Friday, December 6, 2019

The Morning Call---All you need is NotQE

The Morning Call


The Market

The Averages (27677, 3117) edged higher yesterday.  But the Dow didn’t close Tuesday’s gap down open.  Both still have Wednesday’s gap up opens to fill.  Volume declined; breadth was mixed.  The VIX fell another 1 7/8%, remaining below both MA’s and near the boundary defined by April, July and November lows.   I remain of the opinion that all the trading gaps that have been created of late point to a trading market in the near term.  Although seasonal factors plus the quick return of the VIX into complacency territory suggest that downside risk is contained.

The long bond fell another ½ %, (1) remaining below that trend of lower highs, (2) closing below its 100 DMA for a second day; if it remains there through the close today Friday it will revert to resistance but (3) only partially closed Tuesday’s gap up open.  All of these are short term negatives.

The dollar continued its slow drip lower, down another ¼%, ending below its 100 DMA (if it remains there through the close next Monday, it will revert to resistance) after resetting its short term trend to a trading range on Wednesday.   While UUP has not experienced the volatility seen in stocks, TLT and GLD, the downward momentum leaves little doubt that its investors are expecting a weaker economy.

Gold was up eight cents, finishing above Tuesday’s gap up open but below its 100 DMA.
            Thursday in the charts.



             Yesterday’s stats were slightly positive: October factory orders were in line, but ex transportation they were below estimates.  On the other hand, the October trade deficit and weekly jobless claims were better than anticipated.

            Overseas, October EU retail sales were below consensus, its Q3 employment and  GDP growth were in line and the November German construction PMI above forecasts
            Yesterday’s dueling trade headlines:

                        China in close contact with US.


                        WSJ says US officials less optimistic about a trade deal.

                        ***But then we get the overnight happy talk.

            Bottom line:  NotQE.  Enough said.

    News on Stocks in Our Portfolios
C.H. Robinson Worldwide (NASDAQ:CHRW) declares $0.51/share quarterly dividend, 2% increase from prior dividend of $0.50.

Medtronic (NYSE:MDT) declares $0.54/share quarterly dividend, in line with previous.


   This Week’s Data


            November nonfarm payrolls grew by 266,000 versus forecasts of up 180,000.


            October Japanese YoY household spending fell 5.1 versus estimates of -3.0%; cash earnings were +0.5% versus +1.1%; leading economic indicators  came in at 91.8 versus 92.0.

            October German industrial production was -1.7% versus consensus of +0.1%.


            OPEC committee recommends 500,000 bpd cut in production.

What I am reading today

            Chaos at the top of the world.
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