By many accounts, the president was “unglued” yesterday when he made the announcement about tariffs.
For some, that implies a risk for a snap back to areas above SPX 2700 in the near term. Others feel we remain fully entangled in a battle of wills between stock market participants and a handful of politicians who juggle their political destiny alongside issues affecting the trans-global economy.
Many participants are probably thinking that the president can easily rescind his trade war-invoking comments, but bear in mind that once he does this, he will have some explaining to do to his dwindling base. They will refer to him as a pawn of globalists and a hustler. One wonders how many supporters of the administration’s move realize that most jobs that involve steel are not in its production but rather in its use in manufacturing.
As they scramble to do damage control, the hardnosed among them no doubt feel that there appears to be a margin to play here and SPX 2500 area is well within that margin of “safety” or accumulated market cache to sustain any impending trade policy skirmish.
Today’s initial leaders – the ones bucking the trend - were Telecom, IT, Healthcare and Consumer Staples. For you who noticed the Russell candle and levels yesterday, the R2K again faired very well - as foreseen by several astute observers in yesterday's thread.
NYSE breadth moved slowly but surely above the flat line from the open.
S&P/ES/SPY : 2691.25/2692/269.08 ES had been trying all day to achieve balance at the 2676 area, and finally did. SPX was led off the intraday lows by Nasdaq and R2K. Going into the last quarter hour of cash trade, algos are running stops with overhead ES structure looking somewhat ambiguous.
Market Internals NYSE Advance-Decline Lines: +749 . NYSE breadth: +2.3:1. NASDAQ breadth +3.16:1. NYSE TICK trended higher from 11:30 into the close – something that I found unusual in the context volume indicators. TRIN has fallen to .74. NYSE composite volume: Below average most of the day but screamed above the neutral line in the last few minutes of trade.
Implied Volatility
VIX was up 26 area today, but has receded now and holds at -12.82%. VXH8:19.00 VXJ8: 18.25 VIX: 19.59
Open Interest
Weekly protection sellers were very fortunate today, with the pin coming in on their side.
Equity Related Currencies and Crosses USD Index has fallen beneath its 5 day, bouncing from its 17 to settle on its 10 (-.41% at 89.955). USD/JPY got hammered today and fell through recent support. It is off the lows now (-.48% at 105.719). EUR/USD (+.47% at 1.23264). AUD/USD (+.07% at 77627)
Commodities Gold GCJ8 is getting bought on safety/declining USD and looks poised for an attempt at 1340. (+1.36% at 1323) Copper futures HGK8 are up (+.35% or 3.1345) and Crude Light Futures CLJ8, which had been down substantially, now sit about at(+.71% at 61.42).
Debt/Bond/Treasury
ZNM8 10 Year Treasury futures -.40% and the 10 Year yield has risen back to 2.86%
(20min delay)