The Morning Call
1/19/21
The
Market
Technical
As
you can see, on Friday, the S&P challenged a very, very short term
uptrend. That is probably not a big dead
because as you can also see it has done so twice before and regained the trend
line. Further, it remains above both
DMA’s and in uptrends across all but that very, very short term uptrend. So, it will take some serious whackage before
this chart starts to show weakness.
https://www.zerohedge.com/the-market-ear/cmxq9h1msg
Stocks
have retreated from overextended technical position.
https://www.zerohedge.com/the-market-ear/c7imgcb6z6
I
printed the long term chart of TLT last week which showed it still solidly in
uptrends across all timeframes except the very short term trend. Nearer term though it has successfully
challenged both DMA’s. So, there is some
momentum to the downside. I do not think
you disturb long term positions. But
with the rising concern about inflation, we need to keep a careful eye on the
long bond’s pin action.
Gold’s
chart is almost an exact replica of TLT’s. Short term, it has confirmed the
break below its 100 DMA and is now in the process of challenging its 200
DMA. But on a long term basis, it remains in uptrends
across all timeframes. So, like TLT, I
would leave long term positions intact but pay close attention to any further
downward move.
The chart of the dollar is similar to those of TLT and GLD in that short term, it is in a solid downtrend. The difference is that UUP has done extensive longer term damage to its technical picture. That it remains in an intermediate term trading range is about the most positive thing one could say about its chart.
But beware of lower prices.
With
bond, gold and dollar investors continuing to demonstrate concern, it is a bit
mystifying that stocks could remain as strong as they have been. Shows you the power of the Fed.
Friday in the
charts.
https://www.zerohedge.com/markets/gamma-geddon-sparks-stocks-biggest-weekly-loss-halloween
Fundamental
Headlines
The
Economy
Review of the Week
The bulk of the US
datapoints last week were negative although there were two positive primary indicators and none
negative. So, I rate the week as a
neutral. Overseas, the stats were
weighted to the plus side.
In addition, there
was plethora of Fed speak from various regional bank heads as well as a speech from Powell and the
release of the latest FOMC meeting minutes.
As usual we got a lot of the ‘on the one hand…on the other hand’
commentary; but I think (and frankly I am not sure) the ultimate conclusion was
that any tapering actions were still in the distant future.
Finally, the
president elect put forth a new $1.9 trillion stimulus bill.
All of this fed
the growing reflation fears---which from an economic point of view is not
particularly concerning immediately.
However, some Markets (bond and the dollar) are already reflecting
mounting apprehension about inflation.
And if it materializes then (1) the Fed may have to taper sooner than it
now wants and/or (2) the aforementioned anxiety engulfs the equity market and
the jig is up.
Still our base
economic scenario remains intact---the US and global economies are improving
but not at the velocity of the initial sharp rebound off the bottom. In other words, a diminishing probability of
a ‘V’ shaped recovery which would lessen any potential inflationary pressures
and leave the Fed free to continue QEInfinity.
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.
http://scottgrannis.blogspot.com/2021/01/last-year-in-nutshell.html
US
International
The November EU
YoY construction output fell 1.3% versus -1.9% in October; January economic
sentiment was 58.3 versus 54.4 reported in December.
December German
CPI was +0.5%, in line; January economic sentiment was 61.8 versus forecasts of 60.0.
Other
Fiscal
Policy
David Stockman on the latest stimulus plan.
Spending does not bring prosperity.
https://www.zerohedge.com/economics/next-wave-spending-will-not-bring-prosperity
The
coronavirus
More deaths among the elderly after taking
the vaccine.
Unfortunately, there is more.
Fatality rates and nursing homes.
https://www.powerlineblog.com/archives/2021/01/covid-fatality-rates-a-different-perspective.php
Study shows lockdowns were not effective in
limiting spread of virus.
Bottom
line. Everyone is in the pool.
https://www.zerohedge.com/markets/everyone-pool-more-buyers-needed
Earnings season starts today.
News on Stocks in Our Portfolios
What
I am reading today
Priceless
photos.
Photos 004
(douglascountygensoc.org)
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