The Morning Call
2/18/20
The
Market
Technical
The S&P
maintained its upward momentum last week. (The Dow didn’t do quite as well; but
still managed to re-establish is very short term uptrend.) The assumption is that the uptrend continues,
possibly challenging uptrends marked up the upside by 32301/3594.
The long bond
recovered from the earlier in the week sell off, is in the process making a
higher low. That is a technical plus and
points to a continuation of upward momentum.
GLD continues its winning
ways. As you can see, last week it made
a new higher low and a second higher high, suggesting that investors are
pursuing safety trades.
The dollar’s
performance since year end 2019 has been impressive---virtually a straight shot
up. Thursday, it closed above the upper
boundary of its short term downtrend; and even though, UUP ended down on
Friday, it remained above this boundary.
If it finishes there at the close today, the short term trend will reset
to a trading range. Its pin action could
suggest either a strong economy (ala stocks) or a safety trade (TLT and GLD).
As should be
expected, VIX moved lower last week as stocks rallied. Friday, it ended back below its 100 DMA (now
support; if it remains there through the close on Wednesday, it will revert to
resistance) and below its 200 DMA for a third day (now support; if it remains
there through the close today, it will revert to resistance). Nonetheless, the magnitude of move to the
downside did not mirror stocks move to the upside, suggesting the investors are
more risk averse than the indices pin action would indicate.
Fundamental
Headlines
The article is a
bit long but it delves into the math of buy backs and how they contribute to
the mispricing and misallocation of assets.
Summary data on Q4
earnings.
The next Minsky
moment.
Chinese government
appears to be nixing another round of fiscal stimulus.
Apple gets whacked
by the coronavirus.
What makes an
asset safe?
News on Stocks in Our Portfolios
Genuine Parts (NYSE:GPC) declares $0.79/share quarterly dividend, 3.6% increase from
prior dividend of $0.7625.
Economics
This Week’s Data
US
The
February NY Fed manufacturing index was reported at 12.9 versus expectations of
5.0.
International
Q4
Japanese GDP growth fell 1.6% versus estimates of -0.9%; capital
expenditures were -6.3% versus -3.7%;
private consumption was -2.4% versus -2.0%.
December
Japanese industrial production rose 1.2% versus consensus of +1.3%.
The
December UK unemployment rate was 3.8%, in line; average earnings rose 2.9%
versus +3.0%; Q4 productivity was up 0.3% versus +0.2%.
February
EU economic sentiment came in at 10.2 versus forecasts of 30.0;
February
German economic sentiment registered 8.7 versus estimates of 21.5.
Other
Different
perspectives on the Atlantic alliance.
What
I am reading today
Knowing
your limits.
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