Short Term Trading Week Starting: 29 Jan, page-88

US Market Breadth

Didn’t forget you just running late,

NYSE A-D lines: +1772. NYSE breadth: +4.14:1 and NASD breadth: +3.09:1. NYSE cumulative TICK: Quite strong with a high tick of over 1200 and linear rise to the close. TRIN: .96.
NYSE MOC: a large negative -1.3B imbalance near the reveal leading to +11M just at the close and a finish of -166M. SPX volume: 2.545B. SPX composite volume: +19.56%. NYSE composite volume: +8.97% and NYSE total volume: +9.54%. Implied Volatility: VIX: 17.66 or -7.68%, VXG19 (now): 18.00 or +0.04% and VXH19 (now): 18.40 or +0.14%.

Incoming
Thursday we have the Employment Cost Index for Q4 and Initial and Continuing Claims at 08:30 ET, Chicago PMI for January at 09:45 ET, New Home Sales at 10:00 ET and EIA Natural Gas Inventories at 10:30 ET.

Comment

Traders are waxing glib and cynical on the Federal Reserve's dovish tone yesterday. Snark is the go on social media and various financial outlets. Clever snipes about how the market controls the Fed are everywhere. But many feel the US stock market and the US economy are inextricably intertwined and becoming more that way every day. The relationship between consumer confidence and equity market levels is a simple example. Central bankers from the developing world have been pleading with the Federal Reserve to ease up on the overnight lending rate and its balance sheet reduction for many reasons -- not least so that the US Dollar does not crunch emerging markets. That's because the global economy in its post-war state is more the product of trade and less the Hobbesian dog-eat-dog world economy that was more influential at the end of the Great War when the Treaty of Versailles brought its vengeance down on smoldering aggressors, even as they were being sent large sums in an initially successful effort to prevent war from breaking out again. The market crash of 1929, of course, negated those efforts. It became impossible to appease everyone and all kinds of violence broke loose soon after. You know the rest.

Don't take this for an ode to Hume or Keynes or an appeal to nihilism or the modern wisdom that "it is what it is". What society lets its leaders do does eventually matter. Most of you gold bugs know that the reification of currency should be based at least on something real and precious; something that can adequately and durably reflect hard work. Monetary engineering is of course a potentially dangerous thing -- especially when combined with fiscal stimulus that incurs debt in a consumer based economy. But modern traders - of all people - should know that the Fed is going to try to prevent the indices from tanking or currencies from getting out of whack; thereby preventing a hard landing for a waning cycle. Sometimes traders - retail and institutional alike - are when given an audience prone to the most vicious incontinence.