The Morning Call
3/27/19
The
Market
Technical
The Averages
(DJIA 25657, S&P 2818) moved higher yesterday, with the S&P closing
right on the lower boundary of its very short term uptrend (negating Monday’s
break) and above the critical 2800 (2811/2815) level. That suggests that this is now a support
level, meaning stock prices are likely headed higher. I am a little wary because volume shrank and breadth
picked only slightly. But barring a
dramatic reversal today, I think that the S&P has confirmed the
continuation of upward momentum.
The VIX declined
10%, an outsized move for a 140 point up day in the Dow; but it gives credence
to the notion of higher equity prices.
The long bond was
off fractionally, doing little damage to its strong uptrend. That said, last Friday’s gap open still needs
to be closed.
Stellar
Treasury auction.
But Goldman isn’t worried.
The dollar rose
3/8 %, ending back above the upper boundary of the November to present trading
range, above both MA’s and in a short term uptrend.
GLD was down ½ %,
but it still in a solid uptrend.
Bottom line: the
S&P appears to have reset 2800 (2811/2815) as support. I want to see some follow through; but the
odds favor a further advance.
TLT, GLD and UUP
continue to point to lower interest rates/a weaker economy.
Tuesday in the
charts.
Fundamental
Headlines
Yesterday’s
dataflow was negative: February housing starts (I miss reported this stat in
Tuesday’s Morning Call) and building permits, the January Case Shiller home
price index, the March Richmond Fed manufacturing index, March consumer
confidence were disappointing while month to date retail chain store sales were
a plus.
Bottom
line: political headlines aside, the news that was pertinent to equities include
(1) the above listed numbers which support the outlook for a weakening economy
and (2) the continuing flattening of the yield curve [see the links under Bonds
above]. At the moment, opinions on the
latter have been split largely based on how closely their firm’s profitability
is tied to stock prices. The stock guys
are offering multiple reasons of why ‘this time is different’. Bond guys are saying ‘no way, Melvin’.
As you are all
too aware, I have to date been bearish on monetary policy and its impact on the
economy; and I have been wrong. The
technicals are saying that I am going to stay wrong, at least in the near
future.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Month to date
retail chain store sales grew faster than in the prior week.
The January Case
Shiller home price index fell 0.2% versus estimates of down 0.1%.
The March
Richmond Fed manufacturing index came in at 10 versus forecasts of 12.
The March
consumer confidence index was reported at 124.1 versus expectations of 132.0.
Weekly mortgage
applications rose 8.9%, while purchase applications were up6.4%.
The January
trade deficit was $51.1 billion versus projections of $57.0 billion.
International
January/February
Chinese industrial profits dropped 14.3% (YoY) versus the November/December
reading of + 10.3%
Other
Just
say no to Stephen Moore.
Turkey
in currency crisis.
And France.
And
the UK.
What
I am reading today
How
Rick Singer built a college entrance cheating machine.
Quote of the day.
Socialism—the
failed idea that never dies.
How
much do you need to save to retire?
How to deal with adversity.
Who
was Confucius?
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