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Tuesday, February 13, 2018

Market Alert - Pre-Market

Futures vs FV: SP -12.35; DJ -127.27; NASDAQ -40.35

Futures opened lower early morning and range-traded since. They are at the bottom of the range now having faded over the past hour. A bit more selling right now is testing the morning lows.

We anticipated something of a softer open today, and of course there are calls out that the 'dead cat bounce' is over as futures have the audacity to not go up every day. Sure it can be, but we anticipate this early dip is part of the continued relief bounce. Seen it many times as even the relief bounce moves to shake out buyers. We will see if that theory holds.

NFIB Small Business Sentiment, Jan: 106.9 vs 104.9 December

Fed: Cleveland Fed president Mester says the stock market decline is not impacting the US economy's outlook. More talk that the market is not being factored into Fed decisions. For now.

VIX Manipulation: Whistleblower says that the CBOE VIX price could be and was manipulated by companies with sophisticated algorithms where they could increase or decrease the VIX price without placing orders. Now THAT is a handy trick to have.

Earnings Beats: PEP; UA (TL); APRN; GNRC; VIPS

Misses: GNC (TL); Dunn/Bradstreet (TL)

AMZN: Stories are that AMZN is ramping up its medical supply business, and of course medical supply stocks are lower today.

Syria: This is a potential explosion. Bloomberg reports that US air strikes killed 100 or more Russian mercenary soldiers as those soldiers attached a refinery and production facility US-backed rebels held. Russia says it wasn't their people and all are saying it was a 'rogue' attack that was not called for by any side. US, Russia, Israel, Iran and who knows who else are fighting a proxy war in Syria. These are never good and mistakes are often made.

Bonds: 2.842% vs 2.857%. Modest bounce in the 10 year.

EUR/USD: 1.2343 vs 1.22887. Euro trying to bounce off the test.

USD/JPY: 107.59 vs 108.669. Dollar really whacked against the yen.

Oil: 58.76, -0.53. Giving back some of the strong move, but with the dollar lower, oil has an overall support.

Gold: 1328.60, +2.20

Futures continue struggling pre-market, but it is frequently the case that when futures gap higher or lower and trade in a range, that range is not the way the market ends. Given this day to day volatility as well, we are not expecting this pre-market to be the result. Again, we are looking for a return of some bids, if not today then Wed or Thurs as the relief move acts to test the market itself.

We will see how the bouncing stocks behave, particularly those that actually have decent patterns, e.g. AMZN, NFLX. AMZN is up modestly today on the medical supply news, NFLX is down 1.5 in the general market lethargy. That can provide an opportunity to pick up some more NFLX when it shows it is holding and starting back upside.

Jon Johnson, Chief Market Strategist
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