Thursday, January 20, 2022

The Morning Call and Buyer Alert

 

The Morning Call

 

1/20/22

 

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/bonds-bullion-surge-equity-purge-escalates

 

The S&P closed below (1) the lower boundary of its short term uptrend for the second day; if it ends there today, it will reset to a trading range. However, remember that the index broke its short term uptrend numerous times in 2021, only to reestablish an uptrend in short order. So, at the moment, this shouldn’t be a big concern; on the other hand (2) its 100 DMA; if it finishes there on Friday, it will revert to resistance. Unlike the short term uptrend, the S&P has consistently bounced off its 100 DMA for over a year. Hence, if it successfully challenges this MA and follows through to the downside, it would be a very concerning development, technically speaking.

            https://www.zerohedge.com/markets/technical-sell-signal-100-hit-rate-dip-buyers-triggered

               

                NASDAQ looks ready to bounce.

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

 

            Is the VIX telling us this decline is over, at least in the short term?

            https://www.zerohedge.com/the-market-ear/cj1x7ilzdu

 

            The dollar or the bubble?

            https://www.zerohedge.com/markets/choose-one-only-one-defend-billionaires-bubble-or-us-dollar-and-empire

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

                       

Weekly jobless claims were reported at 286,000 versus forecasts of    220,000.

 

The January Philadelphia Fed manufacturing index came in at 23.2 versus predictions of 20.0.

 

 

                        International

                            

The December Japanese trade balance was -Y582.4 billion   versus consensus of -Y784.1 billion.        

 

December German PPI was +5.0% versus estimates of +0.8%; December EU CPI was +0.4%, in line.

 

                        Other

                              

                         A contrarian forecast.

                         https://alhambrapartners.com/2022/01/17/weekly-market-pulse-a-very-contrarian-view/

 

                              The December architectural billing index was up.

                          https://www.calculatedriskblog.com/2022/01/aia-architecture-firms-end-2021-on.html

 

 Regime change in the global economy (must read)---I do wonder why the  author so casually dismisses the potential cheap labor pool in Africa.

https://www.project-syndicate.org/commentary/global-economy-regime-change-lewis-turning-point-by-michael-spence-2022-01

                         

 

             The Fed

 

     I have forever lamented the negative consequences of QE---one of the more            important being the mispricing of risk. Here is a great article on the subject.

  https://www.bloomberg.com/opinion/articles/2022-01-18/how-safe-assets-became-investors-biggest-risk?sref=loFkkPMQ

                   

                Correlation versus causation.

                https://www.zerohedge.com/markets/correlation-doesnt-imply-causation

 

                Forecasting Fed policy in 2022.

                https://www.zerohedge.com/markets/rabobank-2021-showed-fed-has-no-clue-about-forecasting-inflation-it-will-somehow-bring-it

 

            Inflation

 

              Barry Ritholtz parses inflation

              https://ritholtz.com/2022/01/inflation-the-elephant/

 

            China

 

              China’s looming property crisis threatens economic stability.

              https://www.piie.com/blogs/realtime-economic-issues-watch/chinas-looming-property-crisis-threatens-economic-stability

 

            Geopolitics

 

              Tensions remain high in Ukraine.

              https://www.bbc.com/news/world-europe-60048395

 

            The coronavirus

 

              New study shows boosters ineffective at protecting against the omicron variant.

              https://www.zerohedge.com/covid-19/south-african-scientists-find-boosters-dont-protect-against-omicron

 

     Bottom line.

 

            Is tech as overvalued as it was in 2000?

            https://www.linkedin.com/in/edward-yardeni/detail/recent-activity/

 

    Buy Alert

 

            I have spent a good deal of time and ink documenting the deteriorating breadth in the Market. The net result is that the stocks of some companies have been getting clocked while the indices are barely off their highs. The point being that the stocks of a number of companies in our Universe have entered their Buy Level Zone. Accordingly, at the open today:

 

            The Dividend Growth Portfolio will make purchases of one half positions in Healthcare Services Group (HCSG--$18) and Calavo Growers Inc (CVGW-$43).

 

            The High Yield Portfolio will purchase a one half position in Unum Group Co (UNM-$27).

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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