Market Alert - Pre-Market

Futures vs FV:

Stocks are set to gap upside as the major theme from last week, trade wars, is suddenly brighter. No done deals, but Mnuchin and his Chinese counterpart are having 'very productive conversations' and Mnuchin is 'cautiously hopeful' they can 'reach agreement.' Some are viewing this as China blinking. The talks reportedly are focusing on China's forced 'joint ventures' where companies must 'partner' with a Chinese company to do business there and then the IP is stolen. Also on the table are the tariffs on US autos.

With a terrifically oversold market, this news on the predominant market worry results in the big upside surge on the open. That is great as news, real news, tends to trump everything. This is not exactly 'real' news because it is couched in 'maybe, could, possibly' kind of language and comes out late weekend after a large market drop. That makes it sound like some damage control attempt as well.

Therefore, you have to factor that in to a higher open and watch how the sellers respond. Last week there was selling in certain areas while others just suffered a lack of bids and faded as they waited for the bids to return after the selling worries subsided. After this rip higher at the open, how they hold the line is of course the key to the session.

Already the futures are off the highs though holding the bottom of the trading range of the morning after futures gapped upside when they opened. It is not all just blazing upside and you have to see how the sellers react to this big fat upside gap.

Happy to see it, it comes at right about the correct levels on DJ30 and SP500, but would have liked to see another blow down and then an intraday reversal. Oh well, if it works, it works. It is not something I feel totally comfortable buying right off the open but I can warm up to it based upon how stocks react. Remember, there are stocks that are solid, that held nice patterns during the selling, and those are in great position to make moves that hold up.


M&A: JD Sport UK is buying FL for a $3 premium


Short week: Good Friday


INTC: Upgraded to market perform by Raymond James. It looks to me that INTC went to market perform and beyond quite some time back.


Russia: US expelling 60 Russian diplomats over the UK spy poisoning.


OTHER MARKETS
Bonds: 2.845% vs 2.814% 10 year. Bonds fade as some of the late week fears subside

EUR/USD: 1.2401 vs 1.2351

USD/JPY: 105.17 vs 104.72

Oil: 65.72, -0.15

Gold: 1347.80, -2.10


Futures are at the bottom of the morning range formed after gapping upside when the trade opened. As noted, how the sellers respond, how the stocks that held up well during the selling react will dictate what we do. If the stocks in good patterns can makes some solid moves and hold them, then we react.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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