Futures vs FV: SP +13.40; DJ +134.80; NASDAQ +60.15
Stocks in modest rebound mode to stat the post-Christmas trade. The President expressed confidence in Powell, Mnuchin -- though said the Fed was raising rates too high -- and said it was a good time to buy. He also said that higher rates were not that bad as those with money in the bank could finally earn some interest. Good for seniors.
Stocks have held modest gains in the morning but are really starting to accelerate upside as the open approaches. Once those algos turn, as we have seen, the moves can be dramatic.
Indeed, the WSJ writes complaining of the algos controlling trade, seeing them as the culprit for the hard selloff. Where was the complaining when they were buying hand over fist? Recall I wrote frequently about the problems the market would face when the algos flipped to the sell side.
Holiday Sales: MC reports a +5.1% increase in sales, the best in many years. AMZN claims its best retail season ever.
Govt Shutdown: Trump says it will continue until we have a wall. Keep it closed. They can do less damage when the government is shut down.
Upgrades: ATVI, AMZN, GOOG are said to be good rebound plays. ROKU upgraded by Needham.
Bonds: 2.754% vs 2.736% 10 year
EUR/USD: 1.1389 vs 1.14015. Rebounding some from the Monday selloff.
USD/JPY: 110.52 vs 110.37. Rebound less dramatic here.
Oil: 43.10, +0.57
Gold: 1277.80, +6.00
Futures continue strengthening into the open as the BTD advocated by the President is being followed . . . into the open. This market has an issue holding its gains, BUT as chronicled the past several sessions, the internals and sentiment hit extreme levels, and on Friday/Monday VIX finally started breaking out, closing just below the February closing high on Monday. Things are in place for a bounce so we will see if it holds and would like to pick up some AMZN on that play as that can move well in rebounds and the doji Monday after that sharp drop looks promising.
As for downside, most closed at the low and we are interested in lettng them work if they can -- will see how the initial gap higher holds. ULTA showed a doji Monday, and it is one we said we would take at least some more gain if it held a move off that doji.
Jon Johnson, Chief Market Strategist
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