6/25/19
The Market
Technical
The Averages (26727, 2945) were mixed (Dow up,
S&P down) yesterday, finishing above the upper boundaries of their short
term trading ranges (all-time highs) for a third day, resetting to uptrends. Both are overbought, though less so. More sideways to down pin action would be
normal; and remember, both indices have to fill those gap up opens made on last Tuesday. Volume was terrible; breadth mixed.
VIX was down
1 %. It ended above its 100 DMA but is
still in a very short term downtrend.
TLT rose ¾%, closing above both MA’s (now support),
in a very short term uptrend and is again nearing (less than a point) its
twenty year high.
The dollar fell 1/8% on monster volume. But it ended in a short term uptrend, above
its 200 DMA (now support) and still needs to close Thursday’s gap down open. However, it finished below its 100 DMA (now
support) for a second day (if it remains there through the close today, it will
revert to resistance).
GLD was up another 1 ½ %, also on huge volume,
finishing in a short term uptrend, above both MA’s (now support) and above the
upper boundary of its intermediate term trading range. If it remains there through the close on
Thursday, it will reset to an uptrend. However,
there is a major gap up open lower down---which needs to be filled.
Bottom
line: the Averages have reset to
uptrends (and broken above their all-time highs) which sets the stage for an
assault on the upper boundaries of their uptrends. That said, on a very short term basis, they
still need to close Tuesday’s gap up opens.
Longer term, it
is remains disconcerting that volume is low (versus high volume in bonds, the
dollar and gold which are pointing to recession/or the need for a safety trade),
relatively weak breadth, the lack of confirmation (of all time highs) from most
other indices (NASDAQ, Russell, transports, etc) and a VIX that has been acting
unconventionally for the last couple of weeks.
Monday in the charts.
Is Bitcoin going higher?
Fundamental
Headlines
Yesterday’s data was disappointing: the May Chicago Fed national activity
index and the June Dallas Fed manufacturing index weren’t just bad, they were
awful.
Overseas, the April Japanese leading
economic indicators came in slightly above estimates.
It was a generally quiet day with most of the headlines
centered on the aftermath of Trump’s decision not to bomb Iran:
Trump threatens more sanctions on Iran; however,
there is not much left to sanction.
Except the Ayatollah.
Iran’s
response.
Trump:
why is the US guarding Middle East oil shipments when it doesn’t need the oil?
On
the other hand.
Another concerning headline that the
Market seems to be ignoring---the Chinese banking system is freezing up.
And
Trump’s newest threat won’t help.
Bottom
line: the economic data is not
improving. The question is will it show
up in second quarter earnings---which are about to begin being reported.
We
will know more about the US/Chinese trade dispute by this coming weekend;
though as you know, I see no incentive for the Chinese to comply with US
demands for reforms in their industrial/IP theft policies until the pain is excruciating
and maybe not even then---which means in the short term, Trump either folds or
there is no deal.
Of
course, the stock market/Fed co-dependency is the major factor in equity
prices; and the continued market advance in the face of lousy economic, trade
and Middle East headlines is a testament to that. Until that paradigm changes, the trend in
stock prices will likely remain to the upside.
Six Fed officials are scheduled to speak today.
Saving and investing.
News on Stocks in Our Portfolios
FactSet Research Systems (NYSE:FDS): Q3 Non-GAAP EPS of
$2.62 beats by $0.25; GAAP EPS of $2.37 beats
by $0.17.
Revenue of $364.53M (+7.2%
Y/Y) beats by $5.28M.
AbbVie to buy Allergan.
Economics
This Week’s Data
US
The
June Dallas Fed manufacturing index was -12.1 versus consensus of -1.0.
International
Other
The
sorry state of political economics.
The
case of the missing inflation.
I
am not sure I believe this author’s conclusion, but he does point to how the US
solves its massive debt problem. It is
sort of a corollary to Modern Monetary Theory.
Why
lower oil prices are not an unmitigated positive of the US economy but higher
prices maybe.
Loan
delinquency rates on the US.
What
I am reading today
The discipline for improving your business. The comments are directed at traders but they
apply to all businesses.
15,000 Mexican
troops deployed at US border.
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for Survival’s website (http://investingforsurvival.com/home)
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