Monday Morning Chartology

The Morning Call

3/16/20

The Market

         

    Technical

            Despite the S&P’s powerful bounce (oversold plus short squeeze) on Friday, it was not enough to undo the technical damage done earlier in the week.  If finished below (1) the lower boundary of its short term trading range for a third day, resetting to a downtrend and (2) the lower boundary of its intermediate term uptrend for a third day; if it remains there through the close today, it will reset to a trading range.  In short, this chart continues to deteriorate.

            The long bond sold off powerfully last week---unusual for a risk off week.  As I have mentioned before, it is likely that this pin action was the result of rampant margin calls, where everything was being sold ‘safety trade’ or not. 

            Ditto GLD, except that its chart experienced technical damage in the selloff.  It fell below its 100 DMA on Friday.  Now support; if it remains there through the close on Tuesday, it will revert to resistance.  This is the first challenge to what has been a very strong chart. 

            UUP is the chart of the week.  Look at that three day reversal---from below the lower boundary of its short term trading range and both DMA’s to above the upper boundary of its short term trading range (if it remains there through the close on Tuesday, it will reset to an uptrend), its 100 DMA (now resistance; if it remains there through the close on Tuesday, it will revert to support) and its 200 DMA (now resistance; if it remains there through the close on Wednesday, it will  revert to support).

            https://www.zerohedge.com/markets/pray-powell-world-hit-12-trillion-dollar-margin-call  (must read)

            The question that I posed last week remains, is current technical turmoil the result of the aforementioned margin calls or are TLT, GLD and UUP pointing to a new concern among their investors (liquidity risks pertaining to corporate balance sheets).

            https://www.zerohedge.com/markets/good-luck-ran-out-because-dollars-did

            While the VIX declined on Friday as would be expected, it sustained an elevated level suggesting that there remains a lot of uncertainty among investors.

            https://www.zerohedge.com/markets/vix-broken

            Monday morning in the charts.

            https://www.zerohedge.com/markets/us-equity-etfs-signal-massive-opening-loss-wti-crashes-below-30

    Fundamental

       Headlines

            ***overnight, on coronavirus.

            https://www.zerohedge.com/geopolitical/assume-everyone-you-meet-infected-us-europe-wake-society-lockdown-death-toll-rises

           

            ***overnight, Fed cuts rates, institutes QEV.

            https://www.zerohedge.com/markets/fed-panics-powell-cuts-rates-zero-announces-700bn-qe5-unveils-enhanced-global-swap-lines

            IMF prepares $1 trillion bazooka.

            https://www.zerohedge.com/geopolitical/imf-prepares-1-trillion-bazooka

    News on Stocks in Our Portfolios

 

           

Economics

   This Week’s Data

      US

            The March NY Fed manufacturing index came in at -21.5 versus expectations of +4.4.

            https://www.zerohedge.com/economics/empire-fed-survey-crashes-most-ever-11-year-lows

     International

            January Japanese machinery orders rose 2.9% versus estimates of -1.6%.

            January/February Chinese YTD fixed asset investments fell 24.5% versus forecasts of +2.8%; industrial production was -13.5% versus +1.5%; retail sales were -20.5% versus +0.8%.

            https://www.zerohedge.com/economics/february-china-economic-data-collapses-massively-more-expected

    Other

What I am reading today

            Quote of the day.

            https://cafehayek.com/2020/03/quotation-of-the-day-3097.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CafeHayek+%28Cafe+Hayek%29

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