Friday, November 22, 2019

The Morning Call---Market quietly working off overbought condition

The Morning Call


The Market

The Averages (27766, 3103) continued to fade yesterday, but keeping the current consolidation off a very overbought condition quite mild.  Breadth was weak again as the overbought condition gets worked off.  Volume fell and the VIX was up 2 ¾%.  On the other hand, the Dow negated its very short term uptrend and the S&P will do so today in the absence of a rally. 

The bond market retreated 5/8%, but remained above its 100 DMA for a second day (now resistance; if it remains there through the close today, it will revert to support).  If the challenge is successful, the downward momentum in TLT will clearly be over.  The only remaining negative is that it is still in a very short term trend of lower highs.

The dollar was up 1/8%, holding above the lower boundary of its short term uptrend.

Gold was down ½ %, retreating from both the upper boundary of its very short term uptrend and its 100 DMA (now resistance).

The UUP, TLT and GLD are all nearing or in the process of challenging key support/resistance levels which if successful would not only mark a change in momentum but also imply a reversal in economic perceptions.  Were TLT and GLD to successfully challenge the aforementioned resistance levels and the dollar hold its uptrend, it would suggest a flight to safety.  If the dollar breaks down, it would imply a weaker economy.

            Thursday in the charts.



Yesterday’s data was upbeat.  While weekly jobless claims were disappointing,  October existing home sales (primary indicator) and the November Philadelphia Fed manufacturing index were markedly positive.

Update on recession odds.

            One of the economic positives that I have consistently listed is the decrease in the regulatory burden on industry.  While much of what we have seen to date supports that, this piece points out that there is another side to that coin.
            Overseas, the November flash EU consumer confidence index was slightly better than anticipated.
            Bottom line: aside from the political circus and the US/China trade circle jerk, it was a quiet day as the Market calmly works off an overbought condition.  Nothing has changed.
            For the bulls.

            Making money versus sounding smart.

    News on Stocks in Our Portfolios
Tiffany (NYSE:TIF) declares $0.58/share quarterly dividend, in line with previous.

Brown-Forman (NYSE:BF.B) declares $0.1743/share quarterly dividend, 5% i
increase from prior dividend of $0.1660.

Home Depot (NYSE:HD) declares $1.36/share quarterly dividend, in line with previous.


   This Week’s Data


October existing home sales rose 1.9% versus forecasts of up 1.4%.


            The November flash EU consumer confidence index was -7.2 versus consensus of -7.3.
            The October Japanese CPI was 0.0%, in line; the November flash manufacturing PMI was 48.6 versus 48.7,  the flash cervices PMI was 50.4 versus 50.0, the flash composite PMI was 49.4, in line.

            Q3 German GDP growth was +0.1%, in line; its November flash manufacturing PMI was 43.8 versus 42.9, the flash services PMI was 51.3 versus 52.0, the flash composite was 49.2 versus 49.4.

            The November EU flash manufacturing PMI was 46.6 versus estimates of 46.4, the flash services PMI was 51.5 versus 52.5, the flash composite PMI was 50.3 versus 50.9.

            The November UK flash manufacturing PMI was 48.3 versus forecasts of 49.0, the flash services PMI was 48.6 versus 50.0


            The economic viability of sanctions.

            I have often voiced skepticism about the ‘reported’ Chinese economic data, opining that it is just made up.  This article addresses that issue.

What I am reading today


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