Sunday, November 22, 2020

Sunday Morning Chartology


The Morning Call




I am off this week.  Have a great Thanksgiving.


The Market




         The S&P remains in a three month trading range, having failed to break above its all-time high for the third (fourth) time.  Long term, its bias is to the upside but with the caveat that it may have made a major top.  The good news is that it did not experience a sell off after being rejected at its high.  The bad news is that there are multiple gap up opens going back to 2300 that need to be filled.


        More month end rebalancing on deck.


        The long bond is also in a short term trading range, though at eight months, it is bordering on becoming a longer term range.  Also like the S&P, it has bounced off its all-time high three times; but it also held above the lower boundary of its very short term uptrend.  Also like the S&P, its price bias is to the upside (in uptrends across all timeframes) but with the caveat that it may have made a major top. 


        Gold continues in a three month plus trading range.  On the surface, it seems to have a slight short term downward bias.  That drift lower is off its all-time high and it has reset its 100 DMA to resistance.  So, there is reason to wonder if a top has been made.  On the other hand, it has bounced off the lower boundary of its trading range four times demonstrating strong support at the 153 ½ level.  Plus, it is uptrends across all timeframes and remains above its 200 DMA.  This is all a blueprint for uncertainty.  My bottom line is that the long term bias is to the upside but a decent probability exists that GLD has made a top.


        The dollar made, at least, an interim top, traded lower but found support near the lower boundary of its short term trading range now being reinforced by the lower boundary of its intermediate term uptrend.  The question is, is the dollar acting as a leading indicator for the other indices, i.e. (1) UUP clearly made a top; the others seem to have made a top, (2) UUP traded lower and has found strong support, the other indices are trying to build a support level.


          Bottom line: all the indices have made tops and are attempting to consolidate.  The $64,000 question is will they be successful?  The answer is that I haven’t a clue and, therefore, I believe it is a time to be on the sidelines.



              Friday in the charts.






              The Economy


                         Review of last week


The economic data last week was positive as were the primary indicators (three plus, one neutral, one negative).  This is the first sign of any meaningful improvement in several weeks---which begs the question, was this an aberration or the start of something new?  Follow through.


For the moment, I continue to discount any notion of a ‘V’ shaped recovery.  Not helping is the declining odds of a stimulus bill anytime soon.  Plus, the reimposition lockdowns are making a ‘V’ recovery even more unlikely.


Overseas, the indicators were neutral, maintaining the erratic course of the global economy.  And with renewed lockdowns occurring across Europe, there does not seem much hope of improvement.  Not helpful to our own recovery.


Whatever the shape or magnitude of the near term bounce back, 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.








                          Losses from student loans may eclipse subprime crisis.




    News on Stocks in Our Portfolios


Fastenal (NASDAQ:FAST) declares $0.40/share special dividend.


Tiffany (NYSE:TIF) declares $0.58/share quarterly dividend, in line with previous.


What I am reading today






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