The Morning Call
8/2/21
The
Market
Technical
The S&P drifted last week; but because of the
angle of ascent of its short term uptrend (oh, that again), it ended below the
lower boundary of that trend. If it
remains there through the close on Wednesday, it will reset to a trading
range. That said, I don’t have any
illusions of much downside. After all,
the FOMC (Powell) assured us that QEInfinity is still in place. So, my current short term pin action premise
remains unchanged: ‘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.’ That said, we are
in the seasonally weakest Market action period of the year. So maybe there is a bit of follow through lower
but nothing dramatic.
The TLT also
drifted through the week; though it remained within an uptrend off its May low
as well as above both DMA’s. In other
words, long term interest rates are trending down suggesting an economy weaker
than expectations.
https://www.zerohedge.com/markets/jpmorgan-finds-fed-has-broken-most-fundamental-correlation-market
GLD had a very exciting
a week. As you can see, it made a powerful
move to the upside on Wednesday and Thursday.
With Thursday making a huge gap up open which, as you know, I counter intuitively
believe is a short term negative---the historical tendency for the gap to be
filled. However, as you can also see, it is caught between
its 100 and 200 DMA’s. I await a
successful challenge of either for more directional information.
As so often happens,
the dollar’s pin action was the mirror image of gold---big down days on Wednesday/Thursday
(with Thursday being a gap down open) and recovery on Friday, almost filling
that gap open. So, like TLT and GLD, its
downward tendency was supportive of a slowing economy.
Friday in the
charts.
Fundamental
Headlines
The
Economy
Review of Last Week
The data releases
last week were pretty evenly matched as were the primary indicators (two:two). So, the stats continue to confirm that the
post Covid burst of economic activity is slowing.
The macroeconomic headline
this week was the FOMC meeting and its subsequent narrative. While at times it twisted itself into a granny
knot, the storyline did not change: economic conditions are improving but it
will continue to pump money into the system at warp speed.
Overseas, the numbers
were extremely negative. No improvement
there.
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
June German retail sales grew 4.2% versus expectations
of 2.0%.
The July Japanese
manufacturing PMI came in at 53.0 versus 52.4 in June; the July Chinese Caixin
manufacturing PMI was 50.3 versus estimates of 51; the July German
manufacturing PMI was 65.9 versus 65.5; the July EU manufacturing PMI was 62.8
versus 62.6; the July UK manufacturing PMI was 60.4, in line.
Other
Update on big four economic indicators.
The
Fed
MBS purchases matter.
https://www.zerohedge.com/the-market-ear/creawz69mx
Bottom line.
More on valuation.
https://www.zerohedge.com/markets/earnings-have-grow-38-perpetuity-stock-prices-make-sense
News on Stocks in Our Portfolios
What
I am reading today
Bill Maher rips
woke mentality.
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