The Morning Call
1/22/24
The
Market
Technical
As you can see,
the S&P is now in a challenge of the upper boundary of its intermediate
term trading range, attempting to reset that trend to up. Under our time and
distance discipline, we have to wait until the close on Tuesday to know if that
will be successful. Before getting too far ahead of ourselves, it is important
to remember that Friday was January option expiration, and those days can be
quite volatile and not always predictive of future direction.
That said, if we
assume that the challenge is successful, then there are no clear resistance levels
until the S&P reaches the upper boundary of its reset intermediate term uptrend---which
is a long way up. If unsuccessful, then the current technical picture remains
in place, with support existing at all three DMA’s and the lower boundary of
its short and intermediate trading ranges. Clearly Tuesday/Wednesday will be
important directionally speaking.
Where have the
bulls gone?
https://www.bespokepremium.com/interactive/posts/think-big-blog/where-have-the-bulls-gone
Hedge
funds are shorting stocks.
A
recipe for trouble.
https://www.zerohedge.com/markets/nasdaqs-right-idea-wrong-price-usually-recipe-trouble
The long bond’s
pin action is another problem with assuming an equity break out to the upside. Because
if stocks are moving higher presumably it is the result of the belief of Fed easing
(lowering interest rates and/or ending QT)---which if it does or soon will do,
then bonds should be moving up not down. Something has to give; so be cautious until
it does.
GLD just added to
the confusion. The trend since late December has been down, suggesting a soft (no)
landing and higher interest rates; but on Thursday and Friday, it rose, implying
just the opposite (???). But forget that, my bottom line on gold is
easy---until it breaks up through its all-time high, leave it alone.
While
the long term uptrend remains in place, the dollar’s short term technical
picture has been wrecked. To be sure, a gap down open of the order of magnitude
shown on the chart begs to be closed. But that will likely take a long time. Expect
a lot of directionless trading over the short to intermediate term. That said, the
recent rally in the dollar adds to the sense of confusion (at least for me)
because a strong dollar tends to be a negative for stock prices.
There are two
potential explanations for this bit of inconsistency. (1) as I noted above,
Friday’s option expiration led to abnormal behavior by stocks, and (2) investors
may be starting to discount a strong economy [corporate earnings] persuading the
Fed to stay higher for longer. Follow through will inform us which.
Friday in the
charts.
https://www.zerohedge.com/markets/sp-500-surges-new-all-time-high-despite-wrecked-rate-cut-hopes
Fundamental
Headlines
The
Economy
Week in review
The stats in the
US were slightly upbeat last week, with the primary indicator more so (two up,
one neutral). Meanwhile, overseas the data continues to vacillate between positive
and negative readings. So, we still are not getting a clear picture as to
whether the coming landing is soft, hard or we have no landing at all---although
the fact that there is lack of clarity is itself a sign that a hard landing is
the least likely alternative.
Bottom line:
(1)
I think that the inflation risks are behind
us, at least for the short term. However, longer term, I believe that the most
important economic factor is the potential [inflationary] impact of a grossly
irresponsible fiscal policy which if left unresolved will ultimately push
interest rates and inflation to higher levels, risking a tighter monetary
policy and impeding the economy’s ability to grow.
Deficit
Spending Keeping The Economy Out Of Recession - RIA (realinvestmentadvice.com)
(2)
The question of recession [what kind of landing] is
gaining some visibility, in my opinion. That is, the continuing lack of consistently
in the data is more an indication of a ‘muddle through’ scenario than it is of
a hard landing. So, I a shifting a bit in my outlook---downgrading the likelihood
of a hard landing and focusing on whether or not we get a soft or no landing. Clearly
that is a more upbeat outlook for both the economy and stocks.
US
International
Other
The
Fed
More on why the Fed will have to ease in
March.
The end of QT.
End
Of QT, The Return Of QE, And Markets New Highs - RIA (realinvestmentadvice.com)
We’re obsessing over the wrong Fed question.
https://www.zerohedge.com/markets/we-are-all-obsessing-over-wrong-fed-question
Fiscal
Policy
Repealing tax cuts will not reduce the
deficit.
Please tax me.
https://reason.com/2024/01/18/tax-us-daddy/
Recession
The recession alert weekly economic index.
The latest Q4 nowcast.
https://www.capitalspectator.com/moderate-growth-is-still-the-estimate-for-us-q4-gdp/
Civil
Strife
The elites have created a disaster.
https://brownstone.org/articles/the-heroism-of-guido-darrezo/
A progressive’s view.
https://www.nakedcapitalism.com/2024/01/rob-urie-the-end-of-the-world-as-we-know-it.html
China
China’s $6.3 trillion stock selloff.
Bottom line
Bitcoin is not
money.
Future Dividend
Aristocrats.
https://allstarcharts.com/young-aristocrats-january-2024/
The latest from
BofA.
https://www.zerohedge.com/markets/hartnett-fate-world-will-be-determined-4-million-people-8-counties
News on Stocks in Our Portfolios
What
I am reading today
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for Survival’s website (http://investingforsurvival.com/home)
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