The Morning Call
9/8/20
The
Market
Technical
As you can clearly see, the S&P challenged the lower boundary of
its short term uptrend on Friday and was unsuccessful. In the process, it filled yet another of
those four gap up opens. Two down, two
to go. Those a big pluses. The 100 DMA moving above the 200 DMA is another
plus. Of course, those negatives that I have
been enumerating daily haven’t gone away.
The key in the short term is whether Friday’s S&P test of its short
term uptrend can hold.
https://www.zerohedge.com/markets/market-finally-cracks-bull-market-rally-over
More
wonky discussion on what drove the Market melt up.
Long
term, it is easy to observe that the long bond remains in uptrends across all
time frames and above its 200 DMA---which would point to an upward bias in
momentum, Short term, things have gotten
a bit confusing. First, TLT experienced
a sizable gap down open in early August that it has yet to fill---a positive. Second, on Thursday, it broke out of a
downtrend off its August, closed above its 100 DMA (now resistance) and failed
to make a second lower high. Also,
pluses. But Friday reversed all of that;
and more important, it appears that TLT
has made a triple top (March/April/August).
That is really not good. So, like
the S&P, TLT is in a somewhat technically uncertain position. It could be just part of a consolidation
process or it could mark the beginning of a change in direction. Stay tuned.
Gold’s long term
chart remains solid. But short term, similar
to the S&P and TLT, it is experiencing some indigestion. On the negative side (1) it has fallen out of
the uptrend off its March/June lows, (2) the current decline started with a
huge gap down open that was almost immediately filled, (3) GLD subsequently
broke out of a pennant formation to upside and then immediately plunged lower
and (4) in the process made two lower highs.
All this negative activity argues that some sort of top has been
made. On the other hand, it has taken
place above a minor support level, it established in August. I am
going to wait until/if that level is successfully challenged before making a negative
call of gold
There is no directional confusion with the
dollar. It is down and, at present, without
the slightest hint otherwise.
I have been repetitious in saying
that the VIX hasn’t been acting normal over the last month, specifically, exhibiting
a lot more uncertainty (not declining in unison) than the S&P. It certainly didn’t make a new low (as the
S&P did a new high). It decisively
broke out of the downtrend off its March high.
And now it is challenging both its 100 and 200 DMA’s---though as yet not
successfully. If that occurs, the implication
is that stocks are going lower.
Friday in the charts.
Fundamental
Headlines
The
Economy
Last Week in Review
The data last
week was slightly upbeat, but the primary indicators were mixed again. So, while the recovery is progressing, it
remains a stretch to characterize it as a ‘V’.
Still, conditions are improving and that is a plus. Unfortunately, the international stats turned
back negative; and I think that their sluggish performance will serve to
restrain our own growth.
https://www.zerohedge.com/bailout/economy-continues-unravel-despite-all-stimulus-measures
Intermediate
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 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 small
business optimism index came in at 100.2 versus estimates of 97.
International
July Japanese
leading economic indicators were reported at 86.9 versus forecasts of 85.0,
household spending was -6.8% versus -2.3%, cash earnings were -1.3% versus
-1.0%; final Q2 GDP was -7.9% versus -8.1%, capital expenditures were -4.7%
versus -3.1%, private consumption was -7.9% versus -8.2%.
July German
industrial production was up 1.2% versus consensus of up 4.7%; the July trade
balance was E19.2 billion versus E22.0 billion.
The EU Q2 GDP growth
(third estimate) was -11.8% versus projections of -12.1%.
Other
Saudi’s lower oil
prices due to weak demand.
https://www.zerohedge.com/commodities/crude-drops-saudi-price-cuts-reflect-demand-woes
France again
applying stimulus.
https://www.zerohedge.com/economics/france-again-being-forced-stimulate-bad-news
The
Fed.
Murphy’s
law is Fed law.
https://www.zerohedge.com/markets/murphys-law-feds-law-and-everything-wrong
The social and economic side effects of
negative interest rates.
https://www.zerohedge.com/markets/social-and-economic-side-effects-negative-interest-rates
The
coronavirus
The first US reinfection case.
News on Stocks in Our Portfolios
What
I am reading today
Quote of the day.
How to survive
when you are the target of an angry mob.
https://www.zerohedge.com/political/how-survive-when-youre-target-angry-mob
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
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