Wednesday, October 9, 2019

The Morning Call--Follow through

The Morning Call


The Market

The Averages (26164, 2893) took it in the chops yesterday.  The bad news is that (1) volume was up but breadth was down, (2) the indices followed through to downside on Monday’s negative day; last Friday is now a lower high,  (3 ) they also closed below their 100 DMA’s [now support; if they remain there through the close on Thursday, they will revert to resistance], (4) the VIX remained above both MA’s and in a very short term uptrend and (5) GLD, TLT and UUP were all up, indicating a retreat to safety.  The good news is that both remain above their 200 DMA’s.

While yesterday’s pin action was not pretty.  But again, it is one day’s trading.  What will be meaningful is follow through; so, it is too soon to be calling for a general sell off.  However, the Averages lack of upside follow through after closing that gap down open  does not inspire confidence.  I continue to believe that the trend is up, though less confidently.  However, if they successfully challenge both MA’s, then it points to a turn to the downside in momentum.

Monday in the charts.



            Yesterday’s data was weighed to the downside: August consumer credit grew  more than expected, the September small business optimism index was less than anticipated as was September PPI and core PPI.  Month to date retail chain store sales continued to shrink

            Overseas, August Japanese household spending and cash earnings and the September Chinese Caixin services PMI were below consensus while August German industrial production surprised to the upside.

            IMF warns that global growth is slowing.  Duh.

            Other main headlines:

(1)   Powell announces QEIV but just doesn’t call it that.
(2)   Trump ramps up China trade tensions.  Remember the ‘art of the deal’.


(1)   latest on Brexit.

(2)   Turkey begins invasion of Syria.

(3)   China says [repeats] that it may be open to a partial trade deal.

            Bottom line: Powell’s QEIV (but don’t call it that) remarks a little impact on the Market in the face of poor trade news.  As I said above, this is one day’s price action; so, you can’t read too much into it.  It is, however, another incident pointing to the Market’s demotion of monetary policy as ‘the’ most important consideration.

    News on Stocks in Our Portfolios


   This Week’s Data


            Weekly mortgage applications rose 5.4% but purchase applications were down 0.7%.


            September Japanese machine tool orders plunged 35.5% versus estimates of down 30.0%


What I am reading today


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