The Morning Call
4/18/19
The
Market
Technical
The Averages
(DJIA 26449, S&P 2900) drifted lower on higher volume and mixed breadth. While the pin action was hardly attention
grabbing, it did result in a confusing outcome: (1) the S&P closed below the
lower boundary of its very short term uptrend; if it remains there through the
close today, it will void that trend and (2) the Dow ended above its prior high
for a second day, reestablishing a very short term uptrend. I am not going to read too much into this until
there is some clarifying follow through.
For now, I continue to believe that the indices will almost surely hold
their momentum long enough to challenge their all-time highs.
But, there are two potential negatives that I
discussed in last weekend’s Closing Bell: (1) both indices made a second gap up
open on Friday. Meaning they now have
two gap up opens exerting restrain on the upside, (2) while the recent drawdown
in the VIX would normally be a plus for stocks, it has now reached a level that
puts it near an all-time low.
Historically, this has been a signal that stock prices are getting
stretched.
The long bond was
up fractionally, ending above (but near) near the lower boundary of its very
short term uptrend and above MA’s.
The dollar was down
two cents. So, 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 (120) was down
slightly, finishing below its 100 DMA/triple bottom for a second day. If it remains there through the close today,
the 100 DMA will revert to resistance and the downside objective established by
it head and shoulders will be roughly the lower boundary of its short term uptrend
(117). Clearly, this chart is deteriorating.
Bottom line: after
one day of trading in sync, the Averages are back out of it---though not enough
to raise questions about direction (up).
And the other Markets that I follow continue to reflect an emerging narrative
pointing to improving economic growth and higher interest rates. It is still a bit early to feel comfortable
with this scenario; but the signs are there.
Corrections
and declines.
Wednesday
in the charts.
Fundamental
Headlines
Yesterday’s
US data was slightly upbeat: weekly mortgage applications down while purchase applications
improved fractionally, February wholesale inventories were below expectations
but sales increased, and the February trade deficit was less than anticipated.
The
Fed released its latest Beige Book survey.
It read as one might have expected, providing anecdotal evidence for
being ‘patient’.
And
speaking of anecdotal evidence:
BofA’s
Fund Manager Survey show institutions positioned for secular stagnation.
Retailers
have already shuttered more stores than they did in all of 2018.
Soybean
exports plunge.
Architecture
billings index declines in March.
Overseas,
the stats were mixed with China once again providing the bulk of the positive
numbers: March Chinese industrial production and retail sales were well ahead
of forecasts while March fixed asset investments and Q1 GDP were in line; February
Japanese industrial production was one half estimates but capacity utilization
was much better; the February EU trade surplus was less than expected while CPI
was in line: both the headline and core March UK PPI were below consensus.
German
economy headed for worse growth in six years.
Here
is one guy who shares my doubts about the Chinese economic data.
The latest ‘progress’
report on US/China trade talks.
A
better approach to China trade.
Bottom
line: the improving economy narrative received more good news yesterday as earnings
reports continued to come in above estimates and the Chinese dataflow remains
every optimist’s wet dream. The only
question is, if this is all real, at what point does it force the Fed to
re-re-think its interest rate/QT policy?
This
is a clear explanation of the problems wrought by financial institutions and
why they are a tax on the economy. (must read)
No
safe place to hide.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
Other
Will
China capture the main benefit from its Belt and Road policy?
Will
China sustain its reported first quarter rebound?
Update
on Brexit.
What
I am reading today
What ‘freedom of the
press’ means.
Activity detected at
North Korean nuclear site.
A formula for investing
disaster.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment