The Morning Call
8/10/20
The
Market
Technical
The S&P
continues its push higher, even though the Dow is lagging dramatically. While my assumption is that its momentum is
to the upside, (1) it made two gap up opens last week that need to be filled,
(2) the February high [upper boundary of its intermediate term trading range]
will likely offer some resistance, (3) equities are overbought and (4) while
the VIX is directionally in sync, it is just barely so. My guess is that stocks will consolidate
after attempting to challenge the February high.
The
long bond is still struggling to push above those March/April closing
highs. After such a strong run, it is
not surprising that it would need a rest at a resistance level. And remember
TLT has been above both DMA’s and in uptrends across all timeframes for almost two
months. So, it will take a lot of
negative pin action before this chart turns negative.
While GLD was down
on Friday, it still closed above the upper boundary of its long term trading
range for the fourth day, resetting it to an uptrend. It is now above both DMA’s, in uptrends across
all timeframes and has no visible resistance except the upper boundary of its
new long term uptrend (400+)---clearly a major plus. And there was even good news in Friday’s
decline---it filled Wednesday’s gap up open.
The dollar bounced
hard on Friday. Not surprising given that
the rebound was off the lower boundary of its short term downtrend. So, the downtrend is not is danger of being
challenged. Plus, UUP made a gap up open
which needs to be filled.
The
VIX traded around the level of its June low all week. While it closed below that low on Friday
leaving it in sync with the S&P, its pin action is suggesting more
uncertainty than that of the S&P.
Friday in the
charts.
https://www.zerohedge.com/markets/tech-tumbles-weekend-copper-crumbles-silver-soars
Fundamental
Headlines
The
Economy
Weekly Review
The data (and
primary indicators) last week was upbeat again.
Overseas the stats were negative.
Indeed, they seem to be trending that direction as the velocity of the
initial bounce off March lows peters out.
Short
term, the economic recovery continues
though the question of additional progress remains. The progress in the numbers thus far has been
insufficiently rapid so as to preclude a ‘V’ shaped recovery. While the data could certainly re-accelerate,
in its absence, the shape of the recovery is an issue.
Longer term,
the economic growth will be influenced by how quickly virus treatments and a
vaccine are discovered as well as the permanent impact this disease/government
reaction will have on the spending and work habits of the nation.
Whatever the
shape of the recovery, I am not altering my belief that long economy will grow
at a historically subpar secular rate due to the twin burdens of egregiously
irresponsible fiscal and monetary policies---which, by the way, are becoming
even more egregiously irresponsible as a result of measures being taken by the
government and the Fed in dealing with the current crisis.
https://www.zerohedge.com/markets/3-reasons-treasury-rates-can-still-hit-0-part-iii-death-growth
US
International
Other
The
coronavirus
***overnight update.
Do masks work?
https://www.zerohedge.com/political/worlds-top-epidemiologists-masks-dont-work
Trump issues executive order to re-start the
money flow.
No payment, no problem, until……..
https://www.zerohedge.com/personal-finance/no-payment-no-problem-bizarre-new-world-consumer-debt
The
Fed
Heading for a collapse.
https://www.zerohedge.com/markets/gordon-were-heading-complete-financial-moral-political-collapse
At some point, you have to stop digging.
https://www.zerohedge.com/markets/fed-wants-inflation-their-actions-are-deflationary
Time to position for the end game.
https://www.zerohedge.com/markets/martenson-its-time-position-endgame
Bottom
line. Whatever the timing of a vaccine, however receptive
the population is to inoculation, however fully the economy returns to
pre-coronavirus levels, the economy will still be stuck with trillions of new government
debt that has to be financed and a Fed which almost surely will slow the rate
of expansion of its balance sheet if not reverse it. And, in the absence of a meaningful decline
in equity prices, the Market will have to reconcile the current excesses in
valuation with impact of slowing secular economic growth, a global financial system
saturated with liquidity and their effects on earnings growth and inflation.
News on Stocks in Our Portfolios
Illinois Tool Works (NYSE:ITW) declares
$1.14/share quarterly dividend, 6.5% increase from prior dividend of $1.07.
What
I am reading today
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