The Morning Call
7/8/19
The
Market
Technical
The S&P
successfully challenged the upper boundary of its short term trading range,
resetting to an uptrend. It remains
above both MA’s and in intermediate and long term uptrends. So, my assumption is that it will challenge
the upper boundary of its long term uptrend (3191). That said there are two negatives (1) last
Friday’s gap up open which needs to be closed and (2) all the other indices are
pointing to a need for safety which is contrary to the current pin action in
stocks.
The long bond
broke to a new high last week but unsuccessfully challenged the upper boundary
of its short term trading range.
Importantly, a successful challenge will reset its long term trend to
up. Also note that it had a gap down
open on Friday which needs to be filled---which if it happens, would start
another challenge of the upper boundary of the short term trading range. Other than the retreat below that level,
every other indicator for TLT suggests more progress to the upside. It continues to act as a safety trade.
The dollar
regained some upward momentum last week.
Its 100 DMA reverted back to support, joining the 200 DMA; and it
remained in a short term uptrend. However,
it made a gap up open on Friday which needs to be closed. I still believe that its pin action reflects
its role as a safety trade.
GLD has been
abnormally volatile of late. It
continues to push to the upside but has made one gap up and one gap down opens
and those need to be dealt with. That
said, it continues to act as a safety trade.
The VIX
successfully challenged its 100 DMA last week (now resistance), remains below
the 200 DMA and in a very short term downtrend.
While the momentum is clearly to the downside, it nonetheless is nearing
its all-time historic low; meaning the odds of a trend reversal are growing
stronger.
Friday in the
charts.
Fundamental
Headlines
The total economic
data last week was mixed; however, the primary indicators were negative
(construction spending [-], factory orders [-] and nonfarm payrolls [+]. I rate the week a negative. Score: in the last 195 weeks, sixty-three
positive, eighty-nine negative and forty-three neutral.
The stats from
overseas were also poor with Japan sort of bad, China bad and the EU positively
awful. In addition, the JP Morgan June global
manufacturing PMI was below estimates.
Hence,
my sluggish growth forecast remains in place with the yellow light flashing---a
warning of even slower growth and, perhaps, recession.
The big headlines
of the week were a (supposed) truce in the US/China trade war, an escalation in
trade tensions with the EU and a new ECB chief (Christine Lagarde).
Morgan Stanley
lowers equity exposure.
Meet the new EU
leadership.
Trouble at
DeutscheBank.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
May
Japanese machine tool orders declined 7.8% versus estimates of -4.7%; June bank
lending was up 2.3% versus +2.8%; June economic sentiment came in at 45.8
versus 48.3.
May
German industrial production was up 0.3% versus forecasts of up 0.4%.
Other
What
I am reading today
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