Market Alert - Pre-Market

Futures vs FV: SP +13.58; DJ +231.59; NASDAQ +45.09

Futures spike, setting the stage for a gap up off the 50 day MA's the indices tested again WED (SOX at the 200 day MA).

Reasons? The usual litany: China goes to Washington. Yes, a Chinese delegation is coming to DC in late August. No, not to pilfer US IP secrets as during the Clinton administration, but to talk trade. Nothing like some internal heat that even the communist block cannot censor to get the trade talks again.

Turkey: Lira continues a rebound. Indeed, China is now copying what Turkey copied from China -- limiting conversions to other currency to dry up the external market for yuan and thus making it easier for China to control (read stop the shorts).

Earnings: WMT beats big with online sales +40%. Biggest gains in WMT in 10+ years, basically forever, as it has revamped its store focus and it is having an impact.

Beats: WMT; CSCO; NTAP

Misses: JCP (TL, BL, lowers guidance -- the anti-WMT); JD (TL, BL)


Housing starts, July: 0.9% vs 8.3% expected. Not much of a bounce off that 9 month low. Interest rates, baby. Approaching 5% and that is squelching the housing market.


Philly Fed, August: 11.9 vs 23.0 exp vs 25.7 July. Not much happy to say about that. This is the first regional sentiment data to show a decline after a series of gains.


OTHER MARKETS
Bonds: 2.864% vs 2.879%

EUR/USD: 1.1373 vs 1.374

USD/JPY: 110.62 vs 110.80

Oil: 65.28, +0.27

Gold: 1183.80, -1.20


Futures are off the highs but holding gains after gapping upside then rallying to a peak just before 7:00ET. Indices will gap up from the 50 day MA as noted.

Volatility? You bet. Still a factor though the upside gap makes everyone feel better and ignore the volatility. But, it is there as stocks gapped lower WED. Back and forth still, this time at support. That would suggest the bounce we are getting, BUT BUT BUT, the key is still will the move hold? Volatility to this level and now volatility off it, at least to start. After that, a steady move to higher highs?

Perhaps. The indices are certainly positioned to do so with these tests, and there are stocks in good position to take advantage of it.

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Jon Johnson, Chief Market Strategist
InvestmentHouse.com

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