The Morning Call
6/7/19
The
Market
Technical
The Averages (25720,
2843) had yet another good day yet on even lower volume and only marginally
improved breadth. However, both closed
above the upper boundaries of their very short term downtrends for a second
day, voiding those trends.
The Dow ended above
its 100 DMA (now resistance; if remains there through the close Monday, it will
revert to support) and above its 200 DMA for a second day (now resistance); if
it remains there through the close next Monday, it will revert to support.
The S&P closed
above its 200 DMA (now support) and above its 100 DMA for a second day (now
resistance; if it remains there through the close today, will revert to support).
Clearly, the
indices are testing multiple resistance levels and so far successfully. However, until those challenges are completed
positively, my assumption is still that the direction is lower.
VIX fell 1%---pretty paltry for a big up price
day. Still it finished in a very short
term uptrend and above its 100 DMA (now support). However, it ended below its 200 DMA for a
second day (now support; if it remains there through the close on Monday, it
will revert to resistance). So, like
stocks, it is on the cusp of change.
TLT was up 3/8%, finishing
above both MA’s (now support) and in a very short term uptrend. It seems to be working off its overbought
condition by running in place; so, more downside may not be as likely as I thought
a couple of days ago.
The Fed, QE and
why rates are going to zero.
Ditto. From one of my favorites.
The dollar declined
3/8%, but remained in a short term uptrend and above both moving averages (now support). It still has one more lower gap up open that
needs to be filled.
GLD rose 3/8 %, closing
within a short term uptrend and above both MA’s (now support).
Bottom line: the
indices are working their way through numerous resistance levels formed during
the decline off the May double top, though volume and breadth have been anemic
at best. If they are ultimately successful
then the question becomes they will challenge the double top (assuming the validity
of the technical saw that ‘there are no triple tops’, then that challenge should
be successful) or fall short further cementing the likelihood of a double top.
UUP, TLT and GLD
continued to act like safety trades.
Thursday in the
charts.
Fundamental
Headlines
Yesterday’s data
was mixed: weekly jobless claims and the April trade deficit were slightly
less than anticipated while the Q1 nonfarm productivity and unit labor cost
numbers offset each other.
Overseas,
May German factory orders were better than estimates while its construction PMI
was below; Q1 EU employment and GDP growth were both in line.
ECB downgrades EU
economic growth forecast.
Not a lot of
sizzling headlines yesterday. What we
got was mostly trade related:
China’s threat to
embargo rare earth shipments to the US ring hollow.
But allowing the
yuan to depreciate is still likely.
Mexican tariffs? Maybe not. Well, maybe.
But they are
trying---blocking immigrants at southern border and freezing bank accounts of
known human traffickers.
Bottom line: of
course, a dovish Fed remains, in my opinion, the driving force behind stock
prices.
The death of the
virtuous cycle.
More on valuation.
The total return roller
coaster.
May dividends by
the numbers.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
May
nonfarm payrolls rose 75,000 versus expectations of 185,000; the unemployment
rate was 3.6%, in line.
International
April
Japanese YoY household spending was up 1.3% versus estimates of +2.6%; cash earnings
(income) fell 0.1% versus -0.7%; its leading economic indicators came in at
95.5 versus 96.1.
The
April German trade balance was E17 billion versus consensus of E21.1 billion;
industrial production was -1.9% versus projections of -0.4%.
Other
Household
net worth increased in the first quarter.
Heavy
duty truck orders falling.
What
I am reading today
Russian
comedian’s prank call to Adam Schiff.
The
day that brave men changed the world.
The
failure of Common Core education reform.
The misuse of data on
extreme poverty.
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for Survival’s website (http://investingforsurvival.com/home)
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