Short Term Trading Week Starting: 27 May, page-86

US Closing Update

Special Counsel Speaks

On Wednesday SPX closed -0.69% at 2783.02 after a skirmish at the 2770 area on weak breadth and a strong US Treasury market.

An unexpected press briefing from special counsel coincided with a trip below the 200 day average in the 11:00 ET cash session hour. The ex FBI director came to impress upon us that DOJ rules do not permit him the indictment of a president. We already know that. You can do the math to see what the announcement means. Hint: Bobby Three Sticks is no fool and does not like being misconstrued...intentionally or otherwise. As the cameras rolled he stated clearly that if his team had been confident the president did not commit a crime they would have said so. The special counsel's mandate meant that the constitutional duty to deal with crimes or the obstruction of justice is with congress. That is the traditional way to do it. You can bet that although many didn't need Mueller to verify what they see as obvious, the confirmation will get some wheels turning.

Just before the European open at 03:00 ET, ES 2889 half was a point of contention after a higher volume one minute break of that level. Europe's open didn't help things and an overnight low of 2782 was followed by a brief bounce and a fall back after the opening gap down to 2788.50. The news of the press conference yielded an initial balance low of 2778.75. That drifted for a while until the actual press conference when 2766.25 was tested. 2775 was the area of interest in the last few hours and a final bounce saw SPX clear that level by ten points. 2740 is still the mid-week contingency support as of this note.

US Treasury futures spiked higher on the eth open and stayed higher through the night and the cash session saw the 2-year note lose 4 bps and fall to 2.08% while the 10-year note shaved off 3 bps to 2.23%. The long bond yield is down 4 bps to 2.67%. Gold made another discreet climb today but flailed in the face of a stronger USD while the Yen pairs are flat on the session after some overnight action lower. Light crude saw weakness but had an intraday bounce. NYSE A-D lines: -1005, NYSE breadth: -2.09:1 and NASD breadth: -1.46:1 closed off of their intraday lows with the end of session bounce higher