Friday, October 14, 2022

The Morning Call--What was behind yesterdays staggering intraday reversal?

 

The Morning Call

 

10/14/22

 

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/stocks-bonds-purgensurge-after-hot-cpi-rate-hike-odds-soar

 

Note: it was quite a day. The S&P dove initially, then bounced off its Fibonacci 50% retracement level, closing above the 6/13/ low. But since it had only voided that support on Wednesday, I am maintaining it as a viable support level. I said yesterday that the news on CPI could set the Market’s direction through election; and while I didn’t expect the results we got, it probably is a good sign of further advances into the election. After that we move into the most positive seasonal time of the year for stocks, i.e., the Holidays. So, this bounce will likely have legs. To confirm that, the S&P needs to get through the downtrend off its 8/16 high which currently is ~3732. As I note below, I did nibble at stocks yesterday after the bounce off the 50% Fibonacci level; but I am not going to chase prices higher

 

            What was behind yesterday’s staggering intraday reversal

            https://www.zerohedge.com/markets/what-was-behind-markets-staggering-intraday-reversal

 

            As bond bets blow up, financial instability increases.

            https://www.wsj.com/articles/as-bond-investors-bets-blow-up-they-might-usher-in-era-of-higher-rates-11665658801

 

            King dollar’s uncertain throne.

            https://www.aier.org/article/king-dollars-uncertain-throne/

 

            The strong dollar is a risk to corporate profits.

            https://www.advisorperspectives.com/commentaries/2022/10/13/the-strong-dollar-is-a-risk-to-corporate-profits

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

September retail sales were flat with August versus forecasts of +0.2%; ex autos, they were up 0.1% versus -0.1%.

                          https://www.zerohedge.com/personal-finance/real-us-retail-sales-tumble-again-september

 

                        International

 

The August EU trade balance was E-50.9 billion versus projections of E-37.0 billion.

 

September Chinese CPI was +0.3% versus estimates of +0.4%; September YoY PPI was +0.9% versus +1.0%.

 

                        Other

 

            The Fed

 

              Monetary wisdom from Milton Friedman.

              https://gregmankiw.blogspot.com/2022/10/monetary-wisdom-from-milton-friedman.html

 

              The financial system is in better shape than some think.

              https://scottgrannis.blogspot.com/2022/10/charts-you-probably-havent-seen.html

 

            Fiscal Policy

 

              UK does U turn on tax cuts.

              https://www.zerohedge.com/markets/uks-truss-announce-major-u-turn-ditch-tax-cut

 

            Recession

 

              IEA says OPEC+ production cut could tip world into recession.

              https://www.wsj.com/articles/opec-supply-cut-could-tip-global-economy-into-recession-iea-says-11665650917

 

              Bad policies are greasing the wheels for recession.

              https://www.bloomberg.com/news/articles/2022-10-13/podcast-bad-policies-are-greasing-the-wheels-for-a-global-recession?sref=loFkkPMQ

 

 

     Bottom line

 

            These factors outperform during a recession.

            https://www.institutionalinvestor.com/article/b205mghdmv4y45/These-Factors-Outperform-During-Recessions

 

     Investor Alert

 

Yesterday the High Yield Portfolio Added to its positions in Walgreen (WBA) and Intel (INTC). The Dividend Growth Portfolio Added new one quarter positions in Comcast (CMCSA), Costco (COST) and Intuit (INTU).

 

    News on Stocks in Our Portfolios

 

            Kroger to buy Albertson’s.

            https://www.zerohedge.com/markets/kroger-combine-albertsons-246-billion-grocery-mega-merger

 

What I am reading today

 

           

 

 

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