The Morning Call
11/12/18
The
Market
Technical
While
the S&P sold off on Friday, it still bounced off its 200 DMA intraday. Notice the two gap opens further below
The
long Treasury experienced a small up move last week. But not enough to break even its very short
term downtrend.
The
dollar’s strength continues. On
Wednesday, it bounced off the lower boundary of its very short term
uptrend. I expect more as the dollar
funding problem becomes more acute.
Gold
got hammered on Friday, falling out of new trading range. It continues to have the sickest chart on the
block.
The
VIX was down last week as the Market rallied; however, it remains above both
moving averages (in fact, it bounced off its 200 DMA) and in a short term
uptrend.
Fundamental
Headlines
The
economic data last week were mixed and there were no primary indicators
reported; so I am scoring the week a neutral: in the last 161 weeks, 53 have
been positive, 72 negative and 36 neutral.
One observation: the October PPI number was well above expectations,
pointing an increase in inflationary pressure.
That, in turn, provides the Fed with added ammunition to continue to
pursue unwinding QE.
Plus a little more clarity to
the economic outlook was provided by
(1)
the elections---a likely less stimulative fiscal policy,
meaning a lessened chance of a second shot of cyclical adrenaline to the
economy and therefore the continuing reversion of economic growth to a below
average secular pace,
(2) the
Fed is full steam ahead on the unwinding of QE, meaning interest rates [cost] are
going higher, the dollar funding shortage becomes more acute and the closer we
are to the end of the mispricing and misallocation of assets.
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