The Morning Call
1/15/19
The
Market
Technical
Averages (DJIA 23909,
S&P 2582) sold off modestly yesterday; though it could have been worse
given the economic news out of China and the EU and an inauspicious start to
earnings season. However, both indices
finished below both moving averages (the 100 DMA’s are close to crossing below the
200 DMA’s [the S&P has started to do so]---an historically negative
technical signal). The Dow finished in
a very short-term downtrend and a short-term trading range. The S&P is in a
short-term downtrend. While its very
short-term uptrend remains intact, yesterday’s selloff puts it right on that
trend line. In addition, both indices continue
to back off several overhead resistance levels. So, there remains a lot of work
to be done to re-establish an uptrend.
For instance, the S&P would have to successfully challenge the upper
boundary of its short-term downtrend (~2621) before it makes any sense to start
thinking that the worst is over.
And:
And:
And:
Volume rose
slightly; breadth weakened.
The VIX was up 5
%. But it still closed below the lower
boundary of its very short-term uptrend, voiding that trend. However, it ended back above its 100 DMA,
negating Friday’s break. It remained
above its 200 DMA and in a short-term uptrend.
Voiding its very short-term uptrend is clearly not a plus; but the
remainder of its momentum and trend indicators are.
The long bond
was down 3/8%, but finished above both MA’s, in short and intermediate-term
trading ranges and in a very short-term uptrend. However, yesterday’s retreat
pushes back toward its prior higher low.
The dollar was
unchanged, closing above both MA’s and in a short-term uptrend; though it has
not regained the lower boundary of that mid-November to present consolidation
phase.
GLD continued
its ascent, ending above both MA’s, within a very short-term uptrend and within
a short-term trading range. It remains a
healthy chart.
Bottom line: while stocks traded off,
not enough damage was done to question the very short uptrend in the
Averages. That said, breadth is fading
and the S&P is struggling near a couple of overhead resistance levels. I continue to watch key technical levels for
a sign about what the Market is thinking.
On the upside, that is the upper boundary of the S&P short term
downtrend (~2615) and on the downside, the December 26th low (2349)
or, at least, the last higher low (2446).
The pin action in TLT, UUP and GLD was a bit
inconsistent.
Monday
in the charts.
Fundamental
Headlines
No
US economic releases yesterday. However,
the overseas data was dismal: December Chinese exports and imports fell
dramatically while November EU industrial production declined more than anticipated.
Citicorp
started off this season’s earnings parade with a so so report, following on the
earlier lower guidance statements from Apple, Macy’s etc. I think that it is likely that the fourth
quarter earnings and the accompanying forward guidance will have a more
significant than normal impact on investor perception and, consequently, the
Market narrative over the next three weeks.
So be watchful.
***overnight, JP
Morgan disappoints.
Our
ruling class continues to be unable to compromise on funding ‘the wall’/government
shutdown. Trump continues with all the happy
talk about China trade. While it may be turn
out to be the case, the constant sunny outlook is wearing a bit thin given the
lack of progress to date. Meanwhile, the
everyone’s hair is on fire over the Mueller investigation and that is not
helping the legislative process.
Bottom
line: the global economy continues to show signs of exhaustion. While I continue to believe the US can grow
despite weakness overseas, we can’t forget that a decent percentage of US corporate
profits come from abroad. With the kick
off of 2018 Q4 earnings season, we will have a much better idea about the
latter in the next three weeks. The
point here is that the US economy can do OK but corporate profits can still
decline.
Meanwhile,
the outcome of the US/China trade talks is uncertain; and it is not clear in my
mind exactly what the Fed is doing right now about its balance sheet---which as
you know, I think is the most important variable for the Market right now. Until I know, I am sitting on my hands.
https://www.zerohedge.com/news/2019-01-14/collapse-global-m1-signals-worldwide-recession-has-arrived
The
latest from Morgan Stanley.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
December
PPI fell 0.2% versus expectations of 0.0%; ex food and energy, it was down 0.1%
versus estimates of +0.2%.
The
January NY Fed manufacturing index came in at 3.9 versus forecasts of 12.0.
International
2018 German GDP rose 1.5% versus
+2.2% in 2017.
November EU imports declined
1.9% while exports dropped 1.0%.
Other
An
interview with Robert Shiller.
Update
on Brexit.
Thoughts
on QT.
Update on rioting in France.
What
I am reading today
Russia
appears to be set to buy $10 billion in cryptocurrencies,
Chinese capital outflows
increasing which should also benefit crypto currencies.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment