Tuesday Morning Chartology

The Morning Call

2/20/18

The Market

         

    Technical

            The S&P had a solid week, ending above both moving averages and within uptrends across all timeframes.  However, since it remains below its former high, that leaves it in a very short term trading range.  To be able to say unequivocally that stocks are going higher, that former high needs to be overcome.

            https://www.zerohedge.com/news/2018-02-18/great-bear-market-2018

            The long Treasury continues under pressure, a small lift on Thursday and Friday notwithstanding.  It is in a solid downtrend, with the lower boundary of its long term uptrend the only remaining support.

            https://www.marketwatch.com/story/heres-the-real-reason-stock-market-investors-are-worried-about-bond-yields-2018-02-15

            The dollar’s chart remains pretty ugly, though the dollar did manage to bounce off a minor support.

            https://www.realclearmarkets.com/articles/2018/02/19/trump_needs_to_return_to_king_dollar_103154.html

            Gold had a good week, bouncing off minor support and rallying substantially.  It remains above both moving averages and within a short term uptrend.

            https://www.marketwatch.com/story/why-commodities-and-gold-wont-protect-you-from-inflations-punch-2018-02-15

            The VIX moved lower last week as stocks rallied; but managed to bounce off of support.  It remains at an elevated level, suggesting more volatility to come. 

            Bottom line: the Averages continue to improve and are shooting at their recent highs.  Given this past week’s economic data, equity investors seem to be assuming that inflation is not a threat and that the weak stats mean that the Fed stays easy.  As much as I may disagree with that assessment, I could accept it if weren’t for the confusing pin action in the long bond (higher rates), a weak dollar and rising gold prices (lower rates).

           

    Fundamental

       Headlines

            Trump takes another step toward a trade war, considers imposing tariffs on steel and aluminum (medium):

            https://www.zerohedge.com/news/2018-02-18/china-threatens-retaliate-if-us-imposes-metals-tariffs

            Imports are not hurting the steel industry (medium):

            https://www.realclearmarkets.com/articles/2018/02/19/imports_are_not_shrinking_steel-industry_jobs_progress_is_103153.html

                       

                        Trundling toward a trade war (short):

            http://econbrowser.com/archives/2018/02/trundling-to-trade-war

            The case for free trade (medium):

            https://www.nytimes.com/2018/02/16/business/trump-economists-trade-tariffs.html?smid=pl-share

            David Stockman on last week’s industrial production number (medium):

            https://www.zerohedge.com/news/2018-02-18/swan-song-central-bankers-part-5-flat-line-does-not-spell-recovery

            For the optimists (short):

            http://blog.yardeni.com/2018/02/liquidity-legends.html

    News on Stocks in Our Portfolios

 

Home Depot (NYSE:HD): Q4 EPS of $1.69 beats by $0.05.

GAAP EPS of $1.52

Revenue of $23.9B (+7.6% Y/Y) beats by $240M.

Home Depot (NYSE:HD) declares $1.03/share quarterly dividend, 15.7% increase from prior dividend of $0.89.

Genuine Parts (NYSE:GPC) declares $0.72/share quarterly dividend, 6.7% increase from prior dividend of $0.675.

Medtronic (NYSE:MDT): Q3 EPS of $1.17 in-line.

Revenue of $7.37B (+1.2% Y/Y) beats by $170M.

Economics

   This Week’s Data

      US

     International

    Other

            Yen’s rise clouds Japanese economic outlook (medium):

            https://money.usnews.com/investing/news/articles/2018-02-18/japan-jan-export-growth-points-to-continued-economic-recovery

            Goldman on US fiscal policy (medium):

            https://www.zerohedge.com/news/2018-02-19/us-fiscal-policy-set-blow-us-economy-goldman

What I am reading today

            Dealing with decision regret (medium):

            http://awealthofcommonsense.com/2018/02/decision-regret/

            Making sense versus being right (medium):

            http://www.collaborativefund.com/blog/making-sense-vs-being-right/

            Nominees for 2018 World Press photo contest (medium):

            https://www.theatlantic.com/photo/2018/02/nominees-in-the-2018-world-press-photo-contest/553463/

            ‘Teacher of the Year” explains school violence (medium):

            https://www.zerohedge.com/news/2018-02-19/floridas-teacher-year-bluntly-explains-why-school-violence-out-control

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