The Morning Call
12/9/19
The
Market
Technical
What a week for
the S&P. A gap down open on Tuesday which hasn’t been filled and then a gap
up open on Friday that needs to be filled.
And don’t forget the October 11th gap up open waiting to be
closed. While long term momentum remains
to the upside with the S&P above both MA’s and in uptrends across all
timeframes, all these gap opens suggest to me that short term traders are
controlling the pin action which is not healthy and could be an indication that
the Market is entering or has already entered a blow off top.
The long bond performed
more in line with the technical norms.
It gapped down on Monday, gapped up on Tuesday, then spent the rest of
the week filling both. That leaves the
long term momentum to the upside. But that is starting to be challenged given
that (1) on Friday, the 100 DMA reverted
to resistance, (2) it continues trade in a trend of lower highs and (3) it is
approaching the lower boundary of its very short term uptrend.
I
noted in last Friday’s Morning Call that, of late, the dollar had exhibited the
most stable pin action among the indicators that I follow. It was moving steadily downward throughout
the week, resetting its short term trend from up to a trading range and
challenging its 100 DMA on Thursday.
Then it gapped up on Friday’s open, its investors joining the
schizophrenic behavior of their brothers in stocks, bonds and gold.
GLD shared in last
week’s volatility. It had a gap up open
on Tuesday which never got filled. Then
gapped down on Friday’s open, leaving two gap opens in the same week. Both need to be filled. Short term, the most important thing to note
about this chart is the continuing trend of lower highs.
After rocketing
higher on Monday and Tuesday, the VIX spent the rest of the week drifting back
into a range indicating complacency. I
can’t resolve in my mind how investors can be at once complacent but also react
so violently to headlines that aren’t sudden exogenous events. But it makes me nervous.
Fundamental
Headlines
Big headlines this
week:
FOMC
meets Tuesday/Wednesday.
ECB
meets Thursday.
UK
elections on Thursday.
Tariff
deadline on Sunday.
The angst of John
Mauldin.
More on the
September repo funding problem.
China retaliates
for Huawei.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
Q3 Japanese GDP growth was +0.4% versus
consensus of +0.2%.
The
October German trade surplus was E21.5 billion versus forecasts of E17.5 billion.
Other
Credit
card usage surges in October.
OPEC
and Russia agree to oil production cutbacks.
What
I am reading today
Twenty highest paid
coaches in American sports.
Social Security is not the financial
lifeline you might think it is.
A perfect example of conspicuous
consumption.
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