The Morning Call
8/16/19
The
Market
Technical
The Averages (25579,
2847) bounced around yesterday but ended
up modestly on the day. Volume was down
and breadth positive, though just barely.
The Dow ended below its 100 DMA (now resistance) but right on its 200
DMA (now support; that stops the clock on a reversion to resistance pending
follow through). The S&P ended below its 100 DMA for a second day; however,
given its recent see saw price action above and below this boundary, I have put
a directional call on hold. It remained
above its 200 DMA (now support). Very
short term, both indices intraday bounced off their 8/5 low. So that is a level to watch.
The VIX fell 4 1/8
%, but still finished above both MA’s (now support) and continues to build a
short term uptrend. So, it lends a
negative bias to equities.
The long bond was
up another 1 1/8 %, ending above both MA’s, in uptrends across all timeframes
and has made another gap up open.
The dollar was up two
cents, ending in short and long term uptrends and above both MA’s. It still has a gap down open which needs to
be filled.
Gold rose an
additional 5/8%, closing within very short term and short term uptrends and
above both MA’s. However, it still has
last Friday’s gap up open which needs to be closed.
Bottom line: long term, the
Averages are in uptrends across all timeframes; so, the assumption is that they
will continue to advance. While they
appear to have taken out their 100 DMA, they are out of sync on the 200
DMA. However, they remain well above the
lower boundary of their short term uptrends
(23376, 2562). So, the indices
could fall a lot further without breaking their long term upward momentum.
The pin action in the long bond, the
dollar and gold continues to point at the need for a safety trade.
Thursday in the
charts.
Fundamental
Headlines
Yesterday’s data
was very positive including several upbeat primary indicator releases:
July retail sales, July business inventories/sales,
the August housing market index, the August Philly and NY Fed’s manufacturing
indices, the preliminary Q2 nonfarm productivity were above estimates while weekly
jobless claims and July industrial production were below.
Update
on big four economic indicators.
Overseas,
June Japanese industrial production and July UK retail sales were better than
anticipated.
Aside
from those really good numbers, investor attention was divided between concern
about the recently inverted yield curve:
Don’t freak out about the yield
curve, says this analyst.
Counterpoint.
But
be cautious.
***overnight, the Bank of Japan reduces
its bond purchases (QE).
And the US China
trade dispute:
US/China trade war
unlikely to be solved soon.
***overnight, Hong Kong announces $2
billion stimulus program.
Bottom line: yesterday’s stats were a welcome
relief from what has been a negative trend.
It is not enough to turn off the flashing yellow light. But if it is a precursor to a turn in the
dataflow, then it improves the odds that my current forecast (sluggish growth)
could prove correct even if the global economy slips into recession or near
recession.
Of course, the yield curve seems to
be pointing otherwise, though if you have been reading the linked articles, you
know that it takes months if not years for the economy to roll over following a
yield curve inversion. Plus, we just don’t
know the ultimate impact of a prolonged US/China trade dispute.
https://www.advisorperspectives.com/commentaries/2019/08/15/s-p-500-plunges-on-yield-curve-inversion
Advice from
Nomura.
Advice from Charles
Gave.
(good) Advice for
the Fed.
For the
optimists.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
June
business inventories were flat versus expectations of up 0.1%; however, sale
rose.
July
industrial production declined 0.4% versus estimates of down 0.1%.
The
August housing market index came in at 66 versus forecasts of 65.
July
housing starts fell 4.0% versus consensus of -1.7%; however, building permits
rose 8.4% versus +3.1%.
International
The
June EU trade surplus was E20.6 billion versus an anticipated increase of E16.3
billion.
Other
Update on Brexit.
What
I am reading today
The four stages of
retirement.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment