Sectors: The market was led by Energy (+0.59%) and Materials (+0.55%) for most of today, while Technology (-0.95%) and Financials (-0.82%) took a bit of a hit with the SPX sector profile was kind of scattered.
ESZ8 E-mini S&P 500 futures were consolidating on low volume and neutral breadth today following yesterday's short covering rally. ES peaked at 2754.50 and then fell back to pause at yesterday's high, about 2745, before falling through in the last quarter hour on profit taking. Like a QB would feel after being hit very hard by a 125 kilo defensive end, shorts were kind of skittish today and have lost a bit of confidence. Intraday, the SPX fell to the year to date high volume area and then waffled at the 2730 area, bounced through 2750 resistance and sold off for a small loss. The indices have managed to move through some crucial areas and it would not be irrational to expect increasing nervousness on the part of shorts as the market consolidates above SPX 2700...and even as the glad-handing and one-upmanship in Buenos Aires is about to begin. SPX 30 minute view.
Standouts
FOMC Minutes are interpreted as supporting the idea that the Fed is in caution mode vis impending tariffs. Released 2 hours before the market close to little immediate reaction, the takeaways seem to be that there is ' no preset path' and that they are 'data dependent'. Something tells me that yesterday's Fed Chair comments take precedence, but the minutes seem to confirm the bull's interpretation. The minutes also seem to confirm the widely expected December rate hike.
WSJ reports that the White House and Beijing are trying to work out a delay (until spring?) in the impending increase in tariffs. Isn't it nice how things all come together? Denials may be forthcoming, but it's all in the game.
Oil (CLF19 41 or +2.23%) bounced back from an overnight slump, buoying the Energy sector.
As you already know, Asian markets, particularly Chinese indices, did not appreciate US rally and this no doubt bolsters the US administration's confidence going into the glad handing at G-20 this weekend. But that might change in your open today, as the WSJ is reporting some 'good news' on that front. The DAX is still in troubled waters. Slightly off topic, I have noticed increased verbal support across the political spectrum for the idea that China is cheating in matters of intellectual property, and this no doubt pleases the Administration as well as bullish market participants who would like the trade narrative to morph into something that supports a recovery in US stocks. Perverse logic, perhaps, but we should be used to that by now; particularly near year end and just above the year to date unchanged line.
Market Internals and Volatility A/D Lines: -180. NYSE breadth: -1.34:1 NASD breadth:-1.23:1 TICK: positive but subdued today. Note that rolling intraday TICK is still flat to curving up. NYSE MOC: A -1B sell side gave way to a flip on the close and the final number was -12M to sell. SPX Volume: 2.098B.VIX: 18.79 or +1.62%, sort of flat.
US Treasuries
The Treasury market remains subdued following the Fed Chair’s remarks, with ZN futures giving up intraday gains – after a weaker than expected Pending Home Sales number - and moving little on the FOMC Minutes. Core PCE prices came in at +0.1%. The 2 (2.80%) to 10 (3.04%) year spread is now at 24 bps and the 2 to 30 year (3.33%) spread is at 53 bps.
News
The question earlier in the week about whether the market would get extra juice from positive spins going into the G-20 has been answered...WSJ is reporting that there has been a kind of temporary deal in the works. This is sort of a recycle of the rumors that get refuted from time to time by various US trade war architects.
The President now says he will not meet with his Russian counterpart at the G-20 on account of the Russian seizure of Ukrainian ships. This news came amid speculation that the Kremlin had demanded a meeting. Some might view this as coordinated theatrics taking place between the two leaders. Valid suspicions and idle conjecture are flowing like water, but one thing we cannot deny is that the Democrats - soon to be installed as a majority in the House of Representatives - are in high gear vs the Special Counsel's investigation into election meddling. In other words, the heat is on, and the President's dealings with the Russian Federation and Saudi Arabia are under intense scrutiny. What this means for oil prices going in and coming out of the G-20 summit is anyone's guess.
@Bugsam, by now you're seeing all kinds of analysts bickering going on as to what exactly the Fed Chair was getting at when he said that the overnight rate was just below a range of estimates of what constitutes "neutral".Imho, semantics and doublespeak work as well for the Fed as for the funds that have placed bets on a direction for the rest of the year. As you predicted, the overall sentiment was said to be dovish in terms relative to what bears expected.Perhaps part of the rationale for any Fed caution - rhetorically and pragmatically - is to compensate for the potential effects of the trade skirmish.
Thank you, @48&34, I agree with what you've said about the rally being somewhat contingent on the trade war posturing, but as noted above, we might want to be ready for narrative changes in the short term. Yes, diving in WA can be a little nerve wracking when those critters are migrating. Nothing like a decompression stop three meters under the surface in churned up water to give you the shakes, even if we rationally know the statistics are well in your favor. They blend in so well with the blue/grey shadows right? I just keep doing slow 360s while I wait. I have used the ankle and tank mounted electromagnetic pulse devices, they seem to work well in live testing. They can inspire confidence in shallow water if you're swimming on the surface, alone, without goggles and just after twilight... and the suspense is taking away from your enjoyment. I've been led to believe the technology is sound, and failures to date seem to have been caused by errors in usage...last I checked. Wearing a mask in clear water changes the mindset but you have to be having a fair bit of fun to completely forget that you might not be alone.
I posted too much this week, but I got kind of excited by being back with you!
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