The Morning Call
5/6/19
The
Market
Technical
For
some reason, the charting service that I use didn’t update the charts for the
S&P and VIX reflecting Friday’s pin action.
So, I will have to make do with the narrative.
The S&P
again challenged the upper boundary of its short term trading range (its all-time
high) but on puny volume and mixed breadth.
Still if it remains there through the close on Tuesday, it will reset to
a short term uptrend and pave the way for a challenge of the upper boundary of
its long term uptrend. ***However, given
the trade news (see below) and investor reaction, that seems unlikely. It needs to close that April 1st
gap up open; though in doing so, little technical damage will be done to its
chart.
The
long bond continues to fight off any attempt to force a challenge of the lower boundary
of its very short term uptrend. So, despite
the selloff from the late March high, its chart is positive and implies lower
interest rates.
The
dollar fell on Friday. Its chart remains
very strong, though it still needs to close that lower gap up open. Its pin action suggests higher interest
rates, putting it out of sync with the long bond.
GLD
bounced nicely on Friday. But its chart
remains broken and supports UUP’s higher interest rate scenario.
The
VIX was down which is to be expected and continues to reflect investor
complacency.
Fundamental
Headlines
With Friday’s
good trade and nonfarm payrolls numbers, last week’s stats were positive both
in total and with the primary indicators.
I rate the week a plus. Score: in
the last 186 weeks, sixty-one positive, eighty-four negative and forty-one
neutral.
This is the
second week in a row with upbeat data and does begin to substantiate the +3.2%
Q1 GDP report. I still want a couple more
weeks of consistently positive stats before getting serious about changing my
forecast.
The
main non-data headline last week was the FOMC meeting, its decision (no
change), its statement (slightly dovish) and Powell’s news conference (slightly
hawkish). As has been the case for the
last ten years, the implications of Fed policy had less to do with the economy
(since it has had almost no impact on the economy) and more to do with the
Market (on which it has had an enormous effect) and how it parses every comma
for meaning.
***overnight, apparently
all that happy talk on trade was just that.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
The
April Chinese Caixin composite PMI was 52.7 versus estimates of 52.5; the
services PMI was 54.5 versus 52.8.
The
April EU composite PMI was 51.5 versus forecasts of 51.3; the services PMI was
52.8 versus 52.5.
March
EU retail sales were flat versus expectations of -0.1%.
Other
What
I am reading today
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