On Friday the
SPX settled at up
+1.09% or
2970.27 and just above the downtrend line and did not yet fill the gap created in the overnight ES session and the expectations of progress on trade out of DC. The 50 day moving average is sort of flat and the 20 is still curving downward. The ES gap up originally topped at 2968.75 but was made slightly smaller toward the end of the session as participants took profits. The most time was spent at 2983.25 while the high volume point of interest is at the lower end and 2979. SPX cash 2970 for Monday is a point of contention that the bulls would like to open and stay above on a closing basis. 2950 is important support and central to the week's support/resistance profile. That area will become clearer early in the week.
NYSE A-D lines closed at
+1596 and NYSE breadth at
+5.25:1. NASD breadth left off at
+4.19:1. NYSE total volume left off slightly higher than the week's previous sessions.
Opinion The administration says China promised to buy US agriculture products of 40-50B on a yet-to-be detailed time frame and this was rewarded with a reprieve in the 5% increase on 250B in existing tariffs that had been scheduled for next week. The December tariffs are still to be reckoned with.
The big package deal sought by the administration gave way to talk of a phasic series of deals. This move is in the interest of the stock market stability. The election campaign depends in part on consumer confidence and consumer confidence depends very much on the stock market. Even financial outlets sympathetic to the administration's efforts noted the lack of details and caution from business leaders and advisors from the likes of the AEI and the Business Roundtable. Agriculture representatives were more sanguine but that is to be expected as they represent the administration's base support. The underlying issues of bipartisan concern were of course put off for later. Market participants, never too proud for a bit of action, were quick to facilitate the game...Thursday's night's ES session comprises the net gains of the move as Friday's intraday heights were given back when trade truce news was sold going into the weekend.
Lack of details can mean different things. It can mean you're well-intentioned but still catching up to your long-term plan or merely that you're in trouble and winging it for your willing congregants. According to friendly US financial cable news, the president has the Chinese right where he wants them. We know that Friday's talk means that both parties are wary of a steepening global slowdown that threatens to make everyone too cranky for friendly negotiation.
The Chinese are said to be eating our lunch in many ways. They understand their present dependence on the American consumer but they are never shortsighted. A high relative capacity for suffering puts time on their side and the idea of a multi-part deal will help them run out the clock. They understand that the president is on the ropes and dealing with problems of his own making. Perhaps they also sense they are dealing with a society given to the convenient disposal of values and principles. One thing they know for certain is that the US executive cannot afford to injure or even offend the stock market's amazing power of absolution. Friday's trade-talk theater was a bread-and-circus fix for market participants and a broader distraction against any impending political fire.
Whatever the final truth or outcome of the week's dealings, there is something that global adversaries and market participants might factor in their general calculations for trust. Though deemed less important than trade to markets, the blood sacrifice of our Kurdish allies with what many view as an attempt to distract from the administration's problems -- one with tragic consequences that makes everything else seem all too shallow.
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