Monday, April 8, 2024

Monday Morning Chartology

 

 

4/8/24

 

The Market

         

    Technical

 

The S&P had a wild ride last week---beginning with a gap down open that was subsequently filled. But in the end its very short term uptrend was negated. However, it remains above the upper boundary of its short term uptrend and above all DMAs. Let’s watch the follow through but my assumption remains for continued upward momentum. The only negative is that large gap up open below that needs to be filled.

 

Something broke on Thursday.

https://www.zerohedge.com/markets/something-broke-markets-thursday

 

Momentum goes vertical.

https://www.ft.com/content/8a24676e-a8af-44d8-8785-ba1b05d3da02

 

The latest from Goldman.

https://www.zerohedge.com/markets/goldman-hedge-fund-honcho-warns-price-action-consistent-reflation-trade-vol-inducing-stocks

 

The latest from BofA.

https://www.zerohedge.com/markets/hartnett-explosion-gold-shows-investors-are-preparing-endgame

 

The risk of a disorderly unwind is growing.

https://www.zerohedge.com/markets/multimanager-funds-are-20x-leveraged-each-new-billion-risk-disorderly-unwind-only-grows

 

I continue to hold my IWN trading position.

 

           

 

 


 

 

The long bond had an even rougher week than stocks. Tuesday saw a huge gap down open and the subsequent successful challenge of all three DMAs. Coupled with the facts that (1) TLT has now made four lower highs suggests and (2) it is in downtrends across all time frames suggests that the bond boys are not buying lower rates (higher prices).

 

Where does rising bond yields start to hurt?

https://www.zerohedge.com/the-market-ear/rising-bond-yields-what-level-goldilocks-and-what-level-does-it-start-hurt

 

Hardly anyone is short Treasuries.

https://www.zerohedge.com/markets/hardly-anyone-short-treasuries-perhaps-they-should-be

 


 

 

GLD continued its Titan III formation. The pin action suggests more to come. The main negative is those two gap up opens that need to be filled. As you know, I am becoming increasingly concerned about (long term) inflation.

 

I continue to hold my trading position in GDX---the gold miners ETF.

 

Gold versus bitcoin.

https://www.zerohedge.com/markets/bitcoin-vs-gold-debate-continues

 

Gold bulls eye more record highs.

https://www.reuters.com/markets/commodities/gold-bulls-eye-more-record-highs-despite-lightning-gains-2024-04-05/

 

 

 


 

The dollar was down for the week but maintained its very short term uptrend. In addition, it challenged its 100 DMA and then bounced to the upside. It makes no sense to me for GLD and UUP to be simultaneously as strong as they are. So your narrator is confused.

 

 


 

            Friday in the charts.

            https://www.zerohedge.com/markets/oil-gold-soar-week-good-data-wrecks-rate-cut-hopes-slamming-stocks-bonds

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Week in review

 

Last week’s stats were mixed though the primary indicators were upbeat (two up, one down). That does nothing to bring clarity to the overall direction of the economy---even though the headline narrative is that it is gaining strength and there was lots of Fed speak reinforcing that notion. I recognize that puts me on the radical fringe; but I have never had problem with a contrarian viewpoint.

https://www.zerohedge.com/markets/behind-todays-stellar-jobs-print-it-was-literally-all-part-time-jobs-and-illegals

 

The inflation data was relatively benign again, fitting my ‘inflation in the rear view mirror forecast.’  However, as I have been indicating I am starting to have second thoughts on that position. An unbelievably irresponsible fiscal policy, a historically dovish Fed (its current hawkish noises, notwithstanding) and the recent performance of commodities (gold, oil) and bitcoin have me thinking that inflation may be as good (low) as it is going to get. I am not altering my call, but I am close to doing so.

 

Bottom line:

 

(1)   the overall economic outlook remains unclear,

 

(2)   I am not altering my inflation forecast [i.e., inflation in the rear view mirror] ---although I am beginning to contemplate it.

 

 

My primary concern remains that an easing in monetary policy will only amplify the impact of a grossly irresponsible fiscal policy which if left unresolved will ultimately push interest rates and inflation to even higher levels, risking a tighter monetary policy and impeding the economy’s ability to grow.

 

                                                           As an example:

                             https://www.zerohedge.com/political/house-freedom-caucus-members-earmarked-nearly-1-billion-taxpayers

 

                             How about another one?

                             https://www.zerohedge.com/political/he-blackmailed-mtg-questions-speaker-johnsons-complete-departure-over-abortion-illegals

 

(3)   the question of recession [what kind of landing] remains a bit murky, especially with the constant downward revisions in the data. As you know, my forecast had been for some type of growth problem which I have considered changing---likely back to the ‘muddle through’ scenario.

                                

                                       The latest nowcast.

                              https://www.capitalspectator.com/us-q1-gdp-nowcast-highlights-growth-slowdown-persisting/

 

                                     

                                 From my favorite optimist.

                         https://scottgrannis.blogspot.com/2024/04/moderate-growth-and-disinflation-still.html

 

                  

                        US

                                               

                                               

                        International

 

The February German trade balance was +E21.4 billion versus consensus of +E25.5 billion; February industrial production was up 2.1% versus +0.3%.

 

                        Other

 

            Inflation

 

              Rising oil prices reignite inflation fears.

              https://www.nytimes.com/2024/04/05/business/dealbook/oil-prices-inflation.html

 

    Bottom line.

 

            The 2024 S&P earnings outlook.

            https://www.ft.com/content/fe384e83-8a39-4d24-b47e-d5ae180a7883

 

            Investing lessons from your mother.

            Investing Lessons From Your Mother - RIA (realinvestmentadvice.com)

           

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

            The hubris of our ‘expert class.’

            https://www.realclearmarkets.com/articles/2024/04/05/oh_the_hubris_of_our_expert_class_it_really_needs_a_whuppin_1022907.html

 

 

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