The Morning Call
5/13/19
The
Market
Technical
The
S&P had yet another volatile day on Friday, selling off big initially, then
rebounding to close up on the day. It had
closed the April 1st gap up open on Thursday---which is a technical
plus. On Friday, it tested that level
intraday, then bounced hard and finished right on the upper boundary of a newly
established very short term downtrend.
Pushing above that boundary would open the way for another challenge of
its all-time high.
This
five year chart gives a bit more perspective to the long bond’s recent
performance. It bounced off the lower boundary
of its short term trading range (yellow line), established a very short term
uptrend (green line), has completed and broken out of a reverse head and
shoulders pattern (a technical positive) and has regain the lower boundary of
its former long term (20 year +) uptrend---that doesn’t mean that the long term
trend has been reset, but it is a first step.
In other words, investors seem to be expecting a weaker economy/lower
rates or are buying TLT as a safety trade.
The
dollar basically marched in place last week.
But it did so sustaining an uptrend.
Investors appreciate it either as a safety trade or because they expect
a relatively strong US economy or both.
Gold
managed a decent rally last week.
Indeed, it ended right on the upper boundary of a very short term downtrend. Voiding that trend would clearly be a technical
plus; however, assuming it succeeds, it still needs to challenge its 100 DMA before
its chart starts to improve. Rising in
the face of a strong dollar suggests that it is being viewed as a safety trade.
The
VIX has a real roller coaster of a week, soaring over both MA’s, holding a
couple of days then plunging back below them.
The 100 DMA reverted to support for one day then fell back. I am going to change it back to
resistance. However, it is still in a very
short term uptrend. With investor
psychology so closely linked to the trade headlines and given that we are sure
to get a steady stream of them, I am not sure what informational value can be
derived from the VIX until some kind of end game is visible. That said, it seems unlikely that complacency
will return to the levels two weeks ago.
Fundamental
Headlines
***just
in, China unveils retaliatory tariffs.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
March
Japanese leading economic indicators came in at 96.3 versus estimates of 96.4.
April
Chinese vehicle sales fell 14.6% following a 5.2% decline in March.
Other
What
I am reading today
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