The Morning Call
1/11/21
The
Market
Technical
The
S&P remains in uptrends across all timeframes and above both DMA’s. And it would have to decline over 200 points
to challenge the closest support level. This
upward bias will most likely continue as long as the Fed and the federal
government throw money at the economy. There
is really not much more to be said except that I am as nervous as I can be over
valuations.
https://www.zerohedge.com/the-market-ear/c9o7irivgd
I
am presenting the long term chart for the long bond to provide some perspective.
We all know that that TLT has been in a downtrend since August. But it has come off what appears to be a blow
off top. So, it is not unreasonable to
think that prices could continue much lower (rates higher) without breaking any
uptrends or approaching its 200 DMA.
After
GLD’s gap up open on Monday, breaking out of its downtrend since August, it got
hammered on Friday, seemingly pushing it back into the aforementioned downtrend
and below its 100 DMA (now support; if it remains there through the close on
Tuesday, it will revert to resistance). There needs to be some follow through to
assure that Friday’s pin action wasn’t a one off move. If it is not, then GLD would be back in harmony
with its inverse relationship with interest rates (i.e., higher rates equal a
lower GLD price).
Like
TLT and GLD, the dollar has been on the decline since August. The difference between it and the other two
is that it is down relatively more. And at
the moment, there is nothing to indicate that it will not continue lower. However, given the extent of its fall, it
would not be surprising to see some kind of bounce near term---not necessarily
a trend reversal but, at least, a countertrend rally.
https://www.zerohedge.com/the-market-ear/c7wtopqimx
Friday in the
charts.
Fundamental
Headlines
The
Economy
Review of the Week
The economic data in the US was positive,
though the primary indicators were neutral (one each). Still a plus is a plus. And that keeps the trend positive though not
overwhelmingly so.
Overseas, the
numbers were awful---which is the first really poor showing in some time. However, it is not surprising given the
second wave of the coronavirus and subsequent lockdowns and is likely to
continue as long as those lockdowns are in effect.
In sum, while the
US and global economies are improving, there remains no reason to assume the
initial sharp rebound off the bottom will continue. In other words, a diminishing probability of
a ‘V’ shaped recovery. More likely a
swoosh, ‘W’ or ‘K’.
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.
https://www.zerohedge.com/economics/time-not-different-more-debt-less-growth
US
International
Other
Morgan
Stanley worried about runaway inflation.
https://www.zerohedge.com/markets/five-reasons-why-morgan-stanley-expects-imminent-runaway-inflation
The Fed
Fed vice chair sees no tapering in 2021.
The
mythical printing press.
Fed driven rallies always end badly.
https://www.zerohedge.com/personal-finance/fed-driven-bubble-destined-end-badly
Bottom line. What yield on the 10 year Treasury could burst
the stock market bubble?
https://www.zerohedge.com/markets/what-yield-10y-will-burst-stock-bubble-here-answer
Mohamed El Erian: the markets are reaching dangerous
levels.
https://themarket.ch/english/mohamed-el-erian-this-is-starting-to-get-to-dangerous-levels-ld.3371
Markets are in uncharted territory.
https://www.morningstar.com/articles/1017076/todays-markets-are-in-uncharted-territory
Counterpoint.
https://www.aier.org/article/angst-over-high-price-earnings-levels-likely-misplaced/
News on Stocks in Our Portfolios
What
I am reading today
Alien
debris discovered.
Quote
of the day.
Quotation
of the Day... - Cafe Hayek
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