Monday, October 28, 2019

Monday Morning Chartology

The Morning Call


The Market

            Friday’s pin action allowed the S&P to reset its very short term uptrend and overcame the last lower high.  However, it still has another lower high to challenge before it can go after its all-time high.  That said, my assumption remains that it will move to that high; and given the relative positive earnings and news flow, a push to a higher all time high seems likely.


            The long bond’s rally was short and contained.  It is now back approaching its 100 DMA.  The good news is that remains above both MA’s and in uptrends across all time frames.  Still this strong chart is in danger of losing momentum.

            Problems in the high yield loan market.

Subprime auto loans are defaulting at the fastest rate since 2008.

            The dollar continued its rebound off the lower boundary of its short term uptrend and 100 DMA.  It is reclaiming the title of the strongest chart of those indices I follow.

            Gold has broken out of the pennant pattern to the upside.  Typically, this means a directional move up.  It still has a series of lower highs to overcome but with a little follow through, it should, at the least challenge its recent high (146.82).  What is a bit mystifying to me is that it is breaking to the upside at the same time the long bond is declining and the dollar rising---both of which are typically negative for the GLD price.

            On Friday, the VIX broke below the lower boundary of a trading range, pushing toward the 9/25 low (= 9/25 high in the S&P).  So, it continues to mirror the S&P, providing little informational value.



***overnight, EU approves Brexit extension.

            An interview with Jim Bianco (must read).

      Subscriber Alert

            In my quarterly review of the financials of United Technologies (UTX),  Donaldson (DCI), Coca Cola (KO) and PepsiCo (PEP), they failed to meet the minimum financial quality standards for inclusion in their respective Universes.  Accordingly, at the Market open, the Dividend Growth Portfolio is Selling its position in UTX, KO and PEP, the High Yield Portfolio is Selling its position in KO  and the Aggressive Growth Portfolio is Selling its position in DCI and PEP.      

            The stock price of Kroger (KR) has traded into its Buy Value Range.  Accordingly, the Dividend Growth Portfolio is Buying a one half position in KR.

    News on Stocks in Our Portfolios
Illinois Tool Works (NYSE:ITW): Q3 GAAP EPS of $2.04 beats by $0.09.
Revenue of $3.48B (-3.6% Y/Y) misses by $70M.

AT&T (NYSE:T): Q3 Non-GAAP EPS of $0.94 beats by $0.02; GAAP EPS of $0.50 misses by $0.22.
Revenue of $44.58B (-2.5% Y/Y) misses by $490M.

LVMH (OTCPK:LVMHF) confirms its interest in acquiring Tiffany (NYSE:TIF) with an official statement.
"In light of recent market rumors, LVMH Group confirms it has held preliminary discussions regarding a possible transaction with Tiffany," notes the company. "There can be no assurance that these discussions will result in any agreement," reads the statement.
LVMH's offer for Tiffany is believed to be at $120 per share.
Shares of Tiffany (TIF) are up 28.61% premarket to $126.90 to sail past the 52-week high of $117.93. LVMH is up 0.33% in Paris trading.

   This Week’s Data


            The September Chicago Fed national activity index came in at -0.45 versus forecasts of -0.37.

            The September trade  balance was -$70.4 billion versus consensus of -$76.2 billion.

            September wholesale inventories fell 0.3% versus expectations of +0.2%.


            September EU loan growth was up 3.4% versus estimates of +3.5%.

            September Chinese industrial profits fell 2.1% versus an anticipated decline of 1.2%.


What I am reading today


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