The Morning Call
9/30/19
The
Market
Technical
The S&P has almost
closed the 9/4 gap up open. One more modestly
weak day and that will be eliminated as a downside pull; which would set the
stage for an attack on its all-time high (3027) and the upper boundary of its
long term uptrend (3217?) which is low but my charting service still hasn’t
solved its problems so I don’t have a good reading). On the other hand, the Dow isn’t close to
filling the 9/4 gap up open. Until that
occurs it will act as an anchor to any general price advance.
The long bond has rebounded
from the sharp 9/4 selloff; but it is not out of the woods. To do so, it needs to set a second higher
lower (which it may be in the process of doing) and then a second higher high. This is a wait and see chart.
Of all the major
indices that I follow, UUP’s chart is the most the most stable. It has no gap opens, no potential challenged
to MA’s or trend lines. For obvious
reasons, that circumstance usually occurs when the world wants dollars either because
various countries’ industries need dollars for trade (good news) or their
financial systems need dollars for liquidity/solvency reasons (bad news).
The latest on dollar
funding shortage.
On a short term
basis, GLD have been weak, though it remains above both MA’s and in very short term
and short term uptrends. As you can see,
there are two trendlines that will define its short term pin action---the
declining boundary on the upside and the base it has been building since
9/6. One has to break.
The
VIX spiked again on Friday, leaving it above both MA’s (now resistance; if it remains
above its 100 DMA through the close on Tuesday, it will revert to support; if
it remains above its 200 DMA though the close on Wednesday, it will revert to
support). The VIX has pretty much traded
in sync with the Averages of late. So, I
don’t see this pin action as particularly telling. But it is clearly not
suggesting that stocks have overdone it to the downside.
Fundamental
Headlines
As last week
progressed, my impression was that the economic data was going to be positive. Actually, out of 17 indicators, nine was
positive and eight were negative. The
primary indicators were mixed---one plus, one minus and one neutral. My call is neutral. To be clear; even if I ruled a positive, it
would be so weak as to not really count.
Score: in the last 206 weeks, sixty-seven were positive, ninety-one
negative and forty-eight neutral. So, the pattern continues: A little
bit of this (positive). A little bit of that (negative). My forecast for sluggish growth is unchanged.
Overseas, the numbers
were overwhelmingly negative. I am not
sure the US economy can grow with the rest of the world’s economic growth slowing.
The three major headlines
last week were:
(1)
lots of happy talk about trade which as you know I believe
should be discounted heavily,
(2 ) the dem’s
push toward impeaching Trump [again]. I have
no idea how this turns out. But I do believe that if the dem’s are
pushing for a vote to impeach, it won’t help investor psychology,
(3)
continuing turmoil in the overnight repo
market. There are varied opinions about this a either a signal that global liquidity
is drying up or just a [sort of] normal situation about which there should be
no concern. Certainly, to date the latter
opinion is dominant in the investor class.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
The
September Chinese Caixin manufacturing PMI was 49.5 versus estimates of 49.0;
the services PMI was 53.8 versus 54.0 and the composite PMI was 50.4 versus
50.0
August
Japanese housing starts fell 7.1% versus forecasts of -6.1%; construction
orders were down 25.9% versus -2.0%.
August
German retail sales were up 0.5% versus expectations of +0.6%; September CPI
was 0.0% versus +0.1%.
Q2
UK GDP growth was -0.2%, in line; business investment was -0.4% versus -0.5%.
August
EU unemployment was 7.4% versus projections of 7.5%.
Other
Latest
on Brexit.
A
summary of Rouhani’s visit to the UN.
What
I am reading today
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