The Morning Call
12/10/18
The
Market
Technical
The
S&P made a valiant two day attempt to reverse the deterioration in its
technicals but failed. It is now back
within a very short term downtrend, below both MA’s and has set a new lower
high and lower low. I have to think that
stocks will stage some kind of oversold rally; but I thought that last Thursday
and Friday and look what happened. You
can clearly see the next two support levels: the late October low and the lower
boundary of its short term trading range.
The
long bond’s chart changed dramatically in the last week, apparently the result of
a morphing of bond investors’ sentiment from bearish (higher rates) to bullish
(lower rates). Its 100 DMA reverted to
support on Friday and if it remains above its 200 DMA through the close today,
it will also revert to support. It did
challenge the upper boundary of its short term downtrend, but failed. It really needs to bust through that
resistance level to confirm that a major change in attitude has occurred.
The
dollar continues to perform reasonably.
It ended above both MA’s and in a short term uptrend. The only negative note is that it closed below
the lower boundary of its very short term uptrend; if it remains there through
the close today, the trend will be voided.
Gold’s
chart is improving. It has lifted above
the upper level of a trading range and is developing a very short term
uptrend. It is holding above its 100
DMA. The pin action usually responds
positively to lower rates and the need for safety, so this better performance
isn’t surprising. In fact, given the
deluge in equities and the developing reversal in TLT’s chart, I had expected
better.
Not
surprisingly in a week full of big declines, the VIX’s chart remained
strong. Notice the 100 DMA is crossing
above its 200 DMA, a technical positive.
Fundamental
Headlines
China
threatens severe retaliation if Huawei CFO not released.
Surging
federal expenditures and declining tax revenues are not a prescription for a growing
economy (must read).
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
November
Chinese CPI and PPI were below estimates; in addition, exports/imports weakened
though the trade surplus with the US grew.
Third
quarter Japanese GDP fell 0.6%, in line.
Other
Consumer
credit hits all-time high.
What
I am reading today
If US quits INF treaty.
Listen to the
Martian winds.
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