Monday, December 31, 2018

Equities: Investor's Business Daily on the Current State of Play

It was back on October 4th that  we intro'd a couple links with:

Readers may have noticed a change in the sources we've been going to after the close the last few days. It's because the current environment has the potential to get out of hand, so more IBD and ZH, fewer cat videos....

That was a pretty good time to get hyper-focused:

And since it served us well, let's keep it rolling on into the new year.
From IBD, December 31:

7:27 am ET
Dow Jones Futures Jump, But Here's A Stock Market Rally Reality Check 
Dow Jones futures jumped Monday morning, along with S&P 500 futures and Nasdaq futures, on China trade deal hopes after President Donald Trump cited "big progress." A stock market rally attempt is underway, but it's still a bear market for now. Still, be ready by watching top stocks such as Broadcom (AVGO), (CRM), Starbucks (SBUX) and Merck (MRK). Steer clear of Apple (AAPL) and other broken-down former leaders. Apple stock has lost one-third of its value and needs serious repair.

Dow Jones Futures Today
Dow Jones futures climbed 1.05% vs. fair value. S&P 500 futures advanced 1%. Nasdaq 100 futures popped 1.05%. Remember that Dow futures and other overnight action don't necessarily translate in actual trading in the next regular stock market session. That's been especially clear during the bear market

Dow Jones futures presage New Year's Eve, the last stock market trading day of 2018. It's also in the midst of a stock market rally attempt. A follow-through day could come as soon as this week to confirm the new market rally. But it hasn't happened yet.

Trump Touts 'Big Progress' In China Trade Deal Talks
President Donald Trump tweeted Saturday that he had a "long and very good" phone call with Chinese President Xi Jinping, citing movement toward a "comprehensive" China trade deal.  The U.S. and China are working toward a trade deal, but Trump's tweet could be "overstated," a source told the Wall Street Journal. U.S.-China trade talks resume in Beijing in early January. The China trade war is a major wild card for the stock market and global economy heading into 2019. A positive outcome could be a big lift to global stock markets.
Separately, the partial government shutdown is in its second week, with no signs of a compromise on border wall funding.

Stock Market Rally: 2 Days Isn't A Bull Market
Two up days, a mixed day and positive Dow futures are not a bull market. The stock market had to bounce at some point. The S&P 500 index fell 1.5% or more for four straight days through Christmas Eve. The prior two times the benchmark gauge had done that, it rallied at least 5% the following session. On the day after Christmas, the S&P 500 index rallied 5%, its best gain since March 2009.
Most of the greatest one-day gains come in stock market corrections or a bear market. Those are often bear traps to lure investors back in before the stock market correction tumbles to new lows.

Where Is The Stock Market?
Last week's two days of stock market gains wiped out ... two days of stock market losses. Forget the 50-day or 200-day moving averages, the Dow Jones, S&P 500 index and Nasdaq all hit resistance at the 10-day line Friday. None have closed above that short-term line since early December, though Dow Jones futures suggest another attempt in Monday's stock market. The major stock market averages have struggled to hold above the 10-day since early October, when the bear market got underway.

Will Big Money Confirm Stock Market Rally?
Will mutual funds and other big institutions put serious money into the stock market? That's what it'll take to trigger a follow-through day to confirm the new stock market rally. Then you want to see the major indexes and leading continue to gain ground, especially because the last two confirmed stock market rallies fizzled almost immediately.

Follow The Major Indexes And Top Stocks
Pay close attention to the major averages and leading stocks. Read the Stock Market Today and The Big Picture to stay in sync with the market. A follow-through day could come any time. You have to be ready to change on a dime.

A large number of top stocks are near potential buy points or close to being close. There are a slew of software names, including Salesforce stock, Atlassian (TEAM), ServiceNow (NOW), Workday (WDAY) and more. Some payment stocks, notably PayPal (PYPL) are acting well, along with a few chipmakers such as Broadcom stock as well as restaurants such as Chipotle Mexican Grill (CMG) and Starbucks stock. Don't forget drug and medtechs, including Merck stock, the top Dow Jones performer in 2018....MORE