The Morning Call
1/23/20
The
Market
Technical
The Averages (29186,
3321) were basically flat yesterday (Dow down slightly, S&P up slightly), though
they still closed above both MA’s and in uptrends across all timeframes. So,
the strong upside momentum continues. Volume was down; breadth weakened a tad,
but prices remained in overbought territory.
Remember that there are still multiple gap up opens down below that ultimately
need to be filled.
Persistency.
The VIX was up ½ %,
but that did little to improve the chart/suggest that investor sentiment could
be changing to the negative.
The long bond rose
3/8%, finishing above its 100 DMA (now resistance; if it remains there through
the close on Friday, it will revert to support). This is the first potential technical challenge
to TLT’s downside momentum. A reversion
to support would bring into question current bond investor sentiment that the
economy is growing stronger.
The dollar continued
to decline (down two cents). Of the
group of indices that I follow, it has by far the ugliest chart. So, it appears that there is more
downside. That said, there is a huge gap
down open dating back to 12/23 that will at some point begin to exert a powerful
magnetic pull to the upside on UUP.
Gold was up five
cents, closing within very short term and short term uptrends and above both MA’s.
The chart of the S&P
is clearly pointing at a stronger economy.
Those of GLD and UUP not so much; and TLT may also about to challenge
that scenario.
Wednesday in the
charts.
Fundamental
Headlines
Yesterday’s US stats
were mixed. December existing
home sales (primary indicator) were strong and month to date retail chain store
sales growth improved. The November housing
index was in line. However, weekly mortgage
and purchase applications along with the December Chicago Fed national activity
index were disappointing.
End of cycle
worries.
***overnight, ECB
leaves interest rates and QE unchanged.
Bottom line: while
there is still no recession in my forecast, there is little support in the
numbers for a pickup in economic growth.
The bond market may be hinting that is the case.
Preparing for low
returns.
Here’s is why you
should rebalance.
News on Stocks in Our Portfolios
Procter & Gamble (NYSE:PG): Q2 Non-GAAP EPS of
$1.42 beats by $0.05; GAAP EPS of $1.41 beats
by $0.03.
Revenue of $18.24B (+4.6% Y/Y) misses by $130M.
Revenue of $3.38B (+4.6% Y/Y) misses by $50M.
Economics
This Week’s Data
US
December
existing home sales rose 3.6% versus estimates of +1.3%.
Weekly
jobless claims rose 6,000 versus consensus of up 10,000.
International
The
November Japanese all industry activity index came in at +0.9 versus
expectations of -0.1; its December trade deficit was Y152.5 billion versus
forecasts of Y150.0 billion.
Other
***overnight,
China quarantines third city.
Trains,
planes and trucks.
Architectural
billings end year on positive note.
Those
who fail to learn from history…………
What
I am reading today
Dealing with gun
violence.
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