Market Alert - Pre-Market

Futures vs FV: SP -9.89; DJ -78.07; NASDAQ -30.61

Futures were modestly lower but the downside kicked into gear over the past hour as some negative stories hit. What was a nice softer open is now more problematic. Soft opens in rallies are positive: it gives buyers a chance to put in bids at lower prices and typically there is a reversal. With the large cap indices past the 50 day MA's but at the next resistance from prior price points (e.g. the December consolidation for DJ30), this might mean a pause for the day to regroup. We will see the half life of the stories.

Main story: TSMC (semiconductors for smart phones) issues lower revenue guidance due to softer high end smartphone demand. That has directly impacted AAPL and NVDA, and when those two are down, NASDAQ is down as well. MS focuses the blame on the iPhone. No secret the X sales are weaker than expected. I said it when the iPhone 8 was released just ahead of the X phone expected release: AAPL was going to learn a lesson in marketing and its own arrogance.

In any event, that news has hit two big NASDAQ players and thus the market weakness accelerated in NASDAQ and this had a bleed over effect into other indices.


Main story 2: Bond yields moving near 3%. That will supposedly hurt earnings (smaller and midcaps especially) and give savers an alternative to the stock market. Maybe, but a poor alternative still.


Philly Fed, April: 23.2 versus 21.0 exp vs 22.3 March

Ostensibly good, but prices paid surged to a 7 year high while prices received pulled back. That means a profits squeeze, and profits are the key in earnings, particularly future profits. Of course, the doom and gloom sites are saying stagflation is ahead. Good grief.


AMZN says 100M prime members. That was the news last night, but that is getting lost in the crowd today with the other stories.


Earnings beats: PG; BX; BBT (BL); BK; AXP; AA (BL)


OTHER MARKETS
Bonds: 2.908% vs 2.867%. Creeping toward 3% and of course that gets blamed for the stock weakness.

EUR/USD: 1.238 VERSUS 1.2373

USD/JPY: 107.34 vs 107.40

Oil: 69.25, +0.78. Continues to new highs post breakout test. And yes, Gartman is still wrong.

Gold: 1350.50, -3.00. Gartman not shorting gold right now so it is a bit lower.


Okay, futures remain at the lows though holding the line the past 20 minutes. AMZN is off the morning high (1549 vs 1565) but still up 20+ clicks. Definitely a very mushy, problematic open ahead. Looks as if DJ30 tests the 50 day MA's broke over Tuesday, NASDAQ/SP500 testing back a bit toward those levels.

Keys will be if key techs catch a renewed bid (MSFT, INTC, MU, LRCX, software) and if oil, retail, drugs continue to step up.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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