Market Alert - Pre-Market

Futures vs FV: SP -16.16; DJ -167.82; NASDAQ -54.64

The rather tame WED reaction to the reemerging trade issues is no longer tame. China's Xi has stated that retaliation is necessary against tariffs in order to defend China's dignity. How can you negotiate with that, with someone more concerned about dignity than addressing facts? Well, we know how it will be 'argued' by the US, with more of the same, and that means more market issues.

Of course, a lot of what China says in public is about face saving, and as seen, it responds after the headlines die down and it does things supposedly 'of its own accord.' Yeah, right. I guarantee this: if no tough stance is taken by the US, nothing gets done at all. China has had no reason to change over the past couple of decades, but now it has felt some heat and has moved some. There is, however, a long, long way to go.

At this juncture the market does not really care what the reason is, but the potential impacts. They are unknowns, the subject of speculation, and that means the market sells. Futures gapped lower sold into 5:30ET, have recovered but just slightly. All sectors are getting hit today.


Earnings beats: DWDP; CI; TEVA; REGN; YUM; SQ; X; FIT

Misses: TSLA (BL); WYNN (TL, BL); TMUS (TL); TRIP (TL). Top line misses again dominate the earnings that miss.


Bank of England: Hikes rates 25BP to 0.75% in a surprise unanimous move.


TSLA: Missed on the bottom line then Musk gives a 'Checkers the dog' response, apologizing for missing the bottom line, making grand promises yet again, and you know what? The market is buying it as TSLA surges on promises. Whatever works.


Brookstone: retailer files Chapter 11 bankruptcy. Amazon fallout or just another 'Sharper Image' type retailer that had its day?


OTHER MARKETS
Bonds: 2.98 vs 3.005% 10 year

EUR/USD: 1.1615 vs 1.166

USD/JPY: 111.39 vs 111.70

Oil: 67.10, -0.56

Gold: 1222.30, -5.30


As noted, all areas are opening lower though there is some recovery as the news is absorbed. Some. The indices will still open significantly lower.

The keys are NASDAQ at the 50 day MA, SP500 & DJ30 ability to hold their pullbacks at nearer support levels. SOX is the quiet force as it has set up a decent base without anyone really noticing. After the smoke clears on the morning selling we will see if it can hold the line.

As for specific stocks, we are watching how some of the NASDAQ and other leaders that fell hard earlier in the week hold at support, e.g. TTWO, HD, V. Those already sold, and if they still hold support that is a good indication the news is getting priced in for them.

So, there are things to watch for, but as of right now the session is not going to provide the rebound for SP500, DJ30 that they were setting up to have.

______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com

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