The Morning Call
9/20/19
The
Market
Technical
The Averages (27094,
3006) closed mixed yesterday (Dow down, S&P up fractionally). Volume was down (as usual) and breadth turned
negative. While they have basically been
treading water over the last week, they still finished above both MA’s and in
uptrends across all timeframes. So, the
assumption is that they will continue to move to the upside---the next major
level to be challenged being their all-time highs (27398, 3027). As a reminder, the gap up opens from fourteen
days ago still have to be closed.
The VIX was up ¾ %, ending below both MA’s (now resistance) and remaining in
(reverse) sync with the Averages. I
continue to watch this indicator for any deviation from its (inverse) symmetry with
the Averages as a sign of a Market reversal.
The
long bond rose 3/8 % and continued to pull away from the recent sharp downward
trajectory. It remains above both MA’s
and in uptrends across all timeframes. So,
the long term trend in rates remains to the downside. And that gap down open fourteen days ago
still needs to be filled.
The
dollar fell ¼ %, remaining the most stable of the indices. It finished above both MA’s and in short and
long term uptrends. However, investors
seem unphased by the continuing global dollar shortage problem.
GLD
increased 3/8%, trading back near that minor support level that I have been
watching since last Friday. It may be
trying to build a base at this level---which would a positive. At the same time, it closed above both MA’s,
in very short term and short term uptrends.
Plus, it still needs to fill the gap down open from fourteen days ago.
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 seem to be
stalling at current levels. I don’t see
that necessarily as a negative. They are
just absorbing the usual supply of sellers as they approach all-time highs.
The dollar has definitely regained its
upward momentum. TLT appears to have halted
its downward momentum and is attempting to rebound. The weakness in GLD hasn’t yet dissipated,
but like TLT it is trying to build a support level.
I remain concerned about gap opens,
increased volatility and low liquidity in other indices and individual
stocks. However, the main technical factor
to watch today is quad witching.
Thursday
in the charts.
Traders confusion.
Fundamental
Headlines
Yesterday’s data
was mixed: weekly jobless claims, August existing home sales and the September
Philly Fed manufacturing index were better than anticipated while the
August leading economic
indicators and the Q2 trade deficit were below expectations
One estimate of
the odds of recession before October 2020.
Another recession forecast.
Overseas, the July
EU trade surplus was above estimates while the July Japanese all industry
activity index and August UK retail sales were below. In addition, the OECD lowered its 2019 global
growth estimate.
There was no big
headline that drew my attention yesterday, but a number of the Market’s major concerns
were in the news:
(1)
the Fed:
Goldman thinks
that the Fed will resume QE in November.
The instability of
Fed induced stability.
(2
) the US is building a coalition after Saudi oil
attacks.
(3)
Trump advisor says China tariffs could go to 100%.
Bottom line: the
economy is not that great but it is not awful.
Meanwhile, the global economy continues to deteriorate which remains a
burden to our own. Major unknowns include
the US/China trade negotiations, the instability in the Middle East and the
approach of Brexit.
On the other hand,
central banks’ monetary policies remain accommodative and that has been the key
to securities markets pin action. As
long as investors believe that, it will remain so irrespective of valuations, fiscal
and trade policies. As you know, I believe
the Fed/Market codependency will ultimately end poorly. So, I would not be chasing stocks at these levels. Indeed, I think that the smart move is to
take some profits in stocks that have moved into their Sell Half Ranges.
Rigged capitalism
is damaging liberal democracy (must read):
News on Stocks in Our Portfolios
McDonald's (NYSE:MCD) declares $1.25/share quarterly dividend, 7.8% increase from
prior dividend of $1.16.
Economics
This Week’s Data
US
August
existing home sales rose 1.3% versus forecasts of a decline of 0.4%.
The
August leading economic indicators were flat versus expectations of +0.1%.
International
August
Japanese CPI was flat versus forecasts of +0.2%.
August
German PPI was -0.5% versus estimates of -0.2%.
Other
What
I am reading today
The threat of health insurance
costs to middle class life. I am not
suggesting that the author has the right solution but he does make the problem
clear.
Your education tax dollars at work.
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for Survival’s website (http://investingforsurvival.com/home)
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