The Morning Call
9/17/19
The
Market
Technical
The Averages
(27076, 2997) sold off yesterday on the news of the attack on Saudi oil
production. However, just like I was
surprised last week that stocks didn’t react more positively to the trade and
ECB headlines, I was equally amazed that prices weren’t down more on the Middle
East news. That suggests investor
caution which can also be seen in the persistently low volume. However, clearly that caution is tempering
optimism versus pessimism. Witness that
the indices are above both MA’s and in uptrends across all timeframes. As a reminder, the gap up opens from twelve
days ago still have to be closed.
The VIX was up 6 ¾ %, but still ended below
both MA’s (now resistance), 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 was up 1 ¼ %, but did not reverse the downward trajectory of its
price trend since the recent sharp decline began. Nevertheless, 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 nine days ago still needs to be filled.
The
dollar was up slightly, remaining the most stable of the indicators that I
watch. It closed above both MA’s and in
short and long term uptrends. I think
that this at least partially reflects the global dollar shortage problem which
I frequently refer to; and that is largely a result of lousy monetary
policy---which is not apt to change.
GLD
was up 7/8 %, closing above both MA’s, in very short term and short term
uptrends and bouncing off that minor support level that I referred to on
Friday. It still needs to fill the gap
down open from twelve 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 have
regained upward momentum; though it is somewhat confusing to me that their pin
action has been muted to both good and bad news at the same time that there are
gap opens, increased volatility and low liquidity in other indices and
individual stocks. That said, they are
only a short hair away from their July
all-time highs (27398, 3027).
Monday in the
charts.
Fundamental
Headlines
Only one US
datapoint yesterday: the September NY Fed manufacturing index was one half of
expectations.
More on a
recession probability.
Still more from
Lance Roberts.
Overseas it was
worse. August Chinese fixed asset
investment, industrial production and retail sales were below forecast.
Of course,
investor attention was mainly focused on the attacks on Saudi oil
facilities, Two questions
(1)
how long will production be impacted? Most of the analysts on the news channels say
that [a] production had been running ahead of demand and [b] there are enough
supply sources to fill in the gap left by the lost Saudi production, at least
in the short term. So, consensus appears
to be that there will be little further upward price pressure resulting
supply/demand imbalance,
(2)
what will the response be? This is the big kahuna. So far, the rhetoric has been very
cautious. Nothing to suggest war is
coming. However, I can’t believe this
attack will go unanswered.
Latest on the
attack upon Saudi Arabia.
Oil prices and the
stock market.
Bottom line: with all deference to the Market, the economy
is not improving.
Higher oil prices
won’t help.
While a half assed
deal with China would almost surely improve the short term outlook for the US economy,
it will do little for the long term.
Crazy me, I don’t think the Chinese are about to compromise on
industrial policy and IP theft.
The US budget
deficit will run at $1 trillion this fiscal year. Trump wants to cut taxes and the dem’s want to
give away your money to anyone who walks, talks and has one. That is not good for the long term growth of
the economy.
The Fed has completely
overstepped the boundaries of its congressional mandate and in the process has
created the gross mispricing and misallocation of assets which are a burden on
the economy.
Where is the growth
going to come from? The hard work of
American business and labor. But they
can’t grow the economy any faster than they already have because the fiscal and
monetary policy makers keep increasing the economic burden they must bear just
to stay even.
If all these
issues were priced into stocks that would be one thing. But stocks are near their all-time
highs. Something is wrong with this
picture. It is a time for caution.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
The
September EU economic sentiment index came in at -22.4 versus expectations of
-32.2; German economic sentiment index was -22.5 versus -37.0.
Other
The
economics profession needs a recession.
Another
case of fraud from our ‘fortress’ bank.
More
turmoil in Italy.
What
I am reading today
Poverty
accelerates aging.
This
day on Wall Street 99 years ago.
The power of passion and
purpose.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment