The Morning Call
12/10/19
The
Market
Technical
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.
Fundamental
Headlines
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’.
https://www.advisorperspectives.com/commentaries/2019/12/09/the-myth-of-the-great-cash-hoard-of-2019
Private equity ‘dry
powder’.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
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%.
International
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%
Other
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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for Survival’s website (http://investingforsurvival.com/home)
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