Tuesday, September 10, 2019

The Morning Call--A quiet day

The Morning Call


The Market

The Averages (26835, 2978) rested again, closing above both MA’s and in uptrends across all timeframes. Volume was up; and breadth improved.   The only negative is that both of the indices made gap up opens last Thursday---which will have to be closed.
                The VIX rose 1 ¾ %, ending below its 200 DMA for a third day (now support; if it remains there through the close today, it will revert to resistance).  However, it closed back above its 100 DMA, voiding Friday’s break and the lower boundary of its August 5th trading range (inversely related to the August 5th trading range for the Averages), negating Friday’s break.

            The long bond was down 1 ¾ %, finishing above both MA’s and in uptrends across all time frames.   So, the chart remains strong and the trend toward lower rates remains intact.  It also has last Thursday’s gap down open---which needs to be filled.

            Bond calendar remains near record levels.

            The dollar declined a nickel, but ended above both MA’s and in short and long term uptrends.  Like TLT, there is no immediate danger of any technical breakdown.  In addition, it still has last Wednesday’s gap down open---which needs to be closed. 

            GLD was down another 3/8 %.  Nonetheless, it closed above both MA’s and in very short term and short term uptrends.  There  is also 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 resolved their August 5th trading range to the upside, pointing to the return of upward momentum.  The next resistance levels are their July all-time highs (27398, 3027).  The only negative is that both indices plus TLT, UUP and GLD all experienced gap opens last week, which, in my opinion, just multiples the odds of price reversals that will close those gaps.

            Monday in the charts.



            Two minor stats were released yesterday though neither was upbeat: July consumer credit rose more than anticipated and August consumer inflation expectations were up.

            Update on big four economic indicators.

            The national debt is now ten times tax receipts.

Overseas, Q2 Japanese GDP growth, its price index and private consumption were all in line; capital expenditures were lower than expected.

            The July German trade balance was larger than estimates.

            The July UK GDP growth, construction spending, industrial production and trade deficit were better than consensus.

            The danger of a currency war.
            Bottom line: aside from the above data, the day was quiet on the news front.  So, nothing changes in my outlook: the economy is struggling but not declining (at least not yet); fiscal and monetary policies are primary reasons for this subpar performance; the odds of a US/China trade deal before November 2020 are directly correlated to Trump’s willingness to fold; given that environment, most stocks are grossly overvalued though there are a few that are near or in their Buy Value Ranges.

            Investors growing more negative on stocks.

            ***overnight, comments from Xi.

    News on Stocks in Our Portfolios
            AT&T soars after activist proposes breakup.


   This Week’s Data


            July consumer credit rose $23.3 billion versus forecasts of up $16.1 billion.

            August consumer inflation expectations were 2.41% versus estimates of 2.65%

            Month to date retail chain store sales declined.


            August Chinese CPI came in at 0.7% versus expectations of 0.5%; PPI fell 0.8% versus -0.9%.

            August Japanese machine tool orders  dropped 37.1% YoY versus projections of -26.0%.

            July UK unemployment was 3.8% versus forecasts of 3.9%; personal income rose 4.0% versus +3.7%.


            August rail carloads down 4.6%.

            Freight shipping growth and recession probability.

            Germany considering fiscal stimulus.

            Update on auto loans.

            Johnson pushes ahead with plans to suspend Parliament.

            Help for those worried about funny accounting.

            The costs and consequences of a higher minimum wage.

What I am reading today

            Who was the man in the iron mask?

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