The Morning Call
6/9/20
The
Market
Technical
The Averages (27572, 3232) experienced another explosive
day to the upside. Both of the indices
remain in very short term uptrends. The
DJIA finished above its 200 DMA for a second day (now resistance; if it remains
there through the close on Wednesday, it will revert to support). While the current move continues to look like
a blowoff top to me, the negatives are growing:
(1) the two huge gap opens (5/18, 6/5) that remain unfilled, (2) the
indices are now solidly in overbought territory and (3) the VIX continues to
reflect growing investor uncertainty [yesterday it was up on a big up day].
What
if the stock market is exactly right?
What
if it not?
Part 2 (must read).
GLD had a good
day, but not enough to reverse Friday’s weakening in upside momentum. Ditto with the long bond---price up but no
improvement in last week’s significant loss of momentum. The dollar was down again on volume,
remaining in a newly reset very short term downtrend.
Monday
in the charts.
Fundamental
Headlines
The
economy
No US stats
released yesterday.
The US officially
entered a recession in February.
Update in big four
economic indicators.
The economy is
experiencing an epic collapse in demand.
Overseas,
final Japanese Q1 GDP fell and private consumption along with April German
industrial production were below consensus while final Japanese Q1 capital
expenditures were better than anticipated.
The
coronavirus
***overnight
update.
The coronavirus is
yesterday’s story.
WHO now says
asymptomatic coronavirus carriers are not very infectious.
The Fed
Could the Fed buy
gold?
Bottom line. barring an unexpectedly damaging second wave
of the coronavirus, the economy is likely through the worst of the
recession. However, as I continue to
note, we still have no idea what the lockdown’s ultimate impact will be on
American’s spending, social and work habits.
And
yet, investors are tip toeing through the tulips. To me the only explanation
for this total breakdown of the relationship between price and value is QE; and
I have no clue when and how this disconnect corrects itself. Invest accordingly.
P.S. if I were
fully invested, I would be desperately seeking sell candidates. Conversely, if I had more cash than I might
want, I would definitely NOT be chasing stocks up.
News on Stocks in Our Portfolios
Revenue of $555.5M (-44.5% Y/Y) misses by $98.47M.
Revenue of $709M (-4.7% Y/Y) beats by $27.88M.
Economics
This Week’s Data
US
The
May small business optimism index came in at 94.4 versus estimates of 86.0.
International
April
Japanese YoY cash earnings fell 0.6% versus expectations of growing 0.6%; May
YoY machine tool orders declined 52.4% versus -44.0%.
The
April German trade balance was +E3.5 billion versus consensus of +E15.9
billion.
Q1
final EU GDP dropped 3.6% versus forecasts of -3.8%; unemployment decreased
0.2%, in line.
Other
A deeper dive
into last week’s nonfarm payroll number.
Six high
frequency indicators for recovery.
North Korea cuts
contact with the South.
What
I am reading today
How to avoid a funding
shortfall in retirement.
Policing the police.
Hubble telescope makes astonishing
discovery.
How to control frustration.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
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