Tuesday, December 10, 2019

The Morning Call---Just in, Trump delays tariffs

The Morning Call


The Market

The Averages (27909, 3135) edged lower yesterday.  But they didn’t close last Tuesday’s gap down open or last Wednesday’s and Friday’s gap up opens (not to mention the October 11th gap up open).  The sudden plethora of 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.

Volume declined; breadth was negative. 

The pin action in the VIX put it more in line with that of the Averages.  As you know, it spiked dramatically last Monday and Tuesday, then spent the rest of the week drifting back into a range indicating complacency.  Yesterday, in erratic intraday trading, it first challenged the boundary defined by the April, July and November lows before soaring 16% to end above its 100 DMA (now resistance; if it remains there through the close on Wednesday, it will revert to support) and its 200 DMA (now resistance; if it remains there through the close on Thursday, it will revert to support).

The long bond was up ¼ % but short term momentum remains down  (1) as it is still well below its 100 DMA which reverted to resistance last Friday and  (2) it continues trade in a trend of lower highs.

The dollar dropped 1/8%, but failed to close Friday’s gap up open.  It remained above both MA’s and in a recently reset to a short term trading range.

Gold fell three cents, leaving both last Tuesday’s gap up open and Friday’s gap down open unfilled.

The pin action in TLT, UUP and GLD support my nervousness about stocks.
            Monday in the charts.



            No US data releases yesterday.  Overseas, Q3 Japanese GDP growth and the  German trade surplus were better than anticipated.

***overnight, major freight carrier goes bankrupt.

            Tuesday starts a week of heavy weight news events.  First, the FOMC December meeting starts today.

Why investors should ignore the Fed’s ‘forward guidance’.

            ***just in, WSJ says Trump will delay the imposition of tariffs on December 15th.
            Bottom line: while the headlines coming out this week could certainly impact stock prices on a short term basis, as long as NotQE remains in force, the bias in the Market is to the upside.  Enjoy it, but be sure your portfolio has the protection of a cash reserve.

The myth of the ‘great cash hoard’.

            Private equity ‘dry powder’.

    News on Stocks in Our Portfolios


   This Week’s Data


            November small business optimism was reported at 104.7 versus estimates of 102.8.

            Q3 nonfarm productivity was -0.2% versus forecasts of -0.1%; unit labor costs were up 2.5% versus 3.3%.


            November Chinese CPI was +0.4% versus expectations of +0.1%; YoY vehicle sales were up 3.6% versus -3.1%.

            November Japanese YoY machine tool orders fell 37.9% versus consensus of -32%.

            The October UK trade deficit was L5.19 billion versus projections of L3.0 billion; GDP was 0.0% versus +0.1%; construction output was -2.1% versus -0.1%; industrial production was +0.1% versus +0.2%; YoY construction orders was -6.8% versus -3.2%


            Inflation remains in a coma.

            Could Japanification go global in 2020?

            Late stage capitalism.

            US farmers are having their best year since 2013.

What I am reading today

            Vietnam, Part 2.

            Nine investment nuggets for retirees.
            Quote of the day.

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