Market Alert - Pre-Market

Futures vs FV: SP -13.62; DJ -149.38; NASDAQ -29.66

Futures are lower, gapping down early morning, selling off, then slowly, slowly recovering over the past four hours. Not the kind of recovery that you anticipate a lower open quickly flipping positive as happened last week, but futures are not dragging lower and lower, showing there is some kind of resistance to the selling.

WMT slower online sales are blamed for the market losses, but that is nonsense. HD earnings were strong and it is a Dow stock. WMT is having an impact on some other retailers, but the move straight upside off the lows is real reason why we were taking gain Friday ahead of a 3-day weekend after 6 upside sessions that started with the Friday reversal two Fridays back. A very strong relief move started to show some weariness as the indices faded to tombstone doji on that session as some leaders tested prior highs and faded a bit.

That makes the start of this week important in terms of a drop to test the prior low. The futures' slog upside off the morning lows suggest the market may try to bump at these resistance levels a bit before giving up and falling. But, you also cannot discount the possibility that the market rebound pauses for a few days and then tries even higher.


Not a ton of news. Some earnings as noted.

Small business confidence hits a record high in the aftermath of the tax reform passage.


Dollar: rebounding nicely.


Economy/market: BLK going overweight on stocks from neutral on the tax reform 'supercharging' earnings. Rah, rah.


Some stocks are opening higher: OSTK, ROKU, NVDA, CREE


OTHER MARKETS
Bonds: 2.913% versus 2.873%. Bonds sell again.

EUR/USD: 1.2325 vs 1.2405. Dollar bouncing from last week.

USD/JPY: 107.30 vs 106.30. Dollar bouncing against yen as well.

Oil: 61.92, +0.24

Gold: 1341.30, -14.90. Giving back some of the gains.


Stocks will open significantly lower, showing overall softness after the 6-day surge upside. As noted, however, while opening lower, they are trending higher toward the open, still showing some underlying support for stocks. Not saying stocks will close positive today, but this action shows there is an attempt still to buy a dip even after 6 days straight upside. Thus, stocks, even if the rally bounce is over, may try to hang around for a couple of sessions. Or they might even break higher once more.

With that, we will see how stocks bounce off a lower open, and that means not necessarily jumping into the downside plays right away or closing positions right at the open. We will see if there is a bounce and if it holds or folds.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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