Today started with a shout-out to the collective efforts of the central bankers and William Blount! Hip, hip, hooray! Month end/new month is here and so are the central bankers! <BAM> from William Blount’s morning commentary: Yesterday was VERY INFORMATIVE — it PROVIDED the first Place where all of BLUE(5) could be completed on an ascending triangle and the FLIP SIDE is a messy ‘running correction’ (very bullish – see daily charts in 2005-2006 for same look).. THE BANE, biggest pitfall of all MEMBERS OF THE PENCIL AND ERASER SET is counting too fast…so, it is possible that the 1 min chart labeling the ascension of the rally from minor 4 LEAN at 1670.5 SPOO/1676.03 SPX may be off by 1 set of a-b-c’s to seal the triangle AND if it is a running correction then we are about to accelerate VERY RAPIDLY to the 1700’s.
Globex volume was a bit higher than recent weeks average, but light for all the news and the price action that followed. 240k ESU and 800 SPU traded on Globex, trading range was 1694.20 – 1684.70. Wednesday’s regular trading hours (RTH’s), pit session trading range was 1680.30 – 1694.00 before settling at 1680.50 (adjusted for month end), down 4.2 handles. ECB and BOE leave rates unchanged. Global growth trifecta! U.S., Europe (over 50) and China beat PMI expectations! Markit’s final manufacturing U.S. PMI for July checked in at 53.7 versus the flash reading of 53.2. beginning of the month risk on – chasing performance and selling credit, 30yr bond was down almost 1%. Jobless claims decline to lowest level in 5yrs, falling 19k to 326k. Also, the morning’s earnings were mixed to better, but the [XON] miss weighed the most.
Today’s pit hours gapped 15 handles higher (from the month end adjusted settlement of 1680.50) to 1695.30 – 1694.80, traded an initial low 0f 1694.70 before briefly topping the 1700 psychological barrier, trading a new contract high of 1700.70 by 9:25 with the Nasdaq hitting a 13-year high! At 9:00 the ISM data checked in at a whopping 55.4 vs exp of 52.0 and prior 50.9, indicating a big jump in the manufacturing sector. The SPU faded to double bottom at 1696.50 before grinding sideways to higher on the back of the day’s events. The FOMC was seen as uneventful to slightly dovish as the message remained that although tapering will probably start in September, it is dependent on data between now and then. Banks were higher, as were managed care stocks, as both sectors stand to benefit from higher interest rates down the road. Homebuilders rallied hard yesterday afternoon too as the Fed said it would watch mortgage rates carefully while implementing tapering which in turn should help quell fears that tapering will lead to less mortgage demand. The [DJIA] [SPX] [QQQ] were up 1%, [RUF] [XLF] were up 1.5% and the [BKX] was up 2%. redliontrader (10:47) 355 new highs NYSE – wow! [NYSE] down to 1:1.. warning there, SP500 10:1 – broader market not so convinced. NASDAQ comp 2.5:1. NYSE 2:1. That is a critical level for the A/D line to hold to keep these gains bearish tick divergence @ 1699.50.
After trading in a tight 3-handle range during the midsession, the SPU was retesting the morning high by 1:00 and printed a new high of 1702.00 in light volume as the e-mini topped just 1M in volume, 800k net during the day session. The SPU continued the slow grind, printing a new record high 1703.30 going into the closing imbalance. The closing imbalance showed $975M to the buy side. The spoos traded 1701.80 area on the cash close before settling at a new record high of 1700.20, up 19.7 handles on the day.
On deck: Unemployment, NFP consensus 175k and TGIF!
Fed Statement Tracker http://projects.wsj.com/fed-statement-tracker/