Thursday, October 10, 2019

The Morning Call--Who's on first?

The Morning Call


The Market

The Averages (26346, 2919) recovered yesterday, though volume was down and they remained below their 100 DMA for a second day (now support; if they remain there through the close today, they will revert to resistance).  On the other hand, breadth improved and the VIX fell below the lower boundary of its very short uptrend (now support; if it remains there through the close today, it will revert to resistance).

While yesterday’s pin action was an improvement, the indices remain in a trend of lower highs and below their 100 DMA’s.  For the time being, I am sticking with my assumption that the trend is up.  However, if they successfully challenge both MA’s, then it points to a turn to the downside in momentum.

            Yesterday’s price action in gold, the dollar and the long bond provided little directional information.

            Wednesday in the charts.



            A couple of datapoints were reported yesterday: the August job openings report showed a decline while wholesale inventories declined on flat sales.

          Overseas,  September Japanese machine tool orders plunged.

          The major new items:

(1)   the FOMC released the minutes of its latest meeting which read more hawkish than anticipated.

(2)   turmoil in repo market eases as NotQEIV expands.

(3)   China trade talks were on a roller coaster ride.

First the good (sort of news).

                  Then, the bad news.               

                  ***overnight, Markets were chaotic with rumors swirling that there was some kind of ‘mini-deal’ and that there was no deal and the Chinese were going home early.

            Bottom line:  stay focused on the long term.  Right now, stock prices are a short hair off their all time highs.  So, at least some portion of a trade deal is priced in.  However, if there is anything resembling a ‘comprehensive’ agreement, that would still be a plus for the economy, investor psychology and valuations.  The question is how much?  I continue to believe that the best strategy is to Sell Half of a position if the stock trades into that price range irrespective of a trade deal. 

            Bottom line:

    News on Stocks in Our Portfolios


   This Week’s Data


            September CPI was flat versus estimates of up 0.1%; core CPI was +0.1% versus +0.2%.

            Weekly jobless claims rose 29,000 versus consensus of a decline of 3,000.


            August Japanese machinery orders fell 14.5% versus forecasts of down 10.8%; September PPI was flat versus -0.1%.

            The August German current account was a surplus of E16.9 billion versus expectations of +E18.1 billion.

            August UK manufacturing production was -0.7% versus projections of 0.0%; industrial production was -0.6% versus -0.1%; construction output was +2.4% versus -0.2%; YoY GDP was +1.1% versus +0.9%


What I am reading today


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