5/6//24
The Market
Technical
Last week, the S&P (1) closed the prior week’s
gap up open, (2) bounced off its 100 DMA for a second time and (3) is now
challenging its 50 DMA. That suggests more upside and that we should be focused
on resistance levels which include (1) the upper boundary of its short term
uptrend [~5211] and (2) the March high [~5264].
The gaps.
https://www.zerohedge.com/the-market-ear/mind-gaps
Is the bottom near?
https://www.zerohedge.com/markets/change-sp-leadership-suggests-bottom-near
Don’t pick a fight with this chart.
https://www.zerohedge.com/the-market-ear/do-not-pick-fight-chart-0
Systematics the least long in a
year.
https://www.zerohedge.com/the-market-ear/systematics-least-long-year
While the long bond was up on the week, it remains (1)
is below all DMAs (2) has made five lower highs and (3) is in downtrends across
all time frames. While it appears that it has found some support, it is still
too soon to be chasing bonds.,
GLD broke the uptrend off its February low and
appears to be developing a very short term downtrend. I am betting that huge
gap down open above helps break this downtrend because I am still holding my
GDX (gold miners ETF).
The dollar took a dive on Friday and is now
challenging its 200 DMA. On the other hand, it remains above the lower boundary
of its very short term uptrend as well as its 50 and 100 DMAs. Plus, it made a
large gap down open that needs to be filled; although in doing so it closed a
previous gap up open. Its pin action remain at odds with its traditional correlations.
So my puzzlement over its pin action remains.
Friday in the charts.
The stock market in ten charts.
https://www.zerohedge.com/markets/brief-story-stock-market-ten-charts
Fundamental
Headlines
The Economy
Week
in review
Last week’s stats were overwhelmingly negative as
were the primary indicators (no positives, one neutral, three negatives). Unfortunately,
those negatives showed both a weakening in the economy and an uptick in
inflation (note to Powell: that is both stag and flation). After much back and
forth which included the FOMC meeting and subsequent Powell presser, the Market
chose to focus on the disappointing growth numbers (raising hope of Fed rate
cuts). I don’t think that necessarily points to a recession, but I am revising
my forecast to a ‘muddle through’ scenario.
As noted above, the inflation stats continue to
make for unhappy investor reading, reflecting my recently revised forecast:
inflation is as good as its going to get absent a more fiscally responsible congress
and less compliant Fed. Clearly, I don’t believe the ‘higher for longer’ storyline
the Fed is trying to sell.
Bottom line:
(1)
as long as the government pursues its current
spend, spend policy, I don’t see us making any further progress in lowering the
inflation rate. Indeed, I don’t think that the Fed has any choice but to
continue monetizing the government IOUs.
(2) the economy seems
to be returning to its pre-covid sluggish growth path---the result primarily of
the ‘crowding out’ effects of irresponsible government spending/financing.
US
International
The March EU PPI was -0.4%, in line.
The April
German services PMI was 53.2 versus consensus of 53.3; the April composite PMI was 50.6 versus 50.5; the
April EU services PMI was 53.3 versus 52.9; the April composite PMI was 51.7
versus 51.4.
Other
Latest per capita consumption trend.
https://econbrowser.com/archives/2024/05/consumption-per-capita-relative-to-trend
The Fed
The
$1.3 trillion elephant in the room.
https://www.zerohedge.com/political/david-stockman-13-trillion-elephant-room
Fiscal Policy
Bear
in mind that this guy is the head of Biden’s council of economic advisors.
Inflation
This
is an argument for a declining inflation rate---which I find tenuous at best.
https://disciplinefunds.com/2024/05/02/chart-of-the-week-the-softening-labor-market/
Stagflation.
Myth or reality?
Economic Stagflation - Myth Or Reality? -
RIA (realinvestmentadvice.com)
Recession
Update
on big four recession indicators.
OECD
predicts 3.1% global economic expansion in 2024.
https://www.oecd.org/newsroom/economic-outlook-steady-global-growth-expected-for-2024-and-2025.htm
Latest
Q2 nowcast.
https://www.calculatedriskblog.com/2024/05/q2-gdp-tracking-solid-early-look.html
Bottom line
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-higher-longer-cracked-march-13-forcing-fed-and-boj-step
Earnings beats are being ignored; earnings
misses crushed.
Investment tips form Lance Roberts.
Behavioral
Traits That Are Killing Your Portfolio Returns - RIA (realinvestmentadvice.com)
News on Stocks in Our Portfolios
Illinois Tool Works Inc. (NYSE:ITW) declares $1.40/share quarterly
dividend, in line with
previous.
What I am reading today
Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment
Strategy, Prices Disciplines and Subscriber Service.
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