Futures vs FV: SP +5.77; DJ +5.66; NASDAQ +49.82
Futures are up but well off the highs after peaking at 8:00ET. A steady rise before that as China's Shanghai rose 4.1%, continuing the Friday rally. That Friday rally occurred when the PPT stepped in after China hit successive 4 year lows in its markets and showed no signs of bouncing. Controlled market and economy, so they exercised control, buying up stocks with its funny/phony money. If China's debt bomb blows, it will make a Yellowstone caldera eruption look like a pimple pop.
US futures are still higher, and interestingly, NASDAQ is leading. It is down hardest along with RUTX and SOX, so they are pulling the expiration opposite, i.e. rallying the following Monday when expiration was weak. It would have been so much better if the market just sold off some more then tried to reverse Tuesday. This bounce is thus suspect as if the tail off toward the close was not an indication.
China: +4.1%. No change in anything, just buying appeared. Magic. No, its PPT.
Earnings: Thus far 30% TL misses and the WSJ is reporting this not just us. Others are taking note of the slowing profits. Slowing profits = topping markets = economy to follow. Hello? FOMC? Are you behind the curve again? You silly Fed. Better get to work Mr. Chairman.
Beats: KMB; HAL; PII
Misses: HAS (thanks to Toys R Us biting it from the grave)
Upgrades: INTC, CMG
EU: Italy refuses to alter its budget. Moody's downgrades Italy. Cause, effect.
Bonds: 3.181% vs 3.196%
EUR/USD: 1.1474, -0.003
USD/JPY: 112.72, +0.18
Oil: 68.79, -0.33
Gold: 1226.10, -2.60
Futures still up, off highs, growth trying to bounce. That tells us this is likely just a relief move to start Monday and may not last.
That said, we are still watching to see if the tech stocks that rolled back over at the 10 day EMA last week after a relief bounce can hold the prior lows/prior support and set short term double bottoms. This action of an up Monday morning does not allow them to do that.
I will say SOX was already at the prior low and some stocks were as well, e.g. VMW. Overall, however, that is not typically enough. Thus, to us the early gains are suspect, but that is just to us. We will see how the stocks are able to hold the early move.
Jon Johnson, Chief Market Strategist
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