The Morning Call
5/20/19
The
Market
Technical
The S&P
retreated Friday after a good three day run to the upside. In the process, it negated the very short
term downtrend and remains above the April 1st gap up open---both
positive. Plus, it remains well above
both MA’s. So, the assumption remains that
a challenge of its all-time high is coming.
That said, the thing to watch will be its ability to get back above Thursday’s
high; if not, then the chart takes on the ominous look of a double top.
The long bond was
up ¼ %, but still fell just short of its recently set two year new high. It finished above both MA’s and in a very
short term uptrend. This chart continues
to give off confusing signs. If it is up
as a safety trade, then why isn’t gold up and stocks down. If it is signaling economic weakness, then why
isn’t the dollar down? As you know, I
trust the bond market more than any other to give the right signal on economic
developments. Declining yields are not a
plus if the expectations are for the economy to be getting better.
The dollar was
up another ¼ %, closing right on its all-time high. Its chart remains quite positive but UUP has
two unfilled gap up opens (horizontal green lines) below current price levels. It is acting like either the economy is
improving or as a safety trade.
While the VIX was
up on Friday, it remained below its 100 DMA for the third day (reverting to
resistance) and its 200 DMA for a third day (now support; if it remains there
through the close today, it will revert to resistance). And as you can see, the 100 DMA has crossed
below the 200 DMA---a negative technical indicator. However, it is still in a solid very short
term uptrend. So, we have a range to
watch (DMA’s on the upside, very short term uptrend on the downside). A break in either direction would provide
directional information.
Fundamental
Headlines
The latest from BofA.
Lacy Hunt in support of the
Reinhart/Rogoff thesis (too much government debt slows economic growth).
***overnight,
the US/China trade war escalates.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
April Chicago Fed national activity index was reported at -.45 versus estimates
of -.33.
International
April
German PPI was +0.5% versus expectations of +0.3%.
Other
What
I am reading today
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