The Morning Call
3/19/20
The
Market
Technical
The Averages (19898, 2398) gave a thumbs down to Tuesday’s
Fed and the White House moves to solve the coronavirus problem. The S&P remained in its newly reset
intermediate term trading range. The Dow ended below the newly reset lower
boundary of its short term trading range for a third day, resetting to a downtrend. Next technical
support 15399/1810; but very short term, stocks are quite oversold.
TLT, GLD and UUP continued
their volatility. TLT continued Tuesday’s
plunge but remained above both DMA’s and the lower boundaries of its short term
and intermediate term uptrends. GLD did
another reversal finishing back below its 200 DMA (it is still below its 100
DMA). The UUP spiked again, closing back
above its 100 and 200 DMA’s and the upper boundary of its short term treading
range---if it remains there through the close on Friday, it will reset to an uptrend.
***overnight, Treasury
mulls 50 year bond.
The question remains,
are TLT, GLD and UUP reflecting a coming 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.
This is what a $12
trillion margin call looks like.
Wednesday
in the charts.
Fundamental
Headlines
Yesterday’s
numbers were disappointing. Weekly
mortgage and purchase applications were down.
February housing starts dropped but were better than anticipated while building
permits were worse.
Update on big four
economic indicators.
Big 3 automakers
shutter US plants.
Overseas,
the January EU trade surplus less than expected while its February CPI was in
line. The February Japanese trade
surplus was larger than estimates.
The major headline
of the day was the senate passing a coronavirus aid package (which had already
been voted in the house). It will
certainly help get the country through this crisis, though it will ultimately
add to inflationary pressures.
Coronavirus
perspective.
***overnight
update.
***overnight,
Germany to suspend debt break on Monday.
***overnight, Fed
unveils another bailout fund.
***overnight, ECB
fires its own bazooka.
That said, I continue
to believe that the real problem is solvency of the credit markets which the
Fed has yet to figure out how to remedy.
More problems in
the credit market.
Boeing: A great
example of the misallocation of assets.
What the ECB still
needs to do.
Bottom line. My strategy remains: 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.
Equity wealth and
consumption.
Subscriber Alert
The stock price of
Cisco Inc (CSCO) has traded into its Buy Value Range. According, it is being Added to the High
Yield Buy List. At the Market open, the
High Yield Portfolio will Buy a one half position in CSCO.
The
stock price of Paychex Inc (PAYX) has traded into its Buy Value Range. The Dividend Growth Portfolio owns a one half
position, having Sold Half earlier. At
the Market open, the Dividend Growth Portfolio will Buy a one half position in
PAYX.
News on Stocks in Our Portfolios
Revenue of $11.14B (+6.6% Y/Y) beats by $40M.
Economics
This Week’s Data
US
Weekly
jobless claims rose 71,000 versus expectations of up 9,000.
The
March Philadelphia Fed manufacturing index was reported at -12.7 versus forecasts
of +10.
The
Q4 trade deficit was $109.8 billion versus projections of $109.0 billion.
International
January
EU YoY construction output rose 6.0% versus consensus of +1.3%.
February
Japanese CPI YoY was up 0.6%, in line; ex food and energy, it was up 0.6%
versus 0.9%.
The
March German preliminary business climate index came in at 87.7 versus
estimates of 88.0.
Other
Crude
oil prices continue to plunge.
What
I am reading today
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