Monday, March 18, 2024

Monday Morning Chartology

 

 

3/18/24

 

The Market

         

    Technical

 

The S&P spent another directionless week. While almost all of its trendlines and DMAs are showing support, (1) it closed below the lower boundary of its very short term uptrend. If it finishes there today, that trend will be negated. But remember that very short term trends get broken easily and can be reset quickly, (2) it still has that large gap up open below that needs to be filled.

 

That said, if the S&P does successfully challenge its very short term uptrend, I will not press my luck and sell my IWN trading position.

 

            Goldman runs for cover.

            https://www.zerohedge.com/markets/goldman-runs-cover-tells-client-buy-vix-calls-now

 

            This is not 2023.

            https://allstarcharts.com/us-consumer-hurting-badly/

 

            Twelve technical observations.

            https://www.zerohedge.com/the-market-ear/12-tech-observations

 

 


 

As suggested below, the Fed regained control of the Market narrative (i.e., it will stay tighter for longer). In the ensuing sell off, TLT closed the prior week’s gap up open, made a third lower high and ended below all three DMAs. Plus, it remains in downtrends across all timeframes. Until it can establish a higher high on a very short term basis, the assumption has to be that the trend is down (rates up).

 

 

 


 

 

 

GLD spent the week digesting the huge gains from the prior week. It still has those two gap up opens that need to be filled; but its current narrow consolidation range suggests that gold has seen a major breakout. I continue to hold a small position in GDX---the gold miners ETF.

 

 

 


 

The dollar had a good week as the Fed pinky promised to stay tighter for longer. While it bounced off its 50 DMA, it remains in a very short term downtrend. Longer term, its chart is in decent shape; it just has a lot to overcome short term.

 

 


 

 

            Friday in the charts.

            https://www.zerohedge.com/markets/bad-news-battered-bonds-big-tech-banks-week-copper-crude-rip

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Week in review

 

Last week’s stats in the US were negative as were the primary indicators (one positive, three negative). Perhaps as important, a pattern is developing in the data reporting in which prior month’s readings are being revised down. That tends to get lost in the reporting of the current month’s reporting (which are generally positive) but clearly a consistent pattern of downward revisions points to a weaker economy than is generally accepted. It also means that the economy is weaker than reflected in current month’s stats. I am not saying that recession is a lock; but we are definitely not out of the woods. In short, no reason to back off my recession call.

 

Bottom line:

 

(1)   the overall economic outlook remains unclear,

 

(2)   I am not altering my inflation forecast [i.e., inflation in the rear view mirror] ---although the numbers keep getting worse and the Fed keeps sending mixed signals.

https://www.aier.org/article/inflation-remains-elevated-is-money-actually-tight/

 

My primary concern remains that an easing in monetary policy will only amplify the impact of a grossly irresponsible fiscal policy which if left unresolved will ultimately push interest rates and inflation to even higher levels, risking a tighter monetary policy and impeding the economy’s ability to grow.

                           

(3)   the question of recession [what kind of landing] remains a bit murky, especially with the constant downward revisions in the data. As you know, my forecast had been for some type of growth problem which I have considered changing. But not yet.

                                                               

                        US

 

 

                        International

 

The January EU trade balance was +E11.4 billion versus estimates of +E20.0 billion; February CPI was +0.6%, in line.

 

                        Other

 

              The Fed

 

              The Fed sticking with its three rate cuts in 2024 agenda.

  https://www.bloomberg.com/news/articles/2024-03-15/fed-seen-sticking-with-three-2024-cuts-despite-higher-inflation?srnd=homepage-americas&embedded-checkout=true&sref=loFkkPMQ

 

           

              Fiscal Policy

 

              Illegal immigrants racked up billions in medical expenses.

              https://www.zerohedge.com/markets/illegal-immigrants-leave-us-hospitals-billions-unpaid-bills

 

              Inflation

 

              Inflation is not running hot.

              https://scottgrannis.blogspot.com/2024/03/inflation-is-not-running-hot.html

 

              Ex shelter, inflation is rising less than 2% per year.

              https://scottgrannis.blogspot.com/2024/03/ex-shelter-inflation-has-been-less-than.html

 

             Recession

 

              Small businesses are cutting jobs.

              https://www.usatoday.com/story/opinion/2024/03/14/economy-small-businesses-interest-rates-credit/72955958007/

 

              Big four recession indicators.

              https://www.advisorperspectives.com/dshort/updates/2024/03/15/recession-indicators-industrial-production-up-february-2024

 

                          The latest Q1 nowcasts.

              https://www.capitalspectator.com/us-economic-growth-still-expected-to-slow-in-q1-gdp-report/

 

     Bottom line

 

            Markets capitulate to Fed on rate cuts.

            https://www.ft.com/content/e7513369-7537-4ce9-b2ce-5c787cb01b32

 

 

    News on Stocks in Our Portfolios

 

Oracle press release (NYSE:ORCL): Q3 Non-GAAP EPS of $1.41 beats by $0.03.

Revenue of $13.28B (+7.1% Y/Y) in-line; up 7% in both USD and constant currency.

 

Oracle (NYSE:ORCL) declares $0.40/share quarterly dividend, in line with previous.

 

Williams-Sonoma (NYSE:WSM) declares $1.13/share quarterly dividend26% increase from prior dividend of $0.90.

 

Microsoft (NASDAQ:MSFT) declares $0.75/share quarterly dividend, in line with previous.

