The Morning Call
9/21/20
The
Market
Technical
The
S&P remains above both DMA’s and in intermediate and long term
uptrends. Still, it is now developing a
very short term downtrend; although, there is lots of support at its 100 DMA,
200 DMA, and the lower boundaries of its short term trading range and
intermediate term uptrend. As you know, I
believe that the Market’s bias will remain to the upside as long as the Fed
continues to pump money into the financial system. However, shorter term, a test of one or more
of the above mentioned support levels would not be surprising.
I have been noting for the last month that the long bond was in a consolidation phase. Here you can see the series of lower highs and higher lows---typical of consolidation. A break of one those trends would point to a move in the direction of the break.
While
the longer term chart for GLD is positive, you can see that it has been in a fairly
tight trading pattern since early August---making progressively lower highs
(not good) but holding a minor support level (good). This is characteristic of consolidation. So, we wait for a break of one those trend lines
to give us directional guidance.
The
dollar has been in a solid declining trend since March and trades below both DMA’s. It made a low in early September near the
lower boundaries of both its short term downtrend and intermediate term uptrend
and since bounced. While it can’t make a
higher high, it is holding above that last lower low. However, it needs to successfully challenge
the short term downtrend before assuming that any recovery is taking place.
I can’t glean anything
of informational value from the VIX chart.
Friday in the charts.
Fundamental
Headlines
The
Economy
Last Week in Review
The stats
last week were negative as were the primary indicators. This adds more evidence to the notion that
the economy is improving but not likely in ‘V’ shape that is hoped for. Overseas,
the indicators were overwhelmingly positive---which continues the pattern of irregular
growth. I think that unfortunately their
sluggish performance will serve to restrain our own growth.
In other news, both the Fed and the Bank of England
held their regular meetings and, like the ECB in the prior week, left rates and
QE unchanged. So, the beat goes on.
Whatever the
shape of the recovery, I am not altering my belief that long term the 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.
US
The August Chicago Fed national activity index
was reported at .79 versus estimates of
1.95.
International
Other
The
latest Q3 nowcasts.
https://www.calculatedriskblog.com/2020/09/q3-gdp-forecasts_18.html
You do not solve
lockdowns with more central planning (must read).
Global debt is exploding.
https://www.zerohedge.com/markets/global-debt-exploding-shocking-rate
The
Fed
Fed weighs a second stress test and capping
bank dividends.
The
coronavirus
Nearly 60% of coronavirus business closures are
permanent.
https://nypost.com/2020/09/17/majority-of-covid-19-business-closures-are-permanent-report/
China
Why China’s recovery is not what it seems.
https://ftalphaville.ft.com/2020/09/15/1600190531000/Why-China-s-recovery-is-not-what-it-seems/
Bottom
line. It ends when the money runs out.
https://www.zerohedge.com/markets/newton-physics-market-bubble
Part 2: The hazards of being in the grips of
growth mania.
https://www.zerohedge.com/markets/brilliant-brain-dead-risk-timing-manic-markets
Where value resides.
https://www.zerohedge.com/markets/tug-war-across-markets-hides-trade-lifetime
News on Stocks in Our Portfolios
Cisco: a bargain in the tech sector.
What
I am reading today
Ten
easy ways to save $870,000.
https://www.marketwatch.com/story/10-easy-ways-to-save-870000-2020-09-17
How
big money is powering the search for alien intelligence.
https://www.sciencemag.org/news/2020/09/how-big-money-powering-massive-hunt-alien-intelligence
The
bill for economic inequality is coming due.
https://www.zerohedge.com/markets/bill-americas-50-trillion-gluttony-inequality-overdue
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