Thursday, June 18, 2020

The Morning Call--Just another reason to pump up the volume

The Morning Call


The Market

The Averages  (26119, 3113) backed off yesterday but on very low volume and a decline in the VIX (should be up on a down stock day). The Dow ended back below its 200 DMA (leaving it as  resistance); however, the S&P is well above its 200 DMA.  That leaves the indices out of sync; meaning that they will be directionless until this anomaly is resolved.  Meanwhile, those ‘island tops’ will continue to weigh on the downside.

A preview of this Friday’s option expiration.

Despite this short term break in upside momentum, I am sticking with my assumption that the Market’s bias is to the upside until the Averages revert their DMA to resistance.

Gold, the long bond and the dollar were all up fractionally, leaving their collective pin action confusing and, hence, of little economic or technical informational value.

Wednesday in the charts.



Yesterday’s stats were mixed. Weekly mortgage and purchase applications rose with May housing starts tumbling but building permits advancing.

            The myth of the ‘V’ shaped recovery.

            The coronavirus

            ***overnight update.

            This changes everything?  Not so much.

            Why government lockdowns should end.
              Coronavirus spending. Rich versus poor.

            The Fed
            The Fed can’t revive the dead, but it can delay recovery.

            Jay’s market.

                ***overnight, Bank of England lowers size of QE purchases.
            Fiscal policy

            GOP senators balk at Trump’s $1 trillion infrastructure proposal.

            Bottom line.  in Powell’s second day of congressional testimony, he again did not disappoint, not only filling it with QEInfinity promises but promises that those promises with be us for the foreseeable future (QEForever) though he qualifies as meaning ‘at least until there is a coronavirus vaccine’.   Well, if history is any guide, when we do get a vaccine, the Fed will figure out another reason to keep pumping up the volume.  And as you know, I believe the force of that liquidity injection will continue to provide an upside bias to equity prices until---------I have no idea.  But something that can’t go on forever, won’t.  In the meantime, I will Sell a portion of any stock that reaches its Sell Half Price; and Buy any stock that enters its Buy Value Range, like occurred in March.  But above all, I will retain a sizeable cash position and my position in gold.  

            The latest from Jeremy Grantham.

    News on Stocks in Our Portfolios
Microsoft (NASDAQ:MSFT) declares $0.51/share quarterly dividend, in line with previous.


   This Week’s Data


            Weekly jobless claims rose 1,580,000 versus expectations of up 1,300,000.

            The June Philadelphia Fed manufacturing index came in at 27.5 versus estimates of -23.0.



            The world rises out of extreme poverty.

What I am reading today

            A look at the hypersonic missile systems of the US.

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