The Morning Call
6/3/19
The
Market
Technical
Everyone have a good time watching the Market fall? The S&P has now made a double top. There is a technical belief that there are no
triple tops---meaning that either the S&P will rally and quickly push through
the 2942 resistance or it is time to piss on the fire and call in the
dogs. It also reset a very short term downtrend;
the 100 DMA is now resistance; and if it remains below its 200 DMA through the
close on Wednesday, that will become resistance). I have marked with purple lines the next two
levels of support.
TLT continues to
advance on volume as the yield curve flattens (signaling a weak economy). It is in a short term uptrend, is above both
DMA’s and is approaching a twenty year high.
The dollar was off
on Friday but remains quite strong. It
is in a very short term uptrend, a short term uptrend, both MA’s are support
and is approaching a thirty year high.
However, those two gap up opens continue to be unfilled. The most likely scenario that explains strength
in TLT, UUP and GLD is their role as safety trades.
GLD spiked on
Friday on big volume---something you would expect on falling interest rates and
a seeming flight to safety. It has now
voided the very short term downtrend and that head and shoulders formation
while closing above its 100 DMA (if it remains there through the close on Tuesday,
it will revert to resistance). It remains
in a short term uptrend and its 200 DMA is support. However, on Friday it had a gap up open.
The VIX is rallying
as is to be expected in a down Market.
However, its move up has been relatively subdued, indicating to me that
the stock guys are still hopeful that this decline will be over soon. Nonetheless, it is above both DMA’s and in a
very short term uptrend.
Fundamental
Headlines
Last week’s
numbers in total were basically neutral though the primary indicators were
positive (personal income [+], personal spending [+], Q4 corporate profits [-]. I rate the week a plus. Score: in the last 190 weeks, sixty-three positive,
eighty-five negative and forty-two neutral.
This
continues the somewhat erratic dataflow of the last two months, implying that
while a recession may not be eminent (the warning from the flattening yield curve
notwithstanding) neither is an acceleration in growth---pretty much in line
with my forecast of sluggish growth.
Overseas,
the stats were horrible. So, our own
economy continues to get little help from abroad.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
The
May Japanese YoY manufacturing PMI was 49.8 versus expectations of 49.6---better
though still in contraction.
The
May Chinese Caixin manufacturing PMI was 50.2 versus estimates of 50.0.
The
May EU manufacturing PMI was 47.7, in line and still in contraction.
The
May UK manufacturing PMI was 49.4 versus consensus of 52.0---so now
contracting.
Other
What
I am reading today
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