The Morning Call
7/20/20
The
Market
Technical
The S&P had a
decent week. It filled the ‘island top’
gap last Friday and pushed higher. And
it continues to make higher lows. While
it has found some resistance at its June high which is probably related to the
Market’s near term overbought condition, I do not see that as a showstopper. My assumption is that higher prices are ahead.
The long bond
continues to grind higher---and why not?
The Fed is soaking up elements from many sectors of the bond
market. Plus, this week’s data
notwithstanding, the economy is not out of the woods. That said, on a price basis, TLT is overextended
on the upside and really doesn’t have that much more upside unless you assume
that rates are going negative---which the Fed has consistently said it would
not allow to happen. Of course, it has
lied in the past with respect to policy.
Gold continues to
advance. Though it is losing some momentum,
it remains technically strong. The only trend
that is not up is long term (it is a trading range); and there is no resistance
between GLD’s current price and that the upper boundary of that range
(~185). So, like stocks, my assumption
is that gold prices have further to go on the upside.
As you can see,
the dollar has been at current levels (the lower boundary of its short term
trading range) on three prior occasions in the recent past. So, there is definitely support at current prices. I have no idea if UUP will challenge this boundary;
but if it does so successfully, it would likely be bad news for the economy and
good news for gold. (must read)
The VIX traded
below its 200 DMA on Friday; but of course, it will take until next Wednesday to
confirm the break. In the meantime, that
puts it near a challenge of that huge gap up open back in February---which, as
you know, I believe has to be filled. In
other words, a lower VIX/higher stock prices.
Fundamental
Headlines
The
Economy
US
International
June German PPI came
in flat versus estimates of +0.2%.
Other
The
coronavirus
***overnight update.
News on Stocks in Our Portfolios
What
I am reading today
The
psychology of ‘virtue signaling’.
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