Futures vs FV: SP500 -21.56; DJ30 -210.95; NASDAQ -63.65
The first move at the inflection point/lick log is downside. Futures gapped lower at the open and while off the lows the past 3 hours, they are still sporting hefty losses.
Some news, none of it obviously the type that spurs buyers.
C misses on the top line as fixed income sources fell 21%. Otherwise, business was not bad.
LULU: Increases guidance both TL and BL.
China: Trade data is weak, ironically resulting in a record trade surplus with the US. Exports -4.4% yr/yr, Imports -7.69% yr/yr. Both flipped from positive in November as the China economy continues a rapid acceleration to the downside.
M&A: Newmont (NEM) buying GG
Downgrades: DAL; WDC
Bonds: 2.679 VS 2.699% 10 YEAR. Bonds bounce after testing the rally last week.
EUR/USD: 1.1461, -0.05.
USD/JPY: 108.09, -0.45. Dollar weaker again vs yen
Oil: 50.88, -0.71
Gold: 1294.80, +5.30
The stage: 2-legs of a rally off the December low took the indices to the bottom of the OCT/DEC trading range and 50 day MA. All set up ABCD downside patterns but SOX -- SOX has been different all along as it sold early, never recovered in prior rallies. SOX broke over the 50 day MA and perhaps it can provide upside leadership to continue the rally, but that is not evident to start the week.
While the doom and gloom websites are saying the recovery has failed this morning, you have to see how this plays out, i.e. if the bids again return. The bell has not sounded in the US and they declare the rally off the December low over. Whatever. The indices are set up to roll over if the ABCD pattern consummates, but you have to see the pattern through, i.e. it is not how it opens on this day, but the action through the close. We will see if this opening drop holds. We may take some partials on some downside early, but not loading the boat until we see the reaction to the open.
Jon Johnson, Chief Market Strategist
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