The Morning Call
3/5/19
The
Market
Technical
The Averages
(DJIA 25819, S&P 2792) had another volatile day, this time closing down big. Importantly, the S&P again failed to hold
above the critical 2800 level. It
clearly remains the line in the sand for bulls and bears. Follow through.
Volume declined;
breadth was weak.
The VIX was up 8%,
bouncing off its prior low (bad for stocks) but remaining below both MA’s (good
for stocks)---though intraday, it challenged its 200 DMA but failed.
The long bond was
up ¾ % on decent volume, finishing back above the support level that it challenged
on Friday. However, it still appears to have
made a triple top.
The dollar rose,
ending back above its prior lower high. While
it remains in that November to present trading range, its chart looks strong..
GLD was down another
¼ %, closing below a minor support level and below the lower boundary of its
very short term uptrend for a second day, voiding that trend.
Bottom line: the
S&P continues to see saw across the 2800 resistance level. While its inability to hold above 2800 is a
negative, the lack of follow through to the downside is a plus. Directional follow through remains the most
important factor for this chart.
The pin action in TLT, UUP and GLD was
inconsistent.
Monday
in the charts.
Fundamental
Headlines
Yesterday’s data
was negative both here---December construction spending and February light
vehicle sales were disappointing---and abroad---the January EU PPI was hotter
than expected while February UK construction PMI fell into contraction.
Two
headlines:
(1)
another round of happy talk regarding the US/China
trade talks. I have beat this subject to
death, so I won’t be repetitive, except to observe that there is a lot of good
trade news priced into the Market,
***overnight,
China lowered its estimate for 2019 economic growth to 6-6.5% from 6.5% in 2018. In addition, it instituted $298 billion in
tax cuts and said that it would target monetary policy to boost bank lending.
(2)
the house judiciary committee issues 81 document
requests in a Trump obstruction of justice probe. While this is likely nothing more than a [Willie]
Clinton payback Easter egg hunt, it still has the potential to cause Market
heartburn.
Bottom
line: the economic news is still negative; investors don’t seem to care. I am not sure the trade news gets any better;
but investors remain jiggy. The Fed is
now ‘patient’ rather than ‘data dependent’ giving it more flexibility to remain
easy; investors love it.
As
long as these trends in investor behavior continue, the Market bias will likely
stay positive. That doesn’t mean stock
prices won’t go down; it means that they probably won’t go down much and the S&P
2800 level is not the high.
https://www.zerohedge.com/news/2019-03-04/morgan-stanley-bear-market-rally-and-we-are-now-selling-it
Update on valuations.
Beware
the Ides of March.
And
if you really want to get depressed, here is the latest from John Hussman.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
December
construction spending fell 0.6% versus expectations of +0.3%.
February light vehicle
sales were 16.5 million versus forecasts of 16.9 million.
International
The
February EU services PMI came in at 52.8 versus projections of 52.3; the composite
PMI was 51.9 versus 51.4.
January
EU retail sales rose 1.3% versus consensus of up 1.2%.
The
February UK services PMI was 51.3 versus an anticipated 49.9.
Other
What
I am reading today
The
earth is greener than it was 20 years ago.
The
opioid dilemma.
A future for value investing.
Ten rules for forecasting.
How long are you willing to look
stupid?
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
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