Tuesday, October 09, 2018

Market Alert - Pre-Market

Futures vs FV: SP -4.18; DJ -33.78; NADSAQ -3.82

Same headlines as not a lot of new stories out.

Bonds are the headline story again as headlines blare that yields hit a 7 year high. They did, but they have also backed off to levels below the Friday close so . . . some bloviating, some whipping up the story a bit more than it is worth? Sure, just as DJ 10K, 20K, etc. is whipped up more than it is worth.

IMF: Cuts global growth forecast due to trade wars. You know it is slow when the IMF is one of the top stories.

Upgrades: WMT upgraded by DB to buy on its online grocery business.

Sentiment: Cramer, who has been an optimist, has now swung to the other extreme (he is OCB, right?), his morose personality where he carps on other people who misunderstand him. Whatever. He is downbeat, complaining about housing (and he is complaining about people complaining about his complaining), autos, retail, saying the economy is slowing down and that earnings will disappoint due to rates and a strong dollar. Add to that his justifiable concern regarding the Fed and Powell's talk that we have outlined for the past month, and you have morose Jim instead of absurdly ebullient Jim.

The point: sentiment. A bull holdout is glum, saying you have to sell industrials given oil prices are holding gains, the dollar is strong (and thus a 'nightmare' for certain companies), and rates are strong -- all impacting earnings. Earnings expectations price stocks. That is the truism.

Hurricane: Michael ready to impact Southeast US, called a 'devastating' hurricane. Of course, it is predicted to keep strengthening into landfall, just as ALL projections show. Recall the last one was a 3 and they were calling for a 4, and it barely was a 1 when it hit, if it was even a hurricane as it hit. I know, they have to forecast the worst to get people to act and seek safety, but to say the least we are jaded by our weather forecasters who claim to forecast climate for decades ahead when they cannot hit the forecast near term. I know, complaining about the weather . . .

But, WMT, HD, GNRC tend to benefit and indeed GNRC was up Monday off a 4-day 50 day MA test.

EU: Greece to seek 280B euro from Germany for War reparations. It was discussed for the past few years as it was clear Greece despised Germany before, at the time, and after Greece entered the EU. The forced immigration as well as hard economic dealings have only festered the anger. One happy family.

Bonds: 3.227% vs 3.233%. Hit a 7 year high but yields are now below Friday close.

EURUSD: 1.1446 vs 1.149

USD/JPY: 113.25 vs 113.24. Dollar has weakened of late

Oil: 74.67, +0.38

Gold 1189.10, +0.50

Futures sold into 8:00ET, then recovered to basically flat. NASDAQ bouncing around the flat line, negative to positive to negative, NYSE indices modestly lower.

Stocks are oversold near term and the piling on of negative sentiment helps them reach a bounce point. Could see that today, later session. Of course that is a relief move from an oversold condition at this juncture. When it occurs, if it occurs. No resolution yet of the issues confronting the market, though the market of course moves before resolution.

Jon Johnson, Chief Market Strategist

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