Market Alert - The Close

Modest losses on the session as the indices closed significantly better for the upside after a weak pre-market. It was said the strong August ISM (61.3, the second highest reading in 25 years, only surpassed by the 61.5 in May 2004) boosted stocks higher, and it is true that stocks did continue a bounce as the ISM hit the wires. Two hours later, however, SPY was right back to the pre-ISM lows. That low held again, and SPY rose through the afternoon session, finally matching the early session high by the close. Pretty much the same for all the indices though SOX was a bit better while SP400 and RUTX were a bit worse.

SP500 -4.80, -0.17%
NASDAQ -18.29, -0.23%
DJ30 -12.34, -0.05%
SP400 -0.21%
RUTX -0.42%
SOX 0.69%

For NASDAQ it was AMZN (+1.33%), NVDA, software stocks, and to a modest extent, AAPL. But for them the index would have lost more ground. Indeed, DJ30's loss was the weight of NKE as it gapped lower to the 50 day MA on the announcement a new ad campaign featuring Kaepernick as one of the celebrities. As for NASDAQ AMZN and AAPL account for 80% of NASDAQ 100's gain this year. AMD helped SP500 with its 11.5% gain on massive volume. There were definite big name upside winners in a market that was basically testing for another session.

It was a good test at that. SP500 showing a nice doji with tail at the 10 day EMA in a 1-2-3 pullback. NASDAQ, DJ30, SP400 show the same action, RUTX to just a bit lesser extent. SOX led the move with a rally off a 10 day EMA test, closing over last week's high as well as the early August peak. Sure AMD helped, but so did XLNX, NVDA, and others.

Thus, despite Trump stating Canada was not necessary to the deal with Mexico, Paychex seeing no increase in wage rates, lots of analyst downgrades, and the circus that is the 'advice and consent' hearings on Supreme Court Kavanaugh, stocks managed a quite orderly session, working on the test of those new highs.

The documents produced for the Kavanaugh confirmation are more than the prior 5 nominees combined, yet there are calls for adjournment in order to obtain another 100K documents. I remember when two great minds were approved, Ginsburg and Scalia. They were often at opposite ends of the spectrum but became great friends. Scalia was approved 100-0. Ginsburg 96-3. Great minds with a hefty background of decisions received the approval they should have received. Kavanaugh has a similar background of opinions (over 300) on all subject matter. Nominees with such obvious credentials deserve quick and overwhelming votes. Justice Kagan? Not the same. No decisional background, no history, extraordinarily limited constitutional background -- she needed a thorough vetting because she simply had no history related to making constitutional decisions.

Oh well, the circus that is DC continues to grow larger as the sides further separate. The democratic strategy espoused in a Senator Schumer phone call was to delay, delay, delay. That is not advice and consent as per the Constitution, but then again, the Constitution is only pulled out to make a statement -- neither side follows it. That is why it is so important to have nominees who know their role as a justice is a constitutional thumbs up or thumbs down, nothing more. Again, it is a circus now, but that did not hurt the market -- the market likely expects that to be the case.

We took some gain on AMZN as it gapped higher for its seventh straight gain and started to back off some. Also banked some on UIS as it hit the initial target. Let SQ, TJX and a host of others continue to work higher and nicely so.

Bought some AMD, WSM and XXII while we jettisoned the likes of CMI, CNI, DIS, RH, WOW that just were not cutting it.

The indices are setting up nicely and these doji at the 10 day EMA could lead to a new rebound already. We will see what they can produce -- already there are some really good moves in software underway, retail as well while transports (trucks, airlines) are getting one going.

Have a great evening!
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com

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