The Morning Call
3/2/20
The
Market
Technical
Hell of a
chart. Five huge down days; with three
gap down opens; the breaking of two resistance levels (the very short term uptrend
and the 100 DMA) and the threat of the break of a third resistance level (the
200 DMA). Clearly indicative of enormous selling pressure. And unless there is some sort of news showing
a slowdown in the infection/death rates from the coronavirus, my assumption is that
that downward pressure will continue.
That said, how
many times did I say last week that stocks were dramatically oversold? Well, guess what? They still are. My point being beware of the technical bounce
especially in a terrible Market.
The long bond was
stronger than duck butter, advancing relentlessly on rising volume. It played the perfect role as a ‘safety trade’. There is certainly nothing in the chart to suggest
that the trend to lower yields won’t continue.
On the other hand,
GLD was down on hug volume---something that was surprising to me in a risk off
Market Of course, the selloff resulted in virtually
no technical damage to GLD’s charts. The
only thing that happened was that it failed to breach the upper boundaries if
two uptrends---which speaks to momentum (slower) not direction. So, there is no reason to think that the
upward momentum on gold’s price is in jeopardy.
The
dollar’s performance was even worse than GLD’s, negating its very short term
uptrend and initiating challenges to both its 100 and 200 DMA’s. If those are successful, then clearly its
value as a safety trade will have been diminished.
Clearly,
the TLT, GLD, UUP ‘safety trade’ triumvirate is losing some its technical strength. That doesn’t mean that their investors still
aren’t worried; but perhaps those concerns are starting to be reflected in
prices.
Investors finally
realized that TLT, GLD, UUP were trying to tell them something and joined the
risk off trade on Monday, returning the VIX to levels more indicative of the
Market’s pin action.
Twelve things that
won’t help navigate a Market decline.
Fundamental
Headlines
Latest on
coronavirus.
In the US.
Warning from National
Institute of Allergies and Infectious Diseases/
OECD cautions
global GDP could shrink by 50%.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
International
Q4 Japanese YoY capital spending rose 3.5% versus
estimates of up 1.6%.
The
February Japanese manufacturing PMI came in at 47.8 versus forecasts of 47.6; the
Chinese manufacturing PMI was 38.7 versus 46.0; the Chinese Caixin manufacturing
PMI was 40.3 versus 45.7; the Chinese nonmanufacturing PMI was 29.6; the UK
manufacturing PMI was 51.7 versus 51.8; the German manufacturing PMI was 48.0
versus 47.8; and the EU manufacturing PMI was 49.2 versus 49.1.
Other
Violence
escalating in Syria.
What
I am reading today
Quote
of the day.
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