Thursday, December 19, 2019

The Morning Call--The beginning of the end?

The Morning Call


Our #3 granddaughter arrives today to start the Christmas season.  I am taking off until after New Year’s.  Have great Holiday Season.

The Market

The Averages (28229, 3191) inched downward yesterday, but still closed above both MA’s and in uptrends across all timeframes.  So, momentum remains to the upside, at least short term; and that is being aided by seasonal factors.


However, nothing changed with respect to those multiple gap up opens down below or my concern that this is not healthy and could be an indication that the Market is entering or has already entered a blow off top. 

Volume was flat; breadth weaker than I had expected but remains near overbought territory.  The VIX was up 2 3/8%, but ended near the lows established last April, July and November. 

The long bond declined 7/8%, finishing (1) below the lower boundary of its very short term uptrend  which is also the lower boundary of the current pennant formation.  If it remains there through the close today, it will negated the very short term uptrend.  If it remains there through the close on Friday, it will void the pennant formation, which would be a decidedly negative technical sign for TLT, and (2) right on the lower boundary of its short term trading range. (must read)

The dollar rose ¼ %, but still ended near the lower boundary of its short term trading range.

Gold was up one cent, closing within a developing pennant formation.

The trading pattern of the VIX and the S&P are clearly pointing at a stronger economy.  And now TLT appears ready to join the crowd.  UUP and GLD continue to suggest uncertainty among their investors.

            Wednesday in the charts.



            Only one minor US datapoint was released yesterday.  Weekly mortgage and purchase applications declined.

            The latest business cycle risk report.

            The latest Atlanta Fed Q4 GDPNow forecast.

Overseas, October EU YoY construction output and November German PPI were disappointing, the November Japanese trade deficit was much better than anticipated and November EU  and UK CPI’s were in line.

              Bottom line: the impeachment hearings sucked all the air out of the Market yesterday.  Indeed, given the extent of its overbought condition, I was surprised that it wasn’t off more.  But I guess that the irresistible force of $500 billion being pumped into the financial system can overcome all.

            ***overnight, the Bank of Japan left rates unchanged and will continue QE; the Bank of China made a huge liquidity infusion into its financial system; the Bank of Sweden raised its key bank rate.; the Bank of England left rates unchanged but hinted that it may start tightening.  Is this the beginning of the end or just noise?

              Trump has never been serious about fiscal responsibility.

            ***overnight, US and China discussing the signing of the Phase One traded deal.

            The latest from Stanley Druckenmiller.

    News on Stocks in Our Portfolios
Paychex (NASDAQ:PAYX): Q2 Non-GAAP EPS of $0.70 beats by $0.02; GAAP EPS of $0.72 beats by $0.03.
Revenue of $990.7M (+15.3% Y/Y) beats by $2.44M.

Accenture (NYSE:ACN): Q1 Non-GAAP EPS of $2.09 beats by $0.10.
Revenue of $11.36B (+7.1% Y/Y) beats by $210M.

Accenture (NYSE:ACN) declares $0.80/share quarterly dividend, in line with previous.
FactSet Research Systems (NYSE:FDS): Q1 Non-GAAP EPS of $2.58 beats by $0.16; GAAP EPS of $2.43 beats by $0.24.

   This Week’s Data


            Weekly jobless claims fell 18,000 versus expectations of down 27,000.

            The Q3 trade deficit was $124.1 billion versus consensus of $122.1 billion.

            The December Philadelphia Fed manufacturing index came in at 0.3 versus estimates of 8.0.


            November UK retail sales fell 0.6% versus forecasts of +0.3%.


What I am reading today


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