The Morning Call
9/25/19
The
Market
Technical
The Averages
(26807, 2966) fell yesterday on significantly higher volume (not a positive
sign) and deteriorating breadth. The
S&P ended just above the upper boundary of the September 4th gap
up open. Though the Dow is still a distance away.
The VIX soared 14
3/8%, closing above both MA’s (now resistance); if it remains above its 100 DMA
through the close on Thursday, it will revert to support; if it remains above
its 200 DMA through the close of Friday, it will revert to support. This is not a plus for equities.
The indices remain
above both MA’s and in uptrends across all time-frames. So, my assumption is that the momentum
remains to the upside. However, the odds
of them closing those 9/4 gap up opens is high and rising. That said, as I noted previously, those gap
up opens needed to close to eliminate them as a technical negative to a further
advance in stock prices---in other words, closing them would be a potential
positive.
Gold was up ½% and
the long bond 1 ¼% so the need for safety appears to be growing. On the other hand, the dollar is backing and filling
which is not really reinforcing the pin action in GLD and TLT.
Tuesday in the
charts.
Fundamental
Headlines
Yesterday’s stats
were mixed: the September manufacturing and composite PMI’s and the September
Richmond Fed manufacturing index were better than anticipated while month to
date retail chain store sales, the July Case Shiller home price index , the
September services PMI and the September consumer confidence index were below expectations.
Overseas, the July
Japanese leading economic indicators, the September services and composite PMI’s
were above estimates while the manufacturing PMI was below.
Other headlines
impacting the Market:
(1)
Middle East.
This situation is not cooling off.
US accuses Iran proxies of attack on US Baghdad compound.
UK,
Germany and France agree Iran responsible for Saudi attack.
(2)
trade. In UN
speech, Trumps hammers China’s trade practices.
But China makes another
‘goodwill’ gesture, preparing to increase US pork imports [it forgot to mention
that the swine flu has devastated its pork producers and it needs to keep its
population fed].
(3)
impeachment. Pelosi announced an impeachment
inquiry. I try to avoid politics; but this
could have an impact on the Market. Two
observations: [a] an inquiry is not an impeachment proceeding and [b] it is the
Senate that votes on impeachment. The dems
would need approximately 20 GOP senators to impeach Trump. Unless
Trump was demanding the Ukrainian president to send over his favorite goat in
order to get US aid, my guess is that the odds of impeachment are slim to none. Indeed, if this whistleblower affair turns
out like every other dem attempt to discredit and impeach Trump, it could prove
a plus for him and his re-election prospects
The latest.
And.
Bottom line: as
volatile as yesterday’s headlines appear, I don’t see anything that would
permanently damage investor psychology.
Ultimately, any mean reversion in equity valuation will be, in my opinion,
a function of investor recognition of the disaster that is Fed money policy.
Insider
selling hits 20 year high.
Blackstone
CEO warns of asset bubble.
News on Stocks in Our Portfolios
Revenue of $10.66B (+7.1%
Y/Y) beats by $230M.
Economics
This Week’s Data
US
Month
to date retail chain store sales grew slower than in the prior week.
The
July Case Shiller home price index was up 0.1% versus estimates of up 0.3%.
The
September Richmond Fed manufacturing index came in at -9 versus consensus of
-11.
The
September consumer confidence index was reported at 125.1 versus forecasts of
133.5.
International
Other
What
I am reading today
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