Thursday, February 14, 2019

The Morning Call---Everything is awesome except the numbers

The Morning Call


The Market

The Averages (DJIA 25543, S&P 2753) staged a solid follow through from Tuesday’s big day.  Their pin action versus their MA’s are getting back in sync:  the Dow ended above its 100 DMA for the second day (now resistance; if it remains there through the close today, it will revert to support) and above its 200 DMA; the S&P is above its 100 DMA (now support) and above its 200 DMA (now resistance; if it remains there through the close on Monday, it will revert to support).  In addition, both re-established very short term uptrends.  The next resistance levels that I am watching are their previous lower highs (~25977, 2800).

However, volume was lower volume and breadth mixed.

The VIX rebounded 1 ½% (not usual for a convincing up Market day), bouncing off the lower boundary of its short term uptrend.  But it remains below both MA’s (now resistance).

The long bond was down, but finished above both MA’s, in short and intermediate-term trading ranges.  However, it ended below the lower boundary of its very short-term uptrend; if it remains there through the close today, the trend will be voided.
The dollar was up ½%, finishing above both MA’s, in a short-term uptrend and above the upper boundary of its mid-November to present consolidation phase---suggesting renewed momentum to the upside. 

GLD declined but its chart remains strong, closing above both MA’s, within very short-term and short-term uptrends.  

 Bottom line: the Averages had another good day, resetting their very short term uptrends.  So, upside momentum seems to have been re-established---a little more follow through is needed to be convincing.  Their next challenge is surpassing their prior lower highs.

          The dollar, bonds and gold seem to be attracting ‘safety trade’ investors even though their daily activity is not always consistent.

Wednesday in the charts.

            Corporations continue to be big buyers of their own stock.


Yesterday’s economic data again tilted negative: weekly mortgage applications and purchase applications were down, the December budget deficit was larger than expected but January CPI unchanged. 

Overseas, December EU industrial production fell more than anticipated.

Otherwise a relatively quiet day.

Bottom line: the dataflow continues to support the proposition that the US economy is slowing and that the global economy may be in danger of going into recession.  However, Markets seem more focused on the potential easing in monetary policy by the major central banks---and small wonder.  QE’s have been a boon to asset prices for a decade.  So, expectations seem to be that this time monetary easing will have a similar impact. 

If so, then I will be watching our Portfolios’ stocks should any trade into their Sell Half Range and act accordingly.
    News on Stocks in Our Portfolios
Sherwin Williams (NYSE:SHW) declares $1.13/share quarterly dividend, 31% increase from prior dividend of $0.86.
Coca-Cola (NYSE:KO): Q4 Non-GAAP EPS of $0.43 in-line; GAAP EPS of $0.18 misses by $0.25.
Revenue of $7.1B (-5.5% Y/Y) beats by $30M.

EOG Resources (NYSE:EOG) declares $0.22/share quarterly dividend, in line with previous.

PepsiCo (NYSE:PEP) declares $0.9275/share quarterly dividend, in line with previous.


   This Week’s Data



            Plus, the government is not the only one getting in over its head.

            Weekly jobless claims rose 4,000 versus consensus of -9,000.

            January PPI fell 0.1% versus projections of +0.2%; ex food and energy, it rose 0.3% versus expectations of up 0.2%.

            December retail sales declined 1.2% versus expectations of a 0.1% increase; ex autos, they dropped 1.8% versus estimates of no change.


            Q4 EU flash GDP showed growth of 0.2%, in line; the German flash GDP was flat versus forecasts of +0.1%.

                January Chinese exports jumped 9.1% versus an anticipated decline while imports fell 1.5%.

            A trade war win may not be all that great for the Market.

            Update on Bank of China liquidity operations.

            Baltic Dry Index collapsing.

What I am reading today

            Quote of the day.

                        How to wreck a pension plan in three easy steps.
                Libertarian fantasies about cryptocurrencies

            Why we lie.

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