US Indices on Friday's close: SPX: (-0.01%), NDX: (-0.30%), Dow: (-0.02%) and RUT: (+0.14%)
Healthcare, Consumer Staples, Real Estate and Financials were weakly positive while Energy, Materials and Utilities led remaining sectors below the neutral line on the flattish tape.
US CPI data for December was in line with estimates at -0.1% m/m for headline and 0.2% m/m for core value excluding food and energy.
The ES profile looks sort of constructive, even if it is built on a series of less-than-perfect structures in the past few weeks. Those 'structures' are built partly on short covering; this leads a market profile analyst to want repair for the areas of light participation. One way to deal with it is to look at the profile on a weekly aggregate or look at the areas of high volume. The problem with putting too much into forced buying is that most bottoms necessarily entail short covering. Tests of poor structure depend on macro factors and earnings expectations as the season is about to get underway. Floor talk and media reports last week put forth the idea that the extreme breadth readings and thousand plus point Dow rally of 26 Dec. was due to pension fund reallocations of money that had been skewed toward the bond market. They are thought to have figured equities were too oversold. If that is the cause of the short covering, then it puts into question the notion that the move from the bottom was as artificial as some think.
News: The US president says that he is not planning any declaration of a national emergency to secure funding for his border wall. He says that it is "up to Congress" to pass a spending bill to fund a "barrier". He said "what we are not looking to do right now is a national emergency". He said that was "an easy solution" but that "I'm not going to do it so fast". The reason for this is that he knows that courts could well block it, thereby causing him even more problems in his pursuit of the wall. As for the Democrats' actions today, the House passed bill to approve back pay for Federal employees who have missed their paychecks. The president says he will sign that bill. The House is still also working on funding for individual agencies to offset the effects of the government shut down.
Yesterday's News: US Treasury Secretary says that China’s top trade negotiator Liu He will likely visit the US in late January.
Market Internals
NYSE A-D Lines: +385. NYSE breadth: +1.41:1 and NASD breadth: +1.29:1. NYSE cumulative TICK: positive, smaller than yesterday but upward on rolling basis. TRIN: .92 - indicates buying pressure . NYSE MOC Imbalance: stronger buying pressure than yesterday with 86% dollars buying and 81% issues buying pressure on a close of +386M to buy. Of that number, Consumer Services and Technology were the strongest sectors but the advance was fairly even. SPX volume muted at : 2.06B. SPX composite volume: -10.96% relative to Thursday. NYSE total volume: -10.45%. NYSE composite volume: -6.97%.
Implied Volatility: VIX: 18.19 or (-6.72%). VXF19: (expires next week) 19.03 or (-4.25%) and VXG19: 19.45 or (-2.87%).
Debt Treasuries were subdued but ended the week on a higher note. Today, most of the action was on the open, in response to some weak European industrial production data. That was followed by a bit of a pullback as US equities pared initial losses. The 2-year (-2 bps to 2.55%) to 10-year (-3 bps to 2.70%) spread came in to 15 bps while the 2-year to 30-year (- 1 bps to 3.04%) is at 49 bps.
Incoming There is no economic data on Monday but PPI and Core PPI for December as well as Empire State Manufacturing Survey results for January will be out before the bell on Tuesday. Hope you all are sleeping or at the beach or some other fun stuff today.
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