Happy weekend traders,
US Indices on Friday's close: SPX: (+1.32%), NDX: (+0.98%), Dow: (+1.38%) and RUT: (+1.04%)
Weekly indices: SPX: +2.87%, NDX: +2.78%, Dow: +2.96% and RUT: +2.43%
That was a bullish day and close for many reasons including good NYSE breadth and volume. The NYSE closing auction saw decent buying. Positively interpreted news from the trade war front and in US manufacturing output data (best since last February) helped, while a lower consumer sentiment survey out of the University of Michigan (lowest since late 2016) did not seem to offset that positivity. It was monthly options expiration so we have to take that into account as we go into next week. There wasn’t much profit taking into the close, which is interesting on a Friday before a three day weekend.
Energy led Industrials, Financials, Materials and Technology higher on a completely green sector profile with the Utilities sector the laggard.
SPX futures opened on a gap and hardly looked back. The ES futures profile shows positioning was net long coming into the cash open, but that didn't stop the opening gap from sticking as the contract plowed straight up after the initial balance saw a test of just over Thursday's RTH (regular trading hours) high of 2645.50, which corresponds with the half-way mark of the entire SPX downtrend. 2668 - the day's point of control - was central to the bulk of today's session. That is also last year's unchanged line for ES.
SPX closed at 2670.71, about 0.9% under the downtrend line that comes in at about 2697 -- if you go straight up. The YTD unchanged level for 2018 is about 2673.00 and it formed part of the intraday struggle, with the index breaching it but settling just below it. As mentioned above, price went through 2642 - the 50% retrace of the Oct downtrend - with relative ease, leaving a gap of its own as the ES SPX futures contract breached the latter level in overnight trade. Watch that last level for initial support. The 20 day moving average is now curving up and the 50 day still flattening at the 2626 area that is the 61.8% retrace from 3 Dec. Beneath that is the October intraday low of 2603 and then 2585 support which is a monthly point of control and previous level of acceptance.
February gold settled at $1282.75/oz or (-0.7%) after breaking just below its 20 day moving average as the USD DXY (96.364 or +0.31%) climbed back above its own declining 20 day. Will be looking at the gold futures profile this weekend as it offers clues of where traders see value. Oil had a big up day and that helped the energy sector lead the market. February light crude settled at $53.84/bbl or (+3.6%).
Market Internals
NYSE A-D lines: +1441. NYSE breadth: +5.33:1 and NASD breadth: +3.22:1. NYSE cumulative TICK: moderately positive and flattening after 14:00. TRIN: .55 -- strong buying pressure. NYSE MOC: Today's closing auction profile was similar to Thursday's, with a +1.3B at the reveal, which stayed firm into 15:54 where the final imbalance went to -17M. Financials led that buying. The McClellan Oscillator NYMO is back over 100. On a rolling basis, there was a bit of SPX tick divergence. SPX volume: 2.618B. SPX composite volume: +6.91%. NYSE composite volume: +5.95% and NYSE total volume: +10.53%. Implied Volatility: VIX: 17.80 or -1.44%, VXG19: 18.25 or -1.48% and VXH19: 18.60 or-0.93%.
Debt US Treasuries saw steep losses today and were lower on the week, even though prices recovered a bit in the second half of the session. The long bond outperformed again. The 2-year (+5 bps to 2.61%) to 10-year (+4 bps to 2.78%) spread compressed to 17 bps while the 2-year to 30-year (+2 bps to at 3.10%) spread shrank to 49 bps.
Incoming Monday the US markets are closed but we always have the futures. Tuesday we have Existing Home Sales for December at 10:00 ET.
Old news: BBG reports that China offered major increases in imports from the US for six years so that the trade imbalance to ensure equanimity, but the US officials responded they wanted to do so in two years.
New news: The US president says he is going to make an announcement about the wall and the government shutdown tomorrow. Goodness what now? A national emergency is thought not to be in the speech. Is the market high enough to be knocked down yet or do his people know you don't want to mess with the levels at this fragile point. Maybe they will juice it. Glad to see you all here and hope you are keeping cool today.
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