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Friday, February 9, 2018

Market Alert - Pre-Market

Futures vs FV: SP +27.55; DJ +221.54; NASDAQ +70.40

Futures all over the map in the morning session, but now on a run higher and the indices are showing impressive gains on the open after impressive gains on the close Thursday. The volatility, subdued for so long, is out sowing its oats, of course greatly, some would say mostly, as a result of the multiple leveraged ETN, ETP, and ETF products. Those continue to work out the massive book that suddenly became the wrong side of the market.

The open looks strong and it is, but holding onto gains has proven elusive for more than a session.

Not a lot of news or at least not a lot of new news.

Budget deal passed Congress in the morning hours after government shut down at midnight. It adds $300+B to the debt as we continue to spend out of control. Won't change until people realize we cannot fund fraud, corruption, graft, non-work, free stuff -- oh right, it won't ever change until it is forced to change by a major crisis. Okay, that was not a very productive rabbit trail.

$24.9B left the equities markets as of Wednesday, trying to reverse the record amount brought in a week or so ago. As usual the crowd shows up at the top.

AMZN: Launches its 'Ship with Amazon' service. FDX, UPS not pleased.

Earnings beats: NVDA; ATVI; FEYE; MDO

Misses: EXPE (TL); AIG (BL)

Winter Olympics has started and opening ceremonies are tonight. I am already sick of figure skating. And curling. Darts on ice. Not a sport. Compare a curler to a downhill skier.

Bonds: 2.842% vs 2.844% 10 year

EUR/USD: 1.2277 vs 1.2255

USD/JPY: 108.99 vs 108.86

Oil: 60.49, -0.66

Gold: 1317.30, -2.00

Okay, futures are running higher toward the open. The fight between buyers and sellers is vicious as the market tries to go back to a thing called price discovery after year and years of Fed control of stock prices. Of course the trading mechanisms that sprang up to take advantage of that environment are not working in this new environment and are kicking wildly as billions upon billions of dollars want to leave now that things are different. That makes the exit what we see now as the system cannot handle it. So, big ups, big downs. Repeat or reverse and then do it again.

We will see where the open goes, see what stocks held support (kind of) in this drop (NVDA, AMZN, NFLX), and see if the bounce gives a better entry on downside such as KORS.

Jon Johnson, Chief Market Strategist
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