Futures vs FV: SP +3.93, DJ +29.20; NASDAQ +24.58
You know it is a light news day when GE tops the headlines as it spins off its health unit and will exit Baker Hughes investment. Kicked out of the DJ30, GE is going the way of Sears.
Other companies making news: HOG evokes the wrath of Trump, the latter stating the company 'quit, gave up' as it moved some operations overseas to avoid the EU tariff. Trump also said HOG would be taxed 'like never before.' The pundits are shouting how tariff talk needs to stop -- but what is their alternative? Again, I heard so many saying 'I am for free trade, stop the tariff talk.' But there is no free trade now, and if we stop the tariff talk, then how does the trade/tariff issues get resolved? If someone has a good answer, let the President, let Congress in on it and lets get on with it. Yea, right. What we get instead is Mnuchin saying one thing, Navarro saying another. Experts saying no one wins in a trade war. But does that mean the US has to stick to losing trade deals? Searching for that answer, but you have to ask: if no pressure is applied in one form or another, how is change effected? Ah, the conundrum.
Earnings beats: LEH, FDS
China: Drops soy bean tariffs from other Asian nations in prep for buying from them versus the US. This as Chinese stock markets enter into a bear market. Also, those Asian countries do not and cannot produce enough bean to replace what China buys from the US, the world's largest soybean producer.
OTHER MARKETS
Bonds: 2.875% vs 2.882%. Bonds continue to get a bid as the yield curve continues to flatten.
EUR/USD: 1.1671 vs 1.1702. Dollar bounces back.
USD/JPY: 109.65 vs 109.66
Oil: 68.21, +0.13
Gold: 1258.20, -10.70
Futures are at session highs, but that is no high praise. Futures are in a most modest rebound, hardly extending the last hour, Navarro-spurred bounce that recovered a portion of the Monday losses. NASDAQ is up more than the other two on a percentage basis, but NASDAQ was also down a lot harder on a percentage basis.
Good to see bids returning, but this is just a modest open and frankly is not that encouraging. The open needs to be down or up really, really big to make a difference. The former could trigger a reversal, the latter just shows strength.
This open releases some pressure. Bids will have to build and grow into a strong move or else what happens is, after the selling pressure release, the sellers take back over and drive stocks lower again. Likely what happens is the initial bounce falters, stocks fall again, and then perhaps enough are shaken out to put in a real bounce. There is an outside chance this feeble open could be tested moderately and then see bids build in. If that shows up, great; we then have stocks to enter.
For now we see if this bounce can hold, but if stocks move up a bit and hit resistance then falter, odds are the selling continues a bit more. The question, of course, is how much more; that always is the question. Down 3 sessions rather sharply on the growth indices, over two weeks on NYSE large cap indices. NASDAQ bounced off the 50 day EMA Monday. If it undercuts that level, then you are on watch for a false break, i.e. where an important support level is broken triggering a lot of sell orders. Then after that flush out there is a reversal that holds that support. If this bounce starts to falter, that scenario described suggests selling, letting NASDAQ undercut the 50 day and then if it can reverse that is a good entry.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
Alert Key
http://www.investmenthouse.com/alertkey.htm
PLEASE DO NOT REPLY TO THIS EMAIL. USE THE CONTACT US PAGE ON OUR WEBSITE.
Customer Support: http://investmenthouse.com/contact_us.php
No comments:
Post a Comment