Monday Morning Chartology

 

The Morning Call

 

7/26/21

 

The Market

 

    Technical

 

What a week.  Monday, the S&P plummeted, challenging the lower boundary of its short term uptrend.  It then soared the rest of the week, recovering all of Monday’s lost, negating the aforementioned challenge and going on to make a new high.  No better example of why I have been sticking with my current short term pin action 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.’ 

 

 

 

 

 

TLT’s performance was the mirror image of equities.  It exploded on Monday; and while it mostly retreated for the balance of the week, (1) it successfully challenged its 200 DMA [was resistance, now support] and (2) remained in an uptrend off its May low.  That suggests a weaker economy which is not what stocks seem to be discounting.  As you may remember, those two indices have been telling a different economic story for the past several weeks,  So, that continues.  ‘Who is correct?  As  you know, I believe that history has shown that the bond guys to get it right much more often than their stock counterparts.’

 

Counterpoint

https://global-macro-monitor.com/2021/07/21/ignore-the-bond-market-flapdoodle/

 

 

 

GLD did not have nearly as exciting a week.  It did trade down; but it is still not providing much informational value to the schizophrenic behavior of the major markets.  You can see that support exists slightly lower at its 100 DMA.

 

Like gold, the dollar had a relatively quiet week.  However, it regained its upward bias which argues for a stronger economic scenario.  It was just the opposite the prior week.  So also, like gold, there is not a lot of informational value to be derived from its pin action.

 

Friday in the charts.

https://www.zerohedge.com/markets/stocks-surge-after-monday-meltdown-bonds-bullion-black-gold-flat

 

            Crypto markets soar.

            https://www.zerohedge.com/crypto/crypto-soars-higher-early-asia-trading-bitcoin-nears-40k

 

            Seasonality pain?

            https://www.zerohedge.com/the-market-ear/cqiz0dc36g

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Review of Last Week 

 

The data releases last week negative, as were the primary indicators (two negative, one neutral).  So, the stats continue to confirm that the post Covid burst of economic activity is slowing. 

 

Overseas, the numbers were neutral, making it still too soon to assume overall improvement.

 

The only other relatively important news was the growing concern about the Covid delta   variant---which, as you know, I think is much less worrisome than the political and chattering classes.  The danger here, of course, is that these morons institute another lockdown.

 

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.’

                        https://www.bloomberg.com/news/articles/2021-07-08/in-new-papers-economists-argue-deficits-are-like-ponzi-schemes?sref=loFkkPMQ

                           

                                US

 

                        International

 

The July Japanese flash manufacturing PMI was 52.2 versus 52.4 in June; the flash services PMI was 46.4 versus 48.00 in June; the flash composite PMI was 47.7 versus 48.9 in June.

 

The German business climate index came in at 100.8 versus estimates of 102.1.

 

            The Fed

           

              Survey on what economists think the Fed will do.

              https://www.bloomberg.com/news/articles/2021-07-23/fed-seen-speeding-taper-of-mbs-in-early-2022-start-to-pullback?sref=loFkkPMQ

 

            Fiscal Policy

 

              The coming debt ceiling debate.

              https://www.zerohedge.com/markets/how-much-risk-coming-debt-ceiling

 

            Inflation

 

              If inflation is transitory, why is this happening?

              https://www.zerohedge.com/markets/if-inflation-was-transitory-would-not-be-happening

 

              Global food supplies in jeopardy.

              https://www.zerohedge.com/weather/worlds-food-supplies-jeopardy-amid-climate-disasters

 

              An argument against inflation.

              https://www.zerohedge.com/economics/lacy-hunt-debt-and-friedmans-famous-quote-regarding-inflation-money

 

          Bottom line.

 

              Goldman’s risk appetite index crashes.

              https://www.zerohedge.com/markets/strange-goldmans-risk-appetite-indicator-crashes-just-stocks-explode-record-high

 

              Druckenmiller says that this is the biggest bubble in his career.

              https://www.zerohedge.com/markets/biggest-bubble-ive-seen-my-career-dems-infrastructure-spending-could-lead-devastating-crash

 

              The problem with forward valuations (must read).

              https://www.zerohedge.com/markets/earnings-multiples-untold-truths-about-forward-valuations

 

         News on Stocks in Our Portfolios

           

What I am reading today

           

               

                The highest forms of wealth.

            https://www.collaborativefund.com/blog/the-highest-forms-of-wealth/

               

                Quote of the day.

            https://cafehayek.com/2021/07/quotation-of-the-day-3595.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CafeHayek+%28Cafe+Hayek%29

 

 

 

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