Monday, October 21, 2019

Monday Morning Chartology

The Morning Call


The Market
             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. 

The VIX has pretty much mirrored the pin action of the S&P, i.e. it hasn’t made a new low and, indeed, hasn’t even gotten close to its July low.  At this moment, it offers little informational value.  



            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


   This Week’s Data




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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