Monday, March 2, 2020

Monday Morning Chartology

The Morning Call


The Market

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.



            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


   This Week’s Data



            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.


            Violence escalating in Syria.

What I am reading today

            Quote of the day.

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