The Morning Call
11/10/20
The
Market
Technical
The S&P (the
Dow followed the same pattern) blasted higher on big volume; and in the process
(1) created its third gap up open in the last week---all of which need to be
filled and (2) challenged its all-time high on an intraday basis but failed to
hold above it. As positive as the fundamental
news is, this is not good technical action made worse by nosebleed valuations. Short term, I would be very careful
here. If you want to participate, I
would wait for a successful challenge of its all-time high. Longer term, QE is still the overriding consideration
as long as the Market’s believes.
https://www.zerohedge.com/markets/bulls-win-bears-have-nothing-everything-great-right
Don’t get too excited.
https://www.zerohedge.com/markets/dont-get-too-excited
Prior to yesterday, it appeared that the long bond
was headed lower (rates higher) and the yesterday’s price decline only exacerbated
the move down. It is now poised to
challenge the lower boundary of its short term uptrend. If successful, it would be the first negative
technical even in almost two and a half years.
To be clear, TLT would have to decline over 20% to present a serious
challenge to the bull market. But then,
20% downside represents considerable hurt.
Since early September, gold has been in a trading
range defined by its all-time high (horizontal black line at top of the chart)
and its September low. In that time, it
was able to negate a trend of lower highs, reset its 100 DMA from resistance to
support and appeared to be preparing for another challenge of its all-time
high. Yesterday’s price action reversed
all that but (1) it created a huge gap down open that will need to be filled
and (2) held above the lower boundary of the aforementioned trading range.
Follow through.
Unlike all the
above, the dollar did not create a gap open though it had done so last
week. It did bounce off the lower boundaries
of its very short term and short term trading ranges, leaving it within both ranges
and, therefore short term, technically directionless.
The
VIX continued to reflect a high level of investor uncertainty, actually closing
up on a mega up day in stocks. That is
not an encouraging sign of investor sentiment.
Bottom
line. The S&P is in danger of
creating a triple top, the long bond is threatening to go lower (higher rates)---not
a plus for stocks, the VIX is reflecting a high investor concern. So, take a deep breath and be sure the Market
commits itself directionally before taking any action.
Fundamental
Headlines
The
Economy
US
International
September UK
unemployment was 4.8%, in line; average earnings were up 1.3% versus +1.0%.
October Chinese
CPI was -0.3% versus estimates of +0.2%.
November EU economic
sentiment was reported at 32.8 versus predictions of 36.0; German economic
sentiment was 39.0 versus 41.1.
Other
Update on big four economic indicators.
Update on seven high frequency indicators.
https://www.calculatedriskblog.com/2020/11/seven-high-frequency-indicators-for.html
Germany considering delaying $4 billion in
tariffs on US goods.
Leading index for commercial real estate fell
in October.
https://www.calculatedriskblog.com/2020/11/leading-index-for-commercial-real.html
The
Fed
Rescues are ruining capitalism.
https://www.advisorperspectives.com/commentaries/2020/11/09/the-rescues-are-ruining-capitalism
Bottom
line.
The failure of ungrounded investment
narratives.
https://mrzepczynski.blogspot.com/2020/11/the-failure-of-ungrounded-investment.html
News on Stocks in Our Portfolios
General Mills (NYSE:GIS) declares
$0.51/share quarterly dividend, in line with previous.
What
I am reading today
What a Biden presidency
would mean for retirees.
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