The Morning Call
5/2/22
The
Market
Technical
Can
you say ‘volatility,’ boys and girls? Three big intraday reversals, followed by
a huge up day, followed by an even bigger down day. In the process, the S&P
tested the lower boundary of its short term trading range and the 23.6% Fibonacci
level for a fifth time, bounced, then crashed through both. If it remains there
through the close on Tuesday, the short term trend will reset to down. Worse,
the only visible support is the 38.2% Fibonacci retracement level---which, as
you can see, sits at 3817. But it is too soon to get beared up, right now. Let’s
where the S&P closes on Tuesday.
This time wasn’t
different.
https://novelinvestor.com/this-time-wasnt-different/
The long Treasury backed
and filled last week---which is better than continuing to drop. So, it still
remains to be seen if this is just a temporary ceasefire or a true attempt to
mark a bottom. Unfortunately, as I noted previously: ‘given
the hefty distance between TLT’s current price and the lower boundaries of both
its newly reset intermediate term trading range and its long term uptrend,
prices could go a good deal lower without totally breaking down.’
Gold gapped down
on Monday’s open, then tried to stabilize the rest of the week. ---suggesting
that gold investors are still more worried about higher interest rates than
higher inflation. On the plus side, that gap down open needs to be filled. On
the negative side, GLD can drop a long way before it challenges either of its
DMAs or the lower boundaries of its multiple uptrends.
Friday’s
pin action notwithstanding, nothing has changed. The dollar’s chart continues
to be the healthiest of the lot. My assumption remains that irrespective of
what happens, investors continue to believe that the dollar is a safe place to
be.
Why the dollar keeps rising (must read).
Friday in the
charts.
Outflows from
everything.
https://www.zerohedge.com/the-market-ear/cm2vyeqmjc
How bad was it?
https://www.zerohedge.com/the-market-ear/scary
Goldman thinks
that the worst is over.
Fundamental
Headlines
The
Economy
Review of last Week
Last week the
economic data were very negative although the primary indicators were balanced
(two positive, one neutral, two negative). Overseas stats were mixed.
The one
mentionable number was first quarter GDP which came in well below estimates and
is clearly inconsistent with my ‘no recession’ forecast. If we begin to get a
more negative flow to the data, then I will have to change the outlook. On the
other hand, were that to occur, history suggests that the Fed will crawfish on
its current tightening rhetoric and decline to follow through with strong
action (remember, it hasn’t done diddily to date).
https://apnews.com/article/us-economy-shrinks-in-Q1-7eb454a7874abeba545f8796edb38edb
For the moment, I
am leaving my current forecast intact but with lesser conviction: the economy is struggling to grow (but no
recession), hampered by irresponsible monetary and fiscal policies, getting no
support from the global economy and threatened by (1) inflationary forces and
(2) continued supply chain disruptions because of the conflict in Ukraine.
US
International
March German
retail sales fell 0.1% versus estimates of +3.0%; the April manufacturing PMI
was 54.6 versus 54.1.
The April EU
manufacturing PMI was 55.5 versus expectations of 55.2; April economic
sentiment was 105 versus 108; April industrial sentiment was 7.9 versus 9.5;
April services sentiment was 13.5 versus 14.2; April consumer confidence was -22
versus -16.9.
Other
Europe’s economy slows to a crawl.
https://www.nytimes.com/2022/04/29/business/europe-economy-gdp.html
Geopolitics
More history on Ukraine/Russia.
https://www.zerohedge.com/geopolitical/1991-when-america-tried-keep-ukraine-ussr
The
coronavirus
The next ten battles (must read).
https://brownstone.org/articles/the-next-ten-battles/
Bottom line
Buying stocks is
easy; selling is the hard part.
https://www.zerohedge.com/markets/buying-stocks-easy-selling-hard-part-7-rules-manage-risk
The latest from
John Hussman.
https://www.advisorperspectives.com/commentaries/2022/04/29/repricing-a-market-priced-for-zero
Bitcoin and the
economy.
https://thereformedbroker.com/2022/04/28/incoherence/
Putin’s booby
trapped bonds.
https://www.ft.com/content/a0b41150-78aa-490d-a3eb-4e8bd7bcf155
News on Stocks in Our Portfolios
AbbVie press release (NYSE:ABBV): Q1 Non-GAAP EPS of $3.16 beats by $0.02.
Revenue of $13.54B (+4.1% Y/Y) misses by $70M.
Genuine Parts (NYSE:GPC) declares $0.895/share
quarterly dividend, in line with previous.
Apple press release (NASDAQ:AAPL): Q2 GAAP EPS of $1.52 beats by $0.09.
Revenue
of $97.3B (+8.6% Y/Y) beats by $3.31B.
Apple (NASDAQ:AAPL) declares $0.23/share quarterly dividend, 4.5% increase from prior
dividend of $0.22.
Paychex (PAYX) declares $0.79/share quarterly dividend, 19.7% increase from prior
dividend of $0.66.
Exxon triples its stock buyback program.
What
I am reading today
Does
swearing make us stronger?
https://bigthink.com/neuropsych/why-does-swearing-make-us-stronger/
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