Friday, June 19, 2020

The Morning Call--There is still those 'island tops'.

The Morning Call


The Market

The Averages  (26080, 3115) yawned their way through trading yesterday.  They see sawed back and forth across the flatline, ended mixed (Dow down, S&P up) on very low volume and remained out of sync on their 200 DMA’s. Meanwhile, those ‘island tops’ will continue to weigh on the downside.

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

Contrary to the media narrative and some anecdotal evidence, this survey shows that individuals are not that positive on owning equities.

Gold was down and the long bond up.  But both continue to attempt to re-establish upside momentum.  The dollar was up for the fifth time in six days.  While this is a hopeful sign of potential technical improvement, it faces huge overhead resistance where both of its DMA’s as well as the upper boundary of its very short term downtrend are all converging at approximately the same level.

            Thursday in the charts.



            Yesterday’s dataflow was slightly upbeat---again. The June leading economic indicators and the June Philly Fed index were better than anticipated while weekly jobless claims again came in above forecast.
The recession low may be behind us but what is next?

            Nothing overseas.

The coronavirus

Hospitalization data shows no sign of a second wave.

The Fed

In the latest liquidity flood, the ECB hands out E1.3 trillion in negative yielding bonds.


China pledges to step up Phase One US imports.

More detail on the China/India border clash.

Bottom line.  yesterday was relatively quiet on the news front.  The big item being the ECB following the Fed’s lead in QEInfinity/Forever---the obvious importance of which is to keep the tank full to fuel further advances in securities’ prices.  That is the theme.  That keeps the bias in the Market to the upside.

How important (accurate) are the numbers?

     Subscriber Alert

            Lear Corp (LEA) cut its dividend.  Accordingly, it is being Removed from the Dividend Growth Universe and the Dividend Growth Portfolio is Selling its position on the open.

    News on Stocks in Our Portfolios


   This Week’s Data


            The June leading economic indicators rose 2.8% versus forecasts of up 2.3%

                        The May trade balance was -$104.2 billion versus estimates of -$103.0 billion.


            May German PPI was -0.4% versus consensus of -0.3%.

            May UK retail sales were up 12.0 % versus expectations of up 5.7%; ex fuel, they were up 10.2% versus up 4.5%.


            Hotel occupancy down 43% YoY.

            Mortgage rates tumble to all-time low.

            Italy once again on the worry list.

            EU car sales crash 57% in May.

What I am reading today

            Hemingway and the bull fight.

            The intelligence of earthworms.

            How cultural revolutions die.

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