The Morning Call
8/23/21
The
Market
Technical
Last week the
S&P once again successfully challenged the newly reset the lower boundary
of its short term uptrend to a trading range.
As I have described ad nauseum for the last month, the cause of these
multiple challenges/resets is the slowing of the upward momentum of the S&P
index. ‘That is not necessarily a bad
thing. Most likely, it just means that
the buyers are getting exhausted and some consolidation is order.’ I see little reason why this pattern won’t
persist. That notwithstanding, 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.’
Record equity issuance
surpasses dot com era.
https://www.zerohedge.com/markets/warning-signs-flash-record-stock-issuance-surpasses-dotcom
The long bond continued
the bounced started the prior week. In
the process, it closed that huge gap down open from two weeks ago---meaning
that it now can decline further without the overhead magnetic pull of that gap
open. That said, the upward bias resulting
from the support of both DMA and the uptrends across most timeframes argue for a
further advance. Watch the boundary of that very short term trading range for directional
information.
Trading in GLD was
relatively quiet following the prior week’s extraordinarily volatile performance. It left that huge gap down open
unfilled. So, there will remain some upward
bias until it is filled. ‘Longer
term, we know GLD is in uptrends across all timeframes; but it is also below both
DMA’s (now resistance). So, again I am
going to pass on making a directional call.’
The dollar resumed
its upward march off the late May/early June lows. It appears to be confirming the lower
interest rate/inflation scenario, meaning that bond/dollar investors are
increasing unconcerned about stagflation.
Friday in the charts.
Fundamental
Headlines
The
Economy
Review of Last Week
The data releases
last week were almost nonexistent. What
there was, was evenly divided, including the primary indicators (1 negative, 1
neutral and 1 positive). So, there was not
a lot of informational value in the stats.
That leaves the trend in economic activity slowing from the post Covid bounce
back.
The other piece of
mentionable economic news was the release of the minutes from the last FOMC
meeting. They indicated that the Fed is
ready to proceed with tapering this year.
Two points: (1) this tapering will be the lowering of the rate of QE; in
other words, the Fed will still be pumping money into the system, just in lesser
quantities, and (2) an increase in interest rates remains in the distant
future. The Fed views them as heavily dependent
on the unemployment rate, which nowhere its target.
Overseas, the numbers
remained negative. So, no help 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
The July Chicago Fed national activity index
came in at .53 versus -.01 in June.
International
The August German manufacturing
PMI was reported at 62.7 versus estimates of 65.0; the services PMI was 61.5
versus 61.8; the composite PMI was 60.6 versus 62.2.
The August EU manufacturing
PMI was reported at 61.5 versus forecasts of 62.0; the services PMI was 59.7
versus 59.8; the composite PMI was 59.5 versus 59.7.
The August UK manufacturing
PMI was reported at 60.1 versus consensus of 59.5; the services PMI was 55.5
versus 59.0; the composite PMI was 53.3 versus 58.4.
Other
The
Fed
After yields turn negative, what happens next?
https://www.zerohedge.com/markets/david-stockman-return-negative-yields-and-what-comes-next
The
coronavirus
The more masks fail, the more we need them,
https://www.zerohedge.com/covid-19/more-masks-fail-more-we-need-them
Afghanistan
What a clusterf**k.
https://www.zerohedge.com/geopolitical/did-pentagon-generals-want-disastrous-war
Bottom line
Three indicators to watch for signs that the
Market is topping.
Where is the outlook the most m miserable?
https://www.zerohedge.com/markets/where-outlook-most-miserable
News on Stocks in Our Portfolios
What
I am reading today
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