The Morning Call
10/2/19
The
Market
Technical
The Averages (26573,
2940) got caught off balance yesterday by the poor ISM manufacturing
index. Volume picked up---but not all
that much; as you might expect, breadth was poor. The VIX popped 14 ½ % ending back above its
200 DMA (now resistance; if it remains there through the close on Friday, it
will revert to support) and above its
100 DMA for the third day, reverting to support. The S&P closed its 9/4 gap up open, while
the Dow needs to decline a bit more to also fill its comparable gap up. My
directional assumptions remain that short term the 9/4 gap up opens need to be
filled and that looks to be occurring. That
will relieve the drag on the indices to the downside and set the stage for a
resumption of momentum to the upside.
But, but , but that doesn’t mean that stocks will bounce immediately.
The
long bond up another 1/8% continuing to recover from the 9/4 selloff. GLD bounced back above the lower boundary of
the pennant formation shown in the chart on Monday. Despite being down 3/8%, the dollar remains
in a solid uptrend. While one day does
not a trend make, the safety trade may be returning.
Tuesday in the
charts.
The latest from my favorite technician.
Fundamental
Headlines
Yesterday’s economic
data tilted to the negative: month to date retail chain store sales grew faster
than in the prior week and the September manufacturing PMI was slightly better than
expected; however, both August construction spending (primary indicator) and
the September ISM manufacturing index were well below estimates.
Federal
debt and the US economy.
Overseas,
August Japanese unemployment, Q3 large manufacturers, small manufacturers,
large nonmanufacturers indices were above consensus while the Q3 all industry
capex was below; the September German manufacturing index was slightly above
projections (though it was still in deep contraction); the September EU core
CPI was in line; the September UK housing price index fell and the September EU
manufacturing PMI was abysmal.
World economy
sends up flares.
Japan raises
national sales tax. What could possibly
go wrong?
Bottom line: the
economic data was the big story of the day with several major disappointments
both here and abroad. That quickly
resurrected the ‘global recession’ scenario.
As you know, this has been an on-again/off-again state of affairs for
the last five or six years. So, it is
way too soon to assume that this is anything other than another on-again
situation. Besides, you know this is
just fodder for a rate cut at the Fed’s October meeting. And as long as the Fed can juice the Market,
then this latest set of poor stats will not likely lead to a major sell off. Only when investors realize that the Fed is
problem and not the solution will the mispricing and misallocation of assets be
corrected.[SC1]
Update on
valuation.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Weekly
mortgage applications were up 8.1 while purchase applications were up 0.9%.
August
construction spending rose 0.1% versus estimates of up 0.4%.
The
September manufacturing PMI was 51.1 versus consensus of 51.0.
The
September ISM manufacturing index was 47.8 (that’s contraction) versus
forecasts of 50.1.
The
September ADP private payroll report showed an increase of 135,000 jobs versus
expectations of 140,000 jobs.
International
September
Japanese consumer confidence came in at 35.6 versus projections of 37.3.
The
September UK construction PMI was reported at 43.3 versus estimates of 45.0.
Other
Johnson
issues Brexit ultimatum to EU.
https://www.zerohedge.com/markets/johnson-issues-ultimatum-eu-ireland-balks-new-brexit-backstop-plan
US
and North Korea resume nuclear talks.
What
I am reading today
Treasure
hunting for 800 barrels of gold.
Global warming in the charts.
The IG on the whistleblower report.
The goal of the new Mars rover.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment