Brian’s Monday recap: Eking out a win as another old-school name misses

Commentary, Market Recap

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Today started with a light 175k ESU and 800 SPU traded on Globex, trading range was 1688.40 – 1694.00. Friday’s regular trading pit hours (PTH’s) trading range was 1690.00 – 1678.80 before settling at 1689.50, up 8.9 handles. Mizuho says the Abe election win was “very positive for political stability” and priority is economic growth. Their JGB traders say inflation-linked bonds may gain popularity as “issuance is expected to resume in October, for the first time in 5 years” and their equity strategists are bullish on the Nikkei until the autumn tax hike debate.

In the U.S. over the past month analysts have been busy revising their GDP estimates lower following Fed policy concerns leading up to 2nd quarter earnings season. This is the big week for the S&P 500 earnings and that is a good thing because the economic calendar is a bit light. We can add [MCD] to the list of ‘old school iconic’ name brands to miss their earnings and also offering a weak outlook. So, has the consumer decided to cut back as the retail sector, discretionary spending has shown recently or is it due to the higher prices at the pump during the summer trips?

Today’s pit hours opened unchanged at 1689.20 – 1690.00, marking the early high before quietly trading a low of 1685.70 and slowly bouncing. Existing home sales disappointed, checking in at 5.08 vs expectations 5.25, but prices have worked their way to a five-year high. Equities caught a bid going into 10:30, the European close as the SPU traded a series of new intraday highs tagging an intraday high of 1692.90 at 10:42 before fading back to retest the opening range/previous settlement during the lunch hour(s).

The volume was light all day as traders waited on the big pickup in earnings releases this week. The next meaningful set of economic data does not come out until Tuesday night/Wednesday mornings flash PMI followed by Thursdays initial jobless claims, durable goods orders and Fridays University Michigan confidence.

The afternoon was lackluster. redliontrader (14:15) 319 new NYSE NHs that’s pretty good.. The market is losing momo though with a pathetic A/D line NYSE 1.3:1. The SPU sat on the opening range and had no momo to test the morning high. The imbalance was $398M to buy sell side and the S&P traded 1690.40 area on the cash close before settling at 1690.30, up 0.8 handles on the day and another record high.

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