The Morning Call
6/3/20
The
Market
Technical
The Averages (25742, 3080) maintained their upward
momentum. Both of the indices remain in
very short term uptrends. The S&P has now successfully challenged
both its 100 and 200 DMA’s (now support).
The Dow finished above its 100 DMA for a second day (now resistance; if
it remains there through the close today, it will revert to support). The one negative is those huge 5/18 gap opens
that remain unfilled and will continue to act as a magnet that needs to be
closed. My assumption continues to be
that equity prices’ bias is to the upside.
Fragility is off
the charts.
GLD was off but its
chart remains strong. TLT was down,
ending below the upper boundary of its intermediate term uptrend---not necessarily
a negative but a sign of the loss of upside momentum; while the dollar was
whacked again, finishing below (1) the lower boundary of its short term uptrend
for the third day, resetting to a trading range and (2) both its 100 and 200
DMA, both having reverted to resistance. This pin action is pointing to a risk
off scenario (a little bit less so for GLD), though it is clearly at odds with
stocks.
The case for gold.
The dollar declines as
risk on trade gains momentum.
Tuesday in the
charts.
Fundamental
Headlines
The
economy
Only one datapoint
reported yesterday. Month to date retail chain store sales declined at a
slower pace than in the prior week.
The latest CBO economic forecast.
The latest Atlanta
Fed nowcast.
There is nothing
normal about the savings rate.
The
coronavirus
The real looters
are the politicians.
Overdoses
spike in Chicago amid coronavirus lockdown.
Banks brace for surge in
defaults.
The Fed
Mohamed El Erian slams the Fed (must read)
China launches QE.
China
The US declaration
of (cold) war.
Update on US/China
trade.
Bottom line. this Market has a lot of the signs of some
kind of blow off top. I don’t know if the
indices can make all the way back of their former highs; but it sure looks like
higher stock prices are in the cards. In
my opinion, this is an extremely risky time to be buying stocks. All my attention is focused on our holdings
that at nearing their Sell Half ranges.
The
spring 2020 update on S&P 500 earnings.
Update on valuations.
News on Stocks in Our Portfolios
Revenue of $629.7M (-11.7% Y/Y) beats by $23.69M.
Economics
This Week’s Data
US
Weekly
mortgage applications dropped 3.9 while purchase applications rose 5.3%.
Month
to date retail chain store sales declined at a slower pace than in the prior
week.
April
construction spending fell 2.9% versus estimates of -6.5%.
The
May ADP private payroll report showed a job loss of 2,960,000 versus forecasts
of 9,000,000.
International
The
May EU final manufacturing PMI came in at 36.6 versus forecasts of 36.8; the
services PMI was 30.5 versus 28.7; the composite PMI was 31.9 versus 30.5; the April
unemployment rate was 7.3% versus 8.2%; April PPI was -2.0% versus -1.8%.
The UK May final
manufacturing PMI was 40.7, in line; the services PMI was 29.0 versus 28.0; the
composite PMI was 30.0 versus 28.9.
The May German final
services PMI was 32.6 versus expectations of 21.4; the composite PMI was 32.3
versus 31.4; the May unemployment rate was 6.3% versus 6.2%.
The May Japanese
final services PMI was 26.5 versus projections of 25.3; the composite PMI was
27.8 versus 27.4.
The May Chinese Caixin
final services PMI was 55.0 versus estimates of 48.6; the composite PMI was
54.4 versus 49.1.
Other
Framing
lumber futures prices rise.
Update
on oil.
What
I am reading today
Photos
of the works of Christo.
Why we are blind to
probability.
The real reason social security is
in trouble.
The
benefit of talking an idea out.
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for Survival’s website (http://investingforsurvival.com/home)
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