Morning Market Thoughts

by DAN Good morning. We’re looking for a higher open this morning, as the S&P is up 3.75 and the Dow is up 14 points. However, the high profile tech stocks are only very slightly higher, and I suspect that we will continue to see money rotating out of this established sector.

Don’t forget about geopolitical events. This market has been really resilient, shrugging off one event after another. The most recent such event was the launch of a medium range ICBM by North Korea. They continue to ramp up their rhetoric, to a point where you’ve got to wonder they’ll launch a nuke at us in retaliation for some hapless individual tweeting something about that bad haircut on the heavy guy with the stupid smile on his face all the time. (So don’t anyone troll Kim Jong Whatshisname. It could have international implications!!) This is a complex matter because of the players involved. The US continues to pressure China to take action against North Korea, and China continues to do nothing. China and Russia are BFF’s lately and consider themselves to be “most trustworthy strategic partners.” We seem to be on the outside of that great strategic partnership, having substantial differences with both China and Russia. And when you’re one of three big superpowers, the other two are great buddies, and neither of them likes you very much, it doesn’t take much imagination to start thinking about that old adage, “The enemy of my enemy is my friend.” Translation: China and Russia are probably just a-ok with the current threats to the US by North Korea.

This has totally escaped the scrutiny of the financial markets. It just doesn’t seem to matter. At some point, it will matter. And when it does, look for a very hazardous trading environment. No need to anticipate it; but do be aware of the possibilities.

My focus is on financials this morning, with several stocks close to breaking out above their early March highs. In particular, $JPM, $MS and $GS are poised for breakouts. Citigroug ($C) is already moving higher again. These stocks should have some juice, and I think you should be in this group. It’s not volatile…and it will make you money!

See you in the forum this morning.

–Dan

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