Market Alert - Pre-Market

Futures vs FV: SP +10.12; DJ +217.11; NASDAQ +34.02

Futures are surging back upside after the 2-day drop as the President worked through the State of the Union hitting the right market buttons.

Still have the FOMC and Yellen's last meeting announcement today as well as bonds continued to show rates over 2.7% though lower this morning. As noted last night, rising bond yields due to economic growth and increased demand for dollars is not bad. The problem is the artificially low rates for more than a decade that has skewed expectations.


BA earnings adding 130 pts to the DOW, things look good to for a rebound. Volatility continues, doesn't it? Everyone gushing on the financial stations, and perhaps things are great again in the market, but the same issues are facing stocks and a rather modest 2-day fade after this kind of run does not reset the clock. Still a lot of important earnings to come and stocks such as AMZN have had no test, actually rising in the Tuesday selling. Not saying the market cannot rebound here and indeed can give us some trades, but in all likelihood the issues are not worked out.

We will still be watching how AMZN et al perform and looking to bank some gain ahead of earnings while we can leave some to work if this renewed rah rah leads to pops on results as the earnings reported last night and this morning are showing can still happen.


Beats: BA, ATHM; ADP; LLY; AMD; ALGN; SFLY; JNPR. What do you see? There are not top line misses or darn few ones compared to the earnings for the prior 10 years where cost cutting and buy backs boosted the bottom line while sales missed quarter after quarter after quarter. More proof the growth is now real.


ADP: 234K vs 190K expected vs 242K prior (from 250K)


ECI: 0.6% vs 0.5% exp vs 0.7% prior


Wages: the past year showed the fastest rise since 2008. The numbers tell the story as to what works economically and what does not. After a desert of economic growth, a period of stagnation due to regulation, taxation, and domination by the federal government, business and individuals are again investing in the US and producing growth.


OTHER MARKETS
Bonds: 2.711% vs 2.724%

EUR/USD: 1.245 vs 1.2403

USD/JPY: 108.96 vs 108.77

Oil: 64.34, -0.16

Gold: 1341.60, +6.60


Futures are off the morning highs but holding gap and rally gains from early session. Volatility is back and that is something to watch, i.e. can they hold the gains? Likely will today, but after that it could still be rocky. Fed this afternoon, more important earnings (FB). We have some plays in great position, and if they show it, we likely go with it unless we see something not right.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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