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Tuesday, September 11, 2018

Market Alert - Pre-Market

Futures vs FV: SP -6.83; DJ30 -84.77; NASDAQ -31.43

After trying an upside open Monday that did little to change the stock index positions, stocks are set to start lower. Indices testing near support in continuing uptrends. Softer starts in that situation can lead to a return in bids.

Is there a cause? Everyone wants to pin the tail on the reason for weakness or strength, but it is typically the sum of the whole and that is shown in stock charts. Day-to-day the news of course causes swings within the trend. Today that is trade though the financial stations are not discussing it.

Trade: China is filing with the WTO for sanctions on the US. That can result in years of wrangling and no fix for the trade issues. Ironic isn't it? China has the policies that are the farthest from free trade and it says the US is the problem. Well, what do you expect when the WTO allows China to call itself an emerging economy? These worldwide governing bodies are abject failures because most of the countries in them have no idea what free enterprise and free economies are. Thus their guidelines, rules, advice, etc. are all fundamentally flawed because they are based upon central planning. That is why the US under Trump and other more open market Presidents than the prior one want out of these bodies.

Sentiment: Small business optimism is at a record high and the respondents are saying it is a direct result of a much more business and market friendly administration. As one analyst put it, the government's foot is now off the throat of small business. Yes, but it needs to do more, i.e. get rid of the ACA totally and implement a free market in health insurance. The cost of health insurance is still wrecking small businesses on a daily basis.

Ray Dalio, hedge fund billionaire: Markets are in the seventh inning, investors should be more defensive as the upside is limited. I would agree that the risk/reward is nowhere near where it was at lower prices. That does not mean there is not a lot of money to be made on the market leaders as they set up good patterns and continue breaking higher.

AAPL: UBS raises price target to 250 from 215. Will see if that helps snap AAPL out of its recent dips, aided by the President.

TSLA: Nomura now says TSLA is no longer investible, that Musk is a bully, etc. Nothing like personal attacks when issuing an investing comment.

9/11: Memorials, moments of silence, etc. All good. Every school should show the towers falling each anniversary. They stopped teaching the evils of communism and socialism that many of us saw on a daily basis as we grew up and what has that gotten us? A generation who is convinced that the government can hand out free money to all and all problems will end. Oh yes, and if you click your heels together and say 'there's no place like home' you can just go back home and your troubles are over. Facts, principles, economic laws have a way of wrecking those plans, but if you are not taught the downside you have to learn it from experience. As Hal from Rocky Mountain Rescue said in 'Cliffhanger' as one of the bad guys plummeted to his death off the mountain, 'gravity is a b*tch.'

Bonds: 2.959% vs 2.937%

EUR/USD: 1.1573 vs 1.15946

USD/JPY: 111.37 vs 111.192

Oil: 67.66, +0.12

Gold; 1193.90, -5.90

Okay, futures were up off the lows but are slipping back to the bottom of the rather narrow morning range. Trade is a b**ch for the market near term. NASDAQ has been very volatile pre-market at -19 to -25 to -32. Not a settled in trade.

What we watch for is how AAPL, AMZN, software and the like come off the lower open. We know HD and the storm trades are up again as is TLRY. After a sluggish start the others will show if they are ready to bounce today after a failed early attempt Monday.
Jon Johnson, Chief Market Strategist

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