The Morning Call
10/17/19
The
Market
Technical
The Averages (27001,
2989) were off fractionally yesterday on lower volume and mixed breadth. Still, they ended solidly above both MA’s and
in uptrends across all timeframes. The VIX rebounded 1%, bouncing off the 9/20
low (a slight negative for stocks). The other
downbeat sign is the October 11th gap up opens which need to be closed.
Overall, this pin action doesn’t change my
assumption that momentum remains to the upside and that the all-time highs
(27398, 3027) will be challenged.
Gold rallied back
above the lower boundary of its pennant formation, leaving that technical
pattern intact. TLT was up slightly,
remaining close to challenging its 100 DMA but finishing in uptrends across all
time frames. The dollar was down ¼% but
its chart is the strongest among those I follow.
The yield curve
has dis-inverted. Are we safe now?
Despite the institution
of NotQE, the overnight repo market is again experiencing liquidity problems.
Wednesday in the
charts.
Fundamental
Headlines
Yesterday’s
numbers were mixed: August business inventories/sales and the October housing
index were positive; weekly mortgage/purchase applications neutral; and September
retail sales (primary indicator) were terrible.
Update
on big four economic indicators.
Also, the Fed
released its latest Beige Book which downgraded the economic growth outlook. Somewhat surprisingly, it expressed concern
about the labor market---which is a lagging indicator. The bottom line is that it set up the Fed for
more rate cuts.
Overseas, the
September UK CPI and PPI came in lower than anticipated; September EU CPI was in line; the August EU trade surplus was
smaller than expected.
More thoughts on
the US/China trade war.
Zach Karabel
NY Times.
Bottom line: while the technical position of the Market
suggests further upside, equities are overvalued on a historical basis. So, I am focused on taking advantage of strength
that drives a stock’s price into its Sell Half Range. This strategy is not undisciplined selling;
but targeted selling of a portion of the holdings of a successful investment. But that said, this strategy has raised my
cash position to near 50%. A level that helps
me sleep well a night even after a 300 up day in the Dow.
Subscriber Alert
In my quarterly review
of Gilead Sciences (GILD), it failed to meet the minimum quantitative criteria for
inclusion in the Aggressive Growth Universe.
Accordingly, the Aggressive Growth Portfolio is Selling its position in
GILD.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
August
business inventories were unchanged as sales rose 0.2%.
September
retail sales fell 0.3% versus estimates of up 0.3%; ex autos, they declined
0.1% versus +0.2%.
The
October housing index came in at 71 versus consensus of 68.
Weekly jobless claims
increased by 4,000 versus expectations of up 5,000.
September
housing starts fell 9.4% versus projections of -8.6%; building permits dropped
2.7% versus forecasts of -5.2%.
The
October Philadelphia Fed manufacturing index was reported at 5.6 versus
projections of 8.
International
August
EU construction output rose 1.2% versus estimates of +2.6%.
September
UK retail sales were flat, in line; ex fuel, they rose 0.2% versus consensus of
-0.1%.
Other
What
I am reading today
Inside
the decline in out of pocket health insurance costs.
Defer
gratification and save.
You
will never change your life unless you change what you do in your life daily.
Stamina succeeds.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
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