Friday, December 28, 2018

Market Alert - PreMarket Continued

Futures vs FV: SP +12.92; DJ +122.18; NASDAQ +32.70

Pardon the pre-release earlier. The alert trailer I suppose.

This time the market is NOT giving up a late surge on the open. WED stocks surged into the close, driving DJ30 up 1000+ points to an all-time point record. THURS stocks opened lower and cut 600+ points off that prior DJ30 gain only to reverse 800+ points to close up over 200.

Today futures are up solidly, not giving up the gains to start. Perhaps the bids are confident and are going to drive stocks higher to yearend in a traditional Santa Claus rally. The massive volatility has given way to a yearend move. We anticipate this move to hold today - - BUT in this market of 1000 Dow point swings, nothing is certain. That said, massive volatility gives way to a bias one way or the other, and this one has birthed upside bias. We anticipate this to continue through today to Monday. Then the new year and we will see; would not be surprised to see it move up a bit more at that time and then face the sellers' wrath.

What is driving stocks? Nothing. This is the rally about nothing, just the same as 'Seinfeld,' the show about nothing. This is technical: massively oversold, massively extreme internals, somewhat (somewhat) extreme sentiment, volatility, then a release of pressure upside. Technical, not news. A rally about nothing -- other than technical, the most important thing there is.

Here is the 'news':

Citi: trader says he is on the golf course because no one knows how to trade this market. There is your sentiment: he is on the golf course missing the relief move, bear market bounce, whatever you want to call it. We are trading it: we played it downside, closed out those positions, now playing the bounce. Hello.

Trump threatens to close the southern border, end Central American aid if no wall is built. The budget arguments continue, the government remains closed (yeah!), we somehow survive without the feds. Indeed, the market is rallying now the government is shut down. I know, it is all coincidence right now, but if there were less government there would be more wealth in more people.

Former Reddit CEO: Intenet metrics are 'completely fake.' Ironic, isn't it? Internet companies know everything about us but we know nothing about the truth of what they are selling us in terms of advertising, etc.

Bonds: 2.759% vs 2.774% 10 year

EUR/USD: 1.1448 vs 1.1432

USD/JPY: 110.34 vs 110.98. Dollar continues to struggle against yen

Oil: 45.03, +0.43

Gold: 1279.00, -2.10

Futures are off the morning highs but indicating a solid open. Again, we anticipate this to survive the day though some sellers will take a shot at the gap open. The sellers right now, however, are somewhat back on their heels after the THURS action torched many. We will see how the upside gap holds and see if there are any further opportunities to play this move.

Jon Johnson, Chief Market Strategist

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