Futures vs FV: SP -12.89; DJ -98.22; NASDAQ -60.59
Futures lower from the get go, trading in a range the entire morning, well below the flat line. The PPI dropped futures from the top of the range as it came in hot. Regardless of the PPI, stocks were going to open lower for a second session following that surge Wednesday.
PPI: 0.6 vs 0.2 vs 0.2
Largest increase in 6 years
Core: 0.5 vs 0.2 vs 0.2 prior. Highest since 1/2016
Final Demand: 2.9% year/year. Most of the increase (60% of increase) was due to gasoline prices (+7.6%). With oil tumbling, winter starting in earnest, gasoline prices are already falling so this bump will not last.
Most items were up. What was lower: loan services, hospital outpatient care, furniture retailers.
Earnings not helping as SWKS, an AAPL proxy, beat but did not have good things to say about its 'premiere customers' (read AAPL) and the sales to those customers (AAPL). That means AAPL is weaker as well.
Beats: DIS; REV; ACTI (BL); HRZ; DBX
Misses: POT (TL, BL); YELP (TL, BL)
Bonds: 3.226% vs 3.239%
EUR/USD: 1.1351 vs 1.1365. Dollar continues higher today as well.
USD/JPY: 113.89 vs 114.03. Off against yen.
Oil: 59.65, -1.02. Heading for a record decline in length. Oil is one of the indicators showing a slowing world, and US, economy. More on that this weekend.
Gold: 1211.70, -13.40
Gloomy as the weather, stocks are starting lower again. Gloom or ebullient, the market is working through its selloff and rebound. Follow through WED followed by a couple of sessions lower. This often occurs in follow throughs, so it is not worth getting wrapped up in all the prognosticators and their opinions on buying or not. We have plays ready to go if the follow through kicks back in. Indeed, taking 2 to 3 days off following a follow through is good as it lets stock patterns set up better.
Thus, we don't engage in the punditry, but will watch if the stocks we are watching make the moves. Friday is not the favorite entry day anyway. So we be patient let the patterns develop, and if they can show a new break higher, that is very positive for a rally to year end. Not expecting that today but instead early next week.
Jon Johnson, Chief Market Strategist
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