The Morning Call
3/11/20
The
Market
Technical
The Averages (25018, 2882) bounced yesterday---not surprising
given how oversold they were on Monday’s close (that notwithstanding, they are
still oversold) The technical highlights
included multiple reversals though the S&P finished below its 200 DMA for a
fourth day, reverting to resistance. However,
it ended back above ( 1) the lower boundary of its short term trading range, voiding
that break and (2) the lower boundary of its intermediate term uptrend, voiding
that break. On the other hand, the Dow finished
below the lower boundary of its short term uptrend for a second day (if it
remains there through the close today, it will reset to a trading range).
The fastest bear
market in history.
This is not a Q4
2018 selloff (must read).
One other technical
point that bears mentioning is that the VIX declined much less than I expected---suggesting
continued investor concern.
TLT, GLD and UUP
staged major reversals. TLT and GLD’s charts
remained positive. UUP closed back above
the lower boundary of its short term trading range, voiding Monday’s break.
The question is,
did all the above reversals mark the end of the investor anxiety? Follow through.
Tuesday in the
charts.
Fundamental
Headlines
The US dataflow
continues sparse. Yesterday, month to
date retail chain store sales were disappointing while the February small
business optimism index was in line.
Overseas,
February Chinese CPI, the final Q4 EU GDP growth estimates and employment
changes were in line. February Japanese
machine tool orders were awful.
The
three risks:
The
coronavirus.
An infectious disease has not previously
caused a recession.
Atmospheric CO2 and the coronavirus.
https://politicalcalculations.blogspot.com/2020/03/atmospheric-co2-and-coronavirus.html#.XmfNZKhKg2w
The coronavirus by the numbers.
Panic government policies in not the solution.
Speaking of which.
Oil
Assessing the impact of the oil price decline.
The Fed
Lower rates and
more QE won’t solve the Fed’s problem.
***overnight, Bank
of England cuts rates 50 basis point, Laguard promises ECB action and Merkel says
that she would consider doing away with the balanced budget requirement.
And Japan buys
record amount of ETF’s.
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.
More optimistic
thoughts.
Things to remember
in the heat of battle.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Month
to date retail chain store sales declined at the same rate as the prior week.
Weekly
mortgage applications rose 55.4% while purchase applications were up 5.6%.
February
CPI was +0.1% versus consensus of 0.0%; core CPI was +0.2%, in line.
International
The
January UK trade balance was +L4.2 billion versus estimates of -L3.7 billion; manufacturing
production was +0.2%, in line; industrial production was -0.1% versus +0.3%;
GDP was 0.0% versus +0.2%; construction output YoY was up 1.6% versus up 2.4%.
Other
Is
inflation really dead?
What
I am reading today
The
Biden tax plan.
It
is too soon for the complete switchover to renewable energy sources.
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