The Morning Call
3/10/20
The
Market
Technical
The Averages (23851, 2741) got nuked yesterday. The technical highlights were (1) the
S&P finishing below [a] its 200 DMA for a second day {now support; if it
remains there through the close today, it will revert to resistance}, [b] the lower boundary of its short term trading
range {if it remains there through the close on Wednesday, it will reset to a
downtrend} and [c] the lower boundary of its intermediate term uptrend {if remains
there through the close on Thursday, it will reset to a trading range, (2) the
Dow ending below the lower boundary of its short term uptrend [if it remains
there through the close on Wednesday, it will reset to a trading range].
Clearly, a
horrible day. While multiple support
levels are being taken out, those challenges still need to be confirmed. And that brings us, as it always does, to
follow through. Short term, stocks got
very oversold yesterday; so, some kind of bounce is likely. Longer term, given the current chaos in the
Markets, I have no idea what happens next.
TLT and GLD continued
to soar to new highs on big volume while UUP was ripped again, closing below
the lower boundary of its short term trading range; if it remains there through
the close on Wednesday, it will reset to a downtrend.
Fundamental
Headlines
No economic releases
in the US yesterday. Overseas, Q4 Japanese GDP
growth, and capital expenditures were below expectations while private
consumption was above. The January
German trade surplus and industrial
production were better than anticipated.
***overnight, Xi
declares victory in Wuhan.
***overnight, White
House not ready for roll out of coronavirus counter measures.
***overnight,
global update on coronavirus.
Bottom line: as
painful as the last couple of weeks have been, it was not unexpected. Stocks were overvalued, making what is
occurring inevitable. And given that some
segments of the Market remain overvalued, I think that more of the same is to
be expected. On the other hand, as I have
pointed out, some segments of the Market have been plummeted and now represent
great value.
As the decline
continues, my strategy is to Buy beaten up stocks gradually until it is obvious
that the worst is over. In my opinion,
the worst won’t be over until (1) the peak infections/deaths from the
coronavirus has been reached, (2) the Saudis’ and Russians come to an agreement
on oil pricing and (3) the Fed stops its unnecessary interference in the
capital markets. (today’s must read):
More on the liquidity
problem.
Don’t panic.
Subscriber Alert
The stock price of
3M (MMM) has fallen into its Buy Value Range.
Accordingly, it is being Added to the Dividend Growth and High Yield Buy
Lists. Both Portfolios own one half
positions having Sold one half at higher prices. At the open this morning, both Portfolios
will Add to these positions.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
February small business optimism index was reported at 104.5, in line.
International
February
Chinese CPI was +0.8%, in line.
February
Japanese machine tool orders YoY fell 30.1% versus estimates of -22.0%.
The
final Q4 EU GDP growth estimates was +0.1%, in line; employment change was
+0.3%, also in line.
Other
What
I am reading today
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