 

Kroger (NYSE:KR) declares $0.29/share quarterly dividend, in line with previous.

 

 

What I am reading today

 

            Wisdom form Nvidia’s Huang.

            https://www.zerohedge.com/markets/i-wish-upon-you-ample-doses-pain-and-suffering

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

 

 

 

Friday, March 1, 2024

Monday Morning Chartology---early

 

The Morning Call

 

3/4//24

 

I am off the beach for a week. Back 3/12.

 

The Market

         

    Technical

 

The S&P continued its positive performance. It remains above the upper boundary of that wedge formation and has no visible resistance except at truly extended levels (~6700). On the one hand, it has that large gap up open below that should exert a gravitational pull on the index’s upward momentum. Plus, almost all the Street strategists seem to agree that valuations are getting extended. On the other hand, none of them are making a ‘Sell’ call. And the Market internals remain healthy.

 

Bottom line. Momentum remains to the upside, at least short term. I continue to hold the IWN trading position. But as I pointed out last week, several of our holdings are nearing their Sell Half price range.

 

            Beware the ides of March.

            https://www.zerohedge.com/markets/ides-march

 

 

 


 

The long bond was up again on the week. However, it remains in downtrends across all time frames and below both its 50 and 200 DMAs. Until it can establish a higher high on a very short term basis, the assumption has to be that the trend is down.

 


 

 

GLD rallied hard on the week and appears to have its all-time high in its sights again. If it continues to advance that will be its fourth challenge of that high in as many months---the first three clearly being unsuccessful. Will number four be the lucky charm? In don’t know. But I do know that (1) it has two big gap up opens below that need to be filled and (2) I think it pointless to consider a position in gold until it can break above its all-time high.

       

 

 


 

 

 

While the dollar’s long term uptrend remains in place, its short term technical picture has been wrecked. To be sure, a gap down open of the order of magnitude shown on the chart begs to be closed. And that is what has been happening since its low in late December. However, two weeks ago week, the dollar’s advance showed some signs of tiring. As it approached the upper boundary of its short term downtrend and both its 100 and 200 DMA’s (heavy resistance), it failed to hold the minor uptrend off its December low. Last week, it was basically traded unchanged---so no directional follow through.

 

 


 

            Friday in the charts.

            https://www.zerohedge.com/markets/everything-rallies-first-day-march-after-fed-hints-next-qe

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Week in review

 

It was a big week for economic data. The stats in the US were overwhelmingly negative while the primary indicators were tilted to the minus side (one positive, three mixed, two negative). I think that this puts an end to any thoughts that the economy was headed for a soft landing which was created by the recent brief string on upbeat readings. I am not saying that the latest numbers prove that we are recession bound; but we are definitely not out of the woods. In short, no reason to back off my recession call.

 

In addition, there were indications that the trend towards lower inflation was encountering some problems---supporting the more hawkish tone coming out of the Fed recently. However, Friday afternoon a regional Fed head made some dovish noises (which the Markets loved), suggesting that Fed may be getting more confident of its victory over inflation (see below). So color me confused.

 

Bottom line:

 

(1)   last week’s data [and Fed speak] certainly muddied the overall economic outlook,

 

(2)   unfortunately, the inflation risk may not be behind us as per my current forecast. I am not altering it yet. And last week’s numbers coupled with some confusing Fed speak leave me befuddled. However, if indeed the Fed is considering an easier monetary policy that would only amplify the impact of a grossly irresponsible fiscal policy which if left unresolved will ultimately push interest rates and inflation to even higher levels, risking a tighter monetary policy and impeding the economy’s ability to grow.

                              

(3)   just as unfortunate, the question of recession [what kind of landing] which appeared to be gaining clarity, turned a bit murkier with last week’s data. As you know, my forecast had been for some type of growth problem which I was considering changing. Now, not so much.

 

                       

                        US

 

 

                        International

 

                        Other

 

            The Fed

 

              Ten reasons why the Fed won’t cut rates in 2024.

              https://www.zerohedge.com/markets/apollo-10-reasons-why-fed-wont-cut-rates-2024

 

              Fed’s Waller hints a QE reverse twist. (similar to the funky chicken)

              https://www.zerohedge.com/markets/gold-bonds-soar-feds-waller-hints-qe-reverse-twist

 

            Inflation

 

              The problem with a 2% inflation target.

              https://www.econlib.org/the-problem-with-doves/

 

              The latest nowcasts.

              https://www.calculatedriskblog.com/2024/03/gdp-tracking-low-2-range.html

 

     Bottom line

 

            Strategists are scrambling to keep up with the Market.

https://www.bloomberg.com/news/articles/2024-03-01/big-tech-s-boom-has-strategists-scrambling-to-keep-up-with-rally?srnd=homepage-americas&embedded-checkout=true&sref=loFkkPMQ

 

            Living in an Nvidia stock market.

                        https://www.wsj.com/finance/investing/nvidia-stock-market-f254a7ac?st=zby6syfh54rpmnu&reflink=desktopwebshare_permalink

 

            February equity performance review.

            https://www.bespokepremium.com/interactive/posts/think-big-blog/a-5-february-what-worked-and-what-didnt

 

            Crypto skeptic.

            https://www.ft.com/content/4de4c6b7-6335-4953-a81b-927499ba0bbb

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            The rise of the financial dopamine culture.

            https://portfoliocharts.com/2024/02/27/the-rise-of-financial-dopamine-culture/

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.