Wednesday, January 2, 2019

Wednesday Morning Chartology


The Morning Call

1/2/19
The Market
         
    Technical

            After a huge down draft, the S&P managed a strong rally last week.  However, it remains below both moving averages and in a short-term downtrend.  Nevertheless, on Monday, it closed just slightly above the upper boundary of its very short-term downtrend.  If closes there today, that trend will be negated and we can start thinking about the worst being over. 



            The long bond remains technically strong (lower interest rates) on decent volume.  Nothing suggests that is going to change.

            Leverage loan prices falling.
                               
                  Eurodollar yield curve inverting.



            While the dollar remains above its 100 and 200 DMA and in a strong short term uptrend, it does look like it is struggling to make a new high.  The best assumption right now is that UUP is in an uptrend but needs to consolidate more before moving higher.



            Gold’s chart continues to do better.  That fits with lower stock prices and higher bond prices.  It does not square with a strong dollar.



            Despite the dramatic Market recovery last week (mini Santa Claus rally?), the VIX is still in a solid uptrend, suggesting that there could be more downside in stock prices.



    Fundamental

       Headlines

            Week of 12/24:

            The economic stats for the week were overwhelmingly negative with no primary indicators released.  However, several datapoints, the most important being November new home sales, were not reported due to the government shutdown.  So, I am tentatively scoring that week a negative, subject to the reading on new home sales (primary indicator).  Overseas, the numbers were lousy.  So, nothing here to alter my forecast.

            Trump did shut the government down.  There is little macroeconomic consequence short term save whatever psychological impact it might have on the Market.

            The really big headline was the volatility in the Market which I covered above.
           

    News on Stocks in Our Portfolios
 
           

Economics

   This Week’s Data

      US

            The December Dallas Fed manufacturing index came in at 7.3 versus November’s reading of 8.4.           

     International

            The December Chinese manufacturing PMI fell into contraction territory, coming in at 49.4 versus November’s reading of 50.0.

            The December Chinese Caixin (small business) manufacturing PMI came in at 49.7 versus November’s 50.2.

            The December Taiwan manufacturing PMI was 47.7 versus 48.4 in November.

            The December EU manufacturing PMI came in at 51.4, in line.

    Other

            The Fed put---or not.

Doug Kass’s opinion.
The latest in US/China trade talks.

The latest from Goldman Sachs.

Italian bank put under EU control.

What I am reading today

           

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