The Morning Call
9/28/20
The
Market
Technical
On
Friday, the S&P nicely followed Thursday’s bounce, leaving it above its 100
(and 200) DMA---which is the good news.
The bad news is that it has already reset its short term trend to a
trading range. Plus, the Thursday/Friday
rebound did not break the trend of lower highs and lower lows. If it can hold its 100 DMA, then this recent
downtrend would just be part of a consolidation phase. If not, then expect more downside, though it
would have to fight its way through multiple support levels for that downside
to really be meaningful.
The Market’s
momentum has turned negative.
The
long bond has struggled to break out of a pennant formation and the challenge its
100 DMA (now resistance). While ostensibly
successful, the results so far are not awe inspiring. So, I need more upside follow through to be
convinced the prices are headed up (rates down).
Gold
had a terrible week, breaking below minor support and sustaining a trend of
lower highs and lower lows. That said,
it remains in uptrends across all time frames and above both DMA’s. However, it is poised to challenge its 100 DMA,
a break of which would fuel more downside momentum. But for the moment, the worst that can be
said is that it is consolidating.
The
dollar has successfully challenged its short term downtrend and reset to a
trading range. However, before getting
jiggy about a change in momentum, it still has to overcome resistance in the
form of its 100 and 200 DMA’s. Were that
to occur, it would insinuate either a stronger economy or a flight to safety. At the moment, the long bond is supporting
the ‘flight to safety’ alternative while gold and stocks are hinting at the
possibility. So, we need more time and
distance to really draw any conclusions about the message.
I
cannot derive a lot of information value from the VIX chart. It has see sawed around both DMA’s and it can’t
sustain a directional trend, although it does remain at an elevated level relative
to stocks---which indicates heightened uncertainty/anxiety. That suggests an inclination to a ‘flight to
safety’.
Friday
in the charts.
https://www.zerohedge.com/markets/dow-suffers-worst-week-june-dollar-surges-most-six-months
Fundamental
Headlines
The
Economy
Last Week in Review
The stats
last week were slightly positive but the primary indicators were mixed. 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 negative---which continues the pattern of
irregular growth. I think that unfortunately
their sluggish performance will serve to restrain our own growth.
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.
https://www.nytimes.com/2020/09/24/business/economy/us-economy-pandemic.html
US
International
Other
The
election
Investors are starting to freak out about the
outcome of the 2020 election.
The coronavirus
Overnight update.
German minister warns lockdowns will cause
more deaths that the virus.
https://www.zerohedge.com/medical/german-minister-admits-lockdown-will-kill-more-covid-19-does
Breakthrough research on coronavirus.
China
China’s second largest property development company
in financial trouble.
Bottom line. The economic recovery story is as fake as ever.
News on Stocks in Our Portfolios
AT&T (NYSE:T) declares
$0.52/share quarterly dividend, in line with previous.
What
I am reading today
Art
looted 123 years ago.
https://www.nytimes.com/2020/01/23/arts/design/benin-bronzes.html
Quote of the day.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment