Monday, November 13, 2023

Monday Morning Chartology

 

The Morning Call

 

 

11/13/23

 

The Market

         

    Technical

 

The rally continued, only briefly fazed by the hawkish comments from Powell.  After a checkback on Thursday, the S&P lit up the charts on Friday, pushing through both its 100 DMA (now resistance; if it remains there through the close on Tuesday, it will revert to support) and the upper boundary of its very short term downtrend (if it remains there through the close today, it will void that downtrend).  If that occurs, the next major stop would be the upper boundary of its short term trading range (~4607).  That said, two successive gaps up opens from the prior week make me very nervous short term because of the magnetic pull.  That doesn’t mean that the Market isn’t going higher.  But historically, those gaps tend to get filled in the reasonably near future.  So, I am not going to get too bulled up until that happens.

 

Stocks recent strength point to new bull market.

S&P 500: Stocks' Recent Strength Points to a New Bull Market | InvestorPlace

 

Historic sentiment shift.

https://www.bespokepremium.com/interactive/posts/think-big-blog/historic-sentiment-shift

 

The latest from Goldman’s trading desk.

https://www.zerohedge.com/markets/goldman-prime-brokerage-spots-remarkable-divergence-beneat-market-surface

 

 


 

 The long bond was flat on the week; though in the process, it made a new higher high (good news) but failed to successfully challenge its 50 DMA (bad news).  Further, like stocks, it has a big gap up open from the prior week that needs to be filled. 

 

You may remember that I recently committed funds to a small position in TLT, thinking that it was at or near its bottom and then took a small loss when it appeared otherwise.  The last two weeks’ pin action may have been that bottom that I was (unsuccessfully) looking for.  I will wait to see how TLT handles that 50 DMA and, perhaps , try again.

 


 


GLD continued to retreat supporting the notion that zone around the all-time high holds a lot of resistance.  Until that level is successfully challenged, I see no reason to jump into GLD.

 

  




 

After riding the upper boundary of its short term uptrend for several weeks, the dollar backed off on two huge gap down opens.  Last week, it tried to regain its footing and was able to close one of those gap down opens.  Nonetheless, that upper boundary will continue to act as resistance.  That won’t stop UUP from continuing going higher, although I suspect it will impact its rate of advance.  As I have noted several times, a rising dollar has historically not been good for stocks. 

 


Friday in the charts.

https://www.zerohedge.com/markets/big-tech-bitcoin-bid-bonds-bullion-biggest-shorts-battered

 

                 Three more charts.

             https://www.zerohedge.com/the-market-ear/3-charts-we-are-watching-these-gaps-refrain-us-becoming-too-bullish

 

    Fundamental

 

       Headlines

 

              The Economy

                         

                        Last Week Review

 

There was virtually no (three) US datapoints last week and they were all secondary indicators.  So no change in the short term outlook---a directionless economy with no clear answer to the questions as to the likelihood that inflation being in the rear view mirror or whether we get a soft, no or hard landing.

 

The major headlines of the week only added to that uncertainty (1) renewed hawkish statements out of the Fed/Powell and (2) a terrible Treasury auction.

 

That said, the more important longer term issue remains---a grossly irresponsible fiscal policy which if left unresolved will ultimately push interest rates and inflation to higher levels and impede the economy’s ability to grow.

 

Bottom line: As you know, I have suspended my recession forecast though at this point my real outlook remains ‘I don’t have a clue’. 

 

I am leaving my ‘Fed chickens out’ call in place---because (1) that it what it does best and (2) these morons controlling the budget may give it no choice.

 

Longer term, we are faced with an economy growing at well below its historic secular rate and a base rate of inflation above 2%.

 

Correcting that won’t be easy. It will take years of fiscal and monetary restraint to do so. And that would mean less fiscal stimulus and interest rates staying higher for longer than many now expect---which unfortunately is not apt to happen.

                                          

              The Economy

 

                        US

 

The November economic optimism index came in at 44.5 versus estimates of 40.2.

 

                        International

 

                        Other

 

             The Fed

 

               Powell’s speech from the Fed whisperer.

               https://www.wsj.com/articles/jerome-powell-outlines-cautious-approach-to-raising-rates-or-declaring-end-to-hikes-9546a3c3?mod=economy_lead_pos2

 

               Hoping for the best.

               https://www.zerohedge.com/economics/fed-has-no-plan-and-just-hoping-best

 

             Recession

 

               Recession alert weekly leading economic index

               https://www.advisorperspectives.com/dshort/updates/2023/11/10/recession-weekly-leading-economic-index

 

             Government Shutdown

 

               The next deadline in 11/17.

               https://www.npr.org/2023/11/10/1211830728/speaker-johnson-navigates-mission-impossible-to-avoid-shutdown-without-clear-pla

 

      Bottom line

 

               Bernstein believes that we have a major buying opportunity.

               https://www.advisorperspectives.com/commentaries/2023/11/10/once-generation-opportunity-richard-bernstein

 

              The latest from BofA.

               https://www.zerohedge.com/markets/hartnett-panic-flipsto-year-end-greed-and-here-what-investors-think-happens-next

 

      News on Stocks in Our Portfolios

                         

 

What I am reading today

 

 

*****************************************************************************

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

 

 

No comments:

Post a Comment