The Dow Jones Industrial Average began last Thursday  with a variety of geopolitical issues to grapple with, including signs of a potential nuclear bomb blast in North Korea in the coming days; and then, the bomb was dropped- the mother of all bombs, in fact. 

The Dow Jones Industrial Average is down 3.4% from 21,169, but continues to be in its perfect up channel that began after a double bottom was formed in February 2016.  The index is slightly below its exponential 50-day moving average; the stocks will have to take a stand soon as the next major support level is 20,000.

Over the weekend, North Korea fired a dud; that should momentarily quell some geopolitical anxiety, but there are other worries.

On Friday, retail sales for March were released.  The headline number came in below consensus as slumping sales continue to make this the worst two-month span in over two–years

The Street might be able to put North Korea and slumping retail sales in the rearview mirror if earnings come in better than expected. Remember: expectations are sky-high with whispers of 12% earnings gains for the S&P 500 from a year ago.  Today 131 companies report but that’s only a drop in the bucket to the 369 reporting on Thursday.

Today’s Session

There is more soft data weakness this morning as the Fed’s Empire State survey on manufacturing has come in well below consensus.

There is no doubt near term anxiety is spread across several areas, from geopolitical concern to signs of a domestic economic slump.  On that score, the Philly Fed report reflects growing concerns about the near-term timetable of President Trump’s economic agenda while underscoring a general belief among manufacturing businesses that it eventually happens.  Manufacturers are much more confident on key components of their business six months out.

The market is poised to open higher after a brief dip on the Empire State news.  Without a doubt, stocks have become oversold on a short term basis.  The problem however has been sparking greater buying on slight moves higher. 

Let’s hold off this morning.