Wednesday, October 24, 2018

Market Alert - Pre-Market

Futures vs FV: SP -2.14; DJ +66.87; NASDAQ +2.73

Futures were sharply lower -- so much for the Tuesday recovery move right? -- when BA announced earnings that were blowout. That single handedly turned DJ30 from down to up. It also helped pull the other indices higher though hard to say they are surging.

Indeed, the list of earnings misses, top line misses, is disturbingly impressive. Hate that this prediction came true, but we saw this disturbing trend develop last earnings season and it is really ramping this season. ONCE AGAIN, the Fed will hike into a slowdown and the question is whether it crashes the market and the economy now or later.

Earnings misses: UPS (TL); ITW (TL); HLT (TL); TXN (TL); QSR (TL, BL); T (BL)

Beats: BA; SIRI; IRBT (but lowered guidance).

Fully 1/3 of company conference calls mention the tariffs.

Interest rates: Trump attacks Powell again, saying that Obama had 0% interest rates, that every time the economy does something okay, Powell raises rates.

At the same time, Obama is out stumping, trying to preserve his legacy, saying 'when you hear all this talk about economic miracles right now, remember who started it.' Yep, as soon as he was out of office and a person who wanted to reduce the Obama regulations and taxes was in, the stock market exploded higher. Then after regulations were slashed and taxes cut, the economy blasted higher after its first 10 year stretch without a year of 3% economic growth since the Great Depression. Indeed, Obama is RIGHT: his economy was so bad, was so hampered by his regulations, taxes and policies, that all someone had to do was get rid of those and the economy would be unleashed. Okay, he wants it so bad: thank you Obama.

Bonds: 3.141 vs 3.1692

EUR/USD: 1.1406 VS 1.147

USD/JPY: 112.13 vs 112.42

Oil: 66.95, +0.52

Gold: 1231.50, -5.30

Post-BA, futures rallied into 8:00ET and have since leveled off. Holding modest recoveries. The market was not ready to continue the Tuesday rally until BA. I don't think BA can carry the entire market in its cargo bay. Too many Top Line misses. Thus, we will see if this recovery holds.

The market can bounce. It was oversold and some numbers hit extremes. But as with each session, everyone was calling a bottom. Again.

We will look at good patterns, good patterns and good setups. I don't think it is a time to buy everything. There are simply not enough good bases out there and again, the market was ready to sell off before BA's earnings.
Jon Johnson, Chief Market Strategist

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