Monday, June 11, 2018

Monday Morning Chartology

The Morning Call


The Market

            The S&P has broken free of its 100 day moving average and is now developing a very short term uptrend.  The next visible resistance is at its all-time high which it seems likely to challenge.  Very short term, it and the Dow are moving into overbought territory.

            The long bond continues to lose some momentum after the late May price spike (drop in yields).  The trend is still towards lower yields/higher prices though clearly TLT is near two crucial support levels (100 day moving average, lower boundary of its long term uptrend).  If the Fed continues to raise rates and other central banks join in, then the uptrend will almost certainly be challenged.

            While the dollar voided a very short term uptrend last week, it remains in a steeply upward trajectory, finishing well above its 100 and 200 day moving averages and the upper boundary of its short term uptrend---indicating a strong US economy and higher interest rates.

            GLD continues to go nowhere.  It remains below its 100 and 200 day moving averages but is now challenging the upper boundary of its short term downtrend by virtue of trading sideways as the short term trend goes lower.  If it remains above the upper boundary of its short term downtrend through the close tomorrow, it will reset to a trading range.

            Momentum in the VIX remains down, suggesting higher stock prices.  However, historically, it is at a level at which institutional investors start buying it as portfolio insurance.



            ***overnight, the Italian PM said that Italy would not seek to leave the EU; the US refused to sign the joint communique following the G7 meeting.

    News on Stocks in Our Portfolios


   This Week’s Data



            April UK industrial production was down 0.8% versus consensus of up 0.1%; its trade deficit grew from L11.4 billion to L14.0 billion.


            Growth in Chinese credit is slowing (medium):

What I am reading today

            Don’t buy the Pentagon’s argument for staying in Afghanistan (medium):

            When to deploy capital (medium):

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