Wednesday, September 9, 2020

The Morning Call---This is just mania and, as such, it will end.


The Morning Call




The Market




The Averages  (27500, 3331) took another beating yesterday with the S&P finishing below the lower boundary of its short term uptrend (if it remains there through the close on Wednesday, it will reset to a trading range).  Clearly, a potential adverse development.  On the other hand, the negatives that I have been dwelling on over the last month are dissipating: (1) two of the four gap up opens have been filled, (2) the VIX which was not in sync with stocks as they advanced remains out of sync as they fall, (3) the Markets’ overbought condition is being ameliorated but (4) unfortunately, September’s record as the worst month of the year for Market performance is not going away. And let’s not forget that both of the indices remain above both DMA and in intermediate and long term uptrends.


The worst time of the year.



The key in the short term is whether the S&P can hold its short term uptrend.  If not, then we are likely in for more downside.  But that does not change my current operating assumption that the Market’s bias is to the upside long term---and until QEInfinity/Forever either comes to an end or investors conclude that it has been, is and will be an economic disaster. 


Gold was off fractionally, remaining below the uptrend off its March/June lows.  Though it held a minor (July/August) support level.  Still, its pin action is troubling. Ditto TLT which rose 5/8%, but remained below its 100 DMA.  The dollar was up ½% and is trying to make a higher high.  But its chart remains the ugliest of those indicators that I follow. 


            Tuesday in the charts.







              The Economy




Weekly mortgage applications rose 2.9% while purchase applications were up 2.6%.


July consumer credit rose $12.25 billion versus expectations of up $13.75 billion.





                          August Chinese CPI came in at +0.4%, in line; PPI was -0.2%, also in line.




                          Permanent job losses still do not match 2008/2009.



                                  States face dire fiscal problems.



                                  Update on seven high frequency economic indicators.



                                  A tale of two recessions.



                                  There is no recovery.



            The coronavirus


              How we handled the virus was a mistake.



              But Sweden, that is another story.



            The Fed


              Ron Paul on the Fed’s brilliant new policy.



              The flaws in Fed policy (must read).



            Bottom line.  This is just mania and, as such, it will end.




              Interview with Byron Wien.




    News on Stocks in Our Portfolios




What I am reading today


            David Stockman on crime and punishment.


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