The Morning Call
4/29/19
The
Market
Technical
The
S&P’s chart is really self-explanatory.
It has staged a virtually uninterrupted 600 point run and is now a short
hair away from its prior all-time high.
The obvious questions are
(1) will it
successfully challenge that all-time high?
My guess [operative word] is that it is carrying so much momentum into
this challenge, that it will be successful.
Though several factors argue for some consolidation before that occurs
[a] the complacency reflected in the VIX, [b] the magnetic pull of the April 1st
gap open {which I marked with a red line} and [c] all-time highs tend to be
powerful resistance levels.
(2) if it does,
what is next? ~3191.
TLT
continues to rally after bouncing off the lower boundary of its very short term
uptrend, meaning that the chart remains technically sound. In my opinion, the Goldilocks GDP report
(growth not too hot, not too cold; inflation well below estimates) suggests
little upward pressure on rates (downward pressure on prices).
I
thought a long term chart would help put the recent strength in the dollar into
some perspective. As you can see, it is
less than a quarter off its all-time high.
Of course, this is a double edged sword because it could mean either
current prices are about as good as it will get or, given the time spent in
this long term trading range, a break of that upper boundary would presage much
higher prices.
Gold
is rallying; but still faces near term resistance from both its 100 DMA and the
upper boundary of its very short term downtrend. While it remains in a short term uptrend and
above its 200 DMA, its chart has been damaged. We will have to wait and see how
the technical forces play out---which is technical jargon for I have no clue
what comes next.
Again,
a long term chart for some perspective.
Clearly, the VIX could return to prior lows; but you can see, it didn’t
stay there very long on prior occasions.
On the other hand, a break of those levels would suggest a moonshot for
stocks. To be sure, this is only one
indicator among many as measures of investor sentiment; but it is an important
one to watch.
Fundamental
Headlines
Signs
of bank illiquidity? (must read):
Latest
on US/China trade talks.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
February
personal spending was up 0.1% versus estimates of +0.2%; March personal
spending was up 0.9% versus +0.7%.
March
personal income was up 0.1% versus forecasts of +0.4%.
February
PCE inflation indicator was up 0.1% versus the January reading of 0.0%; March
PCE was up 0.2%.
International
April
EU business confidence came in at .42 versus expectations of .49; consumer
confidence -7.9, in line; services sentiment 11.5 versus 11.1; industrial
sentiment -4.1 versus -2; economic sentiment 104 versus 105.
Other
Is
inflation dead?
Russia
and the Chinese Belt and Road policy (must read):
Credit
card charge-offs are rising.
What
I am reading today
Stock market investing is
a game of pain control.
This
question will change your life.
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