Thursday, December 06, 2018

Market Alert - Pre-Market

Futures vs FV: S- -38.56; DJ -402.07; NASDAQ -121.96

Stocks continue in sell mode after getting dumped Tuesday ahead of the Wednesday market closure. There are reasons cited for the selling, but it is the same result as stocks will get hammered again at the open.

China/Trade: Huawei CFO arrested in Canada on 12/1 (day of Trump/Xi meeting) at request of US for investigations into whether the company violated sanctions against Iran. Political? Sure. China says it is a 'serious violation of human rights,' a typical laughable overreaching claim by China -- an arrest is a violation of human rights? If so, China just admitted it is the greatest human rights violator in the world.

Whatever it is, it does not help the two sides make a deal. There was such optimistic talk about how they were working together and quickly as well, then this news hits. The market views it as back to square one.

Q3 Productivity: 2.3 vs 2.25 exp vs 2.2 Prior

Unit Labor Cost, Q3: 0.9 vs 1.2 vs 1.2 prior

ADP, Nov: 179K vs 192K vs 224K (from 227K). ADP says it looks as if job growth has peaked.

Jobless claims: -4K, but still hanging around 6 month highs.

Downgrades: FB; M; TOL

Upgrades: GOOG; TWTR

Earnings beats: SIG; HPE; MRVL (but lowered guidance); OKTA; FIVE

Dividend increases: DE, MA

Bonds: 2.883% vs 2.915%. Bonds continue to rally, yields continue falling.

EUR/USD: 1.1362 vs 1.1341

USD/JPY: 112.73 vs 112.75

Oil: 51.25, -1.64

Gold: 1243.60, +1.00

Futures are off the lows but that means little as they gapped downside and have range-traded the entire morning. SP500 is set to open just over the November low that tested the October selloff low. The yearend rally as it was known is over and stocks will have to try and hold that prior low. A gap such as this makes it hard to play downside positions so we are waiting for a bounce to move into those.

For the upside the key is whether the same leaders from before the rebound from November hold support and continue their trends, e.g. drugs, food, consumer discretionary. They were sold Monday, mostly held position Tuesday. Important group if there is to be any upside.

Jon Johnson, Chief Market Strategist

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