The Morning Call
11/12/19
The
Market
Technical
The Averages (27691,
3087) turned in a mixed performance (Dow up, S&P down) on a semi-holiday
day. Volume was lower (not surprising);
but breadth was quite strong (surprising on a mixed low volume day), pushing it
still further into overbought territory. The VIX was up 5 1/8%---but still
supports the breadth overbought reading.
My assumption
remains that momentum is to the upside; but there are still some short term negatives: (1) October 11th gap up opens need
to be closed and (2) the VIX and breadth suggest equities are overbought.
The bond market was
closed. The dollar was off 1/8%, but its chart remains
strong.
Gold was down another
¼ %, ending below its 100 DMA for a third day, reverting to resistance. However, it is still well above its 200 DMA
and the lower boundary of its short term uptrend; meaning it has plenty more
room on the downside before meeting any significant support.
Another deep dive
into the problems in the repo market.
Monday in the
charts.
Fundamental
Headlines
No US stats reported
yesterday.
Overseas,
there was plenty. October Chinese CPI was hotter than estimates while PPI was cooler; auto sales declined as did
loan growth.
September
Japanese machinery orders fell more than expected.
September UK
trade deficit was larger than forecast while industrial production, construction
output and GDP were less. October German
PPI declined.
As you might
expect, all was quiet on the Western front on a semi-holiday. The news flow will pick up today with a
speech by the Donald. Then on Thursday,
the Fed releases an update to its bill purchase program (NotQE). Finally, a
giant data dump on Friday that will include October retail sales and industrial
production.
And another consumer confidence measure will
also be released.
Bottom
line: I think that the technical condition of the Market (overbought) is the
story for the very short term. However,
assuming the Fed reaffirms its commitment to NotQE on Thursday, any pullback
will should be limited.
That doesn’t mean that large sectors
of the stock market aren’t dramatically overvalued.
An argument against
stocks being overvalued.
And why they may
stay that way.
But the big boys
disagree.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
October small business optimism index came in at 102.4 versus projections of
103.5.
International
October
Japanese machine tool orders fell 37.4% versus forecasts of -30.0%
Weekly
UK unemployment rose by 8,000 jobs versus estimates of up 38,000; September unemployment
was 3.8% versus 3.9%; average (consumer) earnings were up 3.5% versus +3.8%;
preliminary Q3 productivity was +0.3% versus -0.2%.
November
EU economic sentiment was -1 versus expectations of -32.5.
November
German economic sentiment was -2.1 versus consensus of -13.
Other
US
heavy truck sales up in October.
LA
port traffic down in October.
What
economists don’t know about the economy.
What
I am reading today
Retirement
math.
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