Monday Morning Chartology (early)

 

The Morning Call

 

11/15/21

 

The Market

 

    Technical

 

The S&P consolidated a bit last week; but nothing that would suggest a reversal of fortune.  To repeat: ‘If a picture is worth a thousand words, then I don’t need to say anything.  The upward seasonal bias seems in place.  Sit back and enjoy it.’

 

The pain trade is till to the upside.

https://www.zerohedge.com/the-market-ear/c5vwazi1q4

 

Buy the dip.

https://www.zerohedge.com/the-market-ear/cnhranjg5a

 

 

While the pin action in the long bond remains a bit confusing, looking at a longer term chart provides some perspective.  As you can see, it has bounced off the upper boundary of its long term uptrend three times in the recent past.  That would be expected and would in no way call into question the long term uptrend (downtrend) in price (yield).  Also notice a fairly easily distinguishable head and shoulders formation which suggests additional short term downward pressure in bond prices as that pattern completes itself---also to be expected as inflationary concerns appear to be kicking into high gear. 

 

That would suggest the conclusion that the chart is telling us that prices (rates) will likely go lower (higher) near term as inflation anxiety continues to mount.  But ultimately, the Fed has to tighten (which may take prices [rates] even lower [higher]), slowing the economy which will lead to the continuation of the long term uptrend in prices.   However, that is getting way too far ahead of ourselves.  I settle for higher rates likely near term.

 

 

 

For the first time in a month, GLD didn’t stage a major price reversal last week.  It continued its surge higher, suggesting the gold is regaining some of its panache as an inflation hedge.  However, two good weeks hardly make a trend; so for the moment, I am just watching.

 

 

 

The dollar continues to follow stocks up.  Last week, it successfully challenged the upper boundary of its short term trading range and reset to an uptrend.  As I noted last week  ‘This…is in line with the aforementioned ‘investors/jiggy/buying everything’ scenario.  However, it may also be reflecting investor conviction that whatever the economy/Fed/ Biden does, the US will still be a better place to invest than anywhere else on the planet.’

https://www.reuters.com/business/dollar-set-biggest-weekly-rise-5-months-yields-rise-2021-11-12/

 

 

 

Friday in the charts.

https://www.zerohedge.com/markets/wall-street-reaches-record-highs-main-street-sentiment-hits-11-year-lows

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Review of Last Week 

 

Last week was very quiet with respect to the economic stats.  In the US, they were slightly negative; though it is important to point about that the inflation numbers were hotter than anticipated. 

 

Also, a slow week for international data.  It was slightly positive.  But again, the inflation stats did not make good reading.

 

My take on the economy remains unchanged---it is struggling to grow, hampered by increasingly irresponsible monetary and fiscal policies, getting no support from the global economy and threatened by seemingly mounting inflationary forces.  (see below)

 

                                                US

                           

 

 

                        International

 

Q3 preliminary Japanese GDP was up 1.9% versus estimates of -0.7%; Q3 preliminary capital expenditures was +1.4% versus -0.6%; Q3 preliminary private consumption was +0.9% versus -0.4%; September industrial production was -3.6% versus -5.4%.

 

October YoY Chinese industrial production was up 3.1% versus consensus of +2.9%; October YoY retail sales were up 4.4% versus +3.6%; October YoY fixed asset investment was up 7.3% versus +6.5%.

                         

 

                        Other

 

                          The latest Atlanta Fed GDP nowcast.

                          https://www.atlantafed.org/cqer/research/gdpnow

 

               Inflation

                   

                The risk of recession is low but the risk of inflation is high.

                http://scottgrannis.blogspot.com/2021/11/recession-risk-is-very-low-but.html

 

                More on rising wages.

                https://compoundadvisors.com/2021/higher-wages-are-not-transitory

 

                Inflation angst.

                https://www.zerohedge.com/markets/frogs-will-get-boiled-regime-change-coming

           

                On the other hand, some assets appear to be fading an inflationary surge.

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

                       

          Bottom line.

 

            Cash as an investment hedge.

            https://www.zerohedge.com/markets/cash-good-risk-hedge

           

 

         News on Stocks in Our Portfolios

           

What I am reading today

           

               

 

           

 

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