The Morning Call
3/26/18
The
Market
Technical
The
S&P had another rough day on Friday.
It closed below its 100 day moving average for the second day; if it
remains there through the close today, it will revert to resistance. In addition, it finished right on its 200 day
moving average. It continues to trade
within all major uptrends. However, the Dow has ended below the lower boundary
of its short term uptrend for the second day; if it closes there today, it will
reset to a trading range. That is a bit
more concerning; but at this point, the latest plunge is nothing more than
correction in an up market.
And:
While
the long Treasury remains below its 100 and 200 day moving averages as well as
remaining in a short term downtrend, it has rallied off the lower boundary of
its long term uptrend and is very close to establishing a very short term
uptrend. I am a little confounded by TLT’s
better recent performance in view of rising interest rates abroad and the Fed confirming
three rate hikes this year and the continuation of the unwind of its balance
sheet---both of which point to higher interest rates (lower bond prices). Some pundits are opining that bond investors
are starting to give up on the Fed’s (and others) pie in the sky economic forecast
and are embracing slow economic growth.
The only way the two (higher overseas rates and lower US rates) make any
sense is if there a funding crisis developing in the global markets and
investors are seeking US Treasuries as a safety trade. Beyond that, color me confused.
As
you can see the dollar is struggling to hold its own in the midst of a confirmed
downtrend (below its 100 and 200 day moving averages and in an intermediate
term downtrend). This doesn’t really
compute with the safety trade thesis mentioned above, i.e. if investors were
running from foreign credits, they would have to buy dollars before they buy
Treasuries. So I remain confused.
GLD
had a banner day on Friday, spiking 1 ¼ % on big volume. It is now well above the lower boundary of
its short term uptrend---which it tested early last week. Likely, this was a safety trade. It certainly wasn’t worried about rising
global interest rates. Still it is a bit
unusual that GLD would move so much on a day that Treasuries and the dollar
were basically dormant.
The
VIX rallied hard last week. It needs to
get above the prior lower high (~26) in order to establish a new very short
term uptrend. Meanwhile, it remains
above its 100 and 200 day moving averages and the lower boundary of its short term
trading range. The recent pin action
suggests more volatility and lower stock prices.
Overnight
charts ahead of today’s open:
Fundamental
Headlines
***overnight,
US/China working on a trade deal (medium):
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
February Chicago national activity index was reported at .88 versus
expectations of .05.
International
Other
What
I am reading today
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