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Thursday, January 4, 2018

Market Alert - Pre-Market

Futures vs FV: SP +6.09; DJ +83.54; NASDAQ +27.20

Unlike Wednesday, futures are up sharply as the market preps for the third 2018 up session. That would fulfill the first market adage about a new year (as the first 3 days go . . .).

This has DJ30 ready for 25K, 3 days off from my one prediction (okay, second; oil's breakout was the other). It is the fastest 1,000 points in the Dow's history, and the action is called 'remarkable' by that guy on CNBC's 'Cramer Morning Talk off the top of My Head Talk Show'. He is gushing and talking as if up is the only way to go. The Dow and SP500 are technically extended, the new money has poured in to start the year, there is a lot of exuberance.

You always have to watch for reversals off this kind of action. Not saying there will be one, but these kind of milestones with all of the hype and excitement and euphoria remind you to remain focused on what the market does, not what the gushing guys on the TV say. There is nothing to keep the market from becoming more extended in terms of DJ30 and SP500 -- NASDAQ, RUTX have room to run and leaders with room. BUT, don't forget that the laws of gravity ultimately work in the market as well, so you just have to be watching.

The news remains good on a domestic basis.

Sales: Stores are reporting expectations beats, e.g. JCP, KSS, M (closing stores as well)

ADP jobs survey, DEC: 250K vs 190K exp vs 185K prior (from 190K)
Mark Zandi says the jobs market is too strong and can overheat. Of course Zandi is a misguided Phillips Curve follower who believes that higher wages lead to inflation. The PCurve has the cause and effect conclusions far from reality. It is like saying that because the rooster crowed the sun came up. Jobs, rising wages are CHARACTERISTICS of an improving economy and increased standard of living, not the cause of inflation.

Challenger: 2017 was the lowest year for announced layoffs since 1990.

Other news:
Pakistan: Going to dump the dollar in oil trades with China. This is gathering steam . . .

INTC: News didn't get better regarding its chips, requiring software workarounds that will slow the computers, particularly older ones. So, the speed you paid for you won't have. How many class actions are coming? Lots.

Downgrades: SNAP; ROKU

Bonds: 2.485% vs 2.463%. Weaker again

EUR/USD: 1.2065 vs 1.2013. Dollar fall continues against euro

USD/JPY: 112.79 vs 112.68

Oil: 61.70, +0.07

Gold 1315.50, -3.00

Futures are holding at the session highs in a steady climb all pre-market. Dow 25K is great, but NASDAQ, RUTX, SOX are the more important leaders in this move because they are not as extended, and thus far they have taken the point in the move. Thus, even if DJ30, SP500 need a pullback/test, these others still have room to move.

Jon Johnson, Chief Market Strategist
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