The Morning Call
6/28/21
The
Market
Technical
For the third time
in this short term cycle, the S&P successfully challenged its short term trading
range and reset back to the uptrend. To
repeat myself: as long as the S&P’s rate of ascent is slower than that of
its short term uptrend, it will likely follow a pattern of violating its short
term uptrend, reset to a trading range, then make a new high and reset the
trend to up. For the moment, I am sticking with my premise:
‘I can’t see an end to this uptrend as long as the money keeps flowing
with abundance and in the absence of any major negative exogenous event.’---with the caveat
that even though the updated ‘dot plot’ still has any tightening moves more
than a year away, if investors decide that the tapering process has really begun,
so has the end.
https://www.zerohedge.com/markets/market-rallies-all-time-highs-bulls-dismiss-fed
How traders are
positioned after the FOMC meeting.
https://www.zerohedge.com/markets/how-has-trader-positioning-changed-fomc-meeting
In the prior week,
the long bond challenged its very short term downtrend. It then spent last week trying to confirm that
break---see sawing back and for the around the upper boundary of the downtrend
unable to make that confirmation. As of
trading today, if it closes below the upper boundary of the very short term downtrend,
the challenge will have been unsuccessful. If it ends back above that boundary,
then the challenge will continue.
GLD traded sideways
last week, leaving (1) a gap down open to be filled and (2) it in uptrends
across all timeframes.
After resetting both
DMAs to support in the prior week, the dollar spent last week unsuccessfully challenging
the reset of its 200 DMA.
So, the technical theme
last week was the indices struggle to confirm the prior week’s break of
important trend lines. It could signify
uncertainty but likely it is just consolidation after a sharp move.
Friday in the
charts.
Fundamental
Headlines
The
Economy
Review of Last Week
Last week was
another negative for reported data as well as the primary indicators (one
positive, one neutral and four negative).
That is eight weeks in a row now. I interpret this to mean that the
stats continue to confirm that the post Covid burst of economic activity is falling
well short of expectations.
https://www.zerohedge.com/markets/how-has-trader-positioning-changed-fomc-meeting
The Fed and its
‘transitory’ inflation forecast remains at the center of investors’
attention. Powell et al spent the week
walking back the Bullard hawkish comments from the prior week. Although I would note that nobody said
anything about changes in the ‘dot plot’ which was the initial headline that
sent the Market into decline. In short, I
think that the Fed has no clue what it wants
to do or its conviction to do what it wants to do is so weak that it
continues to allow the Markets to dictate policy. In sum, I think that the risk to the economy is that it continues to slow,
inflation continues to rise and the Fed fumbles the ball again. (Must read)
Overseas, the data
flow turned positive, keeping the dataflow pattern erratic. So, we continue to get little help on the
economic growth front from the rest of globe.
Bottom line. ‘As
you know my opinion is that following an initial snapback (which may already
be over), the US economy will likely return to its former subpar secular growth
rate, stymied by an irresponsible mix of fiscal/monetary policies.’
US
International
Other
Inflation
Summers sees inflation at 5%.
https://www.zerohedge.com/markets/larry-summers-sees-5-inflation-end-2021
News on Stocks in Our Portfolios
Paychex (NASDAQ:PAYX):
Q4 Non-GAAP EPS of $0.72 beats by $0.05; GAAP EPS of $0.73 beats
by $0.06.
What
I am reading today
Fiat currency is a fraud.
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Fiat
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