The Morning Call
3/12/20
The
Market
Technical
The Averages (23553, 2741) just couldn’t hold Tuesday’s
bounce yesterday and, in the process, got more oversold. The technical highlights included the S&P
finishing below (1) the lower boundary of its short term trading range; if it
remains there through the close on Friday, it will reset to a downtrend and (2)
the lower boundary of its intermediate term uptrend; if it remains there
through the close next Monday, it will reset to a trading range.
TLT, GLD and UUP maintained
the major reversals that began on Tuesday.
TLT and GLD fell but their charts remained positive. UUP continued to rally.
I posed the question
in yesterday’s Morning Call ‘did all the above reversals mark the end of the
investor anxiety?’ Given yesterday’s pin
action, the question should have been ‘are the reversals in TLT, GLD and UUP
just a trading blip or are they starting to forecast a major change/incident in
the economy as they did from late 2018 to their recent peak (low)?’ ---for instance, a
Market rattling credit/liquidity event which would explain higher yields, lower
gold prices and a strong dollar.
https://www.zerohedge.com/economics/banking-crisis-dead-ahead-companies-scramble-draw-down-revolvers
Or?
And.
Wednesday in the charts.
Fundamental
Headlines
Yesterday’s
stats were mildly positive: February
budget deficit was lower than anticipated and weekly mortgage and purchase
application were up; February CPI was a little hotter than expected though core
CPI was in line; month to date retail chain store sales declined at the same
rate as the prior week.
Overseas,
the January UK trade balance was very positive while industrial production, GDP
and construction output were negative; manufacturing production was in line.
The risks:
The
coronavirus
Keeping an eye on South Korea.
Four questions regarding the coronavirus.
WHO declares coronavirus a pandemic.
The coronavirus and the mispricing and
misallocation of assets.
Dealing with the coronavirus is like dealing
with 9/11.
The Fed
Fed increases size of repo facility.
***overnight,
more.
ECB leaves rates
unchanged but increases QE.
Bottom line: when
the stocks of companies that you want to own are down 50% or more and/or are
selling into their Buy Value Ranges, that is the time to put cash reserves to
work---you know sell high, buy low. That
said, I am no Market timing guru; so, a slow steady buy program on down days is
the best I can do at buying low.
Bear market
rallies.
Earnings
expectations are starting to plunge.
Subscriber Alert
The stock prices
of General Dynamics (GD) and MSC Industrial (MSM) traded into the Buy Value
Ranges. The Dividend Growth Portfolio
owns a one half position in GD having Sold Half in late 2017. At the open today, the Dividend Growth
Portfolio will Buy a one half position in GD.
It will also Buy a one half position in MSM.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
February budget deficit was $235.0 billion versus expectations of $236.3
billion.
February
PPI came in at -0.6% versus forecasts of -0.1%; core PPI was -0.3% versus
+0.1%.
Weekly
jobless claims fell 4,000 versus projections of a 3,000 increase.
International
February
Japanese PPI fell 0.4% versus estimates of -0.3%.
January
EU industrial production rose 2.3% versus consensus of +1.4%.
Other
January
2020 snapshot of US/China trade.
China shock hitting Germany’s largest
port.
What
I am reading today
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for Survival’s website (http://investingforsurvival.com/home)
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