The Morning Call
3/14/19
The
Market
Technical
The Averages
(DJIA 25707, S&P 2810) had a good day.
Most important, the S&P closed above the 2800 quad top. It needs to remain there through Friday’s
close to mark a breakout; but a challenge is in process. If successful, it likely portends much higher
prices.
A bit too
technical but a lesson in Market derivative structure.
Spoiling the
fun, volume declined and breadth only marginally improved.
The VIX fell
another 2 ½ %, ending right on the late February/early March double bottom---again
acting in an almost perfect inverse relationship with stocks.
The long bond
was down ¼ %, retreating from a triple top, now a quad top---not a promising
development if you expect lower interest rates.
Still, the chart remains strong.
The dollar
dropped ½ %, finishing below the upper boundary of the November to present
trading range and right on the lower boundary of a recently established very
short term uptrend. The chart remains
strong.
GLD rose another
¾ %, continuing its rebound off a minor support level (now a double bottom) and
above both MA’s.
Bottom line: the
S&P is challenging a major (quad top) resistance level, the successful
completion of which would point to a move to all time highs. As a word on caution, this week is quad
witching and that has historically had a positive impact on stocks prices. Nonetheless, a challenge by any other name………Meanwhile,
the VIX, TLT, GLD and now UUP are caught between strong support and resistance
levels. However, if the S&P’s
challenge is successful, it would likely mean these indicators would begin
breaking out of their own trading ranges.
Who’s
right: stocks or bonds?
Wednesday
in the charts.
Fundamental
Headlines
Yesterday’s
economic data were mostly positive: weekly mortgage and purchase applications,
January construction spending and February PPI were better than anticipated
while the January durable goods orders/ex transportation were below estimates.
Overseas, January Japanese
machinery orders and February PPI were disappointing. January EU industrial production fell but not
as much as expected.
Boeing’s
problems continue to dominate the headlines. (as an aside, this is one of our
biggest holdings. I have done no
selling.) Even to the point at which
that investors seemed to be ignoring comments from Trump that he ‘was in no
hurry to make a trade deal with China’.
***and
now we know why: the US/China trade summit has been pushed back a month. You know, he could learn to be a little less
transparent.
Bottom
line: QE appears to be all that matters; and until it doesn’t, worrying about a
slowing economy, lower corporate earnings and an exploding national debt is
nothing more than an intellectual exercise.
I wonder about the lack of Market response to Trump’s comments.
The Fed’s
confidence game.
Mounting
Fed failures.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
January
construction spending rose 1.3% versus forecasts of +0.4%.
Weekly
jobless claims were up 6,000 versus estimates of up 2,000.
February
export prices jumped 0.6% versus expectations of +0.1%; import prices increased
0.6% versus consensus of +0.3%.
International
January/February
Chinese industrial production advanced 5.3% versus projections of up 5.5%;
retail sales rose 8.2% versus 8.1%; fixed asset investments +6.1% versus 6.0%.
Other
Low
inflation and slower growth will keep the Fed on hold.
The
2020 recession.
Oil prices
continue to rise.
More problems
for the shipping industry.
What
I am reading today
Nothing happens, then
everything happens.
Foreign
policy meddling.
Parliament
rejects ‘no deal’ Brexit.
Jack
Dorsey believes in a bitcoin revival.
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