The Morning Call
9/12/19
The
Market
Technical
The Averages (27137,
3000) regained their upward momentum yesterday, closing above both MA’s and in
uptrends across all timeframes; though volume was down and breadth is pushing
into overbought territory. The only
negative is that both of the indices made gap up opens last Thursday---which
will have to be closed.
The VIX fell 3 7/8 %, ending below its 200 DMA (now
resistance) below its 100 DMA (now support, if it remains there the close today,
it will revert to resistance) and the lower boundary of its August 5th
trading range for the second day, voiding that trend.
The
long bond was down 1/8 %, but still finished above both MA’s and in uptrends
across all time frames. It also closed
right on a minor support level. Let’s
see how it trades around that area today.
Last Thursday’s gap down open isn’t going away---which needs to be
filled.
The
dollar rose 3/8%, ending above both MA’s and in short and long term uptrends. It
partially closed last Wednesday’s gap down open but did so on a gap up open.
GLD
was up 3/8 %, closing above both MA’s, in very short term and short term
uptrends and bounced off a minor support level.
There is also last Thursday’s gap down open---which needs to be filled.
Bottom line: long term, the Averages are in
uptrends across all timeframes; so, the assumption is that they will continue
to advance. Short term, they have regain
upward momentum. The next resistance
levels are their July all-time highs (27398, 3027).
From a technical standpoint, I continue
to believe that all those gap opens are important. If they had been done on huge volume, I could
accept the notion that there has been a huge change in investor
psychology. But they weren’t. Indeed, gap opens on low volume are more
indicative of the lack of liquidity---which is not a good thing when the Averages
are short hair from all-time highs. Time
to be careful.
Wednesday in the
charts.
Fundamental
Headlines
Yesterday’s
stats were largely upbeat: July wholesale inventories rose but sales were up
more; weekly mortgage and purchase applications were up; August PPI and core
PPI were hotter than expected---whether that is good news or bad news depends on
your perspective.
The self-inflicted
recession.
BofA card data
shows big drop in consumer spending in August.
Overseas,
August Chinese vehicle sales were disappointing while outstanding loan growth
was in line.
China’s spy war.
Growing number of
companies reducing investment in China.
Bottom line: it
was another slow day for news on trade, monetary and fiscal policies---though
that will change today with the meeting of the ECB. Meanwhile, the internal mechanics of the
Markets are changing and may be portending a major adjustment. Nothing new in my outlook.
***overnight, the
ECB lowers rates, but adjusts for bank reserves/lending, and restarts QE.
***overnight,
Trump responds to China’s ‘goodwill gesture’ and delays new tariffs until mid-October.
***overnight,
China ups the ante, saying that it is considering lifting the restrictions on
the import of US agricultural products.
Will the sudden
shift to value stocks last?
Projected
quarterly S&P dividends through 2020.
https://politicalcalculations.blogspot.com/2019/09/the-futures-for-s-500-quarterly.html#.XXkw2ChKg2w
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Weekly
jobless claims fell by 15,000 versus estimates of down 4,000.
July
wholesale inventories rose 0.2%, in line; wholesale sales increased 0.3%.
August
CPI was up 0.1%, in line; core CPI was up 0.3% versus up 0.2%.
International
July
Japanese machinery orders declined 6.6% versus forecasts of -9.9%; its August
PPI was -0.3% versus -0.2%.
July
EU industrial production fell 0.4% versus consensus of -0.1%.
August
German CPI was -0.2%, in line.
Other
What
economists need to learn. I agree with
two of the authors points but disagree that economies are not self-correcting. In my opinion, the reason that the latest
recovery has been subpar is the burden imposed on it by irresponsible fiscal
and monetary policies.
The
rising world uncertainty index.
What
I am reading today
Just
when you thought that our education system couldn’t get more stupid.
Ending
the Afghan war, American style.
2018
Census Bureau poverty data.
David Riccardo, among the
best and the brightest.
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for Survival’s website (http://investingforsurvival.com/home)
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