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.
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.
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.
Hoping
for the best.
https://www.zerohedge.com/economics/fed-has-no-plan-and-just-hoping-best
Recession
Recession alert weekly leading economic index
Government Shutdown
The next deadline in 11/17.
Bottom line
Bernstein believes that we have a major buying
opportunity.
The latest from BofA.
News on Stocks in Our Portfolios
What
I am reading today
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