The Morning Call
7/1/20
The
Market
Technical
The Averages (25812, 3100) kept the rally going. Volume remained weak; but breadth did improve. (1) the indices remained out of sync on their
200 DMA’s [Dow below, S&P above], (2) the Dow ended above the upper boundary
of its very short term downtrend; if it remains there through the close today,
it will void that trend. However, the
S&P finished below its comparable trend.
So, the Averages are now out of sync on two resistance/support
levels. As I have noted previously,
stocks will be directionless until those inconsistencies are corrected and (3) they
still have those ‘island tops’ weighing on them.
The short term the
technical picture remains shaky; and the indices are stuck in a narrow trading
range marked by the upper boundary of their very short term downtrend (on the
upside) and their DMA’s (on the downside).
Nonetheless, I am sticking with my assumption that the Market’s bias is
to the upside---at least until/unless the Averages revert their DMA’s to
resistance.
Gold was up,
setting another new seven year high. The long bond was down slightly but that did
not negate its reset to the upside. The
dollar was also down. It continues
unable to make a second higher high.
Tuesday in the
charts.
Fundamental
Headlines
The
economy
Yesterday’s stats
were mostly upbeat. Month to date
retail chain store sales, the April Case Shiller home price index and June consumer
confidence were better than anticipated while the June Chicago PMI came in below
estimates.
Overseas, the
numbers were mixed. On the plus side,
May Japanese housing starts and construction orders and May Chinese
manufacturing and nonmanufacturing PMI’s were above expectations. Negatively, May Japanese unemployment and industrial
production along with final Q1 UK GDP growth and business investment were below
forecasts.
The
Fed
The Fed is now a
large holder of US bond ETF’s.
The coronavirus
The latest media scare story.
The next six days will be crucial.
Lives versus jobs.
China
China ends ‘one
state, two systems’.
Bottom line. QEInfinity/Forever is with us for as far as
the eye can see. So far, events related
to the coronavirus, the riots and the India/China confrontation have proven
irrelevant to stock prices. Until that
changes, valuations will get richer.
The necessity of
enduring volatility.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Weekly
mortgage applications fell 1.8% while purchase applications were down 1.3%.
The
April Case Shiller home price index rose 0.9% versus estimates of +0.4%.
The
June Chicago PMI came in at 36.6 versus expectations of 45.0.
June
consumer confidence was reported at 98.1 versus consensus of 91.8.
The June ADP private
payroll reports showed job increases of 2,369,000 versus forecasts of
3,000,000. However, the big number was
the May revision from a loss of 2,800,000 jobs to a gain of 3,065,000.
International
May
German retail sales rose 13.9% versus predictions of 3.9%; its June
unemployment rate was 6.4% versus 6.6%.
The
final June Japanese manufacturing PMI was reported at 40.1 versus projections
of 37.8; the German PMI was 45.2 versus 44.6; the EU PMI was 47.4 versus 46.9;
the UK PMI was 50.1, in line.
June
Japanese consumer confidence was 28.4 versus estimates of 30.0.
Other
Median
household income in May.
What
I am reading today
How to live in a world
gone mad?
Enough is enough. What are you going to do about it?
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