US Indices on Thursday's close: SPX: (+0.14%), NDX: (+0.66%), Dow: (-0.09%) and RUT: (+0.70%)
Initial jobless claims came in better than since 1969 and semiconductor majors beat on earnings that provided decent guidance. Technology, Energy, Industrials and Consumer Discretionary were positive as earnings buoyed the Transports Sector while Consumer Staples, Health Care and Materials were relatively weak. The ECB conference was interpreted as accommodative and the European indices maintained much of their overnight rally, with the DAX back above its 5 day average but still below its major trend line.
ES Futures profile was balanced overnight and also in the cash session as the overall weekly profile seeks balance at 2635, which has become the second most prominent vpoc on a 30 day basis -- 2585 being the primary vpoc as well as the YTD poc of SPX . ES closed at 2634.25 leaving a point of control at 2637.75.
SPX closed slightly higher at 2642.33 after bouncing exactly on the 61.8% retrace of the 3 Dec. downtrend. It now remains just a point and a bit below the 50% retracement level of the major downtrend that after falling back through on Tuesday -- the exact position depending on whether you base the retrace on 24 or 26 Dec. NDX was the leader for much of today and has settled back above its major downtrend line. Yesterday's Dow action was courtesy of IBM, PG and UTX and some of that progress reversed intraday but Dow managed a flattish close and is still above the half way mark of the downtrend and above its own 5 day average. RUT action was linear in comparison and closed up against resistance at 1464. SPX, NDX and RUT are on their 5 day averages.
AUD/USD down on NAB rate stuff as you already know. AUD/JPY and most other Aussie pairs were having a rough session. USD/JPY was flat and the USD index is up (+ 0.45%) and dealing with its 50 day average and +0.70% higher against the EUR on an accommodative sounding ECB meeting. GCG19 lost a bit more ground intraday and settled at $1280.10/oz and is trading at 1280.00 (-0.3%) as of this note. CLH19 light crude had an up day and settled at $53.15/bbl or (+1.0%).
Market Internals
NYSE A-D lines: +1014. NYSE breadth: +1.82:1 and NASD breadth: +1.93:1. NYSE cumulative TICK: positive but muted until noon and then stronger into the close. TRIN: 1.14 -- light selling pressure. NYSE Closing Auction: +126M to buy at the reveal was quite stable and led to a final imbalance of +129M. SPX volume: 2.435B. SPX composite volume: +8.56%. NYSE composite volume: +2.78% and NYSE total volume: +2.19%. Implied Volatility: VIX: 18.89 or -3.23%, VXG19 : 19.25 or +0.39% and VXH19 : 19.21 or-0.08%. VX term structure has been flat, meaning it is easier than usual to hedge the SPX.
Debt
US Treasuries rallied today with the 2-year (-3 bps to 2.56%) to 10-year (-4 bps to 2.71%) spread shrinking to 15 bps and the 2-year to 30-year (-4 bps to 3.03%) coming in to 47 bps.
Incoming
There is no economic data tomorrow but next week we have quite a bit of data including the FOMC rate decision on Wednesday at 14:00 ET/ 03:00 AWST/06:00 AET and the NFP employment data on Friday before the bell at 08:30 ET/ 21:30 AWST/ 00:30 AET.
News: There are rumors - based in part on one of South China Morning Post's sources - that Chinese officials are considering working something with bond management because their liquidity injections are not proving sufficient. The Chinese economy is said to be under duress and US hard line trade representatives are no doubt very happy about this. Equity market participants who have faith in the US administration's ability to deal with the upper hand are fine with that. The rest of them are left considering the potential for gross miscalculations, given the fragile state of a world built on monetary easing and fiscal stimulus by politicians who increase national debt to ensure their popularity.
Two measures to reopen the US government failed to pass in the US Senate -- even though some Republicans crossed the aisle to help its passage. One of the measures was similar to one that got unanimous approval in December and rejected by the president. These measures were really just trial balloons for further negotiations.
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