Market Alert - Pre-Market

Futures vs FV: SP -10.49; DJ -158.31; NASDAQ -33.44

Futures gapped lower and are floundering around in the same range ever since, trading at the bottom of the range as the opening bell approaches.

As we knew would happen, the trade negotiations ebb and flow and now they are ebbing as the US announces a 25% tariff on $50B of Chinese goods including technology. China vows immediate retaliation and in response soy bean prices dropped hard. As a US trade representative said today on Fox Business, China does not admit it steals US IP even when presented with facts on companies that have Chinese manufacturing 'partners' taking its US 'partner's' design, making an identical copy, and selling it in the US.

China knows it is doing this but of course, of course it will not admit this in public--it is a cultural thing. So, the US has to follow through with its threats to bring about change, change that will happen after the fact and rather quietly as China changes its policies without a lot of fanfare. That has been how this has worked since Trump and Xi started this process.


Germany: Merkel government in trouble over the migration issue. Euro dropped hard but has since rebounded positive.


Expiration: Quad expiration may add to some of the volatility, but the main story of the day is trade.


OTHER MARKETS
Bonds: 2.908% vs 2.933%. Bonds rallying in the uncertainty

EUR/USD: 1.1606 vs 1.1566

USD/JPY: 110.46 vs 110.55

Oil: 66.59, -0.30

Gold: 1295.70, -12.60


Once again the trade issues are pushed to the fore and the new highs from Thursday are tested. We will see how the small caps respond; they have performed well during the trade war worries. Also key is tech and its gains, some of which are taken back today given they are targets as they rose higher.

Also important are the industrials and how they manage to hold patterns. Last night I discussed how many were still holding up despite the disdain for these stocks right now, and how that is a technical positive. Okay, we will see if they can maintain that positive after today.

For now we see how the bids return. Overall the market trend is positive, and we will see if the trend continues to shake off the trade worries as the President seems to keep making positive gains for the US on these fronts despite the negatives that are highlighted.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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