The Morning Call
6/18/19
The
Market
Technical
The Averages (26112,
2889) were up slightly, with the DJIA remaining above the minor resistance
level and the S&P below it. It seems
impossible but volume was down even more---again. Breadth was mixed. Both ended above their 100 and 200 DMA’s (now
support).
VIX was up ½%---ending another unusual day in
which it would normally have been down.
It bounced off its 100 DMA (now support) but is still below its 200 DMA
(now resistance).
TLT advanced fractionally,
closing above both MA’s (now support), in a very short term uptrend and is now
less than two points away from its twenty year up.
And.
***overnight, Draghi
says that if the EU economy doesn’t start growing more stimulus will be
necessary
Global bond yields
are crashing.
The dollar rose a
penny, remaining in a short term uptrend and above both moving averages (now support). However, it has that gap up open lower down---which,
as you know, I expect will need to be filled.
GLD declined slightly,
but still finished in a short term uptrend, above both MA’s (now support) and
remains near the upper boundary of its intermediate term trading range.
Bottom line: yesterday’s
pin action continues to suggest that the indices have been digesting their strong
June advance and/or now awaiting the results of this week’s FOMC meeting rather
than being really stymied by a minor resistance level. My assumption remains that upward momentum
has not been broken and a move higher is likely.
However, I repeat the caveat that low volume,
relatively weak breadth and a VIX that is signalling extreme complacency are
reasons to doubt that scenario. In
addition, the pin action in the bond, dollar and gold markets again pointed at
their function as a safety trade.
Monday in the
charts.
Fundamental
Headlines
Two datapoints
yesterday: the June housing market index was below estimates while the June NY
Fed manufacturing index was terrible.
Nothing overseas.
All quiet on the western
front as investors awaited the conclusion of the ECB meeting, the FOMC meeting,
the G20 meeting and quad witching.
And.
The Chinese
continue to lay a lot of hot tongue on the US.
***overnight,
China is preparing to roll out new rare earth mineral policy.
Bottom line: as
long as the Fed has the Market’s back, it will remain the key factor in equity
pricing. We will get an update on the
Fed ‘put’ on Wednesday afternoon.
Meanwhile, that Averages are a short hair away from their all-time highs
and valuations are rich. For me, that
means caution, taking profits when given the opportunity and keeping alert for
values in Market sectors that have been trashed.
How to invest in
the next recession.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
June housing market index was reported at 64 versus expectations of 67.
May housing starts fell
0.1% versus estimates of -0.4%; building permits rose 0.3% versus 0.0%.
International
The
April EU trade balance was E15.7 billion versus forecasts of E8.8 billion.
May
EU CPI was up 0.1% versus projections of +0.2%; core CPI was +0.8%, in line.
The
June EU economic sentiment index was -20.2 versus expectations of -3.6.
Other
The
referees suck.
Running out of
workers?
Morgan Stanley
thinks that the US is already in a recession.
What
I am reading today
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