After yesterday’s 300-point session, it wasn’t a surprise that the market pulled back; however, the session had its moments when the buy-on-dips crowd made its move. 

Technology was higher, led again by semiconductor stocks, including Advanced Micro Devices (AMD). Healthcare stocks eked out a slight gain as UnitedHealth Group (UNH) continued to move higher; the company had monster earnings that beat big time. Also, there is a lot of speculation on the next big biotech takeover.

S&P 500 Index	-0.16%
Consumer Discretionary (XLY)	-0.09%
Consumer Staples (XLP)	-0.30%
Energy (XLE)	-0.82%
Financials (XLF)	-0.07%
Health Care (XLV)	+0.02%
Industrials (XLI)	-0.54%
Materials (XLB)	-0.05%
Real Estate (XLRE)	-0.95%
Technology (XLK)	+0.18%
Utilities (XLU)	-0.63%

The overall market breadth was ugly:

• NYSE: 2,157 decliners to 826 advancers. The number of stocks hitting 52-week lows swelled to 93 while 180 names hit new highs
• NASDAQ:1,860 decliners to just 1,068 advancers, with 168 new highs against 44 new lows.  Interestingly, the NASDAQ actually had more advancing share volume than declining, which explains why the index was higher for most of the session

Crude Reality

We got the latest on crude oil inventories, which decreased for the ninth consecutive week, hitting the lowest level since February 2015.

Global producers, which includes Venezuela (has OPEC’s largest proven reserves), see a declining output. There is room for U.S. producers to turn on the spigot and still enjoy slightly higher prices.   Crude oil made a major breakout with a close through $64.50.

 

Some investors fear inflation implications of such a move while others are simply concerned that the market has come too far, too fast. It’s time to lighten up in order to change risk-reward dynamics. 

After the close on Thursday, a couple of stocks that had been hot reported results that beat Wall Street, but shares were getting slammed.  International Business Machines (IBM) and American Express (AXP) were considered ‘dogs of the Dow.’ What approach is being taken to find value in this market?  I don’t like those gimmicks but when enough people do, they work for short periods of time.

Ironically, IBM finally snapped 23 consecutive quarters of year-to-year revenue declines.

Shutdown Madness

This morning, we will get the results from last night’s Senate vote on a continuing resolution (CR) to keep the government open for a few more weeks. During which time, they will find an answer to the ‘Jacobian Conjecture’ (probably not), and come up with a deal of compromise on several issues surrounding immigration and military funding.

Then there will be another CR.

Of course, this isn’t unusual (2001 saw 21 continuing resolutions) and we are on the cusp of the fourth this fiscal year. I don’t think it hurts the market. While there is work that suggests cuts up to 0.2% off the Gross Domestic Product (GDP), it’s never been an economic disaster. Heck, if the GOP would embrace the idea of draining the swamp, a shutdown would take the nation across the Rubicon from a bloated government.  

However, I doubt that will happen.

Today’s Session

It’s going to be a huge day for the new Four Horsemen of Technology.

• Amazon popping on news it’s hiking its monthly Prime rate by $2.00 to $12.99
• Netflix popping on an analyst target hike at Key Bank to $270 from $230
• Google up on news it signed a patent deal with Tencent

The Dow will be under pressure from a couple key components, but the overall market seems poised to move higher, a potential government shutdown notwithstanding.  

 

Comments

Another important US asset is being sold. This time to China. China's Nextview New Energy Lion P-E fund agrees to acquire Canadian lithium producer Lithium X (OTCQX:LIXXF +18.5%) for $C265M (US$206M), the latest move by Chinese companies to secure battery raw materials. Lithium X Energy Corp. is a Canadian company that holds properties in Nevada, the United States and in Salta, Argentina. It holds an option agreement on over 15,020 acres in Nevada's Clayton Valley. Valley North covers approximately 5,480 acres in northern Clayton Valley, Nevada. The Company also holds interests in the Clayton Valley South Expansion (Clayton Valley South). Clayton Valley South consists of over 480 federal placer mining claims, totaling approximately 9,540 acres, and is located over 30 miles southwest of Tonopah, Nevada, within the Clayton Valley. Its Sal de los Angeles project is situated in the Lithium Triangle in Salta Province, Argentina. The project consists of approximately 8,160 hectares covering the nucleus of Salar de Diablillos. Alex Alex Majthenyi on 1/19/2018 10:23:03 AM

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