The Morning Call
10/21/19
The
Market
Technical
With Friday’s sell off, the S&P has made
its fifth unsuccessful try at mounting a challenge of its all-time high; and
depending on how you look at the chart, it has made three to six lower high’s. Perhaps this latest lower high is just a
function of the magnetic pull of the 10/11 gap up open. Certainly, longer term the momentum is to the
upside with the index trading above both MA’s and in uptrend across all time frames.
Still, the struggle to move higher has to date been unsuccessful. My assumption remains that momentum is to the
upside and that the all-time highs will be challenged; but the S&P’s inability
to break the trend of lower highs since July lessens my conviction.
The long bond has experienced some heartburn
since late August. On the negative side,
it made a lower high after that late August high. On the other hand, it continues to make
higher lows even in the very short term; and it remains above both MA’s and is
in uptrends across all time frames. Like
the S&P, the weight of the technical evidence points to higher prices (lower
yields) but with fewer negatives.
In less than two weeks, the chart
of the dollar has gone from being the strongest of those I follow every day to
the border of breaking down. As you can
see, it closed right on its 100 DMA and the lower boundary of its short term
uptrend. If those boundaries are
successfully challenged, it will start to break the upward momentum of
UUP. The big question in my mind is why
this is occurring when the US (global?) financial system is experiencing a
dollar scarcity. It seems like something is wrong here. I am just not smart enough to know what it
is.
GLD remains in a
very tight trading range. The upper boundary
is clear; but you could draw the lower boundary one of two ways: (1) a flat line
set by the 9/10 low or (2) a rising trend of higher lows. Either way, the range gets tighter each
day. A break one way or the other should
initiate a directional move.
Fundamental
Headlines
We now have a good
idea at the cause of the financial system’s liquidity problems.
China buying
boatloads of soybeans from Brazil.
China’s economic
growth continues to slow.
Saturday’s Brexit
vote postponed until today.
The latest from
Ray Dalio.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
Other
What
I am reading today
So
far, no one has been willing to put a price tag on Medicare for all. Here is the first estimate. Of course, it ignores the fact that every
government program ever invented has cost more than originally estimated.
Merkel
admits her multiculturism policy is a failure.
Monday
morning humor.
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