The Morning Call
11/4/19
The
Market
Technical
The S&P had a
spectacular week. It moved to a new
all-time high, closed a gap open, then broke and reset a very short term
uptrend. Meanwhile, on a longer term basis,
it is above both MA’s and within uptrends across all timeframes. So, everything
is coming up roses, reinforcing my assumption that momentum remains to the
upside. However, there are some
negatives that act as a short term governor on rate of momentum: (1) the Dow hasn’t
made a new all-time high, (2) both indices still have that 10/28 gap up open to
fill and (3) the VIX is near lows and stocks are nearing overbought territory.
The long bond bounced
hard off the 9/13 low and its 100 DMA.
It did so on a gap open which it partially filled on Friday. That keeps its upward momentum intact though
(1) it has to successfully challenge the downtrend marked by lower highs and
(2) longer term, the natural upper boundaries of its short term and
intermediate term uptrend will tend to restrain the rate of momentum.
The dollar has
been losing upside momentum. It is now
challenging the lower boundary of its short term uptrend for the second time in
as many weeks; if it remains there through the close today, it will reset to a
trading range. It also touched its 100
DMA, also for the second time in two weeks, but has yet to push below it. Clearly, UUP is at a critical juncture. We will know more this week.
GLD did a bit of a
dipsy doodle last week, as it broke to the upside out of the pennant (flag)
formation, then traded below the tip for one day and closed back above the tip
on Thursday and Friday. Given this
somewhat atypical pin action, I am hesitant to push the idea of higher
prices. Follow through.
The VIX is near its
7/25 low, putting it at a level where it usually rebounds (and stocks fall). There is some room for more downside; but it
probably portends some backing and filling by stocks.
Fundamental
Headlines
***overnight,
Commerce Secretary Ross says trade talks going great.
Lagarde says EU QE
was a great success, more to come.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
The
final October German manufacturing PMI came in at 42.1 versus estimates of
41.9.
The
final October EU manufacturing PMI was reported at 45.9 versus forecasts of
45.7.
The
final October UK construction PMI was 44.2 versus consensus of 44.0.
Other
Median
household income in September.
ECRI
weekly leading index.
China’s
inflation worries.
Railroad
freight traffic down 8% in October.
What
I am reading today
The bogus consensus on
climate change.
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