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Wednesday, May 9, 2018

Market Alert - Pre-Market

Futures vs FV: SP +7.53; DJ +82.79; NASDAQ +16.77

The market is trying an upside start and not sure that is such a great thing, but stocks appear to be celebrating, more or less, the US pulling out of Iran. Oil higher, bond yields higher, but so are stocks.

Futures gapped higher early, rallied, but peaked 3 hours back and are on a slow fade toward the open. It will be very instructive as to how the market reacts to a higher open. I said last night the market action was constructive; it has a chance to show that again this morning in dealing with an upside open.

PPI April: 0.1 vs 0.2 vs 0.3 exp. 2.6% year/year

Core PPI: 0.2 vs 0.2 exp vs 0.2 prior (from 0.3%)

M&A: WMT to buy 77% of India's Flipcart. WMT is serious about taking on AMZN or at least fighting all the way to whatever end is ahead.

Earnings beats: WWW; ADT; PRTY; DIS; EA (lower guidance); TRIP; ETSY

Misses: MNST (BL)

NKorea: Pompeo returning with 3 US prisoners as NK appears serious about surviving as a government. This is a huge story: a rogue country wants to change in order to survive. Another rogue country was rewarded for staying rogue and becoming a nuclear power but that deal has been revoked. You make the call.

Bonds: 3.008% vs 2.972% 10 year. Over 3%. Surely a calamity?

EUR/USD: 1.1884 vs 1.18672. Dollar fades a bit after a strong run vs euro

USD/JPY: 109.64 vs 109.38. A bit of give back here as well

Oil: 70.69, +1.63. Likes the post-Iran deal era, and many oil stocks are set to open nicely higher.

Gold: 1312.50, -1.20

Futures are still up, but as noted, are whittling at gains as the pre-market session progresses. Again, how will the market handle an upside open? SP500, DJ30, SP400 are at the cusp of important moves, but they have not made them yet.

The market appears to have a better reaction to decent news. That is a nascent change in character. We will see if it holds. There are some quality stocks looking good, e.g. NOW on top of DATA FLIR, oil stocks, BABA, software (of which are NOW and DATA).

Jon Johnson, Chief Market Strategist
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