The Morning Call
2/25/20
The
Market
Technical
The Averages (27960,
3225) got carpet bombed on heavy volume yesterday. Both ended below the lower boundaries of
their very short term uptrends; if they remain there through the close today,
those trends will be negated. The Dow also
finished below its prior low and its 100 DMA (now support; if it remains there
through the close on Wednesday, it will revert to resistance).
Clearly, upside
momentum has been lost. But keep in mind
that the broken uptrends were very short term, hardly a reason to get major
league beared up. In addition, they both
experienced huge gap down opens which, as you know, I believe have to be
filled. So, to date, nothing really bad
has occurred. Supporting my initial technical
assumption following a breakdown like we just had is that a period of consolidation
is ahead.
True, the suddenness
and ferocity of the reversal in equity prices plus the fact that for the last two
months, the bond, gold and dollar markets have been aggressively pointing to something
amiss in Mudville, suggests that there is a chance that there could be more at
work here than just a technical selloff.
While their message has been quite powerful, the Averages are going to
have to begin breaking major uptrends before it is proven correct.
Yield curve inverted
again.
Recession tipping
point triggered.
Gold gets hammered
on the close.
Monday in the
charts.
Fundamental
Headlines
Yesterday’s stats
were mixed. The February Dallas
manufacturing index was quite disappointing while the January Chicago Fed
national activity index was poor but not as much as expected.
Overseas, the February
German business climate index came slightly better than anticipated.
Bottom line: while
there were plenty of headlines driving it yesterday, the Market was the main
story. In my opinion, it could easily
remain that way until we know what the TLT, GLD and UUP markets have been
discounting (remember they started their tear long before we ever heard of the
coronavirus), whether they are correct and how that gets reflected in equity prices.
News on Stocks in Our Portfolios
Bank of Nova Scotia (NYSE:BNS): Q1 Non-GAAP EPS of
C$1.83 beats by C$0.08; GAAP EPS of C$1.84 misses
by C$0.08.
Revenue of C$8.14B (+7.1% Y/Y) beats by C$110M.
Revenue of $25.78B (-2.7% Y/Y) in-line.
Home Depot (NYSE:HD) declares $1.50/share
quarterly dividend, 10.3% increase from prior dividend of $1.36.
Economics
This Week’s Data
US
The February Dallas
manufacturing index came in at 1.2 versus expectations of 11.8.
Month to date
retail chain store sales declined at the same pace as in the prior week.
The December
Case Shiller home price index was unchanged..
International
Q4
Japanese leading economic indicators were reported at 91.6, in line.
Q4
German GDP growth came in at 0.0%, in line.
Other
How
the $23 trillion national debt effects your own money.
What if rates keep declining?
What
I am reading today
Quote
of the day.
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