Monday, March 26, 2018

Monday Morning Chartology


The Morning Call

3/26/18

The Market
         
    Technical

            The S&P had another rough day on Friday.  It closed below its 100 day moving average for the second day; if it remains there through the close today, it will revert to resistance.  In addition, it finished right on its 200 day moving average.  It continues to trade within all major uptrends.   However, the Dow has ended below the lower boundary of its short term uptrend for the second day; if it closes there today, it will reset to a trading range.  That is a bit more concerning; but at this point, the latest plunge is nothing more than correction in an up market.

                And:




            While the long Treasury remains below its 100 and 200 day moving averages as well as remaining in a short term downtrend, it has rallied off the lower boundary of its long term uptrend and is very close to establishing a very short term uptrend.  I am a little confounded by TLT’s better recent performance in view of rising interest rates abroad and the Fed confirming three rate hikes this year and the continuation of the unwind of its balance sheet---both of which point to higher interest rates (lower bond prices).  Some pundits are opining that bond investors are starting to give up on the Fed’s (and others) pie in the sky economic forecast and are embracing slow economic growth.  The only way the two (higher overseas rates and lower US rates) make any sense is if there a funding crisis developing in the global markets and investors are seeking US Treasuries as a safety trade.  Beyond that, color me confused.  



            As you can see the dollar is struggling to hold its own in the midst of a confirmed downtrend (below its 100 and 200 day moving averages and in an intermediate term downtrend).  This doesn’t really compute with the safety trade thesis mentioned above, i.e. if investors were running from foreign credits, they would have to buy dollars before they buy Treasuries.  So I remain confused.



            GLD had a banner day on Friday, spiking 1 ¼ % on big volume.  It is now well above the lower boundary of its short term uptrend---which it tested early last week.  Likely, this was a safety trade.  It certainly wasn’t worried about rising global interest rates.  Still it is a bit unusual that GLD would move so much on a day that Treasuries and the dollar were basically dormant.



            The VIX rallied hard last week.  It needs to get above the prior lower high (~26) in order to establish a new very short term uptrend.  Meanwhile, it remains above its 100 and 200 day moving averages and the lower boundary of its short term trading range.  The recent pin action suggests more volatility and lower stock prices.



            Overnight charts ahead of today’s open:

    Fundamental

       Headlines

            ***overnight, US/China working on a trade deal (medium):

    News on Stocks in Our Portfolios
 
           

Economics

   This Week’s Data

      US

            The February Chicago national activity index was reported at .88 versus expectations of .05.

     International

    Other

What I am reading today

           

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