Monday, April 22, 2019

Market Alert - Pre-Market

Futures vs FV: SP -7.93; DJ30 -82.54; NASD -33.96

Futures are lower across the board as the weakness in the small caps last week spreads out a bit. Of course, a good move upside for 2-4 weeks depending upon how you want to look at it, and you get a market ripe for some profit taking.

Of course when the market does not advance a reason must be had. This morning it is China (why not?).

China: In a weekend meeting of its communist politburo, it was said China would "take the foot off the accelerator" on the recent massive credit expansion and other stimulus. BUT, China showed it has a heart for the markets and added it was not going to "step hard on the brake." Well, okay then. The communists are going to carefully control the economy so there will only be prosperity. Whew. I was worried that a government intervening in markets might cause serious problems.

In any event, after China makes note of anything economic, there is a reaction. As this statement was on the restraint side, of course the world markets are a bit put off by slowing the free money.

Oil: Administration confirms the foreshadowed position of not renewing the seven waivers on Iranian oil. Oil prices popped on the news to 6 month highs, keeping the uptrend moving . . . up. UAE and Saudi Arabia have already been contacted on producing more oil to make up the shortfall.

Existing Home Sales, March: -0.3% vs +4.1% expected vs 0.4% February.
That is a big miss. Economic data continues to swing back and forth with volatility. Volatility indicates change. After weaker data, volatility can suggest a turn back to stronger data. This occurrence has been somewhat elongated with data on both sides back and forth for a few months.

Earnings beats: HAL; KMG

Downgrades: TSLA; DHR; OXY

Bonds: 2.576% vs 2.56% 10 year

EUR/USD: 1.1251, +0.04

USD/JPY: 111.92, +0.01

Oil: 65.39, +1.39. Hit 1.70 on news of the US ending waivers on Iran oil.

Gold: 1280.60, +4.50

Futures continued to session lows ahead of Pompeo's announcement regarding oil sanction waivers on Iran as Iran threatens closing Hormuz.

As Pompeo ended, futures are trying to put in the low of the premarket, bouncing as Pompeo left the podium and all news was out. No big surge back upside, just an attempt to bounce from a lower pre-market low.

Bigger picture, the indices rallied to resistance, some broke through (SOX), some tried (NDX), others just came close. Now, after a 4 week move, a bit of profit taking is normal. Allows the indices to rest a bit and reload for a shot at the resistance.

Jon Johnson, Chief Market Strategist

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