The Morning Call
4/11/19
The
Market
Technical
The Averages
(DJIA 26157, S&P 2888) recovered from Tuesday’s decline, maintaining solid
uptrends, including very short term uptrends.
So, I continue to believe that they will advance toward their all- time
highs (26951/2942). There are still
negatives that may inhibit momentum---the pin action in the dollar and bonds as
well as last Monday’s gap up open (that will likely be closed).
Volume was down;
and breadth was again mixed---though the flow of funds indicator remains
negative.
The VIX fell 6 7/8
%, finishing right on the (now) triple bottom but above the upper boundary of
its very short term downtrend for a second day, negating that trend. I don’t see that as particularly meaningful.
The long bond
was up another ¼ %, maintaining a strong chart---in a very short term uptrend
and above MA’s. However, it has yet to
close that gap open of three Friday’s ago. More downside would not be
surprising.
The dollar declined
1/8 %. It remains in a solid
uptrend. The only thing I can see wrong
with this chart is that it needs to trade meaningfully above its prior high.
GLD was up
another 3/8 %, closing last Thursday’s gap down open. While it is in an uptrend, it continues to
develop a head and shoulders pattern.
Bottom line: the
upward momentum in the indices continues which I believe will take them to
their prior all-time highs. However,
there is enough negatives coming from other indicators (mixed signals from the
dollar [strong economy], the long bond [weak economy] and gold [confused] plus
Monday’s gap up open) to create some doubt about the strength of any upward
momentum.
Wednesday
in the charts.
Fundamental
Headlines
Yesterday’s
dataflow was just slightly positive: weekly mortgage applications were down but
purchase applications were up, March CPI was a bit higher than expected, but
core inflation was less and the March budget deficit was less than anticipated.
Overseas,
the numbers were also marginally better: February Japanese machinery orders
rose less than forecast while March PPI was hotter than consensus; February UK
GDP, construction spending and industrial production were above projections;
March Chinese auto sales remained in an abysmal downtrend.
Q1
GDP growth now-forecast pick up a little but still show deceleration.
Only
a small chance of recession before April 2020.
The Fed released
the minutes of the latest FOMC meeting, the bottom line which was an ever so
slightly more hawkish tone.
Specifically, in discussing future actions by the Fed (1) most FOMC
participants agreed that it would likely do nothing, (2) some thought that
there may be a need to raise rates, (3) but no one believed there is a reason
to lower them. The gory details:
As
I noted in yesterday’s Morning Call, the ECB met and left rates and its bond
buying program intact. In Draghi’s
following news conference, he made another ‘whatever it takes’
statement---meaning don’t expect any tightening from these guys any time soon.
The
insolvent thinking of central bankers.
***overnight,
the EU/UK agreed to a six month extension of the Brexit deadline.
Bottom
line: in what could have been and big headline day, the net result was, not surprisingly,
the confirmation of the central bank ‘put’ by the ECB and the Fed. As long as it is there and investor make
their portfolio decisions largely dependent on that ‘put’ (operative phrase),
my assumption is that stock prices are going higher. However, it will not deter me from taking
money off the table if one of our stocks trades into its Sell Half Range.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
March budget deficit was $147 billion versus expectations of $180 billion.
March
PPI came in +0.6% versus estimates of +0.3%; core PPI was +0.3% versus +0.2%.
Weekly
jobless claims rose 8,000 versus forecasts of up 23,000.
International
March
Chinese CPI fell 0.4% versus consensus of -0.2%; PPI was up 0.4%, in line.
March
German CPI was up 0.5%, in line.
Other
March
Chinese auto sales down 12% after 18.5% drop in February and a 4% decline in
January.
What
I am reading today
First
ever image of a black hole.
North Korea resumes is saber rattling.
What’s wrong with a free
college education?
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