Friday, January 25, 2019

Market Alert - Pre-Market

Futures vs FV: SP +18.77; DJ +172.76; NASDAQ +52.70

Stock futures gapped upside to start and steadily rose into 9:00ET. Some give back since, but holding the morning uptrend. At the start, stocks look heading for another Friday rally.

Many are picking their 'reason' from the morning headlines, but the market put in a test of the resistance break with SP500, DJ30 showing a 1-2-3 test. Thus, they are in technical position to make the move higher. The spring was recoiled and they are breaking higher again at the open.


Trade: The cancelled meeting that was never scheduled is back on as Chinese envoys are heading to the US to prep for the end of month meeting.

Fed: Reports are that the Fed is considering an early end to QT (quantitative tightening).

Shutdown: This is a mixed 'reason.' Wilbur Ross is taking heat for his statement he did not understand why federal workers were suffering hardship when they could go get a loan. The metrics show that despite all the sackcloth and ashes and self-flagellation over the shutdown and predictions of 0% growth if it lasts, spending is down just 7%/day. We are still spending 93% of what we spent when the government was at its usual pig at the slop trough self. I can see Ross' frustration. A highly educated person, he cannot understand why supposedly highly educated and intelligent federal employees who run the system cannot make use of all the outlets federal employees have that you and I don't. Somehow WE outside the government manage when things happen. Oh well. Sure I made enemies with those comments, but there is definitely a distinct different point of view between those who have their lifelong careers with the government and those who do it in the private sector. I remember a great line from 'Ghostbusters' from Dan Aykroyd . . .

Earnings beats: SBUX, CL (warns of lighter 2019). Damn few compared to high profile misses.

Misses: WDC (TL, BL = TB); RMD; INTC (TL); DRH (BL); LEAR (TL); DISA (BL)

EU: Post-Draghi, Germany business sentiment drops for a fifth month to 99.1, the lowest in 3 years.

Bonds: 2.740% versus 2.734%

EUR/USD: 1.1358 vs 1.1306

USD/JPY: 109.99 vs 109.76

Oil: 53.19, +0.06

Gold: 1287.90, +8.10

Friday starting upside with futures at morning highs. Of course staying power is the key, but we picked up some very good positions in the pullback and they are heading upside today as the third leg tries to resume.

Jon Johnson, Chief Market Strategist

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