The Morning Call
4/2/19
The
Market
Technical
The Averages
(DJIA 26258, S&P 2867) did a moonshot yesterday. The S&P finished above 2800/2811/2815
level and above its prior high; if it remains there through the close today, it
will reestablish a very short term uptrend.
The Dow broke above the upper boundary of its very short term downtrend;
if it remains there through the close today, that trend will be voided. So that negative is about to be removed. However, the pin action in the dollar and the
long bond still are a minus. Further,
both indices gapped up on the open. Nonetheless,
a good price performance today and the assumption has to be that the indices
will challenge their all-time highs.
Volume rose. Breadth improved, although flow of funds
indicator was flat.
The VIX declined
2 ¼ %, ending right on the lower boundary of the trading range marked by the
200 DMA on the upside and the double bottom on the downside---whose violation
would be a plus for stocks. With gap
opens in most of our indicators, it is somewhat surprising that the VIX is
being so docile.
The long bond
was pounded down by 1 5/8% on volume. It
remains in a very short term uptrend and above MA’s. I have pointed out that the gap open two
Friday’s ago needed to be closed and that hasn’t happened yet. So, a decline is not surprising.
More defaults on the way.
The dollar fell
two cents on volume. The good news is that it remains above the upper boundary
of the November to present trading range (a move above its prior high would put
this trading range in the dust bin), above both MA’s and in a short term
uptrend. The bad news is that it gapped
up on last Wednesday’s open.
GLD declined
3/8%, moving closer to the minor double bottom and continuing to develop a head
and shoulders pattern. The good news is
that it is still in a solid uptrend and Thursday’s gap down open needs to be
closed.
Bottom line: yesterday’s
strong follow through by the indices enhances the probability that they are
headed for their all-time highs. However,
there is enough negatives coming from other indicators to question whether or
not they can successfully challenge those levels.
TLT and UUP
continue to point to lower interest rates/a weaker economy. GLD is taking a hit from the strong dollar.
Monday
in the charts.
Fundamental
Headlines
Yesterday
was a big data day. In the US, February
construction spending and the March ISM manufacturing index were better than
anticipated; however, January business inventories/sales, February retail sales
and the March Markit manufacturing PMI were disappointing.
Overseas,
Q1 Japanese manufacturing index and all industry were below estimates, the
nonmanufacturing index was in line while the March manufacturing index was
better than forecast.
The March EU
manufacturing PMI and inflation sell short of consensus while unemployment was
in line.
The March
Chinese manufacturing PMI, the Caixin (small business) manufacturing PMI, the
nonmanufacturing PMI were all better than expected. As you know, I think that there is reason to
doubt the veracity of these numbers.
Although I will count them as a plus.
A
skeptic on the China PMI number.
Bottom
line: even if one assumes that the Chinese numbers are entirely credible, in
totality, yesterday’s dataflow was negative.
Given the ecstatic Market responds, that seems to again confirm that if
the global central banks are easing, stock prices are going up. I sit back and enjoy it for the 50% of my
portfolio invested in equities. I feel
very comforted by the 50% that isn’t.
The
latest from Morgan Stanley.
Confused?
What if the bull
market ended 14 months ago?
Update
on valuations.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
March ISM manufacturing index was 55.3 versus expectations of 54.5.
The
March Markit manufacturing PMI was 52.4 versus estimates of 52.5.
February
construction spending rose 1.0% versus forecasts of -0.2%.
January
business inventories were up 0.8% versus consensus of +0.5%; however, sales
again trailed, up only 0.3%.
February
durable goods orders fell 1.6% versus projections of -1.8%; ex transportation,
they rose 0.1% versus +0.2%.
International
February EU PPI
was up 0.1%, in line.
Other
Zombie
companies.
Two
years of ‘winning’.
Brexit
update.
What
I am reading today
The
psychological dangers of a sedentary life (great read).
Real estate versus the
stock market.
NASA
mission searching for planets most likely to sustain life,
Quote
of the day.
Bitcoin surges.
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for Survival’s website (http://investingforsurvival.com/home)
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