Monday, May 20, 2019

Monday Morning Chartology


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.
            


            Last week, gold made a valiant try to reverse a deteriorating chart when it negated the very short term downtrend and tried but failed to revert its 100 DMA to support.  So, it is back to being somewhat mixed.  It is likely being influenced by the strong dollar.  But it is clearly not performing like 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

           

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