US indices on Monday's close: SPX: (+0.33%), IXIC: (+0.01%), Dow: (+0.44%) and RUT: (-0.87%).
E-mini S&P futures took a small hit overnight but held their ground. Positive price action against moderately weak NYSE Breadth, Advance/Decline ratio and TICK followed neutral momentum oscillators and muted volume for much of the session. Sellers remained neutral for much of the day while buyers were sort of neutral until the last hour. Oil (CLF19 52.09 or +0.89%) drifted higher, and has not given up its small gains as an API build (+3.453Mbbl) was just announced. Safety plays – Healthcare, Consumer Staples and Utilities - were relatively strong while the Materials sector led the Industrials and Energy sectors lower - perhaps on the reinforcement of trade fears. Small caps were the outlier. NYSE MOC: saw 1B to sell going into the close, but finished at -97M to sell.
Yesterday’s closing hiccup - via bellicose proclamations about tariffs - caused a bit of trauma in the futures and some overseas markets, but ES futures did not give back much of yesterday’s run; that is a good thing if you're looking for a continuation past 2680. I do think the bulls had a follow-on run in mind, even if it was altered a bit by the tone of yesterday’s tariff comments. I base that opinion on the futures profile, weekly derivatives positioning in the SPX and some the US Treasury action. Today's session began on weak to neutral footing vis market internals but things seem to be holding up over the YTD unchanged level and support at 2650. We saw a slow but positive low volume grind sideways (mid-session) to up (near the close) as traders wait for tomorrow’s potential catalysts.
The market is now eyeing tomorrow's potential comments from the Fed Chair (12:00 ET/16:00 AET) and Thursday’s FOMC minutes as well as this weekend's meetings at the G-20. At a White House press conference near mid-session, the head of the NEC stated that it is unlikely that there will be any big changes to the trade situation at the upcoming meeting. He reiterated the President is serious when he talks tough on tariffs. Hey then went on to say “there is a good possibility” a deal can be made with China and that the US can handle tariffs much better than the Chinese. Futures were little moved. Traders probably assume this to be part of the overall tack on trade. Competing sentiment at this press conference reinforced further that participants may expect intentionally conflicted messages or even tornadic rhetoric going into the meeting. Later, China’s ambassador warned of severe consequences if the two trading economies grew apart; he is translated to have said that we might be headed toward a depression and trade war. Acceptance of such rhetorical maneuvering by the market gives the messengers (trade representatives) margin for error -and carte blanche for more of the same…trade war architects are also watching the futures. The takeaway for some is that very short term bulls are looking – or pretending to look - past the comments. Tomorrow, bulls will be looking to maintain 2680 and now have their sights on 2697 and 2712. The tone, as far as I can tell, seems cautious/skittish but grindy (is that a word?) Hope you have a great day trading.
Thank you @roberter1 and hound for your welcome, I am very happy to see the garage is in play and as strong as ever. I was hoping hound had forgiven my thoughtless comments on the origins of canine loyalty..and it looks like he has.
(20min delay)
