The Morning Call
8/6/20
The
Market
Technical
The Averages (27201, 3327) were up again and made some
progress in resolving the friction between them, to wit, the Dow finally made a
new high. On the other hand, it still
hasn’t surpassed its June high. In
addition, both of the indices made another gap up open---to go with the one they
made Monday. Further, the VIX continues
to under react to the recent stock price surge; it was off only 3 ¼% yesterday---though
it did close slightly below its June low.
All in all, this pin action is not indicative of a solid trending Market,
just a strong S&P. Nonetheless, I am
sticking with my assumption that the Market’s bias remains to the upside.
For the
optimists. A bit too so, for me.
https://thereformedbroker.com/2020/08/05/its-directional/
Concentration in
the stock market.
https://awealthofcommonsense.com/2020/08/concentrated-in-the-stock-market/
Gold was up
another 1%, finishing above the upper boundary of its long term trading range for
a second day (if it remains there through the close on Friday, it will reset to
an uptrend).
https://global-macro-monitor.com/2020/08/04/gold-heading-to-3000/
The long bond reversed
itself again, putting it back below the uptrend off its June low. In addition, it bounced off its March and
April high closes. So, it seems to be at
a significant test level. Follow
through.
The dollar fell another
1/2 %, ending back below the lower boundary of its short term downtrend. UUP and GLD continue to point to a weak
economy but TLT could potentially call that scenario into question.
Wednesday in the
charts.
Fundamental
Headlines
The
Economy
US
Weekly jobless
claims came is at 1,186,000 versus expectations of 1,415,000.
The July services
PMI was 50.0 versus forecasts of 49.6; the composite PMI was 50.3 versus 50.0.
The July ISM
nonmanufacturing index was 67.2 versus consensus of 60.0.
International
The July EU construction
PMI was reported at 48.9 versus projections of 52.0; the German construction
PMI was 47.1 versus 50.4; the UK construction PMI was 58.1 versus 57.0.
Other
June median household income.
How detrimental is inflation?
https://www.aier.org/article/who-bears-the-burden-of-dollars-falling-purchasing-power/
More on the
Trump/Microsoft/TikTok deal. I agree
with the author regarding Trump’s high handed maneuver; but it is a false
narrative, in my opinion, to downplay the threat of the militant side of the
woke momentum.
https://www.epsilontheory.com/the-mountain-and-the-molehill/
The
coronavirus
***overnight update.
Job losses mount.
More bailout money won’t stop credit card
defaults.
The Fed
The
difference between good and bad economics.
https://www.zerohedge.com/markets/difference-between-good-economics-and-bad
China
Could
China close the Straits of Hormuz?
https://www.zerohedge.com/geopolitical/china-will-soon-be-able-close-straits-hormuz-and-red-sea
Bottom
line. There is nothing in the economic data, the
paths of fiscal and monetary policies or the end game of the coronavirus that
suggests to me that the S&P should be a short hair away from its all-time
high. I think that the cross currents in
the major technical indices reflect that sentiment. I love my gold and cash. Fortunately, QE is helping gold as cash drags
on performance.
https://www.zerohedge.com/markets/let-me-tell-you-terrifying-story
The latest from
Howard Marks.
https://www.advisorperspectives.com/commentaries/2020/08/05/time-for-thinking
News on Stocks in Our Portfolios
General Dynamics (NYSE:GD) declares $1.10/share
quarterly dividend, in line with
previous.
Becton, Dickinson (NYSE:BDX): Q3
Non-GAAP EPS of $2.20 beats by $0.13; GAAP EPS of $0.97 beats
by $0.04.
Revenue of $3.86B (-11.3% Y/Y) misses by $100M.
What
I am reading today
New report shows
Americans are paying less for drugs.
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