Market Alert - Pre-Market

Futures vs FV: SP +8.71; DJ +100.67; NASDAQ +33.85

Futures are at session highs, moving steadily upside in the morning, bouncing sharply toward the bell. There is news, but nothing that surprising or earth shaking.

Tariffs: Still the first topic. Trump to make an announcement at 3:30ET. Supposedly hinting of carve outs perhaps for Canada, Mexico. Hmm, that seems unlikely with is strategy. Anyway, any sign of mitigation encourages markets.

Draghi veered off into tariffs in his discussion of the ECB's latest meeting. Draghi said if you place tariffs on your allies then who are your enemies. Wow what a red herring, a straw man. You CAN have unfair trade practices among allies; history is replete with examples. What can you expect from a political entity such as Draghi? Nonsense. It is the same story: when trading 'partners' see their sweet deals going out the door they lash out to protect their sweet deals. They are not worried about fair trade between allies; they want their advantage and are squealing when they see it threatened by realistic talk.


ECB: Drops its QE bias language, i.e. that it will use QE if things slow. Another 'it should not be that surprising' moment similar to Cohn quitting.


Sentiment: JPM says there could be a 20% to 40% correction coming -- after a year or two of more upside. Pressed further, the correction is expected over 'the next few years.'

Dimon: Cohn resignation 'terrible.' For who? Big banks? Oh, and who cares what Dimon thinks? That said, I love the negativity.

Dennis Gartman: Covering his S&P short after just putting it on this week. He was a contrary indicator again. Is this now an indication the rally, after 4 days upside, will encounter some headwinds?


M&A: CI buying ESRX. ESRX up $11, CI down $11. The market loves symmetry.


Stores: ANF closing 60 stores, stock surges.


NFLX: today its price target is raised a day after it was downgraded.


Jobless claims: who cares?


OTHER MARKETS
Bonds: 2.872% vs 2.879%

EUR/USD: 1.2403 vs 1.2402

USD/JPY: 106.06 vs 106.10

Oil: 61.17, +0.02

Gold: 1325.50, -2.10


Futures are running higher into the open. Jobs Report February is tomorrow morning. Four days upside, and today's higher open will make it five for at least part of the session. Then jobs report. There is a possibility a strong jobs report, wages particularly, would spook investors. What if they are not strong? Is the potential upside on a 'just right' market number greater than the risk of a pullback after 5 days upside? I think it is not as great.

Thus, if we get a great rally today consider taking at least more of the March options. Expiration is next Friday, and five days up suggests the likelihood of more upside next week is not as great. Given expiration is close, they would lose the value rather rapidly.

New positions? There are quality patterns in good sectors that are testing already or have not moved and look good. They are possible. Stocks that are up four days, however, are not as savory right now. Its the probabilities thing. 4 - 5 days higher, not the best time to buy typically. So, we will be choosy, but do like INFI and some others such as LLNW, SIFY. Some smaller issues and smaller caps are -- doing well.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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