI beat expectations at 55.1.

The dollar continued its struggles as the euro surged and the yen strengthened.

Geopolitics played a role. Iran is killing its citizens as they protest a repressive regime. Go figure.

North Korea supposedly continues receiving illicit oil shipments as South Korea detains another tanker. A defector says the launch of a larger and better ICBM is imminent. Kim Jong Un says he has a nuclear 'button' on his desk at all times. Wonder if he has the 'launch' app on his smartphone.

Pakistan: Trump tweets it's cheating nature warranted ending aid payments. A furious (no kidding) Pakistan called in the US ambassador. Truth hurts.

Bitcoin: Looked grim over the weekend as Australia reportedly moved to freeze bitcoin accounts. But, magic, it was revealed Peter Thiel has made a 'monster bet' on the crypto. Bitcoin jumps back above 14K and its related stocks rallied back.

Good first session of the year, looks can be deceiving. Volume was up but still average at best. Breadth so-so to decent. Again, that does not mean no buying as the moves were definitely good enough to enter. And if the action remains there are others to buy. The issue is an extended DJ30, SP500, and NASDAQ getting that way. RUTX, SP400 not as extended, and neither are the FAANG stocks. Those can provide all the leadership the market needs -- look at DJ30, clearly lagging, but the rest of the market was solid.

Have a great evening!
Jon Johnson, Chief Market Strategist
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