Tuesday, January 22, 2019

Market Alert - Pre-Market

Futures vs FV: SP -16.36; DJ -154.35; NASDAQ -49.11

Futures are down and were down Monday as well on the MLK holiday. Of course, some are saying this is the start of the so-called re-test of the December lows. This on the heels of the breakouts late last week over key resistance. That would suggest the first 're-test' would be the resistance just broken, when a test comes.

This early weakness could be the start of that test, or it could simply be post-expiration rally backfilling action that often follows a solid upside expiration. Thus, you would look for some bids to return at some point today or Wednesday.

Thus far, however, no bids appearing, or not many. Futures are off the lows hit at 6:30ET. Not showing sustained bids, but definitely off the lows.

The catalysts blamed for the weakness? New worries about a global slowdown including China and the rest of the world. Touched on this in the weekend report and not surprisingly it is the issue to start the week.

China: Reports 6+% growth rates, lowest in many years.

IMG: Cuts its global growth forecast to 3.5%

Davos: Big names making gloomy predictions, others are upbeat. The truth? As usual, somewhere in between.

Ray Dalio: "significant risk" of a US "slowing" in 2020. Not 2019, but 2020. Headlines read a significant risk of "recession," but Dalio corrected that after he said it, saying growth could be positive, but it would be a 'recession' from where it is today.

Klarman (billionaire hedge fund owner) issues a warning about a global economy slowdown.

As I said over the weekend, the global economy can slow and that does not have to hamper the US. Our fate is in our hands and whether we decide to tear ourselves down via the Fed and the government stymying the expansion created.

Earnings beats: JNJ; TRV; SWK (warns of headwinds--SHW already warned of a slowdown); LOGI (increased guidance)

Misses: UBS

Outtake: SHW warned (paint), SWK warns -- there are issues in the housing market.

Upgrades: NKE; UA; AHB; TTWO

Jobs: Foxcon today reported to be HIRING 50K workers versus the story last week it was LAYING OFF 50K workers. Will the real story please stand up? Right now if you net the stories you have 0 employment change.

GOOG: $57M EU fine for violating privacy. Tell me something new.

Bonds: 2.746% vs 2.788%. Some movement to bonds after the rally last week.

EUR/USD: 1.1353 vs 1.1363

USD/JPY: 109.43 VS 109.71. Holding the move higher, thus far.

Oil: 52.81, -0.99. After surging through resistance, testing that break higher.

Gold: 1282.00, -0.60

Futures continue struggling. As noted, we will see if this is just the post-expiration rally give back or, as the sellers hope and are putting out on the wire this morning in force, the start of the 're-test.' After the breakouts over resistance last week the latter seems unlikely, but if there is a big reversal today, that speaks very loudly that the breakout could have been the last hurrah of the upside rebound move off the December lows. Again, we see if the bids return after a soft open.

Jon Johnson, Chief Market Strategist

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