Wednesday, April 22, 2020

The Morning Call--A test?

The Morning Call


The Market

The Averages  (23018, 2736) fell further yesterday with both ending below the lower boundaries of its very short term uptrends---the Dow for a second day, voiding that trend.  As you know, I expected some consolidation following the steep ascent off the March 23rd lows.  There is visible support at the 21375/2530 levels.  If those hold then my assumption that the indices will challenge of their 100/200 DMA’s will remain intact.

GLD declined slightly while TLT and UUP were up---the latter continuing its breakout to the upside from a pennant formation.

            BofA on gold.

            Tuesday in the charts.



Yesterday’s stats---March existing home sales and month to date retail chain store sales--- were disappointing.

Overseas, February UK average earnings were slightly below estimates while the April EU and German economic sentiment indices were much better than anticipated.

The coronavirus

***overnight update.

It appears that a deal has been reached on the second leg for small business funding.

            Fiscal policy

            US debt to surge past war time level.

            The Fed

            The Fed is buying $41 billion in assets daily.

            And it still isn’t enough.

            Open letter to Ben Bernanke.

            Is inflation coming back?


            ***overnight update.

            Yesterday in oil.

            But Trump has a plan.

Bottom line:  the turmoil in the oil market is having its impact on stock prices in general.  But oil is a commodity; and pricing problems in commodities tend to solve themselves in short order.  On the other hand, liquidity problems are starting to reappear in the financial system.  If they get worse, stocks could experience heartburn that could push prices back to their March lows---although I don’t think that will occur.

As you know, I have a list of stocks that have suffered severe whackage since the February high and bought positions in some of them late in the March decline.  I am not inclined to resume any buying until stocks make a solid test of the March low.

                Estimating the earnings decline.

                The latest from Morgan Stanley.
    News on Stocks in Our Portfolios

   This Week’s Data


            March existing home sales fell 8.8% versus expectations of -8.1%.

                Weekly mortgage applications declined 0.3% while purchase applications rose 2.1%.


            March UK CPI was 0.0%, in line; core CPI was +0.1% versus +0.2%; PPI was -0.2% versus +0.4%; core PPI was +0.3% versus 0.0%.


What I am reading today


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